Patrik Liu Tran

There are many (if expensive) data sources for the later parts of the startup market, but (you know there had to be a BUT coming)... ‌ But what about the founders who are just getting started? And the investors who fund these nascent companies?  ‌ Where can they go for market insights when the vast majority of investment in these spaces happens on unrecorded SAFEs and Convertible Notes? ‌ Enter - Carta’s State of Pre-Seed Report, Q1 2024 (https://lnkd.in/g8wBAH2j). ‌ Since 2020, companies on Carta have signed more than 100,000 SAFEs and notes before raising priced funding. We can speak from experience here about how these convertible instruments have reshaped the face of early-stage venture. ‌ If you’re a pre-seed founder or funder, don’t miss the downloadable addendum to the report above where we break out valuation cap medians for 10+ industries. Source: This is a re-post of the original email from Peter Walker and his team at #carta who create the Carta Data Minute (https://lnkd.in/gbxpyCb6) #startups #founders #fundraising #preseed #venturecapital #ventureinvestors #capvalue #termsheets #thefundraisingangel

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Agents, specifically AI agents, are the focus of the season. In a few years, we will all marvel at how token-heavy the 2024 agents were, with negligible persistence (excuse for this: output freshness), and one-size fits-all implementations. Eagerly waiting for quicker iterations and more nuanced, case specificity. In the meanwhile, use the current gen of agents to get to/past the Hello, world! Thiyagarajan Maruthavanan (Rajan) | Dharmesh Shah #startups #ai #agents

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The most important question for pre-seed investors: What makes this founder truly exceptional? Nothing else matters. The GTM will change. The business model will change. The development roadmap will change. This is the reality of investing in early-stage startups and is why, for ex-operators, it's the most engaging stage to be investing in. Being exceptional is underpinned by the founder's ability to execute and at the earliest stage of startup development, this is all that matters. #founders #startup #vc #business

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Understanding the Rule of X for SaaS Scaleups For SaaS scaleups, the Rule of X offers a straightforward framework to estimate revenue multiples. It was originally developed by Bessemer Venture Partners and supplemented with data last week by Dealroom founder Yoram Wijngaarde. It emphasizes that growth significantly outweighs profitability, even amid VC crunches. However, when growth is constrained, profitability becomes essential. Framework Overview: The Rule of X combines growth rate and free cash flow (FCF) margin to evaluate company value, using a multiplier (typically 2-3x) on growth. Datadog Example: With a 25% growth rate and a 25% EBITDA margin, Datadog achieves a Rule of X score of 100%, implying a 15x revenue multiple for 2024. Importance of Growth: Growth has a compounding impact on valuation, significantly outweighing FCF margins. Subscribe to ‘Siliconnector’ Telegram channel for insights and news from Tech world and Silicon Valley: https://t.me/siliconnector

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What is liquidity management and why is it important? Find out now: https://ow.ly/FwLw50Sk5XE #CQF #quant #finance #quantfinance #quantitativefinance #financialengineering #career #datascience #machinelearning #iquidity #asset #risk

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The profitability sanity test for VC-backed unprofitable cos. Ask this question: How much revenue would it take to be breakeven if: - gross margin % is held constant - all opex spend is held constant on a $ basis Is that revenue achievable with no additional cost? In the attached example, the company needs to grow revenues from $50,000,000 to $87,500,000 with no additional expense to be breakeven. That's $37,500,000 of incremental revenue with $0 of added expense. The question for this business is whether that's possible. If the gap seems too large, then to make the gap more attainable there are two levers: - increase gross margin % - reduce operating expense The best means to do that varies by business, but those are the two levers. And this needs to happen while the company is growing revenues. If the gap seems impossible, then you may have a fundamental business model issue that will make profitability a remote possibility. Of course, there are means in which companies can grow to achieve scale which will help with the profitability likelihood over time - but that will require outside capital which should never be treated as categorically attainable.

