Simon Huber

What’s happening in healthtech? 💊🎉 💪 Hapana raised US$17M led by OIF & Bailador to grow its SaaS for fitness bizes 🩺 Australian Medical Angels bagged $300k from LaunchVic to launch a new VC fund for early-stage health startups 🧬 Proto Axiom got $20M for its incubator to invest in early-stage biotech ventures 🧠 Kinoxis Therapeutics Pty Ltd Therapeutics, raised a $14.5M Series B for Phase 2 trials of its drug candidate 👁️ Eyeonic closed $2.6M for its AI-enabled home glaucoma tests 🔨 Bunnings is trialling blood pressure stations in 30 stores 🚀 Startmate announced their Winter ’24 Accelerator cohort, ft. 3 of our amazing Private WTH community members: PREVE, Tendl & Trova Health 💧 Aussie hospitals face an emergency as IV saline drip shortages force fluid rations 🏥 Medibank announced plans to acquire Pinnacle Health Group, a leading corporate health & wellbeing provider 🩺 nib Group launched hubPass for Business, a subscription service by Midnight Health 🍬 Breathe Life Sciences (BXN:ASX) is Aus’s first manufacturer of pharmaceutical-grade THC gummies with TGA approval 🦠 Long covid, affecting 10–20% of recovered patients, cost the Aus economy nearly $10B in 2022 🧪 The Senate's doing an inquiry into "forever chemicals" (PFAS) over health & environmental concerns 👂 Gold Coast Health partnered with Lyrebird Health to trial an AI-powered ambient listening solution to automate clinical docs 🏛️ The Fed Gov passed the NDIS reform bill amidst controversy 🏅 Aussies are Winning the Longevity Game? 🏅 Researchers found Aussies live 1-4 years longer than those in 6 English-speaking countries. This edge is supposedly driven by lower death rates from treatable diseases, healthier lifestyles, & a high migrant population, with the biggest gains seen between ages 45-84. Keen for the links & delicious deets?? 🍩🙌 Take a gander at last week's newsletter in the comments below👇😊 --- PS - if you liked this and are keen to join >8200 legends getting the latest in health tech and innovation dropped direct to your inbox, subscribe to my newsletter, What The Health linked in the comments below! 💜 📩 #healthtech  #health  #healthcare  #digitalhealth  #medtech  #biotech

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Can you go from $1M ARR to $100M ARR in 7 to 10 years? Note: this isn’t just growth - this is the definition of Venture Scale growth 🚀 But here’s the catch: Growth at all costs is over So 2024 is all about (capital efficient) Venture Scale growth You could argue that 2023’s push to profitability was a bit of a pass on growth But the VC economic model doesn’t work on profitable low growth startups. So we’re left with Venture Scale but now just in a capital efficient way. Which I think is great for our industry. Because this means real PMF The exuberance of 2020/2021 was all about fake PMF. Everyone loves to say they have it, but very few can actually show it. Be one of those few 💪 Focus on finding a repeatable, scalable and capital efficient growth machine As a founder, that's your only North Star Once you do, if you scale to $100M in 7 years, then that’s the classic T2D3: → after you hit $1M ARR → you triple the next year to $3M ARR → triple the year after that to $9M ARR → then double, double, double and a bit more to $100M ARR But take a look at the first few years after $1M ARR ➡️ Because that's the real definition of Venture Scale The 3x of T2D3 means 200% year-over-year growth for 2 years straight So that's 10% month-over-month growth consistently for 24 months in a row That only happens with real PMF Now the fastest companies (the 1% of the 1%) are actually getting to $100M faster than 7 years... → Wiz and Deel did in just over a year → UiPath* and Slack did in about 2 years → Twilio did it in just under 4 years → Shopify and Carta were around 5 years Note, the clock here is only starting at $1M ARR... And it took UiPath 13 years to go from $0 to $1M ARR - then just 18 months from $1M to $100M 🤯 And not every company finds real PMF at $1M ARR. Sometimes it takes longer and that’s okay 👍 Remember, real PMF (ie truly finding a repeatable, scalable and capital efficient growth machine) is the only signal that you're ready to start scaling And until then, don't worry about $100M Focus on finding a truly repeatable, scalable and capital efficient growth machine first 🚀 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my free Unlock your Series A session on how to navigate VC expectations in this market

