Ashvin Prabaker

In 2019, I led a £9m Seed Round. It was the largest Seed Round in the UK that year. Now... You would expect the usual reasons why we invested so much: 1. A clear story 2. Special founders 3. A large opportunity But there was also something else that was a big reason for why we invested. What was it? The founders were able to hire in some of the best people we had seen. They had already built exactly what this company needed to. They had extreme amounts of success doing it. And now were willing to risk everything to join this tiny little start-up. Funnily enough one of those exceptional hires ended up being the CEO! That’s how good their hiring was. At the end of the day, investors invest into teams. And those teams are the people who are going to be the difference between a successful company or not. So as a founder you have to show investors that you can, will and have hired the best of the best. Because second-rate hires will never cut it. -- P.S. What do you think about team-building and its importance? ♻️ Repost to help a founder in your network

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FIXED - Valuation multiples changing over time → from 2020 to 2024 This week I fixed a modelling error when looking at the timing of each round relative to the $1M to $100M in 10 years venture scale curve Instead of using the time between rounds for that specific Quarter for every round, I'm now working backwards (link to deep dive in the comments): → So if a Series B was raised in Q1 2024 → Based on Q1'24 data, that took 27 months → So their Series A was raised in Q4 2021 → Based on Q4'21 data, that took 19 months → Meaning their Seed was raised in Q2 2020 Re-running the data we can look at the trends for Q1 from 2020 to 2024 → Seed stage still remains high → Series A is back around 2020 levels → Series B/C look to be floating back up I'd say take Series D (just 23 deals in Q1 2024) and Series E (only 16 deals in Q1 2024) with a grain of salt (link Carta's state of Private Markets in comments) And for each time period, I’ve also included the SaaS Capital Index for public SaaS companies (the dotted line) for context 👍 -- ♻️ 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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Currently Fundraising this fall? How do you find the right VC firm for you? Here’s some simple tactics that can help you take more accurate shots? Know your sector, stage, investment criteria and over all alignment - Visible.VC is a great resource to find the firms who are looking for you. Cold outreach isn't dead. Make sure your pitch deck is ready and ask for your feedback and something specific about your business. If you want a warm intro, please provide a concise blurb, pitch deck (less than 13 slides) and a clear objective of the meeting with why you should be talking to this person/firm. Persistence is key, if someone doesn’t reach out doesn’t mean they don’t want to talk. VCs get tons of emails and linkedin messages. Make yourself top of mind with an old faithful follow up. Remember, finding the right VC is a two-way process. While you're evaluating them, they'll also be assessing your startup's potential. Be prepared to clearly articulate your value proposition, market opportunity, and growth plans when you do secure meetings with potential investors. #fundraising #venturecapital #startups

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Think ARR/FTE is king? A seismic shift in SaaS metrics is happening, with EBITDA/FTE taking the crown. Here's why... With the zero interest rate glory days behind us, the convention is shifting hard and fast to EBITDA / FTE as a truer performance proxy to hone in on after interpreting a firm’s general position in the landscape via ARR / FTE (team size, number of customers and products, etc.). // ARR / FTE: - What it means: How well a company leverages human capital to generate annual recurring revenue - How to measure: Annual Recurring Revenue/Total Full-time Equivalents (aka employees or anyone working 174hrs per month) // EBITDA / FTE: - What it means: How well a company leverages human capital to generate profit - How to measure: EBITDA (or Operating Profit)/Total Full-time Equivalents (aka # of employees or anyone working 174hrs per month) EBITDA / FTE is, without question, the priority in Micro SaaS. As is the Rule of 40 (Growth + Profitability = 40%+). #microsaas #acquisitionentrepreneur #saasgrowth