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We used to say software is eating the world. Now the talk is AI is eating software. The average valuation multiples for major software businesses in the US market are currently around 5x ARR, trading at a 20% discount to historical levels. Some see this as a buying opportunity, while others argue that software's defensible moat has significantly decreased, with valuations now likely closer to 10x ARR than the previous 20x ARR. In a landscape where the pace of change is accelerating, the costs of building a software business are decreasing, leading to a reduction in the defensible moat. This shift raises concerns for portfolios relying on exit multiples of 15x and above. What do you think? Buying opportunity or is the new normal? #Software #AI #vc #venturecapital #saas

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From 12-18 to 24+ months: Raising between two rounds is getting longer, but is it really bad for founders? •In the past couple of weeks several data points showed that the time between two successive financing rounds is getting significantly longer. •Pre-2022, most VC backed startups raised money every 12 to 18 months until the Series B. •It concretely means that startups had to hit specific milestones every 12 to 18 months to be able to raise again. •And these milestones depended on the “VC zeitgeist”. It could be growth rate, revenue level, product milestones etc… •Fast forward today it’s around 24 to 32 months between two rounds. While it shows that access to funding is getting tougher, is it really a bad thing? First of all, what does it fundamentally change for founders? ----------------------------------------------------------- •Obviously founders need to adjust their burn rate so that they can survive longer than 12/18 months with what they have raised. •They need to focus on sustainable growth. The current “VC zeitgeist” is not about “growth at all costs” milestones anymore but about “sustainable growth” oriented ones. To raise the next round you need to have healthy unit economics. •Board meetings have often dramatically changed. It’s sometimes an almost schizophrenic experience to go from a board that asks you to be super aggressive with growth to a board that asks you to build a sustainable business. •It’s better to have VCs that can support you through bridge rounds over a longer period of time. I know a couple of early stage founders that have raised €1-1.5M with syndicates and small VC firms and are now stuck because they cannot do bridge rounds. So, all in all is it a bad thing? ---------------------------- •If you make the correct adjustments (and most early stage founders have probably done it) I do not think that it’s such a bad thing for founders. •I know many founders that were uncomfortable with the pre-2022 VC Zeitgeist and didn’t feel good when they were pushed by VCs to hire aggressively or spend more money to grow faster. •And many prefer the current situation where the emphasis is on building a real business from day one and accelerate only when it makes sense. And not the other way. The real problem for most SaaS founders is not the longer time between two rounds, but rather to get the very first checks with VCs that are ready to support them over a longer period of time (through bridge rounds).

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🔋 #TodayinVC - All of the biggest deal announcements in venture capital - July 10th, 2024. Sourced from Litquidity's Exec Sum. 💰 Fundraising Announcements: - AI robotics startup Skild AI raised a $300M Series A at a $1.5B valuation led by Lightspeed, Coatue, SoftBank Investment Advisers, and Bezos Expeditions (BW) - Captions, a GenAI video creation and editing platform, raised a $60M Series C at a $500M valuation led by Index Ventures (BW) - Volley, a startup creating voice-controlled games, raised a $55M Series C led by M12, Microsoft's Venture Fund and Lightspeed (FN) - Athletic Brewing Co., America’s largest non-alcoholic brewery, raised $50M at an $800M valuation led by General Atlantic (WSJ) - B2B payments and remittance startup NALA raised a $40M Series A led by Acrew Capital (TC) - Canoe Intelligence, a fintech for alternative investors, raised a $36M Series C led by Goldman Sachs (BW) - Command Zero, an autonomous and user-led cyber investigation platform, raised a $21M seed round led by TECH WEEK by a16z(PRN) - AI video tech startup Phyron AI raised a $10M Series B led by Round2 Capital Partners(FN) - Scaler, an ML-based decarbonizing platform for real estate, raised a $10M Series A led by Plural (EU) - The Lasso, an online car bidding platform, raised $9.8M in funding led by Crosslink Capital and Manresa Ventures(FN) - AI-driven behavioral modeling and big data solutions startup Synerise raised an $8.5M Series B+ led by VTEX (FN) - Biostate AI, a scalable biodata foundry startup, raised $4M in funding led by Matter Venture Partners (FN) - nodaFi, a facility operations platform, raised a $3.5M seed round led by Base10 Partners (FN) - Accend (YC S23), a startup helping fintechs / banks accelerate business clients' onboarding, raised a $3.2M seed round led by Adverb Ventures (FN) Congrats to all - what #startups do you have your eyes on? 👀 Follow @Today in VC for daily #venturecapital news! 📆

