Jason Williams

This year is all about survival. I've seen enough data to call it. Multiple reports are showing Flat -> No growth. Wayflyer/Iris Finance report had Q1 overall growth at +4% YoY. Common Thread Collective Index has same store sales flat YoY. What does this mean? This year is about survival. The industry as a whole isn’t growing. We can blame this on whatever we want. But the outcome remains the same. Instead of obsessing about your topline growth. (Which is a steep mountain to climb.) Focusing on growing your bottom line. In a low topline growth year, spend time becoming more profitable. 100% YoY growth doesn’t do you any good if you’re out of biz in 2 years. The goal needs to be surviving to 2025. #shopify

72

23 Comments

On note: Content provenance is a potent and emerging market.

4

⏰There is a Tick Tock pulse in fundraising and sales⏱️ If Tick is fundraising, Tock is sales. ❌ The problem is most founders go Tick Tick Tick > Tock Tock Tock ❗️Now the next Tick will be much harder because your valuation has now priced in all that past revenue (fair) but without a clear line of sight to future revenues that drive venture-scale growth. 🕥This can prolong the fundraising process as investors wait to see your next batch of contracts come in. 💡One solution is to fundraise after signing a contract but before servicing it. In other words, pre-A/B rounds. It’s a short window but this is the Tick Tock pulse that works incredibly well if you get it right. Here’s the narrative: 1️⃣We have $x in signed contracts and will have to service them over the next 12 months 2️⃣We’re raising now so we can focus on pleasing our customers when the time comes. 3️⃣For this peace of mind, we’re willing to take a 20% discount on our next round valuation given the contracts are already signed. 4️⃣Of course, you are welcomed to join after we’ve closed the revenues. We might be raising at 20% discount to the following round by then. 💡As an added benefit, founders get to focus on one thing at a time - fundraising > sales > fundraising > sales (Tick Tock Tick Tock!) ➡️As with most things I share, works for B2B deep tech. I think? 🧐 💸Don’t try this at home (consumer tech).

32

2 Comments

Tomorrow's episode of The Making of a Nobody podcast will be a huge knowledge share.. Here are some things we'll cover: - Common pitfalls of early stage studios - Effective CEO recruitment - Nuances of VC funding. - Strategies for risk management - Structuring investor deals without a fund - Articulating your studio’s thesis - Critical terms for partnerships - Operational checklists - Ideal number of startups to focus on before scaling Join us tomorrow to learn more, and be sure to bring your questions for us. Link to join is below. #podcast #venturestudio #NobodyStudios

6

5 Comments

Survival of the Fittest in a Shifting Funding Landscape Founders are adopting a low-key approach, focusing their energy on internal growth. Armed with capital secured in 2021, many are strategically revitalising their businesses. But the big question remains: What will the dealmaking landscape look like in 2024? "Overall, capital infusion will be concentrated on a narrower spectrum of companies than in all. The private capital raising landscape is anticipated to be robust, showcasing significant improvement from 2022. However, the capital infusion will be concentrated on a narrower spectrum of companies compared to the prolific scene of 2021." Read More: https://lnkd.in/d3536qvA In the meantime, share your thoughts! Are you a founder facing a funding crunch? How are you adapting your strategy? #StartupFunding #Founders #Growth #DealMaking #SibaPanda

