Julius Danek

VC Platform explained, in apples. By the nature of what I do, I think about social systems a lot: how do we build a platform of founders supporting other founders? It’s so easy to get caught up in complexity here, that I make myself think about it, quite literally, in apples. Give it a try: * If I have two apples, and give you one, how many do I have left? One less than I had, so down to one apple. * But in real life the correct answer is that I now have an apple and a relationship with the culture of sharing with others when you can. I‘ll be able to lean back on that relationship when in a twist of fate it’s now me standing with no apples. I am now part of a system. * Can I rely on someone else to start this system? Yes, I can. But apples in life are a bit more complicated: — Maybe the person in front of me doesn’t share the apple with me, because she has already committed it to someone else. — Maybe she borrowed the apple from someone else in the past, and now wants to return it. — Maybe she hasn’t eaten in a while, and now needs not one, but both apples to sate herself. — All these people might be generally willing to share an apple with me—but maybe not this exact one, the timing may be not right at the moment, they are part of a bigger group where they have agreed to only share apples inside the group etc. Yes, the analogy with deal-sharing is intended, too. :) * When we factor in real-life circumstances, it’s hard to tell if the person, in fact, has a spare apple or not. Besides, when I wait for someone else to share an apple first, I make myself dependent on an external factor over which I have no control. I shouldn‘t, therefore, be surprized to find myself in a situation when I would want someone to share an apple with me, but the system is not there yet. * So, in reality, the only sure way to become part of a system like that is to wait for a moment when I have a spare apple and share it. * For this to work, the person I am sharing the apple with should actually need the apple. Let’s imagine I try to share an apple with someone who has just had two, doesn’t like apples, or has an apple tree. In the best case, it just won’t work. In worse cases, if let’s suppose I insist on giving the apple, the person might grow irritated. So, I need to share my spare apple with someone who actually needs an apple at this point in time. * This example is fabulous, as it helps answer other questions as well. For example, should I then give both apples, so that the relationship is 2x stronger? My answer will follow in the next post. PS. The artwork frivolously used by me to illustrate my thoughts is by a generative artist @dmitricherniak on inst who considers automation his artistic medium. He makes it seem easy, but after spending an hour in DALL•E and getting a bunch of really ugly apples in webs, I am a raging fan.

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4️⃣ SaaStock Fundraising Chatter: Finding the Right VC for You. A key takeaway from Tuesday’s post was how important it is to qualify your investors. With so many options, here's how to be strategic: 🔎 Qualify ruthlessly. Treat your investor funnel like a sales funnel. AlbionVC, for example, invests $1-10M in UK-based B2B software and deeptech. If you’re a Paris-based consumer marketplace raising $20M, it’s a non-starter. Founders waste precious time crafting outreach to funds outside their scope. 🥇 Prioritise Smartly. Rank your target funds by both appeal and likelihood of success. 💘 Find a Warm Intro. If you don’t know the fund directly, network like you would for sales. Get a concise, compelling intro via a mutual connection. Remember a “pass” could even lead to a referral to another, better-fit fund. 🎮 Sequence Pitches. Start with lower-priority VCs to refine your pitch with early feedback. Then, approach your top picks with a polished narrative. Generating interest early creates momentum in your process. ⚠️ Requalify Your VCs! It’s as important to assess us as it is for us to assess you. ➡️Ambition Alignment: Are their expectations aligned with yours? ➡️Personal Fit: Grab a coffee, breakfast, lunch, go on a walk: will you enjoy working with them for years? ➡️Support: What do you need? Do your diligence to ensure they deliver it. ➡️References: Talk to portfolio companies, successes and struggles. Were they fair? were they kind? ➡️Partner Stability: The partner who leads your investment will be emotionally and intellectually invested in you and your vision. They will be on call. They will fight for you when things get tough (bridge rounds, etc)…far more than someone who replaces them later. Also, high turnover at a fund could signal cultural issues. #SaaS #Fundraising #VC #AlbionVC

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🙃 💸 Flink raised $1.5B... and is now valued at less than $1B Let's move beyond the snarky comments of how such a feat is possible. The German quick-commerce startup just raised an additional $150M. And that's actually quite interesting: 1️⃣ If valuation has been slashed (from a peak at $5B) to below $1B, it is a first sign of maturity. 2️⃣ There is a focus on profitability: the startup has broken even in its two main markets: Germany and The Netherlands. It wants to use the money to further strengthen its position there. Done are the days when startups were only focusing on growth and expansion. 3️⃣ That's the last European pure player operating in Europe (JOKR now only operates in Latin America). It is also among the last players operating at scale in developed economies. So, what it does and how successfully it can grow will be key to the future of quick-commerce. 📈 I am quite confident in the future of quick-commerce. It answers a consumer need, but it needs to be operated with care, notably in developed economies, due to high labour costs. 👉 : https://lnkd.in/gmpcNhNP #startup #commerce #grocery #delivery #foodtech