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Can you go from $1M ARR to $100M ARR in 7 to 10 years? Note: this isn’t just growth - this is the definition of Venture Scale growth 🚀 But here’s the catch: Growth at all costs is over So 2024 is all about (capital efficient) Venture Scale growth You could argue that 2023’s push to profitability was a bit of a pass on growth But the VC economic model doesn’t work on profitable low growth startups. So we’re left with Venture Scale but now just in a capital efficient way. Which I think is great for our industry. Because this means real PMF The exuberance of 2020/2021 was all about fake PMF. Everyone loves to say they have it, but very few can actually show it. Be one of those few 💪 Focus on finding a repeatable, scalable and capital efficient growth machine As a founder, that's your only North Star Once you do, if you scale to $100M in 7 years, then that’s the classic T2D3: → after you hit $1M ARR → you triple the next year to $3M ARR → triple the year after that to $9M ARR → then double, double, double and a bit more to $100M ARR But take a look at the first few years after $1M ARR ➡️ Because that's the real definition of Venture Scale The 3x of T2D3 means 200% year-over-year growth for 2 years straight So that's 10% month-over-month growth consistently for 24 months in a row That only happens with real PMF Now the fastest companies (the 1% of the 1%) are actually getting to $100M faster than 7 years... → Wiz and Deel did in just over a year → UiPath* and Slack did in about 2 years → Twilio did it in just under 4 years → Shopify and Carta were around 5 years Note, the clock here is only starting at $1M ARR... And it took UiPath 13 years to go from $0 to $1M ARR - then just 18 months from $1M to $100M 🤯 And not every company finds real PMF at $1M ARR. Sometimes it takes longer and that’s okay 👍 Remember, real PMF (ie truly finding a repeatable, scalable and capital efficient growth machine) is the only signal that you're ready to start scaling And until then, don't worry about $100M Focus on finding a truly repeatable, scalable and capital efficient growth machine first 🚀 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my free Seed to Series A session 💪

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Organizing an intimate meetup for high-growth founders building dev tool / Infra / b2b SaaS, together with Bain Capital Ventures this Friday in SF. If you've either: - Raised at least $2M or achieved at least $250k ARR for your current company - Or, you’re a repeat founder who has raised at least $10M or achieved at least $1M ARR in a previous company - Or, had a previous exit for at least $5M Please comment/DM to get tickets - 5 more spots left

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[Exlusive AFR] 9 out of 10 times VC loses money. But when it works, it really works - how $35k turns into $2.1m: 👉 AFR article in the comments At Startmate, we raise and invest $6m every year. Currently, backing 30 out of 1,200 companies that apply (Top 2%). 13 years later, the funds have world-class returns: 🔥 4 are in the Top 5%. 🔥 9 are in the Top 25% How? We believe in our founders all the way in the beginning and forever after. Bugcrowd is a great example. The initial $35k investment turned into $2.1m. (Note: now we invest $120k) But we love Bugcrowd. So we 👉 only sold off 60% of our position for the 2013 fund to return 6x cash on cash DPI for our investors. 👉 as well as bought new shares through our Continuity Fund. Early investors get an incredible return, with a remaining massive upside. New investors get to tap into great Startmate Alumni. 💰 We raise a new fund every 6 months, if you want more info - hit me up!

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The two main reasons I see PLG SaaS Startups reaching a plateau before they hit $10M ARR: 1️⃣ Mathematical limits of the PLG model If you are serving SMBs with a pure Product-Led Growth (PLG) strategy, it is almost impossible to reach Net Revenue Retention of 100%+. Therefore, it becomes increasingly difficult to maintain the same growth rates as you scale. Inbound cannot be scaled indefinitely, and your churn inhibits further growth. Companies that achieve outsize performance are able to successfully switch to a hybrid motion, combining PLG elements with a more traditional enterprise sales model - also called "Product-Led Sales". 2️⃣ Founders fail to build an organization They were able to built a great product and reached product-market fit, but surpassing a certain ARR mark typically requires a shift in focus. From pure product development to building a robust organization. This usually includes expanding the team, establishing processes, introducing strategic planning, cultivating company culture, and often, diluting founder's control and vision for the company. Not every founder is able or interested in making any of those shifts. And I think that's totally fine :-) PS: If you would like to read more on 1️⃣ and 2️⃣, you will find links to relevant saas.wtf articles below.