8

Hidden Trap Of Convertible Note and Liquidation Preference Multiples. Young entrepreneurs often get screwed by their angel investors on convertible notes and I know I can’t convince you not to do it so I’d like to offer one simple bit of advice to help you avoid getting screwed. 🤐 When you do a convertible note with a cap that converts into the next round of funding, one of the unintended consequences is that if you’re successful and raise at a larger price than your cap the early angels often get “multiple liquidation preferences” on their dollars in. Here’s how it works: 💡 - Let's say an angel invests $500,000 with a $5 million cap. That means they'll own at least 9% of your company if the conversion price exceeds the cap. If you raise funds at a lower price, their ownership goes up. - Now, with a regular 1x liquidation preference, they'd be entitled to $500,000 if you sell the company for less than $5 million. If you sell for more, they'd rather take their ownership percentage instead of that liquidation preference, which acts like a safety net. - Fast forward, You work your tail off for 18 months, securing a series of notes, and guess what? You're lucky enough to land $5M at $25M pre-money valuation. At this point, that early angel investor owns around 16.67% and probably still holds a 1x liquidation preference. - Now here's where the trickery starts: When the initial note converts, instead of snagging a $500,000 liquidation preference, they'd cash in a mind-boggling $2.5 million liquidation preference—a whopping 5x increase! If a VC pulled this move in an early-stage deal, their reputation would suffer, making it hard for them to work with other VCs or entrepreneurs. In VC financings, this term is clear, but on convertible notes, it happens subtly, catching entrepreneurs off guard – a silent and painful setback. So here’s what every entrepreneur should add immediately to any convertible note 😎 "If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest." Papering this when it converts is super easy if the angel has already consented to it and they are not being cheated at all. They get their full investment as a 1x liquidation preference. And please don’t let any angel try to convince you they deserve more for the early risk. The early risk is why they get a cheaper price. 😁 You can also checked “liquidation preference overhang” by José Ancer article to read more about it. (Link in comments) 👉 Check out my free newsletter for more insights: https://lnkd.in/dKZQKHg2 . #startups #funding #VC #investors #founder #entrepreneurs #founders #entrepreneurship #startup #fundraising #termsheet #fund #venturecapital #angelinvestors #angelinvesting

35

9 Comments

Investors must be back from holidays…content has taken a termsheet negotiation lean. — Going to be lots of people putting their opinions out to influence deal terms. Founders need good advice from service providers to seperate BS from Inspo. Two Legals POV’s I’d recommend: Patricia Wing’s SuLe for UK. OR Kristina’s Lawlace for US. Startup specific advice, specialised by geography. Generalists can be good but specialists are best. #fundraising #season #GoGetEm #femalefounders #startuplegals

15

5 Comments

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?

3

In the often VC-fundraise obsessed environment that Tractor Ventures operates in, one obvious way to build our brand and increase the number of companies that we fund is via the financial storytelling - how to use $1 of debt funding such as ours to return multiple $$ without dilution etc etc. Been banging on about this for a few years now, and that will just continue on as the message continues to land. In Aus and NZ, debt as a funding instrument is very nascent compared to overseas ecosystems where it has been accessed for decades. But the other, also obvious one, is truly simple. Difficult to coordinate sure, but 'makes sense.' That is: Storytelling. Showcasing the different types of financial decision-makers that access debt funding for their various purposes and utilise it in their own way to generate ROI without dilution. Smart operators, clever way of business-ing, and who feel some affinity with our Tractor brand. If they're agreeing to the interview, I guess they are happy with their personal Tractor experience, and that fits with our little throwaway byline: 'Here for a long time, not a loan term.' When the addressable market for Tractor gets raised, profiling stories such as these can be more eye-opening and start to illustrate all the opportunities for our continued growth and expansion. What was once believed to be a funding vehicle for B2B SaaS companies has certainly changed over time. So too has some misguided beliefs that venture capital funds *those companies* and debt funds *these companies* In certain scenarios, the two can go hand in hand. And just the same way that VC won't fund a majority of companies, Tractor's debt is for a certain type of company that is revenue-generating AND running sustainably, and that's an important factor to continue to reinforce. Whilst we do say no plenty, we say a very quick no, and that is always appreciated. So, we will be rolling out a number of stories upcoming c/o Stephanie Palmer-Derrien interviewing and myself curating. Very much looking forward to showcasing what a 'tractor' is, which based on these first articles, would be: 🚜 E-Learning Creation Tool 🚜 Real Time Media Monitoring 🚜 Full Service Innovation Studio 🚜 Renewed Goods Social Enterprise 🚜 Remote Monitoring Agriculture Tech 🚜 Reimagined House Rental Experience 🚜 Luxurious Skincare and Aromatherapy 🚜 Underground And SubSea Inspections 🚜 Environmentally Friendly Period Products And seeing as this batch are based in Auckland and Brisbane and Byron Bay and Melbourne and Sydney and Wellington, I think that's a good indicator that the brand-building and awareness is doing the thing its meant to do. Nice 😎