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So Toast is an absolute fricking monster and the best in class vertical SaaS company of our time. 💵 $1.2BN in ARR with 48.4% from payments 💸 Toast Capital has reached $1BN in annualised loans originated 🧑‍🍳 875K restaurants in the US (Toast has 112K: 13% market share) 🚀 75% of locations are coming from inbound channels The first investor invested $500K at a $3M price 😮 The full story and all the lessons 👇 1. Why This $14BN Company Would Not Exist Without Speed - Too many people worry about getting the product right. - One of the most important things you can do is get something out & learn from the user. - We wouldn’t have existed today if we didn’t move fast & iterate. 2. The Man Who Bought 12% of a $14BN Company for $500K - We were trying to raise in 2012-2013. - We were confident but almost everyone said no. - Steve Papa @ Endeca wrote us a $500K check at $3M. 3. The $14BN Company That Did Not Have a Good Business Model to Start - We realized within the first 10 customers that the financial model wasn’t working. - We were making $200 - $300 a month but there were too many customer service calls. - It wasn’t scalable at all. 4. Biggest Mistake: Not Hiring Managers Faster - There is also leverage in hiring managers vs. salespeople or engineers. - You need to move fast once you see signs of PMF. - Building out a team around us would have helped us move faster. 5. The Importance of Market Timing 3 Things: 1. Android 2. Cloud 3. Embedded payments - Without those 3 Toast wouldn’t have existed. 6. You Have to Sequence Strategy - We see many ways to expand the Toast platform across other geos & segments. - We need to be thoughtful about how to sequence this. - This is a long game: You underestimate what you can do in a decade and overestimate what you can do in a year. 7. This Public Company Creates Smaller Companies Within It - We have a New Ventures program for entrepreneurs. - We let them build companies as part of Toast but operate independently. - We want them to have the benefits of being part of Toast without the challenges of being part of a larger org. (links in comments) #founder #funding #business #investing #vc #venturecapital #entrepreneur #startup #seed #funding

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So turns out I screwed up... I made a modelling error when looking at the timing of each round relative to the venture scale curve 🤦🏻‍♂️ As a background - I've taken Carta's Q1 2024 valuation data added their time between rounds and then mapped both to the definition of venture scale to get (an estimate of) Venture Multiples at each stage 😃 But initially I was using the latest Q1 2024 data for every round 😞 → when I should have been using it only for the latest round... So if we look at Series C as an example, I was saying... → Seed to Series A in 26 months (Q1'24 data) → Series A to B in 27 months (Q1'24 data) → Series B to C in 27 months (Q1'24 data) For a total of 80 months from Seed to Series C Historically the time between rounds didn't change much year over year and this wasn't really an issue. But they've grown dramatically over the last few years and that creates a huge issue in the way I'm modelling things here So if I want to map a Series C to the venture scale model, I'll need to work backwards... Which just means I need to use WAY more vlookups in gsheets 😂 So let's look at the Series C again... → Series C was raised in Q1 2024 → Based on Q1'24 data, that took 27 months → So their Series B was raised in Q4 2021 → Based on Q4'21 data, that took 19 months → So their Series A was raised in Q2 2020 → Based on Q2'20 data, that took 19 months → So their Seed was raised in Q3 2018 For a total of 65 months from Seed to Series C Fortunately Peter Walker's data goes back in time so I can do these look backs 🙏 This issue didn't really impact the Seed/Series A multiples, but really compounded to make things worse for the later B/C/D/E rounds - I've taken down the previous posts with the errors Hope this helps ❤️ and let me know if you find any more big errors 💪 -- ♻️ 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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Founders/Investors raising or investing...READ THIS We have raised £400k under the UK Government's SEIS/EIS Scheme, through SeedLegals Of that £400k, £250k was under SEIS and £150k was under EIS. So what does this mean? Well, the £250k we raised under SEIS, qualifies for Tax Relief/Rebate to the individual investor of 50% and 0% Capital Gains Tax. So, that means that £125k will be either offset or claimed back, courtesy of the government. A typical ticket of £25k, suddenly turns into £12,500 of actual investment, but still £25k in terms of your equity/shareholding....BLOODY GOOD RIGHT! Then we have the £150k under EIS. Same as the SEIS, you get 0% Capital Gains Tax and 30% Tax Relief/Rebate. So from the £150k under EIS, £45k is Offset or claimed back courtesy of the government. So of the £400k we raised, £170k will be claimed back, into the investors pockets! Now as we move into our Seed Raise, of £2million, we are still raising under the EIS Scheme, which means £600k will be rebated back by the government. So if someone put the full £2million in, they could claim back £600k, meaning their cash outlay is £1.4million, but they actual shareholding and equaity is at £2million. This Scheme is an incredible incentive for investors and a great way for founders to raise investment and fund their businesses. I hope this helps and I hope people take advantage of this scheme. #seis #eis #investment #Founder #fund #raise

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Compare this to founders and startups from developing Asia. The avg pre-seed round would be around €100K and Founder's salary would be around €10K PA. Startups with lower burn will be invincible as Innovation and tech tools aren't geo-restricted anymore. #Startups #VentureCapital #Investment #Innovation #Funding

