Jim Stevenson

Industry experts call for tailored AI rules in post-election UK

8

1 Comment

Thanks to The Quoted Companies Alliance(QCA) who invited me as a guest on their Growth Capital Podcast recently to discuss the interesting topic of ‘Public or Private?’. James Ashton, Ray Anderson and I discussed timings for founders to go public and how the stock market could increase its appeal so that more entrepreneurs take the plunge. I emphasised the need to give people the confidence to succeed, whether public or private. I also shared some of my personal experience about how we’ve successfully helped smaller companies to scale and grow, setting growth agendas for 6–7 years and working with them towards entering the public market. In this episode we covered key topics such as: · funding gaps, venture capital and how we could use the UK tax system to incentivise businesses · what motivates companies to turn to overseas investment · long-term planning and what the components of the journey to success look like · why some companies would rather stay private than going public – and the benefits of doing that, such as taxation. It was great to hear the thoughts of Ray Anderson; he has more than 30 years’ experience in starting, growing and selling businesses, and is executive chair and founder of Bango. Listen here https://lnkd.in/eseWiqrK #GrowthCapital #PublicVsPrivate #Entrepreneurship

32

1 Comment

I have to repost. First because performance metrics of #VC funds are finally gaining the importance they deserve, secondly because they’re quite misunderstood, and thirdly it explains what matters to LPs in a market where liquidity is king. ✖️ #TVPI is very important at the earlier stages of a fund- measuring the total value of an investment relative to the funds committed and compounding both realized and unrealized returns (NAV+distributions/paid-in capital). It is the metric that captures potential upside. ✖️ #DPI is the metric that matters when a fund reaches maturity. Unlike TVPI, DPI focuses on realized gains and cash distributions to LPs (distributions/paid-in capital). In a market like today where liquidity is king, DPI holds more weight.

5

📋 15 Cheat Sheets on Marketing, Sales, Fundraising, Pitch Decks, and More 🔹 Pricing and Packaging Software 🔹 Five Prospect Stages 🔹 2024 Fundability Benchmarks 🔹 Leadership Transitions 🔹 SaaS Monetization Steps 🔹 Essential Pitch Slides 🔹 Paul Graham’s Investor Guide 🔹 Investor Question Types 🔹 TAM, SAM, SOM Explained 🔹 Comprehensive Pitch Deck Guide 🔹 SaaS Sales with MEDDICC 🔹 Identifying the Right Customers 🔹 Anatomy of a Perfect Pitch Deck 🔹 Prioritization Frameworks #Marketing #Sales #Fundraising #Business #CheatSheets

4

1 Comment

🚀 Thinking of launching a corporate venture capital unit? Here’s the secret sauce. From 13 top CVCs interviews, the blueprint for success gets uncovered. 🎯 Key insights: - Define crystal-clear objectives - Implement structured processes - Set measurable metrics - Exercise patience - Gain board/executive backing - Offer more than just capital to startups PS. check out 🔔 for a winning pitch deck the template created by Silicon Valley legend, Peter Thiel https://lnkd.in/ejp-Bhnu

19

1 Comment

Some big news for UK investors and startups: The European Commission has approved the UK government's plan to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) for another 10 years, pushing the deadline to April 2035. This approval was confirmed in a letter dated July 22, 2024, marking a significant win for the startup scene. The EIS and VCTs are in my opinion more than super important for early-stage companies in the UK. They provide tax breaks to investors who are willing to back new businesses, which helps drive innovation and growth. This extension means investors and startups can count on these schemes for a longer time, ensuring ongoing support for the UK’s entrepreneurial landscape.