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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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Y-Combinator Guide: How to Split Equity between Cofounders & When You Should (and Shouldn’t) Split… https://buff.ly/3WoVkav The Y-Combinator Guide delves into the intricate process of splitting equity among cofounders, outlining the crucial considerations and scenarios where equity division is warranted. Understanding the dynamics of equity distribution is essential for fostering a fair and sustainable partnership. By exploring real-world examples and statistics, cofounders can navigate this challenging aspect of startup collaboration more effectively. It is crucial to establish clear guidelines and agreements to prevent potential conflicts in the future. This guide provides valuable insights for entrepreneurs embarking on new ventures. #StartupEquity #CofounderCollaboration #venturecapital #startups

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While we’re busy cooking up our product for launch, it was great to meet so many old and new faces at Bits & Pretzels in Munich and get early feedback on what we’re building. Two interesting observations: - I came across a large number of successful startups that have bootstrapped (or nearly bootstrapped) their way to impressive size and impact. - Many founders are prioritising research and/or impact over money and high growth. While scaling can be necessary to have high impact and advance the research, in many cases, pursuing niche but high-impact areas requires sacrificing faster growth. If I had to pick one inspiring founder I met, it would be Prof. Dagmar M. Schuller, the CEO of audEERING GmbH. Their research in Voice AI, particularly in voice understanding, is being applied in high-impact fields such as healthcare (e.g., early disease detection through voice analysis), automotive (e.g., reducing the risk of car accidents), and many more.

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💣 Nearly HALF 5X+ VC funds are small funds sub $50m - I posted this last Christmas and tagged the 2 top emerging managers backing FoFs in Europe. Little would I know that by final closing time I'd be so fortunate and grateful for having both on board :) Data for the stats from Pattern Ventures, proving that emerging small funds smash larger, established funds. Now we just have to deliver and score a 5x+ pice of cake haha 😹 But hey, what would life be without a tough challenge 💪 #deeptech #europeantech #venturecapital #emergingmanagers Molten Ventures Multiple Capital

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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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Pre-seed/seed founders: When pitching investors, don't shoot yourselves in the foot by trying to hide what isn't pretty. A good early stage investor accounts for there being things that aren't figured out, or just plainly look bad. When I can't get a straight answer to a fact-based question from a founder, it is likely that my main takeaways will be: 1. #Fundraising will be hard for you. This is a gut and trust business. Obfuscation drops a bomb on that for many investors who index on founder honesty and ethics. "I don't know", "I can get back to you", "It's not great" or "I don't think that's the right question" are better than a cryptic misdirecting answer. 2. #Hiring and #retaining top talent will be hard for you. Great talent won't stick around at the early stage if you can't provide clarity and transparency in your leadership of teams & targets. 3. #Sales will be hard for you. Customers want clarity on value add, and how it solves their problem. I'm less inclined to believe that you provide that when I am not experiencing it myself. Any combo of the above makes a bigger dent on your funding prospects than the ugly truthful answer to the question I asked.

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Imagine pouring your heart into a startup, only to find your co-founder taking a significant chunk of equity while contributing little. That’s exactly what happened to Robin Chase of Zipcar. Robin Chase and her co-founder, Antje Danielson, started Zipcar with a 50/50 equity split. However, as the company grew, tensions developed because Danielson didn’t contribute as expected, ultimately leading to her removal from the company. How to prevent it? Founders MUST have vesting schedules. Think you get all of your equity right away when you incorporate your startup? Think again. Here’s why a vesting schedule is the right decision for your startup’s future: 🚀 Investor Expectations: Investors are watching closely. Without a vesting schedule already in place, they'll demand founders add one before closing a priced round financing, like your Series A. VCs need assurance that you and your co-founders are committed for the long haul and won’t walk away with a hefty equity stake after the financing round closes. It’s all about aligning incentives for the company’s growth for the long-term. 💥 Protect Against Founder Breakups and Disputes: Imagine pouring your heart into a startup, only to find your co-founder taking a significant chunk of equity while contributing little. 🔑 The Takeaway: A vesting schedule isn’t just a formality—it’s essential for aligning the interests of your founding team and the company’s success, can protect against potential founder disputes and will show investors you are serious about building your startup into a success story in the next several years. Don’t let a simple oversight jeopardize your startup’s future. Have questions about founder equity? Let’s connect to keep your equity grants and cap table on track! #startuplawyer #startupfounder #vestingschedule #founderequity

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49 founders and senior startup leaders respond to a survey from Sifted on the relationship between founders and VCs. Are expectations off from the start as VCs try too hard to pander to their founders with over promises of "value-add" and extensive platform teams? Do founders need to be reminded of their primary role - execution?