10

Scale-up business guide to getting investor-ready: THE PITCH (4/7) Have you got your business up and running but never pitched to an investor before? Do you know what you need to prepare for a pitch? Your business’ future may depend on your next pitch. This article outlines the different aspects of your business you need to bring into a pitch. #Investorready #Business #Growth #Funding

4

Up to series A, all that TAM, SAM, SOM stuff in pitch decks is 💩. Sure, put it in the doc if you must. Lots (and lots) of advice says you should. But I challenge you to find any VC that gives it any more than 3 seconds of attention. Or thinks it is anything other than a work of fiction. And I guarantee none of them has had their investment decision influenced by it. So, whether you put it in or not, don’t spend too much time on it and focus your attention and impact on other things. Such as team, mission, metrics. Pretty much anything else in the pitch deck templates!! #founders #startups #vcfunding

89

54 Comments

Founder wants out of founder-led sales How long should it take? When the founder has so many important things to do, this is a common question With board pressure, market pressure, fundraising markets and more The speed to transitioning out of founder led sales is often misunderstood You can want it to be done in days or weeks Maybe you can do it Likely not going to be the case The transition done poorly bucks the revenue chart Be careful of the dip

43

33 Comments

Exposing harsh truths with data, not opinions. Practical, actionable steps for founders to thrive in their next funding round. The time is good to go fundraising - I'll show why and how. If you're at Bits & Pretzels, come have a chat!

30

There’s a concept in fundraising that I keep going back to, coined by Benchmark, which they call 'Liquidity Quality': It refers to how impressive are the early product engagement numbers, independently of our likely flawed assumptions about the initial market size and the world. What’s the main take-away? Work on proving liquidity quality > quantity. Tell a story that clearly displays the quality of your traction. Here’s Bill Gurley explaining the concept using Yelp as an example: #tech #startups #fundraising

58

23 Comments

ANNOUNCEMENT: We just launched our diversified fund investments feature on Mainshares 😲 Starting today, accredited investors can invest in SMB acquisitions managed by sophisticated investors via Mainshares I’ve been telling you all that we’re here to change the game of SMB investing for the better, and this is a huge step for us. Before, SMB investing was commonly done on a deal-by-deal basis, and depending on who you are, you may not have the time to spend parsing out every deal. Well now, investors on our platform have access to deals across a variety of industries, geographies, and deal structures in this (traditionally) inaccessible and fragmented asset class. Invest in ~20 SMBs, all with a single investment. Join the Mainshares train before we take off like a 🚀 Link below for diversified SMB investing 👇

81

6 Comments

Founders, you have very little time to get an investor's attention. Some professional investors see thousands of pitch decks. If the answers to the key questions are on slide 8, they may never get there. They need to 'get it' at a high level by the second or third slide. Or you may have lost your chance. ------------------- Please ❤️ Like, ♻️ Share and 💬 Comment to spread the word. ➕ Follow me, Marc Cohen, for deep yet concise insights into venture investing, startups, fundraising and AI.

20

12 Comments

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

64

16 Comments

Why did we invest in Deasie? We met CEO Reece Griffiths before last summer’s Y Combinator Demo Day and were astounded by his sales presence and high energy. They had a compelling distribution approach, and it didn’t hurt that they had backing from General Catalyst and the founder of QuantumBlack, AI by McKinsey, McKinsey’s flagship AI product. Deasie operates in a multibillion-dollar market of enterprise AI, and they’re committed to making unstructured data more reliable via their automated labeling workflow. Check out their Techcrunch press release here: https://lnkd.in/dm_56ShV. Founders Reece Griffiths, Leonard Platzer, and Mikko Peiponen hail from the likes of McKinsey, MIT, Amazon, and Cambridge - and their engineering team are no slouches either! Watch them become more robust over time to serve enterprise clientele across verticals! Punch Capital

131

4 Comments