Matei Pavel

Voodoo didn’t buy BeReal for €500MM. Per reporting, the cash consideration in Voodoo’s acquisition of BeReal is €166MM, with the remainder of the €500MM “valuation” being paid out if performance targets are met in an earn-out. I don’t think that Voodoo’s acquisition of BeReal is motivated by cross promotion. Voodoo states that BeReal features 40MM “active users,” which is vague. I’d estimate BeReal has MAU in the 5-10MM range, with the 40MM number representing a longer timeline. This isn’t enough MAU to justify the price solely on the basis of cross promotion, especially given that BeReal’s MAU is likely stagnant. Further, Voodoo’s own social media app, Wizz, is growing faster than BeReal in the US: it sits at Top Downloaded rank #17 in the Social Networking category vs. 27 for BeReal. The CEO of Wizz, Voodoo’s social media app, will become the CEO of BeReal. My sense is that Voodoo may integrate the functionality of BeReal into Wizz at some point to accommodate BeReal’s core demographic and serve a larger TAM. If cross promotion does factor into the equation, it’s likely from games into the social media properties. Voodoo is a much more valuable company with a scaled social media property than an operator of a hybridcasual gaming portfolio, the titles in which are volatile from a growth perspective (see the chart below). BeReal was something of a gimmick, and it may work better as a feature than a standalone app. If Voodoo can use BeReal’s core mechanic to grow Wizz into a scaled social media property, with strong retention and long-term engagement, it can pair its existing advertising infrastructure with Wizz to service ads not just in its social media footprint but against an audience network across its published titles. But in the meantime, I’d expect traffic to move from Voodoo’s games to Wizz as it scales that property.

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I used to tell startups the mistakes they should avoid. And now I try avoiding them myself at (Super)Analyst. 1. 𝐁𝐮𝐢𝐥𝐝𝐢𝐧𝐠 𝐟𝐨𝐫 𝐞𝐯𝐞𝐫𝐲𝐨𝐧𝐞 "𝘔𝘢𝘹𝘪𝘮𝘪𝘴𝘦 𝘵𝘩𝘦 amount of 𝘱𝘦𝘰𝘱𝘭𝘦 𝘸𝘩𝘰 𝘤𝘰𝘶𝘭𝘥 𝘨𝘦𝘵 𝘢 𝘷𝘢𝘭𝘶𝘦 𝘧𝘳𝘰𝘮 𝘵𝘩𝘦 𝘱𝘳𝘰𝘥𝘶𝘤𝘵" How I try to avoid this: 🧐 Full focus on our niche: senior-heavy advisory and investment companies 2. 𝐌𝐚𝐤𝐢𝐧𝐠 𝐲𝐨𝐮𝐫 𝐩𝐫𝐨𝐝𝐮𝐜𝐭 "𝐚𝐥𝐥-𝐢𝐧-𝐨𝐧𝐞" "𝘞𝘦 𝘩𝘢𝘷𝘦 𝘦𝘯𝘥𝘭𝘦𝘴𝘴 𝘶𝘴𝘦 𝘤𝘢𝘴𝘦𝘴 𝘧𝘰𝘳 𝘰𝘶𝘳 𝘱𝘳𝘰𝘥𝘶𝘤𝘵, 𝘢𝘯𝘥 𝘭𝘰𝘰𝘬 𝘢𝘵 𝘰𝘶𝘳 𝘛𝘈𝘔: 𝘩𝘶𝘨𝘦" How I try to avoid this: 1️⃣ We only have ONE use case: trained and tailored support, or even call it a 'workbench', for your operations with maximum flexibility 3. 𝐇𝐢𝐫𝐢𝐧𝐠 𝐚𝐧 𝐚𝐠𝐞𝐧𝐜𝐲 𝐭𝐨 𝐝𝐨 𝐚𝐥𝐥 𝐲𝐨𝐮𝐫 𝐠𝐨-𝐭𝐨-𝐦𝐚𝐫𝐤𝐞𝐭 𝐰𝐨𝐫𝐤 "𝘗𝘳𝘰𝘥𝘶𝘤𝘵 𝘪𝘴 𝘣𝘶𝘪𝘭𝘵, 𝘯𝘰𝘸 𝘸𝘦 𝘫𝘶𝘴𝘵 𝘯𝘦𝘦𝘥 𝘵𝘰 𝘣𝘳𝘪𝘯𝘨 𝘪𝘵 𝘪𝘯 𝘧𝘳𝘰𝘯𝘵 𝘰𝘧 𝘵𝘩𝘦 𝘱𝘦𝘰𝘱𝘭𝘦" How I try to avoid this: 👋 Our agency is called Stephan Freudl. Drop me a DM! ❓What are your biggest learnings to share? (Super)Analyst #AnalystAsAService #FutureOfWork #Entrepreneurship P.S.: Happy 50th wedding anniversary Mom and Dad! ✨💫