64

7 Comments

💼 Top 10 UK Venture Capital Firms by Deal Count - Plus the Power of NEDs 💼 The UK's venture capital firms are leading the charge in backing high-growth companies, but think abut this..... if each deal also added a non-executive director (and they invariably do) to bring experienced governance and strategy into play, let’s look at the numbers: Let's start with the top 10 most active VCs in the UK in 2024, and the potential impact: 1. SFC Capital - 99 deals   2. Access EIS - 65 deals   3. Octopus Ventures - 54 deals   4. BGF Growth Capital - 47 deals   5. Ascension - 34 deals   6. Fuel Ventures 🚀 Ventures - 31 deals   7. Seedcamp - 28 deals   8. LocalGlobe - 26 deals   9. Par Equity - 25 deals   10. Amadeus Capital Partners - 24 deals If each deal added a NED, and each fund paid an average recruitment fee of £25,000 per hire, the total cost across these deals would be: 😳 SFC Capital: £2.475m   😳 Access EIS: £1.625m   😳 Octopus Ventures: £1.35m   😳 BGF Growth Capital: £1.175m   😳 Ascension: £850k   😳 Fuel Ventures: £775k   😳 Seedcamp: £700k   😳 LocalGlobe: £650k   😳 Par Equity: £625k   😳 Amadeus Capital Partners: £600k  👉 Total cost: £10.825 million 💸 Ps. Many recruitment fees are in excess of double the "average" fee of £25k. At Virtualnonexecs.com, we work with VCs to flatten the cost of recruitment across their portfolios. The VNXD Operator Network is available on a flat annual subscription - for less than the cost of a single hire. You get access to 22,000 non-executive directors, supported by internal headhunters and there's no "per hire" fee. This means ongoing access to the best talent with no extra costs for every deal. If you are interested in accessing this level of support, let’s discuss. You can book a demo with me here: https://lnkd.in/d3na7CEC or simply drop me a DM. 👉 #VentureCapital #Startups #NEDs #Leadership #BusinessGrowth #Investment #UKTech

11

An observation distilled from numerous VC conversations on the scale-up funding market - A clear "tri-furcation" has emerged: 1) ultra well-funded LLM and other AI companies where VCs see immense use case driven consumer and enterprise adoption. Such immensity of capital has propelled what is perhaps a 20% GM business model to eschew profitability and pursue manic scaling laws, ever hungry for compute and mind-boggling training parameters, forever letting cloud and compute incumbents drive margins lower (and benefit themselves in return as both sellers to and investors in these scale-ups). 🤖 2) big shining stars in other sectors, many of who had benefited from the 2020-21 funding boom, came up against a high bar to match prior terms. These managed to slow growth, slash costs, activate profitable revenue streams and operating leverage to turn things. Think Vinted (e-commerce), Kry (healthtech), Personio (HR tech), Bolt (mobility), Lydia, GoCardless, Checkout.com (payments), OnlyFans, TripleDot (entertainment), Revolut, Starling, Oaknorth, Atom, Allica Bank (neobanking), Octopus Energy (energy) who are all profitable or at the cusp. Most of them have been on some sort of a path to IPO, but playing cards close to the chest, often going the pre-IPO private funding route. 📈 3) the laggards (or even former leaders in some challenging sectors with high capex, FOAK tech, D2C / B2C, or high burn network-reliant models that went for growth at all costs post fundraising success in 2020-21) have borne the brunt of the slow down the worst. 😵 Now, Wall Street has always had and continues to have its eyes set on what they can effectively trade - what's profitable and will scale efficiently. This pressure has, for most parts, led companies beyond a certain scale to pivot to efficiency and deliver numbers that would make sense to relatively less savvy public investors. Category 1’s fall far from this and won’t IPO. As strategic investors and mega-funds with large cash coffers have decided to fund category #1 till kingdom come, it is #2 and 3 that have had to contend with a crunch of growth capital (combined with a dearth of exits) for anyone but the best of performers. In my opinion, the #2's have come out as the true cream sieved out of the great valuation and fundability reset. As public market activity is all but done for the year (or so it seems), and as I build my own pipeline of 2025 IPOs and interesting scale-ups to watch... ✅ I am following companies in category 2 closely to see how well they execute on the current strategy ✅ Keen also on the cusp-y ones in category 3 who might just pull a neat trick. Pivoting hard this late in the game is not an option for most, and hence, in category 3, I am excitedly following formerly well-capitalized companies that have not raised funds in some years, but are innovative, niche-y, and led by good teams in growth markets.