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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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The SaaS industry is still growing. But much more slowly. Last month I shared an Aleph statistic. Over the last 3 years we have invested in 17 companies. Only 1 out 17 was a classic horizontal SaaS company. SaaS was the single best business model of the last cycle (2008-2021), but the category has since entered a maturity stage (see graph below). This new report from the wonderful software team at Avenir clearly illustrates it. Growth rates for the combined SaaS industry are quickly declining as we are entering the later stages of maturity. In other words, there’s already an established software company in most sectors - and there’s very little room for entirely new software categories. At Aleph we still believe there’s an opportunity to build successful SaaS companies, but new entrants would have to carve out market share in existing industries and displace existing vendors. Vertical software is one area where lesser competition makes it more attractive, but entrepreneurs in crowded horizontal markets would have to work harder than ever before. Another key takeaway from the report - there are only 72 publicly traded companies (with market cap > $5Bn) with a combined market cap of $5.8Tr. However, 56% of this value is attributed to Microsoft alone, followed by a very long tail of lesser performing companies. Moreover, only 2 of the largest 11 companies were funded after the year 2000 (ServiceNow, CrowdStrike). If you are building or investing in SaaS, you should definitely read the full report by Jared Sleeper, Hannah Bao and David Prilutsky (link in the first comment).

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How to End a VC Pitch Meeting The end of a pitch meeting is as critical as the presentation itself. While many founders spend the bulk of their time perfecting the pitch, the last 10 minutes of the meeting require as much attention. Abruptly ending a meeting leaves investors uncertain or disengaged. A structured conclusion, however, can lead to a clear path forward. Here are three objectives every founder should aim to achieve when wrapping up a VC meeting: Define a Clear Next Step Never leave a meeting without defining the next step. Investors have multiple demands on their time. Without a defined follow-up, your pitch will get lost in the shuffle. Ask directly when the VC’s internal meeting will take place. If they say their investment team meets on Wednesdays, say, “Great, I’ll follow up with you on Thursday.” This tactic demonstrates initiative and keeps the momentum going. If the VC hesitates to define a next step, it’s a red flag. It indicates they aren’t interested in moving forward. Don’t waste time chasing uninterested investors—focus your energy on those who show commitment. Guide Their Evaluation Process Most VCs won’t know how to evaluate your company. It’s your job to guide them. Highlight the metrics that matter in your industry and set the framework for how they should assess your business. For example, you might say, “Retention is a key indicator of our success. Have a look at industry benchmarks and see how our numbers compare.” Or, “To understand our customers' pain points, I recommend speaking with players in this particular segment of the ecosystem.” If you have a supportive paying customer or an industry expert contact, feel free to suggest a reference call. By giving them a roadmap for evaluation, you help the VC align their assessment with the most critical factors that reflect your company’s potential. Set Terms for Further Information Exchange If the VC requests documents you didn’t cover in the meeting—such as a financial plan—this is a chance to secure another engagement. For example, you can say, “I’ll provide the pitch deck we just covered, and let’s schedule a time to go through the detailed financial plan.” This keeps the dialogue active and ensures that further engagement is tied to your next move. It’s not just about sharing data—it’s about maintaining engagement and moving toward the next step in the process. Each piece of information you provide should act as a bridge to further discussions. Ending with Control The key to ending a VC pitch meeting is to maintain control of the process. Defining a clear next step, guiding the evaluation process, and negotiating further engagement are all critical components of a successful close. By managing these elements, you ensure that the conversation doesn't fizzle out but instead continues to progress. Reserve the final 10 minutes of your meeting to wrap up effectively—because how you end the meeting might just determine whether or not you secure the investment.

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Valuing Pre-revenue Companies One of the most common questions that every founder has is: How do investors value pre-revenue companies? Even most angel investors are not aware of the factors leading investors consider when valuing pre-seed or seed-stage startups. If you have similar questions, check this guide by Kauffman Venturing to learn about how to value pre-revenue companies... 👇 Check out my free newsletter for more insights: https://lnkd.in/eggvJJRE . #startups #vc #funding #valuation #founders #investors #venturecapital #founder #startup #startuptips

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Valuing Pre-revenue Companies One of the most common questions that every founder has is: How do investors value pre-revenue companies? Even most angel investors are not aware of the factors leading investors consider when valuing pre-seed or seed-stage startups. If you have similar questions, check this guide by Kauffman Venturing to learn about how to value pre-revenue companies... 👇 Worth a read! 💫 Check out my free newsletter for more insights: https://lnkd.in/d3QaTQwC . #startups #funding #founders #fundraising #money #founder #investors #invest #valuation #value #fund #investment

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There should be a checklist for founders to determine if they've achieved Product-Market Fit.

