Nicolas Baxter

A top FIVE trend in #startup ecosystems right now

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What is the common point between Instagram, Delicious, and OpenTable’s growth strategies? They all used the “thin edge of the wedge” strategy, popularised by a16z crypto’s Chris Dixon. "Good startups think about the whole wedge from the start. They build an initial user base with simple features and then quickly iterate to create products that are enduringly useful, thereby creating companies that have stand-alone, defensible value." #oldbutgold #venturecapital #startups

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Numbers & insights from a deep tech venture studio that launched 11 companies (all are active) in the last 7 years, reaching £85M valuation across the portfolio: 1. Post Urban, initially bootstrapped by Luke Robinson, an academic with a PhD in physics from Cambridge, now operates with external funding from a UK-based fund. 2. Launched 5 companies during the first 5 years and 6 companies during the last 2 years. 3. All 11 completed pre-seed rounds; 1 of them got Series A, 2 of them are approaching their Series A. 4. The startups have collectively raised ~£25M in venture capital, in addition to receiving grants. The total valuation of the 11 companies is ~£85M, half of which have not yet undergone subsequent funding rounds. 5. Initial equity splits: the venture builder 20%, CEOs of startups 35% (vests over 4 years), CTOs – 20-25%, employees 10-15%. 6. The initial valuation of startups was £2 million, with £300K invested by the venture builder. The last 2 startups were at £3.5-4M initial valuation. 7. Building deep tech ventures requires significantly higher initial funding because these projects need more time to develop demonstrable products. Two portfolio companies hit £1M in ARR. 8. The venture builder has increased the capital for the last 2 startups to ensure they reach meaningful milestones. The CEOs of the startups were able to secure additional funding through their networks, £350K and £450K, respectively. 9. The deep tech investor pool is smaller than that for sectors like SaaS, which requires a stronger proof of concept and market readiness to attract funding. 10. 3-4 times, potential customers became investors in Post Urban Ventures. This is a great approach because it secures investment and validates the concept by gauging whether these potential customers truly believe in the solution and its market necessity. 11. They don't start with a technology or an idea; instead, they integrate insights about global problems and, by actively engaging with advisory boards, founders, and industry experts, identify pain points and align them with technological solutions. 12. They do not bring universities in as co-founders but source scientists or professors to contribute to research and development. This involves leveraging academic expertise to support the technical aspects of startup projects until a prototype is developed. 13. The studio maintains strong connections with major academic institutions, including Cambridge, Oxford, Imperial College, and UCL, supporting its deep tech focus and facilitating access to new technologies and potential founders. 14. Areas of focus in deep tech: AI (Knowledge Graphs, NLP, DNNs, Computer Vision, Edge AI, Active Learning), Quantum Technologies, Biotech, AgTech, Enterprise SaaS. Watch the full interview to gain insights into the portfolio companies, handling IP collaborations with universities, key challenges, and team construction: https://lnkd.in/dCi7fZ7G

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Entrepreneurs like Tom Blomfield and Barney Hussey-Yeo are right to flag the risks facing the UK’s tech scene. But having built two tech companies here, in Beam and JustPark, I’ve seen the UK's moat that makes it a great place to grow a start-up. The talent here is world-class and we attract people from across the globe. The UK’s location, time zone and language makes it a gateway to global expansion. And, to top it off, it’s a great place to live. As #Budget2024 approaches, though, the government mustn’t be complacent about this. I know entrepreneurs in my network who are considering crossing the pond and growing their start-ups and scale-ups in the US, taking with them the jobs and growth these businesses create. The government's focus has to be on getting the financial incentives right for founders, getting more investment into UK start-ups from our institutions and from overseas, and keeping red tape in check to allow entrepreneurs to flourish. What do you think? Is the UK in danger of losing its status as a tech superpower?