9

🚀 Join Us at AI Forge Incubator: Meet Solo Founders Seeking Co-Founders! 📅 When: Wednesday, 29th May 📍 Where: The Old Street Gallery, 62 Paul Street, London, EC2A 4DQ 🕒 Time: 5pm-9pm Are you a visionary CTO, CPO, or commercial expert ready to make your mark in the AI start-up space? Here's your golden opportunity! ✨ What's Happening? Our solo founders are in week 5 of a 12-week intensive incubator program. They are actively seeking co-founders to join them as CTOs, CPOs, or in commercial roles. These companies will be pitching to 450+ investors during the week commencing 8th July, with a high probability of securing funding. 🌟 Why You Should Attend: Dive into the world of promising AI start-ups. Contribute your skills immediately by joining an existing business. Be part of the prestigious AI Forge incubator program. Potentially integrate your own business ideas into an evolving proposition. Network with talented individuals and successful entrepreneurs. Gain invaluable insights and advice from seasoned founders and mentors. 🔎 Types of Businesses Seeking Co-Founders: Our 9 solo founders are leading ventures in: EdTech SalesTech LegalTech FemTech MedTech MarTech 🎉 Event Highlights: 💬 Speed Dating Sessions: Quick, focused interactions to maximize connections. 🔍 Pre-Matchmaking: Initial meetings set up to streamline the matchmaking process. 🤝 Networking Opportunities: Explore collaboration possibilities with like-minded entrepreneurs. Don't miss out on this unique chance to partner with innovative AI start-ups and accelerate your career in the tech industry. Register at Seeking AI Co-Founders · Luma - https://lu.ma/f22d1ih9 #AIStartups #CoFounders #TechInnovation #Entrepreneurship #Networking #AIForge

15

2 Comments

What to Include in a Data Room for Investors? — Advice From VC Fund GP. https://buff.ly/3MEJUK6 Enhancing a data room for potential investors is crucial for a successful fundraising process. Consider including comprehensive financial statements, detailed market analysis, information on intellectual property, and a clear roadmap for future growth. Providing examples of successful case studies or client testimonials can further bolster investor confidence. Statistics show that well-prepared data rooms increase the likelihood of securing investments. Ensuring that all documentation is organized and easily accessible can streamline the due diligence process. Remember, a well-curated data room is an essential tool for attracting and impressing investors. #InvestorRelations #DueDiligence

1

Corporate Venture Capital by The Boston Consulting Group (BCG): In today's fast-paced world, Corporate Venture Capital (CVC) isn't just a trend—it's a game-changer. 📈 The Boston Consulting Group (BCG) reveals the transformative impact of CVC across industries in its latest report. Here's what you need to know: 1️⃣ **Strategic Innovation:** CVC is no longer just about financial returns. It's about driving innovation, accessing cutting-edge technologies, and staying ahead of the competition. 2️⃣ **Broader Horizons:** Beyond tech and pharma, CVC investments are spreading to diverse sectors like consumer goods and construction. The playing field is expanding! 3️⃣ **Long-Term Vision:** Companies are seeing CVC as a strategic, long-term commitment, not just a speculative gamble. 4️⃣ **Core Alignment:** The best CVC initiatives are those that seamlessly integrate with corporate strategies, leveraging existing assets to supercharge growth and innovation. PS. check out 🔔 for a winning pitch deck the template created by Silicon Valley legend, Peter Thiel https://lnkd.in/ejp-Bhnu

42

5 Comments

#interestingdata The VC power law is fundamental, sneakily non-intuitive 🤔 and hugely powerful 💪 As a fully bought-in “power law fan”, I find associated datasets fascinating. A great new one 👌 from VenCap International plc shows that growth funds are also power law instruments 😅 Intuition could have gravitated in the normal’ish direction 🤫 See source in comments. #venturecapital #powerlaw

