Angela Strange

I recently sat down with a group of Forum Ventures founders about to go out to fundraise and the topic of SAFE rounds came up. The context focused on the pros/cons of raising a priced vs a SAFE round and the conversation notably shifted toward the dilution implications of a SAFE round. Founders are keenly aware of the top line dilution of any funding round - ie selling 20% of their startup for $3M at a $15M cap - but very few fully grasp the implications of doing a SAFE round vs a priced round. The universal standard for institutional VC investors is a post money SAFE. This document essentially outlines ownership that an investor will have in a startup just prior to the execution of a priced round. Most importantly though, it is structured so that an investor in that SAFE will not be diluted by subsequent SAFE's that are issued. This is where founder education around the implications of this structure are not fully appreciated. In a situation where a founder continues to stack subsequent SAFEs, they don't actually convert until the first priced round and the net dilution they are taking is actually more than they realize. Here is a practical example - take a situation where a founder has already sold 15% of their business on a post money SAFE in a pre-seed round, and is now choosing to sell another 20% in a seed round. If the founder opts to raise this money on SAFEs, the dilution of that additional 20% will come entirely from common equity holders- meaning they will now own 65%. If SAFE holders were also diluted by that round, as they would be in a priced round, the founder would own 68%. This dynamic becomes more dramatic the more capital a founder raises on SAFEs. Note - this is a high level example and does not include an option pool carve out or other round nuances. Almost universally, when a founder raises their first priced round, there is some degree of sticker shock at the outright dilution on their cap table, particularly when options pools are factored in. This pain is even more acute when a founder has raised a fair amount of capital on SAFEs along the way. There are certainly benefits to raising SAFE round, mainly cash in hand 6-8 weeks faster and not having to decide on board seats too early, but I encourage all of our founders to run through cap table modeling and correctly account for the implications of SAFE rounds before they make fundraising decisions.

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We believe in extreme vetting of our founders. You can't build a unicorn if you spend time on silly stuff, like seeing family and friends. Grow up, and focus on investor returns. #vc #startups #investment

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If you missed key insights from Matt McIlwain(Madrona) at Seattle Venture Day I took some time to summarize a few of the key points! How should small startups or emerging companies think about partnering with enterprises? Enterprises are very motivated to have better solutions, Early stage startups have to think differently and think outside the existing structure silos that the current SaaS applications represent, think outside the generally structured data that lives in databases. Think more about data lakes and unstructured data and crossflows, flows that live across current Saas and structure application. Matt thinks its in the crossflows with the differently structured data that’s where some of the big breakthroughs are going to come with breaking into working with big enterprises at the agentic layer. Overlaps between the current AI boom and the .com boom in Seattle? Less GTM talent than Engineering talent here in Seattle. A lot of corporate capital here, Microsoft and Amazon market cap is over 5T today so a lot of the experts that helped build these companies and worked on cloud technologies, applied AI, Robotics, etc.. have helped grow the startup ecosystem here in Seattle. What is Matts framework for selection companies that are investable in this AI boom? The chip layer is saturated with capital from big cloud and harder to return capital. Matt thinks the agentic and enabling layer there will be a lot more winners. Functional and domain specific solutions are great – Gradial is an example on the marketing side. Madrona wants to see founders who infatuated with the problem they see and are better suited to solve that problem than anyone else. Matts thoughts on the M&A and IPO markets? IPO markets have pretty much stayed soft this year, but M&A is going to pick up a good bit.  There is pressure on the Mag 7 and larger companies from the FTC but a lot more happening in the middle market like Atlassian and Docusign, etcc. Companies that are between 20b and 100b in market cap have to figure out how to increase their market position/AI talent through acquisitions. PE is also hungry to put their capital to work and very aggressive at putting their capital to work. Matt believes he will see VC groups getting bought up by PE groups in different forms. They may allow VCs and founders to keep some of their capital and to re-up in some of those deals. What should founders look for from investors? Matt believes having a consortium of investors is largely a good thing and having great early investors are important in helping you grow. It’s also valuable to have someone who is your lead champion and will roll up their sleeves with you every week. Madrona loves founders who are coachable but not too coachable – If the investor has all the best ideas something is not right. The founder should be leading the way! Pablo Casilimas Justis Mendez OneSixOne Ventures