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2 days ago, I collected 52 answers about how startup studios attract founders. The top 4 problems mentioned while answering an open question: 1. Hard to find the “true founder material” 2. Studio culture & values fit 3. Hard to engage full-time with founders – lack of founder’s focus 4. Small network to attract founders – either the need to hire outside your industry/niche or inside it I think the answer to the first 3 problems lies in these statistics: – Only 10% of studios (5 answers) work exclusively with second-time founders, those who have tried to build their own companies but failed. 90% are ready to work with first-time founders. It’s usually hard to expect (or at least) test grit, perseverance, high level of commitment & risk tolerance in first-time founders. There are two ways: 1. Either you find ways to attract experienced entrepreneurs despite adverse selection (founders will be inclined to launch their own companies independently if a studio can’t provide a no-brainer deal) or 2. You turn the weakness (first-time founders) into your strength, allowing current full-time employees to test new business ideas with your support without the risk of losing jobs and becoming full-time co-founders only after validation and substantial revenue. DQventures is a good example. Suppose you’ve decided to focus on second-time founders. How will you seek them? Grant Morgan suggested one interesting idea for our (potential) future marketplace of venture studios & founders: “To target founders of companies that shut down or got acqui-hired recently. Founders that haven't been successful, but who have lived the startup lifecycle are great in our opinion, and there are / will be more of them than ever over the next couple of years following ZIRP (zero interest rate policy) environment where many companies raised too much and/or at valuations that their companies will never grow into, but the experience these founders have is very valuable, and they're often hungrier having tasted some level of success already.” – 73% of studios consider partnering remotely with candidates from their country. 52% consider co-founders in other countries as well. Yesterday, while discussing with my partner ideas around the marketplace, we thought that as our first MVP, there could be a job fair online conference where some studios will pitch to potential co-founders. 1. Do you think it’s a good idea? 2. Would you pitch to attract candidates (for free or for the success fee? Let me know in the comments, and if we decide to organize the event, I will invite you.

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A common and obvious assumption about generative models (incl LLMs) is that they can only be as good as the data they're trained on. They can't "do better" than that. Can they? This interesting new paper "Transcendence: Generative Models Can Outperform The Experts That Train Them" shows that these models can sometime perform better than any of the experts who trained them! While this was done in the context of chess, there is no reason to believe that it might not be the case in other domains as well. Personally, I especially find this useful when I munge two frameworks from different areas to apply to a problem I have. Doing that myself would be challenging, but having the LLM transcend my abilities to do it gives me a great starting point! I like the term "Transcendence" as well - good marketing :)

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How to connect with investors outside of your network? I'm hosting a webinar with Founder Institute Berlin that covers this (This Friday (7th June 1700-1800 UK time)) Registration link is below in the comments 👇 What we'll cover: 👉 A tactical guide to plan and execute your cold outreach and a live demo of the process 👉Q&A, ask me questions about your round and outreach 👉Information about shipshape.vc (companies that have used shipshape.vc have gone on to raise over $1bn) What You’ll Learn: 👉Investment Thesis: Learn how to align your startup with the investment strategies of potential investors. 👉Fund Lifecycles: Gain insights into the stages of fund investments and how this impacts funding availability. 👉Current Portfolio Analysis: Discover how to analyze an investor’s current portfolio to gauge interest in your startup’s sector. 👉Domain Knowledge Identification: Understand the importance of reaching out to the right investors who have a history and interest in your industry. 👉Effective Outreach: Learn who to contact, when, and how to craft messages that stand out. #capitalraising #startups #fundraising #founders #venturecapital #investors #vc #vcfunding #technology #startup #tech

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Detailed Thread on "Modelling Stock Volatility with Ornstein-Uhlenbeck"🧵with Python Code Implementation The Ornstein-Uhlenbeck (OU) process is a mean-reverting stochastic process that has been extensively used in financial mathematics to model stock volatility. https://lnkd.in/ggfgmeDZ

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🚨 Fundraising Alert 🚨 Top tier companies raising Pre-Seed to Series A in the next 6 months should apply to Focal where they can pitch almost all their prospective investors at once. Demo day is on May 16th. ✅ Applying takes 7 mins ✅ Previous applicants raised from funds like Sequoia, Balderton, Episode 1, Lightspeed and GV. ✅ Even if you find fundraising easy, this is a way to build added momentum. You can apply here: https://lnkd.in/eTdTtSw7

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This should come in handy: The VC Debulshitter https://lnkd.in/deAwaGCX

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