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This year we are restructuring our business model to include the operations for the projects we invest into. It's something that for many years I thought was not scalable or attractive for Venture Capitalists. As a startup founder, I believed that I should stick to the traditional route. But after struggling with this decision, I realized that it was the right way to do it. Not every business needs to be a "startup" and you don't need to call yourself a "founder" to have a great scale or have the business you dream of. Depending on your model venture capital has its advantages, but it also comes with a lot of negative pressure to grow your business and valuation fast or die trying. Most people founding startups are business owners, and that's completely fine. At the beginning, don't fear to do unscalable things, things that are hard to operate, or things where you cannot have crazy margins. Try to understand where you are really good at and that has real value for people, then figure out how to make money and scale from there. It's easier this way than the other, believe me, I have tried. The path is challenging, but it doesn't have to be depressing and ruin your life. At the beginning, I only heard things about how horribly I had to live to demonstrate that I was putting my 1000% into my business and that I was willing to make a harder effort than anyone else. From hearing that Elon Musk lived on a mattress in his office while growing PayPal to hearing all crazy stories of other founders. Nobody, and I mean nobody, can give it all to his business if his health, mental capacity, and emotional wellbeing are in shambles. Remember, success is not just about achieving your goals but also about enjoying the journey.

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Informative chart, but #startup valuations are much different here in Israel In the US, a significant amount of money is being poured into #AI, and there is A LOT of hype around the space In Israel it’s a different situation right now partially because of the geopolitical situation…and the inflow of new money into Israeli AI startups is significantly lower, resulting in valuations that are not on par with those in the US However, this presents a good opportunity for investors… Lower valuations, driven by a lack of demand, make Israel a potential hotspot for those seeking good opportunities So, there's a unique investment opportunity right now in the startup sector here in Israel Agree/disagree? Let me know in the Comments section below! Safra-Tech #venturecapital #startupnation #generativeai

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Q3 2024 is in the books and venture funding in Europe is down to its lowest level since Q3 2023 according to Crunchbase. Overall funding is down 39% to $10B in Q3 2024, from $16.6B a year ago. 🇪🇺 By country: - Germany’s funding is the only one that grew reaching $2.4B, a 33% increase - UK, a leader in startup fundraising, saw its funding plunge 43% to $3.2B in Q3 - France slowed to $1.4B. 𖭦 By stage: - Late-stage funding in Europe was $4.2B, down 57% across 71 rounds in Q3 - Early-stage funding was $4.5B, down by 12% across 291 deals - Seed and angel investment was $1.5B, down 17% across 818 deals In comparison, Israeli startups raised $2.33 billion in 99 rounds in Q3 2024, a 32% INCREASE compared to the first 9 months of 2023 (pre-war). It's not all rosey, but a testament that Israeli startups deliver #NOMATTERWHAT. Links to relevant reports in the first comment 👇

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A VC (an early investor in Facebook) - I will call them ShadyVC - offered us $450K instead of the $150K we asked for. Seemed perfect, until a founder who previously got funding from them called me. He said: "Whatever happens, just trust me and don't sign the term sheet." Then he explained how the terms were designed to eventually swipe our company from us. The red flags that almost f*cked us: 1. A divided to ShadyVC accruing in the background What it looks like: A clause start with "To ensure working capital efficiency,...." and slips in "13% cumulative compounding dividend would accrue to ShadyVC." Why it's bad: It will take years for startups to turn a profit. These unpaid dividends accumulate, and the company will eventually owe them. Even if the company isn't profitable enough to pay the dividend immediately, the obligation grows, potentially creating a significant financial burden in the future. When the company exits (e.g., a sale or IPO), Shady VC will be entitled to their investment back plus this compounded dividend, which could substantially reduce the returns for other stakeholders. 2. Excessive board control What it looks like: "ShadyVC will have identical representation rights on boards of all subsidiaries... including future ones" Why it's bad: These guys want to control everything, even stuff that doesn't exist yet. It's a way to undermine future investors. They used this to block Series A investments in other founders' companies, unless they got their desired board control without investing additional amounts. 3. Forced exit clause What it looks like: "Within 5 (Five) years of the Closing Date, ...shall provide an exit to ShadyVC through QIPO ..., M&A transaction, strategic sale / third party sale, buy back or purchase by Promoter or ... on such terms acceptable to ShadyVC. In the event that the Company and the Promoters fail to provide an exit to ShadyVC in accordance with the Clause, ShadyVC shall have right to cause a drag sale.." Why it's bad: They can force you to sell the company, even if it's not the right time. We're at $3M revenue now, but nobody will buy us yet. It's a ticking time bomb in your term sheet. They used this clause to force founders out in other startups. Right after the founders did all the hard parts. TAKEAWAY: When you're desperate for cash, it's tempting to accept any deal. Stay vigilant. Read the fine print. Get good legal advice. And if something smells fishy, trust your gut. It's better to be broke than to build a company you don't even own. To get a sense of the ideal seed stage deal. See YC's SAFE. A simple 5 page deal. Anything more complex than that is plain stupid in 2024. If YC can do it. There is no reason you should let any investor tell you they cannot too. — PS: Curious how we almost signed it? Check out the post in the comments for the full story. That post went viral, and this one addresses one of the top questions people asked.