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At Forum we look at thousands of deals each year across our Accelerator and Pre-Seed funds but only end up investing in a little over 1% of those startups.  As an early stage VC, I am in the business of saying no to nearly every startup I meet, and while there is nuanced rationale for many of the startups I pass on, a vast majority of businesses that don’t meet the qualification to get funded typically fall into one of two buckets. ▪ First time founders have a tendency to go out to market too early to raise pre-seed capital ▪   I’m sure most founders have heard some iteration of this from VCs that ultimately pass on their business.  In some cases it's a blanket excuse covering up for other pass reasons- perhaps a VC doesn’t believe in a team or isn’t bullish on the market opportunity - but in many cases founders simply haven't proven enough to the market to warrant an investment. I meet many teams with an articulate vision for the product that they want to build, but they either haven't performed enough customer discovery to prove demand for their initial wedge product, or need to raise pre-seed capital to build out an MVP.  In those cases, pre-seed investors are unwilling to underwrite those risks.  To be default fundable, teams need to be able to keep costs low, perform extensive customer discovery, and ship some version of an early product - pilots and early paid customers are key. A huge piece of this is having founding engineering talent on the team. ▪Not every startup is a venture opportunity ▪ By definition, a venture backed business is solving a problem within a market opportunity so massive and so desperately needed, that its growth rate is off the charts.   It spreads like a weed, absorbing almost unlimited amounts of capital to fulfill demand within its customer base.   Each year there are maybe 20 companies launched that ultimately have venture scale outcomes. The bar to reach this rarified air is unfathomably high and the reality is the vast majority of founders simply aren’t building for opportunities that have the potential to be one of these generational companies. Many startup founders view VC as the only viable option for capitalizing their business, but not every great business is a venture business, and most successful founders never take VC dollars.  In order to reach an IPO/acquisition large enough to generate venture returns, a startup needs a credible path to $100s of millions in revenue. This is the standard by which early stage opportunities are evaluated. The flip side to this, and I share this feedback often with founders I meet that are building interesting business in non venture markets, if you are able to scale to $10- $20M in revenue that can be a massively successful outcome for a founder.  There are investors who focus on these type outcomes, namely lower middle market PE shops, and the typical path to those deals is a bootstrapped business or a friends/family capital raise.

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Attention New Zealand founders! 🇳🇿 Chris Tottman shares a brilliant takeaway from Vinod Khosla on building hugely impactful companies. 🚀 Dream big. 🔍 Plan small. 💪 Execute relentlessly. Where do you think NZ founders could use the most support? Is it Vision, Planning, or Execution? Drop your thoughts below! 👇 #NZFounders #StartupGrowth #AmbitiousGoals

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Wei D. (Founder and CEO of unicorn Clipboard Health) dropped some major 💎 gems of wisdom during her fireside chat with PearX founders at Pear VC SF Studio yesterday. These really resonated: 💎 PMF isn't something you achieve once - staying relevant to your market is an ongoing pursuit 💯 (Wei shared that to date she still LOVES talking with customers and - even at 1000+ employees and with all the success already achieved - she continues to chase unlocks for the business and recently obtained her nursing assistant certification in order to stay close to users and unlock new insights with them 🥇) 💎 If you're scared of sales, don't think of it as sales -- you're just talking to someone who you're trying to help. Approach your customers with care and listen to them as you would a friend. The moment it's an actual conversation with a friend, that's probably where you're going to get your first sale. If it feels "salesy" you're probably not doing it the right way. 🤝 💎 Do whatever it takes to get in front of your customers! (For Wei this meant driving around at 8 months pregnant and walking up to DMs at nursing homes!) 🚗 💎 The users you speak with in your market will give you the key jargon you need to use to speak back to your market. Listen intently and adopt their language! 🗣 💎 There is little you decide that can't be undone. Be smart, make calculated decisions, but don't overthink things --- err on the side of action and quick decision making. 🏃‍♀️ 💎 Iterate until your users feel passionately about what you're doing (ie. they get angry when the product is down or doesn't work). You want your users to care A LOT about the problem you're solving. 😡 Wei's resilience, grit and work ethic are off the charts. What an inspiration! 👏 #femalefounders #inspiration #techfounder #unicornfounder #hero