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

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Founders should read this and prep for this list.

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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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At our VC firm, we don't just fund companies, we fund your existential crises. Every investment comes with a complimentary philosophy book. #vc #startups #investment

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Early-stage rounds are getting MUCH harder to raise. Here's what fundraising founders need to know: 1️⃣ 𝐓𝐡𝐢𝐬 𝐢𝐦𝐩𝐚𝐜𝐭𝐬 𝐒𝐞𝐞𝐝 𝐭𝐨𝐨 ↳ If you think "I'm only raising my Seed round, this doesn't affect me" then stop scrolling. The default advice used to be raising 18 months of runway at Seed. But the time between a Priced Seed and Series A is up. WAY up. Median time between those rounds is up to 766 days (over 2 years). The top 25% do it in 469 days. 𝘛𝘢𝘬𝘦𝘢𝘸𝘢𝘺: 𝘐𝘧 𝘺𝘰𝘶 𝘵𝘩𝘪𝘯𝘬 𝘺𝘰𝘶'𝘭𝘭 𝘳𝘢𝘪𝘴𝘦 𝘢 𝘚𝘦𝘳𝘪𝘦𝘴 𝘈 𝘪𝘯 18 𝘮𝘰𝘯𝘵𝘩𝘴, 𝘵𝘩𝘦𝘳𝘦'𝘴 𝘳𝘰𝘶𝘨𝘩𝘭𝘺 𝘢 2/3 𝘤𝘩𝘢𝘯𝘤𝘦 𝘺𝘰𝘶'𝘳𝘦 𝘸𝘳𝘰𝘯𝘨. 𝘗𝘭𝘢𝘯 𝘢𝘤𝘤𝘰𝘳𝘥𝘪𝘯𝘨𝘭𝘺. 2️⃣ 𝐃𝐞𝐚𝐥 𝐜𝐨𝐮𝐧𝐭 𝐢𝐬 (𝐖𝐀𝐘) 𝐝𝐨𝐰𝐧 ↳ The number of Series A deals fell 36% QOQ in 1Q2024, the most of ANY stage. Total invested capital fell 35% QOQ. Many startups are struggling against operational and macro headwinds to hit their revenue targets, yet the expectations to fully break through to the next round continue to rise. 𝘛𝘢𝘬𝘦𝘢𝘸𝘢𝘺: 𝘞𝘩𝘦𝘯𝘦𝘷𝘦𝘳 𝘱𝘰𝘴𝘴𝘪𝘣𝘭𝘦, 𝘪𝘮𝘱𝘳𝘰𝘷𝘦 𝘺𝘰𝘶𝘳 𝘤𝘢𝘱𝘪𝘵𝘢𝘭 𝘦𝘧𝘧𝘪𝘤𝘪𝘦𝘯𝘤𝘺 𝘣𝘺 𝘱𝘳𝘪𝘰𝘳𝘪𝘵𝘪𝘻𝘪𝘯𝘨 𝘎𝘛𝘔 𝘦𝘧𝘧𝘰𝘳𝘵𝘴 𝘰𝘷𝘦𝘳 𝘮𝘰𝘳𝘦 𝘢𝘮𝘣𝘪𝘵𝘪𝘰𝘶𝘴 𝘱𝘳𝘰𝘥𝘶𝘤𝘵 𝘥𝘦𝘷𝘦𝘭𝘰𝘱𝘮𝘦𝘯𝘵. 3️⃣ 𝐘𝐨𝐮 𝐦𝐚𝐲 𝐧𝐞𝐞𝐝 𝐚 𝐁𝐫𝐢𝐝𝐠𝐞 ↳ In 1Q2024, 42% of Priced Seed rounds were Bridge rounds (a significant increase from 35% in 4Q2023). 𝘛𝘢𝘬𝘦𝘢𝘸𝘢𝘺: 𝘚𝘵𝘢𝘺 𝘪𝘯 𝘧𝘳𝘰𝘯𝘵 𝘰𝘧 𝘵𝘩𝘪𝘴 𝘱𝘰𝘴𝘴𝘪𝘣𝘪𝘭𝘪𝘵𝘺; 𝘤𝘰𝘮𝘮𝘶𝘯𝘪𝘤𝘢𝘵𝘦 𝘸𝘪𝘵𝘩 𝘺𝘰𝘶𝘳 𝘦𝘹𝘪𝘴𝘵𝘪𝘯𝘨 𝘪𝘯𝘷𝘦𝘴𝘵𝘰𝘳𝘴 𝘦𝘢𝘳𝘭𝘺 𝘪𝘧 𝘵𝘩𝘪𝘴 𝘭𝘰𝘰𝘬𝘴 𝘭𝘪𝘬𝘦𝘭𝘺 𝘧𝘰𝘳 𝘺𝘰𝘶. 4️⃣ 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧𝐬 𝐚𝐫𝐞 𝐟𝐢𝐧𝐞 ↳ Here's some good news for you: Series A valuations haven't been crushed as badly as some other metrics. They remained relatively flat QOQ, and nearly back to the levels we last saw in 2Q2022. It's a similar story with median dilution, which hovered around 20% for both Seed and Series A. There has been little change since 2Q2023. 𝘛𝘢𝘬𝘦𝘢𝘸𝘢𝘺: 𝘠𝘰𝘶𝘳 𝘭𝘰𝘯𝘨-𝘵𝘦𝘳𝘮 𝘰𝘸𝘯𝘦𝘳𝘴𝘩𝘪𝘱 𝘦𝘹𝘱𝘦𝘤𝘵𝘢𝘵𝘪𝘰𝘯𝘴 𝘱𝘳𝘰𝘣𝘢𝘣𝘭𝘺 𝘴𝘩𝘰𝘶𝘭𝘥𝘯'𝘵 𝘤𝘩𝘢𝘯𝘨𝘦 𝘺𝘦𝘵. (Data Source: Carta) P.S. do you want to see more posts about fundraising market updates and data from me? What would be useful? Let me know in the comments! 👇 __ Was this helpful? 👍 like and ♻️ repost it to help other founders

