Jim Nguyen

📊 Do all roads in fintech lead to license aggregation? 📌 In Feb ‘24 the # of fully licensed payment aggregators (PA) was 15. By May, it ~2x’ed to 27 📌 New entities with a full PA license: CAMS, Toucan, Concerto, Boku, Unlimit, Worldline, CCAvenue, Innoviti, Mswipe, Groww, AmazonPay & Finacus There are others with in-principle approvals & not full licenses (yet) ✅ 33 PAs are in-principle approved & can operate. Major names: PayU, Phonepe, PineLabs, and fintechs such as CRED, Mobikwik, Eazebuzz & Adyen ✅ 11 are approved, & can’t operate. Ex: Nium, Payglocal 60+ PAs? That's pretty crowded. 📌 For ecomm players, a PA license could be more for optionality - enable negotiating power and build in the future (if needed). And for tech & non payment fintechs, a bundled offering: Ex: Microsoft Teams Vs Slack strategy. As companies scale they graduate to multiple PAs, so this could be an added benefit non payment players offer to win clients for their core offering, not necessarily a PA play But that solves for non payment players. Even within payments it’s crowded: ~15 core PAs with some form of license that can operate ✅ Full license & core PA: Razorpay, Paymentz, CCAvenue, Cashfree, Stripe, Worldline, Boku, Unlimit ✅ In-principle approval & can operate: Core PA: Adyen, Eazebuzz, PayU. Non core PA but scaling: PineLabs & PhonePe. Payments Tech: Juspay 📌 And interestingly: 6 /10 Top UPI Fintech Apps (vol. and val.) have some sort of PA license (Phonepe, Gpay). Maybe an early indicator of future movement of UPI App to PA? But it's too soon to tell 📌 Product builds are momentary moats. So the differentiating factor could be licenses, which allow additional monetization & experience. Ex: Prepaid Instruments (PPI) for gifting/loyalty & Account Aggregators (AA) for seamless information sharing 📌 Some PA’s have already started. Below are the PAs (in stages of approval) with multiple licenses: CRED: PA, PPI, NBFC PhonePe: PA, PPI, AA Nium: PA, PPI Razorpay: PA, PPI Pinelabs: PA, PPI, AA Digio: PA, AA AmazonPay: PA, PPI Mobikwik: PA, PPI Sodexo: PA, PPI 📌 Of PAs, CRED, Groww, Zomato, PayU & TATA have affiliated NBFCs. Others like Fi & Jupiter are neobanks - I suppose if not banking then an NBFC is the next best thing 📌 NBFC licenses are highly coveted. There are 9500+ NBFCs in India, most of which are dormant, which fintechs seek to acquire. But RBI is reluctant to give them out 📌 But why? Could be overlapping ownership. The same VC / PE’s have invested in multiple fintechs, some of which have received NBFC licenses. RBI generally is not in favor of the same entity holding multiple NBFC licenses and has extended that logic to investors. That’s probably why OneCard and others were rejected: Matrix is an investor in OneCard & Jupiter, and Jupiter has an NBFC license To read the full article, and other pieces like this, click below: https://lnkd.in/gftFhKV3 #fintech #PA

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Insightful look into bioplatform strategy, and what it takes to raise a Series A from my partner, Omri Amirav-Drory: https://lnkd.in/dFv7GbF6

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Block, the parent company of Square and Cash App, aims to leverage its dual ownership to create synergy between its point-of-sale software and peer-to-peer payments app. Jack Dorsey, Block's founder, highlighted the advantage of having relationships with both merchants and consumers, stating it's a rare position in commerce and payments. Ryan Budd, Cash App's head of financial products, hinted at plans to integrate a small business experience into Square and incentivize Cash App users to engage with Square merchants. Block is focused on connecting Cash App's consumer base with Square's merchant network, aiming to transform Cash App into a consumer app for interacting with Square merchants. This move aligns with Block's strategy to dominate various aspects of the consumer ecosystem and potentially monetize consumer spending data for advertising purposes. Read More Here: https://lnkd.in/eh-8KS9V Eugene Tsay Wade Robison John O'Beirne Emily C. Chiu Eileen Wiens Jim McKelvey Branded Hospitality Ventures #innovation #venturecapital #hospitality #technology Owen Jennings (OBJ) Brooke Ellis Jamie (Russo) HicksMing-Tai Huh