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This scooter company lost 99.9% of its value in 6 years. From $2.5 billion to $1.6 million. Here’s what went wrong (it has to do with rivers). Bird, the scooter company, was launched in 2017 with a bold approach: They dumped hundreds of scooters into cities across the U.S. overnight. At first, it worked. Millions of riders, rapid growth, and big headlines. But there was a big problem: Scooters are expensive. They need constant repairs, replacements—(and people loved throwing them in rivers). Then came the city bans. Bird faced heavy fines and was kicked out of major markets. In 2021, Bird went public. It was a disaster. Investors saw the writing on the wall: The company wasn’t profitable—and it wouldn’t be anytime soon. Masquerading as a tech & not a service company also didn't help... From there, its valuation plummeted - and now it's filed for bankruptcy. RIP Bird. #bird #scooters #businessstories

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Out of some 42,000 startups, 288 have been bought so far in 2024.  The old adage that startups are bought, not sold seems to be holding true. I enjoyed speaking with Peter Walker, Head of Insights Carta, on The Lonely Office to talk about the "Startup Gamble: What are Your Odds?" I've been following his posts for a while and I love the way he stitches together startup insights and advice with a data driven perspective using the Carta database. And I believe I'm not the only one who finds his insights valuable. So we thought we'd bring him on to speak about the best cities to raise angel and pre-seed money (it's no longer just SF and NY), the most common exit periods for startups, and why the VC phrase "lifestyle startup" is a term that needs to be phased out. Check in below for more discussion.

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📍 The co-founder of PayPal and Palantir Technologies, and renowned backer of fintech companies such as Stripe, Wise, Coya, Stash, Bitpanda, and dozens of other high-growth companies, Peter Thiel, announced the close of the new fund of Valar Ventures LLC at $300 million—half the size of its last fund. There is a lot of talk about a big slowdown in fintech, but what does the data say? 📍 As per the Female Foundry report published earlier this year, fintech is the second largest category of innovation for female founded companies (15% of total capital that was raised in 2023 by female entrepreneurs, went to fintech startups). I have pulled up some stats on fintech fundraising to provide more context - *data from Dealroom.co 📍 Fundraising:  VC investment into fintech startups reached $42bn in 2023, a 63% drop from the previous year. The US, however has held better than Europe, with a 45% drop in funding in 2023 from a previous year compared to 66% drop in Europe. Fintech funding is now at ~⅓ of its 2021 peak and at its lowest since 2018. Median round size is down at all stages in 2023, but Seed and Series A show more resilience decreasing 12% compared to 31% for Series C+. 📍 Valuations: In 2021, a record high 148 new unicorns were minted. In 2023, only 8. Today there are 378 fintech unicorns and $1B exits in US & Europe. 222 unicorns were created in the 2019-2021 period. 31 of them have lost their unicorn status. It is now estimated that fintech companies founded in 2000 and onwards (both the US and Europe) are now worth $2tn and 66% of the value is still private hands with less than 20% being public. Exits: The last two years saw nearly no public listings. There was only one fintech IPO in 2023, ReAlpha, down from 51 IPOs in 2021 (!) and a SPAC of Better Mortgage. 2023 has been one of the most active year to date for fintech M&A with 241 recorded in fintech. 📍 Sub-sectors: Payments have attracted nearly 3x the funding as any other sub-industry and were the most resilient segment in 2023. Climate fintech funding even though dropped 55%, but is still 2.4x higher than pre-pandemic levels with Crypto and DeFi seeing the biggest decline in funding 72%. 📍 Geography: The US and Europe accounted for 68% of global fintech funding in 2023, up from 40-50% in 2016-2018. US attracted 5x more funding than the next country, the UK. In Europe, London attracted 4x more funding than the second hub, Paris. Madrid and Munich showed the least decline from 2022. 📍 The most active European VC investors in the past 12 months include SFC Capital (10 deals), BPi France (10 deals), Outlier Ventures (9 deals), Kima Ventures (8 deals), Notion Capital (8 deals) and Speedinvest (8 deals). More on this in the latest Female Foundry newsletter: https://lnkd.in/eTwUapqJ #femalefoundry #news #fintech #funding #venturecapital