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When passing on an investment, most VCs rarely share the real reason and give a canned response that provides no value to a founder. VCs typically do this to (1) preserve right to invest in the next round or (2) avoid an awkward interaction The best founders seek authentic feedback and actually respect investors more when giving their honest opinion. If you got into venture capital to help make the world a better place through innovation, then these canned responses are a disservice to the entire ecosystem. Also, as Mark Ang shares - the founder wont come back to you for the next round!

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🤪 💵 Wow, this is so wrong... Bolt (not the ride-hail company Bolt, but another one) had a revenue of $30 million (2021) and raised a total of $960 million. Pay attention here—its valuation was an astonishing $11 billion, which was... 400 times its annual revenue (yes, 400!) 🤯 To put the scale of the problem into perspective, even assuming a 30% net profit margin (which is rare on the market), investors would need to wait over 1,000 years to see money back 😱 👉 But the story doesn't end there. It gets even more interesting. Unsurprisingly, given this insane valuation, there are lawsuits and scams happening in parallel. So, what did the founder do with a company that has $960 million of investor money, an unrealistic valuation, and modest growth? Naturally, he took a personal loan of $30 million secured by Bolt (meaning if he doesn’t repay the money, Bolt will cover it). Cool, no? Predictably, the $30 million wasn’t repaid, and now Bolt shareholders are suing the founder. However, they will get more Bolt shares, not money 😜 It sounds like a very strange, partial exit strategy from an overinflated balloon 🎈 Of course, a high valuation can be justified for a truly unique product that solves a significant problem for humanity (space exploration, unique medication etc.) However, Bolt is a payment provider (you can personally find 30+ competitors with a quick search) that was growing at a modest 20%. 😱 How did this happen? How was such an overhyped valuation accepted by experienced investors? And how did the founder have the moral right to execute the loan scam? It’s just crazy... https://lnkd.in/dBV5r5Yc https://lnkd.in/dfjK2cJV https://lnkd.in/duKYMKYc. #valuation #exit #bolt

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Why it takes 1,000 no's to get 1 yes, or why does Venture type investing only go to 1% of the field? The answer (partly) might just be in your outreach. I've seen a 5,200% increase of inbound angel investment requests YTD. I am not a fund or a known investor so imagine this amplified by 1,000 in those inboxes. There seems to be 3 general types I have noticed: 1) Spray and Pray into the air - clearly generic en masse outreach which tries to hint at a connection to the subject but actually there isn't. // These just need to stop - feels like it's doing yourself and AI an injustice. 2) Spray and Pray closing rounds and filler ends - a la "Seeking high quality investors for our captable, we've raised everything but the last 60K. You'd be ideal, you in?" // If you are that close to closing a round surely more personal and connected is better than suddenly going wide...assuming the other 160K wasn't raised by small donations (crypto projects aside). 3) Semi personal soft requests - "I've seen you're an investor on your LinkedIn, here's my project. Want to see the deck?" // Quite often these lack the real personality needed in understanding what connects that investor to the project potentially. There is a fourth type - the research lead " I saw you did 'x' and I am building 'y' (insert thought on how it's connected or why relevant)." These have been 0.25% of the approaches. So not a trend just outliers. Goes some way to answering why it takes 1,000 no's to get 1 yes, or that Venture type investing only goes to 1%. Because the severe lack in ability to connect quality over quantity; and quite often married to a disconnect on what constitutes a VC backable business. Thoughts? #investing #vc #angel #founder #approaches #investorrelations #crm

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