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When a seed stage company hits $2M in ARR, they control their destiny: (a) default alive (b) default a Series A target Either choice is great and it’s all in your control. $2M in ARR should be the default goal at seed.

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How do investors price pre-seed rounds?  This is perhaps one of the most misunderstood aspects of fundraising.  Oftentimes, founders want some framework to better understand what market value is when raising capital into their business.  Public equities and later stage privates have a well defined matrix of revenue/margin profiles that dictate valuation, surely there must be some framework for arriving at a pre-seed valuation. So how do investors price startups that are pre-revenue, or have maybe one of two early customers? In reality, pricing is more a byproduct of a VC fund’s portfolio construction model than any metric of the underlying business.  VCs model out portfolios to include a certain number of companies with an ownership target in each startup.  There are variations to portfolio construction, and the chosen strategy will have a direct impact on the types of rounds a fund will participate in. For example, an early stage fund might raise a $60M fund to lead investments in 30 companies and target 12.5% ownership.   After management fees, there is ~$48M in investable capital.  Assuming a fund holds back ~30% for reserves(this number varies across funds) that leaves ~$30M to invest in initial checks.   In this case a fund must average $1M checks at $8M valuations to reach their intended ownership target of 12.5%.   When you are in diligence with a fund, they are first and foremost trying to get to a yes on the investment opportunity.  When arriving at a valuation though, the math outlined above is the determining factor, more so than any multiple of revenue on the business, or the stated desires of where a founder wants to raise capital.  At the end of the day, a VC is trying to arrive at a valuation that works within their portfolio strategy. This means they are very unlikely to price a deal at $15M cap given the aforementioned portfolio construction, as they would either not own enough($1M = 6.67% ownership) or have to cut too large a check( $1.875M = 12.5%). The thing that is most likely to move an investor off their target valuation is another investor in the picture that is driving the price higher, but even then there are upward bound limits of how high an investor is willing to price a deal. I always advise our port cos to ask an investor early in conversations what their ideal check size/valuation is to make sure there is alignment with the founder's objectives.    

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It’s so important for founders to carefully review funding terms. Good legal advice can help you avoid big problems later. This info is crucial for protecting your startup. 🙌 #StartupSuccess #Funding #LegalAdvice #sviyp #siliconvalleyinyourpocket

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Fresh Carta data shows similar trends - longer fundraising timelines, compressed valuation multiples, and a higher bar to get rounds done. But I believe we’re turning a corner. Seeing many bright spots and plenty of reasons to stay optimistic. I think we’re getting more ‘back to normal’ after some crazy years that skewed data, behavior, and overall expectations. That said, I still believe (with some bias) it’s more important than ever for founders and their investors to find and align with long-term, relationship-focused financing partners. Again, I say this with some bias because I’m committed to and invested in helping founders and their companies with this - primarily by providing hybrid capital solutions (mainly flexible debt/credit investments) as a creative partner and complement or alternative to pure equity. I’m obsessed with this craft because, when done right, it benefits both the founders I want to support for life and their investors (and LPs). I believe this financing approach, especially debt for startups, is still underrated and misunderstood. I will continue working every day to improve as an investor and refine these solutions, which can adapt to the ever-changing market we see today, while also working to shift any negative perceptions so they aren’t overlooked in years to come. See you out there! Note: These views are my own and do not represent those of any company I am a part of.

