March 19, 2020 Tech Crunch : When the ‘dry powder’ disappears
With record amounts of venture capital raised, a market peak, and now a sudden plunge, the moment feels very much like it did in the spring of 2000 when the high-flying market, rife with young internet companies, abruptly nose-dived, wiping out thousands of startups — and hundreds of venture firms — over the following three years. At least some lessons were learned in the aftermath of that earlier crash. For one thing, says Rupp, in these “unprecedented times, people will show their character. You get a sense of who people are and how they think about the world, and GPs need to be really mindful of that and of how supportive they are in communicating with their portfolio companies.” (read more…)
CATEGORY: capital, resilience, VC
March 13, 2020 TIMIA Capital : Tired Investors? Revenue Finance Can Help.
Investors can often hinder the forward traction of your company. Sometimes they put unrealistic growth expectations on the team and apply pressure to take on more equity funding. Other times, they prevent you from raising much-needed growth capital because they don’t like the valuation (yet they’re reluctant to cough up more money themselves). (read more…)
CATEGORY: alternative financing, capital, debt
March 9, 2020 Tytchme : When Exits Go Wrong: The Trados Case Study
The Trados case is a rare window into how VCs manage their portfolio companies when things don’t go as planned. Although the company’s revenues doubled between 2000 and 2005, this was not enough growth for VCs to make significant money on their investment. A sale was deemed a better route to move on and spend their precious time on other deals. Thanks to their sale rights and liquidation preference, investors could time an exit that would not hurt them too badly. (read more…)
CATEGORY: growth, valuation, VC
March 9, 2020 Maya Kosoff via Medium : Why All the Warby Parker Clones Are Now Imploding
Perhaps the original mistake of the DTCs wasn’t in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns. (read more…)
CATEGORY: customer acquisition, growth, product-market fit, winner take all
March 2, 2020 Bigfoot Capital : The Pros and Cons of Series A Funding vs. Revenue-Based Financing
Although attaining funds to advance your startup can be pivotal to its success, you can bet that securing financing will take more time than a simple trip to the bank. There are lots of non-traditional financing options available and not all terms are the same. Understanding which type of financing will best meet your startup’s capital needs before pursuing of any one source of funds is crucial. (read more…)
CATEGORY: alternative financing, capital, debt
March 1, 2020 Alex Lazarow via HBR : Beyond Silicon Valley
Start-ups operating amid conditions of relative scarcity, where capital and talent are hard to come by and economic shocks are more likely to occur, face unique pressures. Yet many have become superstars in their own right. Their formula involves a more balanced approach to growth, a focus on solutions to real problems, and investment in their workforce for the long term. These “frontier innovators” hold important lessons for companies of all sizes and in all locations—including Silicon Valley itself. (read more…)
CATEGORY: bootstrap, leadership, profitability
March 1, 2020 Imad El Fay via Medium : Why more money leads to more problems in consumer startups
As VCs flooded the D2C space, they started throwing money at founders, granting them the valuations they asked for, however setting targets/ expectations, which almost always linked back to growth. As a result, D2C founders found themselves chasing growth at all costs, which meant spending most of their cash on Facebook and Google ads. The increased competition for marketing space on these platforms spiked CPMs, which further increased customer acquisition costs and deteriorated unit economics for these companies. (read more…)
February 23, 2020 San Francisco Gate : As the startup boom deflates, a reckoning is coming for Silicon Valley
Over the past decade, technology startups grew so quickly that they couldn’t hire people fast enough. Now the layoffs have started coming in droves. Last month, robot pizza startup Zume and car-sharing company Getaround slashed more than 500 jobs. Then DNA testing company 23andMe, logistics startup Flexport, Firefox maker Mozilla and question-and-answer website Quora did their own cuts. (read more…)
February 13, 2020 Vanity Fair : “No Longer Tethered to the Fundamentals”: A Nassim Taleb Protege On How To Prepare For The Coming Market Crash
What do you do when the bond market is basically uninvestable and the stock market keeps hitting all-time highs and you know in your gut that none of this will end well? What do investors—big and small—do in such unfortunate circumstances, like the ones we collectively find ourselves in now? (read more…)
February 13, 2020 Tech Crunch : Portfolio bloat: What’s happening to thousands of startups going nowhere fast
Ravi Viswanathan of the venture firm NewView Capital sums up what’s happening out there this way: “Firms and funds are generally coming back to market faster with bigger funds, and they’e investing a lot more, so you’re seeing portfolio bloat across the industry. But [limited partners, the outfits and people supplying money to venture funds] are investing for you to make money, and that means spending time on the needle movers.” (read more…)
CATEGORY: capital, customer acquisition, valuation, VC