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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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🚀 Are Europe's Startups in Need of a New Breed of Venture Capital Investor? 🌍 💡 According to David Rosskamp, managing partner of Berlin-based Magnetic Capital, "world-class venture capital is an artisan craft." He contrasts it with the industrial-scale operations of some of Europe's largest institutions, suggesting that these organizations operate with large and undisciplined portfolios, making it challenging to stay closely connected to their investments. 🎯Rosskamp's firm, Magnetic Capital, takes a different approach. "Our funds are deliberately small," he explains, "capped at €120 million." This deliberate choice allows Magnetic to run focused portfolios of early-stage investments in specific themes, offering closer attention to the businesses it backs. 📉 The argument is compelling. While investors in venture capital funds have sometimes been underwhelmed by the results, the sector has also had some big hits. Rosskamp's approach challenges the status quo, advocating for a return to focused, disciplined investing for potentially better results. 💰 Rosskamp, however, is convinced that Magnetic resonates with investors, as well as businesses looking for funding support. He emphasizes the importance of discipline in venture capital outperformance, a key factor often overlooked in Europe. With a team that operates through partners rather than an inflated organization, Magnetic aims to maintain a hands-on approach to its investments. Rosskamp describes Magnetic's approach as a "1970s-style" venture capital approach, with partners engaging in deep-level discussions about portfolio direction. “We think in first principles,” he explains. “What are the necessary building blocks of an inevitable future in our themes and target sectors, and how can we help create them?” 🔍 Magnetic's current focus areas include resilience and security, climate, and modernization of core industries, seeking early-stage firms with broader applications. Examples range from plant-based meat production technology to neobrokers and energy suppliers. Rosskamp emphasizes Magnetic's history of being early movers in emerging sectors, supporting startups that later attract broader investor attention. 💡 Despite Europe's evolving venture capital landscape, Rosskamp believes there's still room for Magnetic's unique approach, promising to back ambitious attempts to address Europe's biggest challenges and create lasting impact. Original interview published by Forbes ✅ Looking to raise capital for your #fund and increase the international pool of your LP #investors?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments?   ▶ G+QUANT's link for inquiries and fund decks: https://lnkd.in/gjC_EuTE #VentureCapital #EuropeanStartups #InvestmentStrategy #FocusedInvesting #DisciplinedInvestment #StartupSupport #Entrepreneurship #Innovation

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Why aren't more CEE founders getting to Y Combinator? 1. They don't ask for recommendations. YC is a network. The partners rely heavily on recommendations from former alumni. If you have none, you're putting yourself at a disadvantage. When our portfolio companies apply (we have three companies that went through YC in SMOK portfolio: Polish Alokai (previously Vue Storefront), Authologic and Bulgarian Slicker), we try to make sure they talk to every YC alumni from our network possible, get to know them, get their feedback regarding the pitch and the product and potentially also earn a recommendation that would help them get through the noise of thousands of other applications. 2. They don't put enough effort. Getting to YC is a month-long project. It starts with talking to dozens of people in the YC network - former managers, YC alumni from your country, university or state - getting their feedback and applying that feedback to make the application stand out. A quick application written by ChatGPT won't nail it. You need to work on your communication, make sure what you do is as easy to understand as possible, remove all the non-essential stuff, focus on how you got the insights, why what you're building matters, how excited your customers are and why this team is the best team in the world (literally!) for the job. 3. Lack of ambition / belief in themselves. People just don't believe they can get to YC as so many founders from all around the world apply. What they don't understand is that by putting in the work you can beat 90% of them easily. Only about one in ten applications are actually good enough for YC to take notice, so if you put in the work, you can increase your chances of getting in tenfold. YC alumni from CEE should be your main source of knowledge and mentorship when you decide to apply from a country like Poland or Croatia. Use them and abuse them as it's in everyone's interest to get more YC founders from Central & Eastern Europe. Ana Marija K. put together a nice piece on how to increase the number of CEE founders at YC. Link in the first comment.