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A System of Agents: Our view on how founders can jump on a $4.6T opportunity. 👇 When Foundation Capital partner Jaya Gupta and I first outlined the Service-as-Software framework months ago, we knew we were describing something transformative. Now, after engaging with hundreds of startups, the potential is even clearer: the way to put Service-as-Software into action is through a System of Agents. Unlike traditional software systems that passively wait for human input, a Systems of Agents approach reimagines how software operates. Groups of cooperating AI agents aren't just tools; they're autonomous workers—capable of capturing, processing, and acting on both structured and unstructured data with unprecedented intelligence. The agents understand context, make decisions, and continuously improve. The initial Service-as-Software shift was significant. But a System of Agents? This is the paradigm shift that will unlock new, previously unimaginable categories of work. Here are four tips for founders building with Systems of Agents: ✔️ Capture data at the source Traditional software relies on human input, but Systems of Agents thrive when they operate directly at the source of data creation. By owning the interface where data originates, you empower your system to orchestrate downstream actions seamlessly. ✔️ Reframe costs as workforce investments When a System of Agents handles an entire job function, think beyond software budgets—classify it as part of a company’s workforce spending. This positions your solution as something that aligns with personnel costs, rather than operational software expenses. ✔️ Expand workstreams with AI’s 24/7 capabilities AI agents never clock out. Builders can use this round-the-clock reliability and scalability to unlock new opportunities—think of offering constant support in healthcare or real-time operations in logistics and customer service. ✔️ Prepare for pricing and business model changes Embrace the shift from seat-based pricing to outcome-driven models. With Service-as-Software and Systems of Agents, your value proposition is tied not to the number of licenses issued but to the measurable outcomes and improvements your AI delivers. Read our full analysis in the comments 👓

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ICYMI I did what I think is a pretty useful super deep-dive on "Getting VC Funded in 2024" here: What it really takes to raise venture capital today, in 2024 - Stress in System - Why Everyone Seems to be Chasing AI - Where the Decacorns Are - Databricks and Canva - What a "Fund Returner" is in Venture Capital - How a $2B and a $100m VC Fund Make Money - What a Top Decile Startup Looks Like and Much More!! https://lnkd.in/gQWEGrGD

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Our Founding Partner Shuly Galili just joined the Executive Summary - תקציר מנהלים podcast as a guest speaker. 🎙️ Drawing from the past 13 years at UpWest, Shuly revealed what it’s like writing the first check for early-stage startup founders while spilling some of the secrets on: 👉 What we look for in startups and founding teams 👉 How we evaluate and select companies to invest in 👉 How founders should prepare for VC meetings 👉 Understanding risk, uncertainty, and potential in early investments Interested in giving it a listen? 📌 Find the link to the full episode in the comments below.

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Did a fund raising workshop with a group of founders last week. Some of my messages were: 1/ Your job in that first mtg is to get the VC *emotionally* excited about you and your startup. It’s not enough to get them rationally excited. VCs are meeting 2-6 founders every day. Most of those founders are smart and driven. You’re competing for attention against all of them by the end of that day/week. Whoever creates emotional excitement won that first mtg. 2/ Be ready to sell the larger than life vision. Don't be shy about your ambition. Show the passion behind the vision and mission statement. Let the ambition come through. They're betting on you! 3/ Two things drive investor excitement in most early stage fundraises: “Why Me?” or “Why Now?” 4/ Be intentional about the entire process: pipeline of intros, which partner at which firm, who’s making the intros, the scheduling… everything. It’s an enterprise sales process. Don't be casual about any aspect of it. 5/ Be ready to manage your psyche thru the process: The No's come before the Yesses. The best No's can be an input to your thinking. But there are some people who will be dismissive of you or your idea - let those No's become fuel to your fire. 6/ Don't underestimate the importance of quality of partner. Will matter a lot in the end. Do backchannel references and ask pointed questions. 7/ Fund raising is hard. Company building is harder. BUT... people like you and me have done it before and will do it after us. Just remind yourself: "If not you, then who?"