21

4 Comments

Very interesting perspectives on the « new Industrial Revolution” powering AI models, who will pay for it, and who will profit from it

11

-Founders should avoid overuse of revenue multiple: what it really means in startups’ valuation- Traditional valuation methods rely on a company's financial statements. If founders use revenue multiples in dealing with potential investors, they should understand the basics of valuation. Otherwise, it might appear as a lack of common sense. Here's a breakdown of the basic approaches and why revenue multiple was invented. https://lnkd.in/gbYqTpAC #Hypergrowth #Valuation #HITSERIESCAPITAL #TANAAKK

8

1 Comment

On further reflection on my previous post (link below) about AI being like electricity, not in the fear mongering sense but in the Nicholas Carr commoditization sense, this is only true in the same way that the Efficient Market hypothesis is true… While the stock market is generally efficient, through brilliance, skill, or specialized domain knowledge, people like Warren Buffett, Peter Lynch, and Edward Thorpe, have been able to consistently find inefficiencies and generate wealth. Especially now when there is so much flux in the whole AI landscape one can find great opportunities. We are experimenting with a few ideas in our field of  CRO (Conversion Rate Optimization) When I interviewed the legendary angel investor Gil Penchina (invested in 7 unicorns) for TechCrunch he told me that one of the questions he always asks startups is:  Why now? What has changed that makes this idea attractive? https://lnkd.in/dqf-aRtJ #ai #startups #ecommerce #conversionrateoptimization

3

The success of a Fund boils down to DPI (distributions back to LPs in relation to how much capital was deployed). The industry often gets infatuated with TVPI, which accounts for paper gains. However, these numbers are frequently not worth the paper they are printed on. Knowing when to stick or twist is always a challenge, so I favor a balanced approach: the third-third-third strategy. Sell a third of the investment at the first opportunity. Gradually sell the second third. Hold onto the final third for potential upside. Even this model needs adjustments based on market conditions, requiring a mix of aggressive selling or patience. The real issue for LPs is the industry's recent obsession with maximizing TVPI without enough attention to DPI. This can lead to portfolio imbalances and potentially disappointing (or zero) cash returns. 🎙 Listen to my full episode of Fintech Leaders with good friend Miguel Armaza for more on data as the new gold, secrets behind successful VCs, and the importance of founder-market fit: Spotify: https://spoti.fi/3KitB4b Apple: https://apple.co/4bXmmuC Youtube: https://bit.ly/3Vh4HIz

37

1 Comment

The UK Venture Capital Financial Returns 2024 report provides a comprehensive assessment of the performance of UK VC funds since 2002. The report draws together data directly sourced from fund managers, from the British Business Bank’s equity programmes, as well as from commercial data providers PitchBook and Preqin. The report contains the following chapters: 🔹 Chapter 1 provides an overview of UK VC financial returns in comparison to the US, and the rest of Europe (ROE), and breaks this down into different vintage year cohorts. 🔹 Chapter 2 explores global VC fund performance in the life sciences and green technology sectors, including how industry returns have evolved over the past twenty years. 🔹 Chapter 3 assesses the performance of VC funds the Bank has invested in through its Enterprise Capital Funds (ECF) programme and through British Patient Capital (BPC). 🔹 Chapter 4 provides an overview of current VC market conditions, covering fund managers’ perspectives on fundraising, competition, valuations and exit opportunities using the results from our UK fund manager survey.

16

Taavet Hinrikus and I made the Financial Times Due Diligence email. https://lnkd.in/ez2AuGQx One 'unintended consequence' is that if there is a 45% tax on carry and CGT (raising £40m per year, remember) it for all intents and purposes closes the door on new VCs in the UK. Especially started by teams from non-traditional backgrounds. To meet the GP commit, you need to be already part of the 'wealthy' as you cannot rely on the value you create - nearly half of it will disappear - to fund it. We have both had extremely successful startups which are few and far between. The smaller number of new VCs will therefore more likely increasingly be for people who have inherited the capital or can draw it from their already rich family. Probably not want they have in mind with this policy.

32

2 Comments