Numerous companies that started during recessions became phenomenally successful.
During the Great Depression, Stanford students David Packard and William Hewlett established their famous store in a Palo Alto garage. Microsoft was founded as the US was recovering from a years-long oil embargo that wreaked havoc on the economy. Slack, Airbnb, Uber, and Square all rose from the ashes of the Great Recession.
As of September 2022, investors have amassed nearly $300 billion in dry powder, and VC funds are still raising money with the boxcar. That’s because venture capital funds tend to outperform public markets even in times of recession.
That explains why I’ve never heard an investor say it’s a bad time to launch a startup. But ask a few entrepreneurs, and you might get a different story.
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According to a DocSend pre-seed report, founders had an average of 52 meetings with investors in 2022, compared to 39 last year. At the same time, they are submitting 30% more pitch decks, but VC engagement is down 23%.
The idea that there is a “right” time to launch a startup is just a bedtime story that investors tell founders.
In Q4 2022, it takes more time to raise less money.
“Founders can get discouraged in this environment, but they should remember that they also have ‘currency,'” said Russ Heddleston, co-founder and former CEO of DocSend at Dropbox.
As investors spend less time reviewing pitches, concise, data-driven storytelling is more important than ever. The DocSend report recommends using no more than 50 words per slide.
The sections of the deck that deal with purpose, product, and business model are the meat in the sandwich, so founders should spend the most time polishing those points.
“Investors spent the third highest amount of time reviewing the business target slide in pre-seed pitch decks, behind only the business model and product slides,” Heddleston said.
The idea that there’s a “right” time to launch a startup is just a bedtime story investors tell founders, and I regret every part I played in promoting it. Starting a business is an uphill slog on an uncertain path, and it’s not for everyone.
But if that’s your path, don’t let anyone talk you into it.
Thank you for reading.
Editorial Manager, australiabusinessblog.com+
Interim Return: A Better Approach to Early Stage Startup Valuation
Low valuation limits enable early-stage investors to gain greater ownership interest and reduce risk.
However, these limits are increasingly being used as a proxy for the value of the company at the time of investment, which in turn creates “unnecessary complexity for inexperienced founders and investors,” write attorneys Andrew Ritter, Adam Silverman and Jack Sousa, partners. at Wiggin and Dana.
“With the intermediate yield method, you simply negotiate a rate of return (such as an interest rate) that applies solely to the investment in a convertible instrument, solely with a view to future conversion or the amount to be paid on a pre-conversion exit.”
3 mistakes to avoid as an emerging manager
Deeptech VC Champ Suthipongchai is a successful fund manager, but he claims to have made many mistakes along the way.
As a co-founder and general partner of Creative Ventures, he raised $65 million “with less than 25 LPs.” Looking back, he says he initially wasted too much time chasing investors and didn’t use FOMO to his advantage.
“While there isn’t one right way to raise money, there are a few wrong ways — and failure is a great teacher,” says Suthipongchai.
Lessons to raise $10 million without giving up a board seat
Over the past two years, intelligent calendar platform Reclaim.ai has raised $10 million “with a more incremental approach,” writes co-founder Henry Shapiro.
“We’ve done all of this without giving up a single board seat, and Reclaim employees still own more than two-thirds of the company’s equity,” rejecting the conventional wisdom that founders should “raise as much as possible as quickly as possible.” .”
In a TC+ post, Shapiro discusses the process they used to identify follow-up investors, shares the email template they used to pitch the SAFE, and explains why “a larger cap table means more founder control.”
Pitch Deck Teardown: Juro’s $23 Million Series B Deck
Juro, a legal tech startup, raised $23 million Series B earlier this year to scale its web-based contract negotiation platform.
Juro’s founders shared their 15-slide pitch deck with TC+ and “blurred only part of the future roadmap and actual numbers for the financials.”
Dear Sophie: Are there visas or green cards that I can get on my own?
I am so worried and stressed about all the layoffs! I’m safe for now, but it has made me realize that I need to take control of my own destiny.
Are there visas or green cards that I can apply for myself without depending on my employer?
– Silicon stressed
4 ways to use ecommerce data to optimize pre- and post-holiday LTV
E-commerce startups earn as much as a fifth of their annual revenue in the months following Black Friday/Cyber Monday. But how can brands convert shoppers who respond to a holiday promotion into repeat customers who come back year-round?
In a TC+ post, Dan LeBlanc, CEO and co-founder of data and analytics company Daasity, provides a detailed strategy guide designed to help marketers increase ROI and conduct cohort analysis to measure lifetime value against cost of acquisition from customers.
“Consumer brands that know how to leverage their data to maximize LTV will win the holiday season and set their brand up for growth well into the new year.”
Top 3 riskiest misconfigurations on the Salesforce platform
No-code technology can be a double-edged sword.
Platforms like Zapier and Salesforce make it easy to automate tasks and workflows, but “configuring a low-code platform is so simple that the low-code administrator often doesn’t understand the impact of ticking a box,” writes David Brooks , senior vice president of product at Copado.
In a post for TC+, he analyzes the three riskiest Salesforce misconfigurations:
- Change all data (MAD) and view all data (VAD)
- Share and share groups
- Run Apex code without the “runAs” method
Startup founders need to be data-informed, not just data-driven
According to Ann Lai, a general partner at Bullpen Capital, many startups that focus on core metrics during fundraising are self-sabotaging.
“Using raw, unfiltered data is common among startups that don’t know how to properly filter their information, and they often end up throwing out data that isn’t relevant to their business and mission,” says Lai.
In a post aimed at both investors and founders, Lai offers three strategies that will help “ensure you’re not just data-driven, but data-informed.”