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Fundraising founders, don’t be too hard on yourself—it’s a tough fundraising environment, and that’s no secret. But remember to keep raising your standards because the bar for VC funding is getting higher, and you’ve got to meet it. As the venture capital landscape tightens, competition for dollars is fiercer than ever. At Startup Ignition Ventures, we’re seeing this shift firsthand, every day more and more apparent. In 2021 and 2022, many startups could secure VC checks despite being loosely thrown together and rough around the edges. Fast forward to 2024, and those same startups wouldn’t make the cut. That's not a knock on yesterday's startups as much as it is a contrast to today’s fundraising environment being completely different. Today, the founders getting funded are buttoned-up, detail-oriented, and operating at a much higher level. Everything has to be top-notch to catch a VC’s attention. Why the change? The number of active investors has dropped by 38% from 2022 to 2024 (PitchBook), meaning fewer deals are being made. VC funding is also down over 30% year-over-year (GlobalData). This means the standard has tightened, and startups must rise well above the average “2022 or 2023 fundability status” to secure 2024 investment. Startups now need to show exceptional business models, traction, products, and teams to stand out in a shrinking pool of opportunities. The landscape may be tough, but it’s also ripe for startups that prove they’re exceptional. Now is the time to build, to gear up, and then be ready for further opportunity as the market begins to turn. Which I personally think is around the corner in 2025.

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The talent market is about as disjointed right now as I’ve ever seen it... There is a incredible amount of tier 1 venture talent (multiple exits - real enterprise value creation and outcomes) opting for advisory, fractional or time on the “Beach” or “bench” right now. It’s not that they don’t want to find their next thing that they can sink their teeth into and go all in - many do - and candidate sentiment on the market has taken a 180 degree turn from Q1 2023 from negative to positive. It’s that the right next thing is incredibly hard to find right now. Messy cap tables, egregious valuations, lopsided preference stacks, limited run way, unclear ways to drive consistent growth (or even if product market fit exists) in a world that rode tailwinds for years, complex cultures, and more. Many of the “Clean” opportunities are still in seed / early series A. Many of the growth stage opportunities are plagued with cultural challenges or require a hard reset across the board. If I was in PE, or a large company looking for innovative talent, I would be doing my best to capitalize on this market. If I was in a clean VC backed company, I’d be going hard at courting the creme of the crop right no. If I was in a complex VC backed company, I’d get creative on management carve outs, outsized offers, and do what it takes to move the ball downfield. I think we’re about 9-12 months away from tech/tech enabled findings it’s way back to being at the top of tier 1 candidates list. It won't be 2021 again.... But I do think the market is going to be way less available. Move now.

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A post from Rob at Balderton Capital pointed me at this piece from TechCrunch, and it perfectly aligns with what I've seen in the market: When things (aka: building businesses) are getting harder, founders seem to be more aware of how to structure ownership within their team. I've recently seen a few transactions where mostly experienced founders insist on longer vesting schedules for them and their team (👋🏻 Mario from Enpal revealing this week the whole company runs on 7y vesting schedules). Avoiding dead capital on the cap table is one of the key priorities we try to make founders aware of when raising rounds - be cautious with part-time, non-operative 'co-initiators', professors, accelerators or angels that don't add much value beyond the very initial stages, or co-founders that decide to move on. Enforcing strong (read: long) vesting mechanisms including cliffs (no need to stick to the 1y cliff market standard either) can be a simple mechanism to align interests for the long-term.

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On my way to London to work with a portfolio company at their QBR and annual planning process. Another example where having investors on your cap table that understand how to build companies vs just show up and pontificate at your board meetings will help you to build world class outcomes. Remember why we do this - build world class organizations that drive meaningful economic outcomes for employees, customers, shareholders, and investors. Lead from the Front!!! #vc #growth #venturecapital

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"Platform" in VCs often feels undefined, and different at every firm. But one thing is clear: firms with dedicated platform teams are seeing higher investment returns. What is 'Platform' in VC? Think of it as a support engine for portfolio companies. Platform teams accelerate growth by providing: 1) Strategy & Growth 2) Talent Partner 3) Marketing & Brand Partner 4) Business Development & Partnerships Lead 5) Community Manager 6) Operations & Scaling Partner 7) Fundraising & Capital Advisor Platform in Venture Studios vs. VC Funds: The big difference? Timeframe. Venture Studio Platform: Involved from concept to exit, guiding startups from the very first spark of an idea. VC Platform: Steps in after the startup is funded, focusing on scaling and growth but not the initial concept phase. Both play critical roles—but understanding these distinctions helps founders and investors make the most of their platform relationships.

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