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Learn from OpenAI’s playbook: Prioritizing key projects and empowering a mission-oriented team are essential for startups aiming to make a significant impact 👇 ➡ 𝗜𝗻𝘁𝗲𝗿𝘃𝗶𝗲𝘄𝗲𝗲: Sam Altman, CEO at OpenAI and Brad Lightcap, COO at OpenAI 🔌 𝗜𝗻𝘁𝗲𝗿𝘃𝗶𝗲𝘄𝗲𝗿: Harry Stebbings, Founder at 20VC ✏ “20VC: OpenAI’s Sam Altman and Brad Lightcap on The Future of Foundation Models” ⭐ 𝗙𝗼𝗰𝘂𝘀 𝗼𝗻 𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴 𝗮𝘀𝘀𝘂𝗺𝗶𝗻𝗴 𝘁𝗵𝗮𝘁 𝗔𝗜 𝗺𝗼𝗱𝗲𝗹𝘀 𝘄𝗶𝗹𝗹 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗲 𝘁𝗼 𝗶𝗺𝗽𝗿𝗼𝘃𝗲 𝗮𝘁 𝗮 𝗿𝗮𝗽𝗶𝗱 𝗽𝗮𝗰𝗲: "There are two strategies to build on AI right now: [...] (1) to assume the model is not going to get better and then you kind of build all these little things on top of it; [...] (2) to build assuming that OpenAI is going to stay on the same rate of trajectory and the models are going to keep getting better at the same pace." ⭐ 𝗙𝗼𝗰𝘂𝘀 𝗼𝗻 𝗮 𝘀𝗺𝗮𝗹𝗹 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗰𝗿𝗶𝘁𝗶𝗰𝗮𝗹 𝗽𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝗲𝘀 𝗮𝘀 𝗮 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝘀𝗰𝗮𝗹𝗲𝘀: "At any given point in a company's life, there's only one to three things that really matter. And that spills over into how we run the team because [...] if we can align on what those things are, [...] then it helps me to translate down to the teams that I'm building." ⭐ 𝗘𝗺𝗽𝗼𝘄𝗲𝗿 𝗲𝗺𝗽𝗹𝗼𝘆𝗲𝗲𝘀 𝘄𝗶𝘁𝗵 𝗮𝗰𝗰𝗲𝘀𝘀 𝘁𝗼 𝗔𝗜 𝘁𝗼𝗼𝗹𝘀 𝘁𝗼 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 𝗽𝗿𝗼𝗱𝘂𝗰𝘁𝗶𝘃𝗶𝘁𝘆: "I think people criminally underrate how important it is and how much return you really get on just giving people access to the technology. [...] Someone who used to spend two days doing something now spends two minutes doing it and is freed up to do 85 other things in their daily life." ⭐ 𝗣𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘇𝗲 𝗺𝗶𝘀𝘀𝗶𝗼𝗻 𝗼𝗿𝗶𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗵𝗶𝗿𝗲 𝗽𝗲𝗼𝗽𝗹𝗲 𝘄𝗵𝗼 𝗮𝗿𝗲 𝗴𝗲𝗻𝘂𝗶𝗻𝗲𝗹𝘆 𝗲𝘅𝗰𝗶𝘁𝗲𝗱 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆'𝘀 𝗳𝘂𝘁𝘂𝗿𝗲 𝘃𝗶𝘀𝗶𝗼𝗻: "I watched what has happened to other tech companies when they just become the place you want to work because it's a good resume item. [...] I think companies that lose their mission orientation and get taken over by mercenaries usually come to regret that." ⭐ 𝗥𝗲𝗰𝗼𝗴𝗻𝗶𝘇𝗲 𝘁𝗵𝗮𝘁 𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝗶𝗱𝗲𝗮𝘀 𝗼𝗳𝘁𝗲𝗻 𝗰𝗼𝗺𝗲 𝗳𝗿𝗼𝗺 𝘂𝗻𝗲𝘅𝗽𝗲𝗰𝘁𝗲𝗱 𝗽𝗹𝗮𝗰𝗲𝘀 𝘄𝗶𝘁𝗵𝗶𝗻 𝘁𝗵𝗲 𝘁𝗲𝗮𝗺, 𝗻𝗼𝘁 𝗷𝘂𝘀𝘁 𝘁𝗵𝗲 𝗺𝗼𝘀𝘁 𝗲𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲𝗱 𝗵𝗶𝗿𝗲𝘀: "Find a way to make sure that there's this very flat and even playing field when it comes to how you look to the team for perspective, decision-making, judgment, and creativity." ───── 👉 Follow me, Alexander Small, for tactics and strategies for building startups from industry-leading Founders, Operators and Investors