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Today’s shoutout goes to Griffin.  A bank you can build on. And their founders, David Jarvis & Allen Rohner. Griffin, the UK's rising BaaS (Banking-as-a-Service) star. Just leveled up in a big way! Here's what makes them stand out: 1/ Going from startup to fully licensed bank. They just secured a full banking license. Proving their operational excellence and regulatory compliance. 2/ Focus on sustainability. From "light green" investments to a dedicated sustainability manager. Griffin walks the walk on ESG. 3/ New opportunities ahead. Griffin secured an additional $24M in funding. This brings their total capital to $39M for continued growth. Griffin is no longer just a sandbox player. They're building castles! My full shout-out note is in the latest EUVC newsletter. Link in comments. 🔽 How about you? Let's show our appreciation more often! Leave your shout-out to a product you love in the comments section! #venturecapital #angelinvesting #startupfunding #europe

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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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PE and VC firms still only have women in 11% of key investing positions. Only 2p out of every 100p invested goes to backing female-led companies. Unlocking the potential of female-led enterprises will contribute about £250 billion to the UK economy. The bottleneck for female entrepreneurs is still access to funding. I’ve been there, pitching your business to a room full of men always feels a little strange. While some of them are supportive, there remains an unconscious bias against female-led companies. This is heightened when pitching companies that solve problems and pain points specific to women. The answer to this problem is creating and supporting more female angel investors. With the support of the British Business Bank, the Invest in Women Taskforce is exploring ways to amplify the value of women backing other women through match funding. Forbes did a feature on IWT’s work titled “When Women Mean Business For Women”. To learn more, read the full piece for yourself here: https://lnkd.in/ezN9AjTQ

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On 22nd Feb, Dan Siroker and I disagreed about funding round dilution on Twitter. In this episode we hash it out 🥊 ❌ Fundraising rules that are BS 🗣️ What VC’s really mean & want 💸 Getting Peter Fenton to invest for less than 10% My key lessons from winning this fight 👇 1. The Importance of Focus I worked on thousands of things at my first company & thought everything was important. In hindsight, there were only 3 or 4 things that made a difference. Founders need to distinguish between which tasks are truly important & focus on them. 2. The Big Secret When An Investor Asks How Much Are You Raising? They are actually asking how much you think you’re worth. Instead of giving a number, say you’re selling a certain percentage & letting the market decide the valuation. This annoys investors because they don’t get what they want. 3. Elad Gil on When and How to Pivot  The things that work tend to work really fast. Sticking it out & being perseverant doesn’t always work. You have to see some glimmer of hope in the early days. 4. Contrarian View on Selling Stock as Employees Founders should let employees sell their stock at any point. I’ve let my employees sell up to 25% when we were oversubscribed in our series A. My theory is more liquidity = more retention. 5. When They Bring up Title It Is a Bad Sign It shows you where their values are. The best people I’ve hired never brought up titles during the interview. They care about the problem & the company. 6. Why Always Be Raising is Total BS You need to have an on & off switch on fundraising. I have all my investor meetings in a week every two quarters. This removes any distractions when I’m building the company. 7. The Best Question Peter Fenton Asks Founders "What will excite you about being at this business in five years?" Great founders need to be perseverant. They have to stay in love with the business in 5, 10, or 20 years. (links in comments) #founder #funding #business #investing #vc #venturecapital #entrepreneur #startup #seed #funding #fundraising

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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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I don't go in for 'building in public' in general, but every now and then I think it's worth sharing what I'm seeing in the market. The below graph shows the average time to close a deal over time at EmergeOne and you can see that this has been creeping up since last year (adjusted for seasonality) and is currently close to 3 months to close a deal. So what's happening? Well, I was recently at an CFO event where we got a bit of a data driven view into the state of private markets. Some key points that came out: 🏷️ Median post money at Series A has dropped from 80m USD in 21/22 to 65m USD in 2024. This is still up from 40m from circa 2020. ％ Top quartile is significantly over at 107m. 📈 Series B median post money is $137m, top quartile $287m USD, but bottom quartile significantly struggling. 🚀 Deal velocity has slowed but started recovering. 💰 Lots of deals are happening but not priced - bridges abound. So how does this therefore relate to what we're seeing in terms of time to close? Firstly, we are a consultancy providing fractional CFO support to venture backed tech startups typically post Seed and pre Series A so this data reflects what we are generally seeing in the market as well. But the two main issues that are seemingly impacting our numbers are around deal velocity and bridge financing. There are simply fewer deals being done and they are taking longer to close, so the volume of potential clients we can target has dropped significantly. This does, however, mean that the quality of deals we're working on is significantly higher this year. Secondly, as companies struggle to raise priced rounds, they are raising lower amounts of capital on convertibles. This impacts us as CFOs are only truly valuable when there is a significant balance sheet to manage, less capital = less need for CFOs and hence the decision as to when to bring us in gets pushed out. But equally, that insecurity over funds means that founders are much more hesitant to make significant hiring decisions, prioritising hires that can directly influence revenue / traction in the near term. But they also know that they need the support so are often waiting for the 'magic moment' where they hit an inflection point that gives them confidence to pull the trigger. Outside of the deal data, we are also seeing venture indexing towards more R&D heavy businesses (life science, hardware etc.) and these sort of companies are often not commercialising for several years. They have security over spend and regard finance as a future problem. We are seeing a lot of companies approaching Series B without anyone in finance, deferring that decision till they close. But we are also seeing leads come through from a multitude of sources proving there is appetite for strong commercially minded CFOs to support and grow these scaling businesses. So as the market stabilises, I would expect to see these numbers come back. Business wouldn't be any fun if it was all easy, would it?!