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Can venture studios earn a profit without losing their soul? The answer might surprise you. 🤔💼 Our recent poll on venture studio profit margins revealed some interesting insights. 37% say "No Charge - Studio not Agency" 21% prefer "0% Studio - Linked Agency +∞%" 15% allow "+10% margin - Studio is Agency" 27% accept "+25% margin - Studio is Agency" With 78 votes, these results show a clear divide in the community, with a slight majority of 58% leaning towards no or minimal charges. Let's dive deeper into this complex issue. The Core Dilemma: Profit vs. Equity Venture studios aim for long-term value through equity. Agencies chase profitable revenue. Can these models coexist? The community's verdict: it's risky business. Key Insights from Industry Leaders: Elliott Parker: "Studios only work when everyone's incentives are aligned." Mark Donnigan: Charging fees can erode crucial trust. Ben Yoskovitz: Maintaining a startup-building culture is challenging when part of the org focuses on client services. Jeremy Burton: Tax implications of below-cost pricing can't be ignored. So, how can studios generate revenue without compromising their mission? Innovative Solutions: Separate Entities: Renan Devillieres suggests a "pure" studio funded by a linked agency. Transitional Model: John-Erik Hassel proposes gradually shifting from agency to studio. Post-Graduation Services: Increase fees for "graduated" companies, incentivizing independence. My take? Venture Studios must pursue an equity driven business model. Returns from equity MUST have a higher priority than short term profitable revenue. When a studio is both an agency and company creator, the business model is mixed and one will win. +95% of the time this will be the seeking of short term profitable revenue and undermine the mission of the venture studio. I whole heartedly encourage studios to start as profitable agencies. Then build an attached venture studio funded by profitable operations. The Path Forward: Clear Separation: Consider separate legal entities for agency and studio activities. Transparency: Be upfront about fee structures and rationales. Alignment First: Prioritize incentive alignment between studio, founders, and investors. Focus on Cost Recovery: Aim to cover costs, not generate profit from portfolio companies. Evolve Over Time: Your model may need to change as the studio matures. The venture studio model is powerful, but it requires a delicate balance. By focusing on equity-driven returns while thoughtfully addressing operational needs, studios can create an environment that truly nurtures startup success. What's your take? How can studios balance revenue needs with their core mission? Share your thoughts! 👇

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🚀 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

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I consider myself lucky—I've worn the shoes of founders and donned the VC hat as well. Attending pitching events was part of my weekly routine in both cases. However, I've never experienced anything quite like what the Pitchflix team and Shane Smith delivered at Level39. rev London was a truly disruptive event for the #venturecapital industry. Instead of the traditional format where founders pitch to investors, this time accelerators and VCs took the stage to explain to founders why they should choose them. It was a true "think outside the box" approach, and I deeply admire it. This is precisely what the ecosystem needs to catch up with Silicon Valley. Beyond the fantastic #networking opportunities, the session fostered real and frank conversations between parties that are typically represented in opposite roles. One thing everyone seemed to agree on: "investors invest in people." That's why ETA Technologies' presence was invaluable. Elizabeth Parker Karl Rego Amy French Oscar J McEntee Jonny Seaman Dilesh Maisuria Richard Lowe CIPD, The Training Alchemist #fundraising #technology #entrepreneurship

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

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🚀 Transform your business with 3 easy-to-use tools! 📈 Don't miss growth opportunities or make costly mistakes. Check out these powerful tools: 1️⃣ Scale-up Growth Diagnostic: Score your strategy, sales, and marketing. Uncover strengths, weaknesses, and prioritise actions. 2️⃣ SWOT Analysis: Evaluate Strengths, Weaknesses, Opportunities, and Threats. Discover gems of opportunities and avoid threats. 3️⃣ MOST Analysis: Create an actionable strategy with Mission, Objectives, Strategies, and Tactics. Stay on track and realign tactics as needed. 🔗 Read more in the article by John Courtney, a Lifetime Award-winning entrepreneur. #BusinessGrowth #StrategyTools #ScaleUpSolutions

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Impress Investors: 3 Vital Customer Research Tips 📈🎯 Customers drive your business, and investors know it. To win them over, focus on these customer research essentials: 1️⃣ Know Your Audience 2️⃣ Reach Effectively 3️⃣ Study the Competition Investor confidence hinges on your customer strategy. 🚀💼 #InvestmentPitch

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Why spend 1000s of hours building Founderland? To get founders money. (NOTE: If you or a brand you know wants to join our Pitch Slam competition at Founderland, write “Pitch Slam” in the comments below and the brand name) Sure, there are other reasons… - Create lasting, high-value relationships - Connect the top retailers with today’s highest potential brands - Get founders to think BIG in one of the world’s most inspiring locations But the primary purpose is to inspire deals getting done. Raising capital is hard. And is incredibly inefficient for everyone involved. Especially today where we spend far too much time behind our computer screens and far too little time connecting with people who can help us move forward. There is still no better way to learn about a company than meeting the founder IRL and getting to know them and what makes them tick. Not behind a slide deck and overly-myopic metrics… But in a setting where you can assess the most important metric of all - founder-problem fit. Our goal with Founderland is to connect the most impactful founders with our favorite sources of capital (including ours ;)... And also allow them to develop relationships and learn from people who can help take them where they want to go. Founderland is all about facilitation & fun… And community building too. Alone we can go fast, but together we can go far.