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📣 Free founders-only event below! I often see founders get a lot of early traction in signing customers and then hit a wall when trying to scale that repeatedly. Why?? Maybe it's because: 1️⃣ that 1st group of customers came through warm intros from your accelerator batch 2️⃣ you've already combed through industry connections from your previous career 3️⃣ you're just good at brute-force selling but you're only one person 4️⃣ you are still narrowing in on product market fit Next week I'm hosting a free, founders-only candid discussion with two people who have had to break through this wall out of necessity and now coach countless founders on this. More on our speakers: 📈 Ian Illig took his 1st job out of college at a friend's startup (employee #1). He quickly found himself trying to sell a product that was still finding its market fit. Fast forward years later and Ian had completely built out the sales team and revenue, allowing the company to get acquired. And then he turned around and did the same thing again with the same founding team. 👀 Sonia Baschez was one of the 1st employees at Atmos, a consumer & builder-facing product for homebuilding. She developed early marketing channels & helped the company grow from Pre-seed to Series A. Sonia optimized product launches to reach the right customers, a challenging feat given their core customers are actively NOT in the tech bubble (aka Techcrunch and a thread on X are not going to do the trick). Whether they know it or not, both Ian and Sonia have been secret superpowers for me as I've grown The Council Fund and supported portfolio companies. I'm excited to share their playbooks & expertise with founders for FREE next Wednesday. Join us 12-1pm Pacific! Link to RSVP in comments below ;)

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I had an amazing chat with Tony Yang, and wow, this guy is a powerhouse for B2B scaleups! As Head of Growth at Mucker Capital, he works directly with founders to build scalable GTM strategies that drive results. MuckerLab, where he plays a major role, has a 𝟵𝟳% 𝗳𝘂𝗻𝗱𝗶𝗻𝗴 𝘀𝘂𝗰𝗰𝗲𝘀𝘀 𝗿𝗮𝘁𝗲, with 𝗯𝗶𝗹𝗹𝗶𝗼𝗻𝘀 𝗿𝗮𝗶𝘀𝗲𝗱 from top investors like Accel and Founders Fund. He is also the founder of RevOptica, a buyer journey visualization tool. During our chat, he dropped some real gold: 𝗠𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴 𝗙𝘂𝗻𝗻𝗲𝗹 𝘃𝘀. 𝗕𝘂𝘆𝗲𝗿 𝗝𝗼𝘂𝗿𝗻𝗲𝘆 Treating the marketing funnel and buyer journey as the same leads to misalignment between company-focused sales processes and buyer needs. Separate the funnel from the buyer journey. Adjust outreach and engagement based on the buyer’s stage, not internal metrics. 𝗗𝗲𝗺𝗮𝗻𝗱 𝗖𝗿𝗲𝗮𝘁𝗶𝗼𝗻 𝘃𝘀. 𝗗𝗲𝗺𝗮𝗻𝗱 𝗖𝗮𝗽𝘁𝘂𝗿𝗲 Relying on demand capture methods like cold outreach or demos assumes prospects already know they have a problem. Focus on demand creation by educating prospects on their pain points and the need for change. 𝗩𝗮𝗹𝘂𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀 𝗳𝗼𝗿 𝗘𝗮𝗰𝗵 𝗦𝘁𝗮𝗴𝗲 Using generic messaging that doesn’t evolve as the buyer moves through different stages is ineffective. Create value statements tailored to each buyer journey stage. 𝗖𝗼𝗻𝘁𝗲𝗻𝘁 𝗠𝗮𝗽𝗽𝗶𝗻𝗴 & 𝗡𝘂𝗿𝘁𝘂𝗿𝗲 𝗣𝗿𝗼𝗴𝗿𝗮𝗺𝘀 Creating content without alignment with the buyer journey stages can result in miscommunication or premature sales pitches. Audit content and tag each piece to specific buyer journey stages (e.g., tagging URLs with /BJS-1-2/). This will help nurture leads with the right content at the right time. 𝗟𝗲𝗮𝗱 𝗦𝗰𝗼𝗿𝗶𝗻𝗴 𝗯𝘆 𝗕𝘂𝘆𝗲𝗿 𝗝𝗼𝘂𝗿𝗻𝗲𝘆 𝗦𝘁𝗮𝗴𝗲 Traditional lead scoring often relies on arbitrary point systems, assigning values for actions like clicks or downloads, which doesn’t reflect buyer readiness. A better approach is implementing a lead scoring system based on buyer journey stages. Separate scoring buckets for early, mid, and late-stage activities. We put these insights together in a playbook below. 👇 Don’t hesitate to download it and pass it along to others! _____ The full interview recording is up in our GrowthMasters community, where we share insights like these. It’s a laid-back space for B2B scaleups, VCs, PE, and M&A pros who love exchanging strategies, playbooks, and resources to help each other grow. We also meet in places like San Francisco and Vienna—a great way to connect, share ideas, and pick up new insights. Would love to have you there, too! Join us here: skool.com/growthmasters #gtm #startups #buyerjourney #VC #marketingfunnel

