AimTäck UG

Just like founders, 30% of VCs never break even and return the money they raised from investors. When they don't, their carry equals zero. This is not a prediction; it's a fact. The industry term for this "return" is 1x DPI (Distribution to Paid-In-Capital). Carry is the cash they are supposed to get after all is said and done. Historically, around 25-30% of venture capital funds fail to return 1x DPI. The top 25% of VC funds return 3x+ DPI. Venture capital is ultimately a game of risk vs. reward. But that's not all. Assuming a VC invests the same amount in 10 companies and industry statistics say 9 out of 10 startups fail, the VC will return 1x DPI to its backers (limited partners) only if the one startup that succeeds returns 10x for the VC. VCs optimize to avoid founders who can't deliver this type of returns. And if they make the mistake of backing such a founder, they move on quickly, hopefully learning from their mistake. So, the pressure is on the one startup that is winning. 10x isn't enough for the VC. The VC wants something around 15x minimum one 1 deal to break even on the 10 deals, or else their business model fails. My experience as a small-time angel investor (45 companies) has taught me a lot. Many have failed, but I've achieved a 3x DPI from companies that returned 100x. To founders: If you are taking VC money, be very aware of the pressure you have invited. Also, remember that your high valuation is not a success—not for you, not for the investor. Align your plans with the investor. Not all investors are a fit for you, and not all startups/founders are a fit for all investors. Your answers about your exit plans reveal the fake guys (spoiler: there are no right answers; for some businesses, IPO is the right answer, for some, selling in 5 years is the right answer. I can write a whole post on this part). One of the things we've learned at Fast Forward is to model analytically what needs to hold true for our exit strategy for a startup to work. We track this as the company evolves and continue to stay aligned with the founders. I know it's easy for founders to discard this, and you probably should - when you are raising money, you need to stay optimistic all the way. Just keep in mind that there are other ways to build a company. #vc #returns #africa #fastforward

Founders - don't raise a small seed round. Wait, what? Isn't the current advice to raise as little money as possible? Isn't fully bootstrapped even better? 𝗗𝗲𝗽𝗲𝗻𝗱𝘀 𝗼𝗻 𝘄𝗵𝗮𝘁 𝘆𝗼𝘂𝗿 𝗲𝗻𝗱 𝗴𝗼𝗮𝗹𝘀 𝗮𝗿𝗲. If the end goal is to take the traditional venture path to Series A, it looks like raising too little at seed is an issue. We looked at 4,000+ software startups (US only, on Carta) that raised a seed round in a given year. We then took the percentage that made it to a Series A round in 24 months or less. Data is split by the year of the raise and the size of the seed round: • Small = Under $2M • Medium = $2M-$5M • Large = $5M + This "graduation rate" clearly differs by year, with companies that raised their seeds in early 2022 having much more trouble getting to A than those that did a seed in the boom years. But no matter the year, the small seed rounds have a lower probability of getting to A in under 2 years. So what's happening here? Maybe the companies that were raising small seeds were never planning on going to Series A (though given the general climate of startups in those years, I kinda doubt that). Maybe it's really hard to know how much money you'll need to get to the next milestone and undershooting is more costly than overshooting. Maybe a lot of things. But for startups that want to go the full VC route, raising too little at seed seems to be a problem. Interesting to see that the relationship between round size and graduation rate levels off pretty quickly. Rising the largest possible round does not give some major advantage. I welcome spirited debate in the comments 😊 #cartadata #seed #SeriesA #startups #founders #fundraising ---------- USDA prime startup data out every Thursday in our Data Minute newsletter here: https://lnkd.in/gNa_Dk-F

Umsatz ab Minute eins. Das ist mein Credo, wenn ich mit Frauen zusammen arbeite. Warum Frauen anders gründen und wie sie schnell die ersten Umsätze machen in ihrer Unternehmerinnen Reise, darüber und über einige anderen unausgesprochenen Dinge spreche ich heute. Bist du auch der Veranstaltung bei der Agentur für Arbeit „Frauen gründen anders? https://lnkd.in/e9nd25Wa Vielen Dank für die Einladung Julia Klein und Anke Jürgens. Startup-Woche Düsseldorf #elevateher #EkaterinaArltKalthoff #speakerin #frauengründenanders #femaleaccelerator

Stop chasing funding without a plan. If you want to raise capital, do this at each stage: 1. Pre-Seed: Focus on developing your MVP and proving technical feasibility 2. Seed: Validate product-market fit and establish early traction 3. Series A: Implement a scalable go-to-market strategy and grow your customer base 4. Series B: Expand your addressable market and optimize operations For example: → Conduct user testing to refine your MVP → Survey customers to identify key pain points → Hire experienced sales leaders to scale revenue → Invest in infrastructure to support rapid growth You will build a fundable startup by methodically decreasing risk at each stage rather than just chasing the next round. Do that consistently and watch your valuation soar. Credit to Chris Tottman for the original post and visual! Check my free newsletter for more insights: https://lnkd.in/dCpgAYjt