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☠ Most venture studios fail within 24 months. ⚠ But that's not the real problem. The real problem? Most investors don't see the fatal flaws until it's too late. After reviewing 500+ studios globally, I've found patterns: ↳ Misaligned incentives with follow-on capital ↳ Fundamentally broken cap tables ↳ Lopsided customer prioritization ↳ Unsustainable strategies ↳ Critical team gaps The harsh reality: A studio can look perfect on paper and still be built to fail. That's why I'm launching something new: Venture Studio Perspective - a newsletter turning awareness into conviction. What you'll get: ↳ Investment frameworks to diligence studios ↳ Go/no-go signals for studio investments ↳ Deep dives into studio failure patterns ↳ Red flag analysis of real cases ↳ For: ↳ Studio investors ↳ Follow-on VCs ↳ Exited founders exploring the model I've told hundreds of aspiring studio founders their models wouldn't work. Now I'm showing you why. 🤔 What hidden red flags have you spotted in venture studios?

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Comparing expected dilution of founders across different UK geographies. Takeaways: Price will always be driven by the interaction of supply and demand. If you have (on average) more investors interested in your equity, the price you can achieve will (on average) go up. #capitalraising #startups #fundraising #founders #venturecapital #investors #vc #vcfunding #technology #startup #tech 

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A US founder raising £0.5-£2.5m looks to sell 13.8% of their business' equity. For the same raise amounts, a founder in Wales will have to look to sell ~23%. In London it's ~16.5%. My hypothesis is this is due to the relative absence of competitive tension in regions outside of centres of financial capital (would note that US founders outside of SF/NYC don't see quite the same drop-off) - keen to hear the thoughts of others! #capitalraising #startups #fundraising #founders #venturecapital #investors #vc #vcfunding #technology #startup #tech

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Emerging #AI investment trends in the UK? The AI landscape is booming, with VC funds increasingly focusing on artificial intelligence across various sectors. But where is this capital flowing? 🔍 Healthcare & Biotech: AI in healthcare is a significant growth area. From drug discovery to predictive diagnostics, VC-backed startups are transforming healthcare. Companies like BenevolentAI are reducing time and costs in drug development, drawing investor attention. 🚗 AI in Mobility & Transportation: Autonomous vehicles and smart infrastructure are also hot sectors, with startups like Oxa. VCs are betting on AI’s potential to reshape urban mobility, optimize traffic, and reduce emissions. 💼 Fintech & AI-Driven Analytics: AI is revolutionizing financial services, especially in risk management and fraud detection. Startups like Onfido, focused on identity verification, are securing major funding as VCs look to AI for enhanced security. 🛠️ Manufacturing & Automation: AI’s role in manufacturing is growing fast, with VC investments in machine learning for predictive maintenance and process automation. AI-driven efficiency is a big draw for investors here. 📊 Comparative Trends: While healthcare AI dominates in long-term societal impact, fintech and mobility sectors are showing quicker returns on investment, making them attractive for VCs seeking more immediate gains. Meanwhile, manufacturing AI remains a consistent, steady-growth domain. As VC interest diversifies, one thing is clear—AI is the future across multiple UK industries. What’s your take on AI’s role in shaping the future of investing? 

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Good to see an #IPO in the DX space with Tempus AI. With 11M shares at $37 per share at #top 🚀 end of the expected range, raising $410M at a valuation of $6B Founded in 2015, Tempus is creating an intelligent diagnostics platform for precision medicine ⚕. #Positive #news Looking forward what's come. #AI #healthcare #data #digitalization #DX https://lnkd.in/dJiKrrPC

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Opportunities for founders detected!!! Speed dating-style pitch sessions: startups get 2–3 mins to pitch, followed by a 6-7 min Q&A with investors. Why attend: - Benefit from live pitch reviews, align with investor expectations. - Make valuable connections and explore funding possibilities. - Connect with a community of like-minded individuals and VCs. #startups #investors #vc #venture

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Hello to new followers from Sunday Times commentary. Glad you’re here. Some opportunities you may be interested in: - For founders / capital partners to work with my team and I to build (organically, buy & build) to 100m+ ev exits over the next 3 years. - For partners with good network / audience who can source and work with us on above. Verticals: tech services, marketing services, cybersecurity, B2B software & AI apps. Geographies: UK, CEE, KSA, UAE. Criteria: Good business (ideally 1m+ ebit), Good people. We have 5 projects live now, very strong pipeline. We are locking at 10 to ensure unparalleled support for all. Intentionally capital-light / cash-flow positive model, meaning better target outcomes for investors (capital at risk, not guaranteed etc) and less equity dilution for founders. As name suggests, we do things differently. We love building businesses and securing exits. (Though, politely, we are very selective and only do this because we enjoy it.) The ‘top secret’ plan is to prove Open Equity > PE/VC (especially in a high interest rate environment) across a portfolio … then consider options to open up platform. DMs open. You can also email: [email protected] Thanks. Going through the connection requests etc now…

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