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$1.7B: the valuation of Zuora, a profitable public SaaS company with $415M in ARR because, 4.25x multiple Also, $1.7B: a run-of-the-mill Series B valuation in Generative AI (revenue optional) because, vibes (I know, I know, low growth at Zuora, but still)

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How do investors price pre-seed rounds?  This is perhaps one of the most misunderstood aspects of fundraising.  Oftentimes, founders want some framework to better understand what market value is when raising capital into their business.  Public equities and later stage privates have a well defined matrix of revenue/margin profiles that dictate valuation, surely there must be some framework for arriving at a pre-seed valuation. So how do investors price startups that are pre-revenue, or have maybe one of two early customers? In reality, pricing is more a byproduct of a VC fund’s portfolio construction model than any metric of the underlying business.  VCs model out portfolios to include a certain number of companies with an ownership target in each startup.  There are variations to portfolio construction, and the chosen strategy will have a direct impact on the types of rounds a fund will participate in. For example, an early stage fund might raise a $60M fund to lead investments in 30 companies and target 12.5% ownership.   After management fees, there is ~$48M in investable capital.  Assuming a fund holds back ~30% for reserves(this number varies across funds) that leaves ~$30M to invest in initial checks.   In this case a fund must average $1M checks at $8M valuations to reach their intended ownership target of 12.5%.   When you are in diligence with a fund, they are first and foremost trying to get to a yes on the investment opportunity.  When arriving at a valuation though, the math outlined above is the determining factor, more so than any multiple of revenue on the business, or the stated desires of where a founder wants to raise capital.  At the end of the day, a VC is trying to arrive at a valuation that works within their portfolio strategy. This means they are very unlikely to price a deal at $15M cap given the aforementioned portfolio construction, as they would either not own enough($1M = 6.67% ownership) or have to cut too large a check( $1.875M = 12.5%). The thing that is most likely to move an investor off their target valuation is another investor in the picture that is driving the price higher, but even then there are upward bound limits of how high an investor is willing to price a deal. I always advise our port cos to ask an investor early in conversations what their ideal check size/valuation is to make sure there is alignment with the founder's objectives.    

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I just set up Relay.app to sync our portfolio database at Tiferes Ventures from Notion to Airtable on an ongoing basis, and it took me less than 10 minutes to set up and test! The challenge we were having is that our source of truth for this data is in Notion, yet some of our team need to operate out of Airtable. I tried setting up a data syncing solution but was having technical difficulties and the solution was charging $99 per month...This morning I remembered that Relay.app recently added a trigger to watch changes in Notion database pages so I figured I'd give it a shot. In less than 10 minutes I had the full solution live and tested! Check out this simple automation below which saves us hours of manual data entry every month and saves us $99 per month. 💪

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Going from Zero to Product Market Fit is like getting out of a Bermuda Triangle For every direction that works out, an equal and opposite direction works too It is shocking how few get to product market fit Only 15 out of 100 SaaS companies get to a million dollars in revenue When you have PMF, it is an awesome feeling Everything is going smoothly for you It also feels scary and out of control You push one unit, and ten units of progress happen But when you don’t have it…. You push ten units of effort, and not even a unit of progress happens It feels like a Sisyphean punishment Moving a boulder up the mountain In the GenAI age, I hear arguments that go “The focus should be on the core functionality. Like how musicians concentrate on the music itself” This is clearly a faulty analogy Businesses providing playback formats (cassette tapes, CDs) are obsolete today Gen AI brings AI below the API No more does one need to stand up a team in ML Spend a few million dollars to “translate languages” or “transcribe accurately” GenAI now assures that Getting to PMF boils down to the basics - Do you understand the problem deeply - Can you build a 10x better solution - Can you execute & iterate faster - Don’t die in the process (cash) What has worked for you to get out of the Bermuda triangle?

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