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I’m thrilled to be announcing that Notion Capital is leading the $15m Series A investment in Cogna today. In the industry, we like to think that software has been eating the world. But when you look at the data a better description would be more of a nibble. Depending on what source you look at the software industry represents between 5-8% of global GDP. Contrast that with the services industry that represents between 60-70% of GDP and worth around $25 trillion on a global basis. Most services have been out of reach for the software industry. They have either been too complex or too specialized for off the shelf software to access in any economically viable way. But that’s beginnning to change with GenAI leading to the emergence of ‘service as a software.’ Cogna is at the forefront of this opportunity - building precision software at scale and delivering huge productivity gains for traditional industries. We know Ben Peters & Lars Mennen well having backed their previous company Five AI that was acquired by Bosch in 2022. And we’re very excited to be backing them again together with Hoxton Ventures & Chalfen Ventures Read my full blog post on why we invested here. Radu Bozga Ben Peters Lars Mennen Bryan G. Mike Chalfen Hussein Kanji Kirsten Connell https://lnkd.in/eh8mhcJb

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Insightful breakdown from my great Partner Omri Amirav-Drory on the simple factors that really separate the top 1% of investors from the rest, and how more operators should become investors! https://lnkd.in/gEiZdT2h

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Ross Haleliuk posted the fantastic article below. This is the world where I live day-to-day. At TechOperators, we invest mostly in early-stage cyber, but we do things a little differently, and we believe there are ways to invest successfully outside of pure Power Law math. The article argues that many security problems are too small for VC. I agree. I often try to convince bootstrapped founders not to raise venture because doing so can turn a successful, slow-growing bootstrapped company into a failed venture-backed company because, despite a large infusion of capital, it couldn't double every year. VC is not monolithic--not by stage, strategy, or style. Venture is often equated with "Tier 1 Venture". Ross argues that VC is not always great for early-stage cyber--and he is right. Bootstrapping AND VC work when incentives are aligned. Does it work for an early-stage VC with a <$200M fund to invest in several early companies at reasonable valuations, setting up the conditions for reasonable exits that pay off for both investors and founders? Yes. Does it work for $800M funds investing in seed stage at $100M+ valuations? Well, that depends! Power law says it does (for VC), but the unfortunate externality is that these rounds destroy companies and founder equity more often than not. There is a role for patient capital in this ecosystem to fuel successful companies that retain exit optionality as they scale--driving exit value for both founders and investors.

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Siren's goals and progress on contactout and athena.vc 23rd July 2024 Last week goal(s) & what did I do: Athena VC: - Deeptech founders Outreach - Meetings ran - 1 - Meetings booked for this week - 1 - Stats - last week (Switching the approach to get on a podcast/interview) - Total connection requests sent: 101 (Founders in sustainable energy) - Connection request accepted: 17 (17%) - Replied to LI message: 2 (12%) - Question answered: 0 (0%) “Expert opinion” article Asking for review and permission to post on YouTube - Sent to 19 founders - 2 agreed to post on YouTube - 6 replied to keep their insights to community members only - Finished editing “Expert opinion” article, created 2 versions - Share to public - Share within the community Curated and sorted into a list of programs for deep tech startups ---------- This week: Athena VC - Continue to schedule more calls with founders in the sustainable energy industry - Follow up for review and permission to post on youtube - Pick a topic to work on (Energy creation) - Study 10 top companies - Read top 20 research journal articles in the field - Write about what road blocks I come across and what is confusing and strategies for figuring it out (Chatgpt or wikipedia, etc.) ---------- Misc 🤰 EDD - Jul 29th Might start taking my maternity leave anytime this week During my leave: Read Sam Altman blog - https://lnkd.in/gAAXZcBC Read startup playbook - https://lnkd.in/g9Uka7Da Read PG’s essays - https://lnkd.in/geHZYnip Read zero to one, paper trail on fire, founders at work #AthenaVC #BuildInPublic