𝗪𝗶𝗿 𝘀𝗶𝗻𝗱 𝘇𝘂𝗿𝘂̈𝗰𝗸 𝗶𝗻 𝗱𝗲𝗿 𝗛𝗼̈𝗵𝗹𝗲 𝗱𝗲𝗿 𝗟𝗼̈𝘄𝗲𝗻! Wir freuen uns riesig, dass wir unsere gemeinsame FreeMOM-Geschichte weiter schreiben dürfen. Im Februar hatten wir in München Besuch vom VOX-Redaktionsteam. Es gab Einiges zu berichten, sowie spannende Einblicke hinter die Kulissen in die Zusammenarbeit mit unserer Investorin Tijen Onaran. Das Team hat uns auch bei unserem ersten Live-Community Event bei LinkedIn begleitet, welches ein mega Erfolg war. Unsere Entwicklung der letzten Monate war rasant, oft eher ein Sprint, zeitgleich ein Marathon voller Emotionen, toller Erlebnisse aber auch Tiefschlägen. Danke an meine beste Anika Schmidt für einfach alles ❤️ und danke an alle, die uns immer wieder unterstützen, an unserer Seite sind und mit uns an unserer Vision arbeiten! Annette Venus Joern Uebelmann Der Tag mit euch, liebe Miriam Cieslar und Team, hat super viel Spaß gemacht und wir freuen uns sehr auf den Beitrag. 📺Schaut am 𝗠𝗼𝗻𝘁𝗮𝗴, 𝗱𝗲𝗻 𝟮𝟮.𝟰.𝟮𝟰 𝗮𝗯 𝟮𝟬:𝟭𝟱 𝗨𝗵𝗿 𝗯𝗲𝗶 𝗩𝗢𝗫 (oder on-demand bei RTL+) vorbei, wenn ihr sehen möchtet, was bei FreeMOM seit der letzten Sendung im September 2023 so alles passiert ist. Schaltest Du ein? 📺 Claire Siegert Eugenia Gagin Ekaterina Arlt-Kalthoff Evelyn Brock Marc Müller Julia Bangerth Marco Duller-Onaran Andreas Sonnefeld Olga Röder Oliver Ewinger Christiane Kilian Cathi Bruns Miriam Sternitzky (née Rabung) Ramona Luiza Hecht Sandra Westermann Fotocredit: Marike Stucke #dhdl #femalefounder #vereinbarkeit #freemom

Seed to Series A has the biggest drop in valuation multiples → Seed has a median multiple of 13 to 53x → Series A sees a 10 to 24x multiple Which means that it’s possible to grow revenue AND still see flat round if you’re not focused on the right milestones Let’s run through an example so you know what to avoid That may or may not be similar to my experience 👀 ➡️ $4M Seed Round at a $20M post-money valuation To unlock your seed round, ideally you were able to show happy customers This is what I consider Problem Solution Fit So in this example... → that’s $500K ARR split across a few large accounts → so we raise a $4M seed round → at a $16M pre-money at a 32x multiple Giving us a $20M post-money valuation Now, we aren’t worth $20M right now This entire valuation is based on the future expected growth For your seed round, you tell a story on how the future will unfold (backed up by problem solution fit signals) and VCs pay a premium today for those future expectations ➡️ $20M pre-money Series A after 4x growth? So we’ve raised $4M in our Seed round and we’re ready to put that money to work 💪 But, VCs pay a premium at our Seed round for two things: → That we’ll figure out our go-to-market fit → And that it’ll translate to venture scale growth And remember, the higher your seed multiple… the higher the expectations at your Series A So in this example, let’s say in the first 12 months things are looking great → We add a few more big accounts → We expand your existing accounts → And we 2.8x revenues to $1.4M So far so good 🙌 But we haven’t quite figure out a repeatable & scalable go to market strategy In fact that growth was from different use cases, different products, across different segments and mostly from existing accounts that are now almost tapped out 😞 But that’s okay, because revenue went up right? So in the second 12 months we start to fall off the growth curve → We add a few more big accounts again → We expand our existing accounts again → But we only 1.4x revenues to $2M So that’s 4x revenues since our seed round But that was 24 months ago now and we’ve only grown 42% in the last 12 months At our Seed round VCs paid a premium 26x revenues. But we’ve missed both GTM fit and Venture Scale growth So we go from a healthy Seed valuation multiple to the low end of the Series A valuation multiple curve And end up with a flat round 🤯 This is obviously illustrative to hopefully give more clarity on why it’s important to focus on the milestones Hit those milestones... And even though the multiples drop, your valuation goes up 🚀 -- ♻️ Repost to help another founder Click 'visit my website' to register for my free 7 term sheets training session on how to get multiple term sheets from VCs