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What’s Happening. A View From The Castle. "Wake up little Susie, wake up"... After an interminable hibernation large VC funds are awakening. So far this year there have been 115 rounds of $100 million or more for US-based startups, compared to only 73 during the same period last year. "To do that, he’s gotta be willing to die himself and I don’t know if he’s ready to do that"... Malls are evolving to stave off the e-commerce juggernaut. Although E-commerce represents 20% of the $5 trillion total of US annual retail sales, 2X its 10% pre-pandemic share, its growth relative to traditional retail has slowed significantly. Play stupid games… The market value of meme coin Normie plummeted 99% in minutes after an exploiter (which many believe was a company insider) significantly increased its token supply by taking advantage of a smart contract flaw. Launched in March and reached a peak market cap of $130 million in April. First do no harm... Ascension, the largest US nonprofit health system, was targeted by a ransomware group that disrupted critical operations across its 142 hospitals and over 2,600 care sites. Mile high vacancy... Office vacancy in Downtown Denver has hit 32.1%, the highest rate in decades. Slam that gate… A $10 billion Starwood Capital Group real estate fund has been trying to preserve cash and credit by limiting investor redemptions. It was hit with $1.3 billion of withdrawal requests in Q1 but only returned $500 million. "How far to the point of know return"??? Farcaster, a decentralized social network popular in the crypto community, raised $150 million at a $1 billion valuation in a Series A round led by Paradigm. The platform only has 13 employees and has had 350,000 paid sign-ups. Here we go again??? For the first time since the global financial crisis investors in a AAA CMBS tranche have suffered losses (and they were significant). The loan on an office building at 1740 Broadway in NYC was sold at a steep discount - all five lower CMBS tranches were completely wiped out, and the AAA holders lost over 25% of their investment. The buyer is considering converting the property to residential. “The family is one of nature's masterpieces"... Private equity accounts for 35% of family office holdings, up from 19% in 2018. Don't worry, we know what's best for you... Amidst significant redemption requests from investors, Starwood REIT reduced its quarterly redemptions cap from 5% to 1% of the fund’s net asset value, and its monthly cap from 2% of NAV to 0.33%. The firm stated it made the move to free up liquidity without selling properties at below their acquisition costs or for below their loan amounts. Precursor to recession, or the new normal??? The yield curve has been inverted for over two years, longer and deeper than any previous inversion in the last forty years. #investmentbanking #technology #corporatecurrency #privateequity #venturecapital #castleplacement #cpgoapp

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One of the 1st startup pitches I ever heard as a VC shocked me because of something my boss said... "I like him. We should seriously consider investing. 𝙃𝙚 𝙞𝙨 𝙝𝙪𝙢𝙗𝙡𝙚." Not the product? Or the market? Or the skills/experience of the team? No. Only after a few years of experience did I realize how profound this comment was. The best founders I've met 𝗔𝗟𝗪𝗔𝗬𝗦 share this characteristic... Entrepreneur are pulled in 2 directions: 1. Having conviction in their vision 2. Being open to feedback, criticisms and change Having strong conviction while also being open to change is a very difficult balance. And only those with humility can pull this off. How? Humility is often misrepresented as a form of meekness. Its not. Humility is the ability to form and change one's perception of themselves through honest introspection. A humble person will not shy away from admitting they are great at something, and will not puff themselves up when they are not. At its core, humility is the ability to assess reality as it is. There is nothing wrong with telling your team, investors or even customers they are wrong. If its coming from a place of humility. Conviction from a place of humility is borne out of experience, research, and trial and error. And the best entrepreneurs know this. However, they also have the ability to introspect and realize when feedback may be true, even when it can damage their ego. This is a very difficult character to develop. But absolutely necessary. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Image credit: Roberto Ferraro #startups #venturecapital #investing #humility