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Sharing a sanitized version of the mu ventures Q2 q'ly LP update. Included musings: 👉 SEOs shrinking impact, and the rise of LLMO (large language model optimization) 👉 examples of the Commerce AI application layer coming to life 👉 a modern fund strategy that accepts companies require less capital, time, and people to trigger the power law 👉 Mu's guide to investing in AI 👉 all 30 companies in the Mu-niverse (and several others we admire) Founders, VCs, LPs - if you like how we think and suspect we can partner, hit us up! https://lnkd.in/dTJ2zjav

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Pretty excited about this one - a team with a remarkable track record across top DeFi protocols, propelled by a clear & effective go to market strategy. The result? Over $300 million in TVL and $2 billion in trading volume within just a few short months. ___________________________ As Blast was gearing up for its launch, the market was flooded with over a dozen different spot and perpetual DEXes seeking funding. At the time, Blast had already achieved over $2 billion in TVL and we anticipated they would launch various mainnet incentives to maintain liquidity within the protocol. Our aim was to identify the team most capable of capturing the majority of mindshare and swap volume from the $2 billion+ of captive liquidity in the ~3 months leading up to the Blast token generation event (TGE). Consequently, we engaged in several discussions and reviewed numerous pitches to better understand how the DEX competition might unfold. We were particularly impressed by the Thruster team and their strategy to attract early attention and liquidity through focused partnerships and integrations. ___________________________ At Futureproof, we invest our own capital, which can sometimes be seen as a limitation in the venture capital space. We do not write overly large checks and cannot invest in all the deals that come our way. However, this constraint sharpens our investment focus. Ultimately, it leads us to invest in those we believe are best positioned to dominate their respective niches, rather than just securing a competitive position. High conviction, high hit rate... betting on the fastest horse. Thruster is exactly that - winning, growing and showing zero signs of slowing down. We can't wait to support them as they staff up and double down on their winning formula to integrate Thruster products and liquidity into other top protocols across DeFi, NFTFi and beyond.

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📝 FOUNDER fundraising hack = write an investment memo for VCs (template linked below). Raising VC is a multi-step sales process. First you need to convince a single partner to invest, and then that partner needs to bring your deal to Investment Committee (IC) to convince the other partners. The initial VC partner (aka deal champion) will write an investment memo to convince the other partners to vote for your deal during IC. If a VC will write their own memo, why write one for them? Three reasons: 1. Control the frame = dictate how your story is told 2. Signal insider status = show you understand how VCs think 3. Reduce friction to $$$ = VCs will copy/paste from your memo to theirs 😂 🪟 Control the frame There are good ways and bad ways to frame your startup. It's possible that a well-meaning VC will write a memo that frames your startup in sub-optimal ways. The less experience and domain knowledge a VC has, the higher the risk. You want to arm your deal champion with ammo to tell a bullet-proof investment story. Don't leave this up to chance. Write a memo and share it with the VC to make sure they hit the right talking points in their own memo. 🥼 Signal insider status I love when founders provide a written memo alongside the usual pitch deck and financial model. It shows they're clued in to the game. They understand how VC firms work. They're an insider. VCs want to invest in insiders, because insiders are more likely to raise subsequent financing and get to an exit. Outsiders are learning how the game works for the first time and will make rookie mistakes on the VC's dollar. Don't be an outsider. 💵 Reduce friction to $$$ You know how great product companies obsessively reduce the # of clicks a customer needs to make before paying for the product? Speed matters. A 2006 Amazon study found that every 100ms in added page load time cost them 1% in sales. VC is no different. The faster you can make the diligence process, the more likely you'll be able to raise capital. Your fundraising collateral is your product, and a memo is a key way to reduce time to funding (TTF). Every VC will have a set of questions during diligence. Answer them up front in a memo, and watch your prospective investors eyes light up. Deals can be a grueling process involving several late/all-nighters, so the deal team will be thankful if you save them work and make their lives easier. Here is a link to the investment memo template I use. Feel free to repurpose for your own needs: https://lnkd.in/ekGBjGWs

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