Category: growth
December 3, 2019 Aaron Dinin via Medium : Venture Capitalists Don’t Invest in Magic. Neither Should You.
Instead, the kinds of growth companies should be studying, charting, and analyzing is intentional, controlled growth. That means growth driven from things like replicable marketing campaigns, sales funnel optimizations, and improving your company’s customer success process. Simply put, when you can attribute a sale to a specific and intentional action your team has taken, and when you can consistently repeat the action to achieve similar results, that’s when it’s reliable, predictable, investable growth. Everything else is just magic: fun to watch, but not something you can invest in. (read more…)
CATEGORY: growth, leadership, product-market fit, VC
November 4, 2019 Lighter Capital : How Revenue-Based Financing and Venture Capital Funding Work Together
As alternative financing solutions attract more attention from entrepreneurs, some VC investors are noticing more startups are turning to these options for their growth and working capital needs, many times mixing and matching RBF with a term loan, line of credit with a forward commitment, or both. These flexible, non-dilutive financing solutions scale with a business’ growth, enabling entrepreneurs to focus on their business without giving up equity, personal guarantees, or board seats; it’s understandable why entrepreneurs are increasingly seeking such solutions to reach their next growth milestone. (read more…)
CATEGORY: alternative financing, debt, growth, VC
August 8, 2019 Tom Tunguz : Which Categories of Seed Startups are Thriving? Which Aren’t?
Overall, the data is consistent with our observations on the ground. Many sectors have fallen out of favor, and others have risen suddenly. A contrarian might found a company in a deflating category; a counter-argument might be to ride the next big wave and start there. Whichever your perspective, the main conclusion is that there’s an incredible amount of opportunity. (read more…)
June 20, 2019 Alex Graham via Toptal : State of the Venture Capital Industry in 2019
- There are fewer companies being funded.
- Startups are raising larger rounds and staying private longer.
- More growth and value upside is remaining inside private markets.
- Rising numbers of “mega funds” are being raised to maintain private stakes.
- Earned reputation allows the best funds to raise more and more access mature deals.
CATEGORY: growth, VC, winner take all
February 14, 2019 Paul Arnold via Forbes : There Are Only Three Venture Capital Strategies
The power law of returns dominates startup investing. Much has been said on the topic (like here, here, here, here, here, here, or here). What matters for a venture strategy is that nothing is more determinative of a fund's success. Power-law distribution is the architecture of the whole game. I measure any investing approach against its impact on the power-law distribution. This is the acid test of what is actually effective. And while it is true that adding value, sourcing better, and investing better are all good strategies other investing situations, the effects, especially of 2 and 3, are especially significant in venture where the power curve has a large exponent. (read more…)
CATEGORY: growth, risk, VC, winner take all
January 29, 2019 Tech Crunch : Startup Investors Consider Revenue Share when Equity is a Bad Fit
Revenue-based financing isn’t some groundbreaking new idea, at least outside of the venture world. A revenue-share deal typically involves a capital investment that is later repaid from a share in the revenue of a growing business. It has historically been used to invest in businesses with potentially predictable cash flow and high profit margins, from Hollywood movies to high-margin service businesses. But the concept has been gaining steam in the venture capital industry. An increasing number of venture funds are actively deploying revenue-share tools. Novel GP has a $12 million fund focused on revenue-share investments in software-as-a-service companies. Indie.vc recently raised their second $30 million fund that invests through a “profit-sharing” structure by which the fund receives disbursements based on net revenue or net income, depending on which is greater. Candide Group, Adobe Capital and our affiliated fund VilCap Investments are a few more examples. (read more…)
CATEGORY: alternative financing, debt, growth
January 23, 2019 Recode : “Venture capital money kills more businesses than it helps,” says Basecamp CEO Jason Fried
Fried told Recode’s Kara Swisher that venture capital “kills more businesses than it helps” because the pressure to grow crazy-fast means companies keep raising money to keep their growth rate up. That, in turn, means they rarely have the opportunity to learn how to spend money in a disciplined, sustainable way. (read more…)
CATEGORY: growth, valuation, winner take all
January 11, 2019 New York Times : More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost
The event had been organized by Frank Denbow, 33, a fixture of New York’s tech scene and the founder of T-shirt start-up Inka.io, to bring together start-up founders who have begun to question the investment framework that has supercharged their field. By encouraging companies to expand too quickly, Mr. Denbow said, venture capital can make them “accelerate straight into the ground.” (read more…)
CATEGORY: growth, risk, valuation, VC
November 29, 2018 Pitchbook : Why this VC puts efficiency above unicorns
If you put too much money in too early, you're going to destroy the cap table and possibly see the team losing focus because they are not ready and don't know how to deploy it properly. You're also going to artificially inflate its valuation, which in the short term might make the entrepreneur happy because of the paper wealth, but what happens if they don't outperform an already-aggressive business plan? (read more…)
November 13, 2018 The Hustle : As funding rounds grow larger, fewer startups are able to raise money
Venture capital mega-funds have supercharged startup fundraising all the way down to the seed: Since 2013, the average seed round of funding has grown from $550k to more than $2m. But, as the size of rounds has increased, The Wall Street Journal writes, the number of companies receiving that funding has decreased by more than 40% (read more…)
CATEGORY: capital, growth, VC, winner take all