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237 rounds of $100M+ so far. Mega rounds are making a comeback. So, what does this mean for VC? In 2023, we saw 210 such deals. This year has already surpassed that number. Some mega deals include: → OpenAI: $6.6B at a $157B valuation → xAI: $6B at a $24B valuation → Xaira Therapeutics: $1B round, focused on AI-driven drug discovery → Radiology Partners: $720M for expanding radiology tech GenAI continues to dominate in terms of the amount. Biotech and healthcare lead in terms of number with 87 mega rounds (but most include AI application). So we are seeing a focus on vertical applications of AI. Despite this surge, total rounds in 2024 are unlikely to match the boom years of 2021 and 2022. Let's see how many mega rounds we'll have in Q4—I don't have high expectations due to macroeconomic factors and political uncertainties. What about 2025? With the resurgence underway, will we see a continued upswing? #entrepreneurship #venturecapital #startup #mergers #acquisitions Serial Entrepreneur & Investor Helping Startups Become Unstoppable – David Hauser

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Fundraising is a very difficult task for startup founders. Unfortunately, it can be one of the most important tasks for your startup to be successful. However, in a lot of cases there is a minimum amount of capital required to get through an R&D phase towards commercialization. If you can’t raise that minimum amount, it may not be worth starting the company. This is fairly a common issue with startups with high technical risk and startups in secondary markets like Atlanta (where I have observed this a lot, I’m sure other secondary markets have a similar issue). Someone described to me a saying that applies to this construct, “making great ideas good”. Let me explain a scenario where, you probably shouldn’t bother starting. A founder has a great idea for a fully autonomous robotic road paver. They study the market and it is massive. They need $5m to get a working prototype, and another $50m to have full commercialization and an initial production run. They pitch a bunch of angels and VCs. They get interest from a local VC that asks “what can you do with $1m?” The founder now has a choice to make. Go back and build a business where $1m could work (great idea to mediocre idea) or keep fundraising. The right answer is to say no thank you. This is where if you are in a secondary market, you will conclude that you either move to SV or give up. IE, it’s enough money for a cupcake but not enough for a full cake, so you would end up with a half baked cake. The issue with taking the $1m is that now you are committed. An investor that operates this way doesn’t have the right mindset and their network is likely to be of investors with their mindset. So while you raised money, you will struggle to raise more. You won’t make enough meaningful progress to demonstrate capability to warrant a new investor being excited. It’s also likely that you raised the $1m at a lower valuation and you can’t justify a much larger valuation to raise $50m. So you are in “no man’s land”. Unfortunately this investor with the wrong mindset may say absurd things like, “go get some revenue”. Venture Capital is a high risk - high reward business. This type of business aligns well with VC principles. It is very difficult to course correct from this point. I have personally made this mistake. It’s tough because as a founder, you are impatient and want to get into your startup full-time. Picking your first VC investor can be the biggest decision you make, and sometimes the decision is to turn down the wrong money and be patient for the right money. Btw. I am the “right” money for many founders, but am the wrong money for the majority of founders.

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1 in 140 VC backed startup makes it to unicorn 🦄 that's a 0.7% overall but not the whole story. According to a recent study by Kauffman Fellows, between 2016 and 2024 approximately 250,000 unique startups raised a VC round. 1,828 startups in the same timeframe reached a $1 Billion valuation. If you take a concentrated portfolio bet, say 20-40 investments per fund, your bet is to be about 4-5X better than the "average". But while statistically you can improve your paper chances by doing more deals, the tradeoff for large portfolios (unless you have an accelerator or incubator model) is that ownership per deal goes down. Therefore even capturing a unicorn may not be enough to achieve outperformance. Both strategies can work. But access to the right deals, a market thesis that turns out to be correct, and a fitting portfolio construction strategy are critical to make either work. Silicon Valley continues to account for the lion share of these, but there is a shift towards other geographies. China and the rest of the US lead the rest, but I'm skeptical about China continuing the trend, given how its government action is curtailing both globalisation ties and local private VC funding. I think Europe has a chance of taking a much larger share of the total count this decade. But we really need to start thinking like a larger tech market, rather than each European country just caring about its own backyard. This is particularly problematic when government funds push local VCs to do most deals in a specific country or region. Another issue is that most value is locked in as unrealised gains, with most of these unicorns continuing to stay private long after crossing the billion dollar mark. This trend is one of the clear reasons for the lack of liquidity in the VC market these days. As more and more larger investors try to stuff billions into the asset class at growth stage, timelines for exit stretch longer. While secondary transactions can provide some relief, I wonder how sustainable the trend is. When does good become good enough to exit? - - - I'm Francesco Perticarari, a deeptech soloVC writing SuperAngel cheques into European startups. I raised my first £5m fund as a tech guy and VC industry outsider, and post about my findings and data as I build out my investment firm. Reshare and follow if you like these posts.

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