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Wow, Don Mal’s journey is a real eye-opener! Scaling to $100M ARR in such a competitive space is no small feat. What stands out is his smart move to build on Excel, a tool everyone already loved. His focus on lead gen from the get-go and using his past experience to land big clients shows how crucial it is to play to your strengths. It’s a great reminder that success often comes from understanding what you’re best at and sticking with it #startups #entrepreneurship #venturecapital #founders #salesstrategy #businessgrowth #marketinsight #VC #VentureCapital #Business

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Hands up if you've been the CFO having <THIS> conversation with a founder recently... One should never confuse the map with the terrain. A financial model - forward looking by definition (the clue is in the name, it's a model) - is never going to be intrinsically 'correct', however accurate it might be. And one thing that people get wrong when they think about a financial model is that this is the output they're looking for from their CFO. But the reality is that the model is just a starting point from which you can have a strategic conversation about the following things: 1. What do we know to be true about what drives our business. 2. What reasonable assumptions can we make about how they might change. 3. What resources are needed to fulfil the expected outcome the model suggests. 4. What could go wrong and how do we plan for those eventualities. 5. How much capital <might> we need in order to achieve these objectives and where will it come from (operational cash flow, debt, equity etc.) A CFO is not a good CFO because they can build an excel spreadsheet or use some third party software (most of the CFOs who work with me won't use a model in a box). Rather a CFO is a good CFO because they understand <how a business operates> and how cash flows impact its ability to grow, what are the tactics that feed in to the overall company strategy to achieve its objectives. Ultimately, a CFO focusses on the following: → Capital Management (runway / burn) → Capital Allocation (budgeting / planning) → Capital Structuring (debt vs equity mix) → Capital Raising (sourcing the cash to drive the busines) If you're unsure or exploring whether a CFO makes sense for your business today, give me and the team at EmergeOne a call 👌🏾

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public SaaS multiples, measured by market valuation against annualized current run-rate ARR, have now reverted to levels seen around 2016. for me, this suggests that the market may have hit rock bottom, opening up opportunities for growth (link to the report is in the comments). the elevated multiples observed during COVID, driven by the expectation of a permanently virtual and remote work setting, are gone for good, though.

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interesting stats from Sifted on the not so good relationship between founders and VCs. There are natural misalignments between founders and investors. It starts with the valuation. Founders want to keep as much equity as possible and therefore have high valuations from the beginning. Investors want control and return so as much equity as possible, which means a low valuation as they come in. That first interaction often sets the tone for what is coming later where both sides do not fully show their cards. It also does not help that founders are often not aligned between themselves. Both sides also show reluctance to get help from outside to manage their relationship, like a dysfunctional couple who refuses to see a therapist...they only see intermediaries as people who can make the first introduction and that is a costly mistake. Most founders and nearly all investors want the company to make an exit, often within 5 years. The sad reality is that only 2% in the UK and often 1% in other countries succeed to exit. The exit itself is a great subject of misalignments that actually cannot be efficiently discussed between founders and investors : most founders don't a have a clear view of what an exit means for them and try to hide that when they are asked by investors. Misalignments are a major cause of this ridiculously low rate of successful exits. When will investors and founders realise they need support in managing they relationship and to help them to get aligned? Dealing with misalignments has become a central activity of Value Squared and partners, so some people get it, but too many still think this is a "nice to have" that they can make the economy of. If both sides are serious about improving their chances of exit beyond the 2% , more founders and investors need to get help to get the right vision and grow together toward a strong exit. #misalignments #investors #startups #investments #valuation

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