Peter Taylor

If you're building a fintech startup, you likely know of this investor, but just in case... This week's findfunding.vc spotlight is on Neil Kapur from TTV Capital. He: 🛫 Is based in SF & Atlanta 💲 Has spent time at Google in consumer-facing payments & at two fintech startups  🏔️ Loves alpine mountaineering and has climbed Kilimanjaro, Denali, Rainier, and more!! Amongst founders, Neil and the team at TTV Capital , including Gardiner Garrard, Mark Johnson, Sean Banks, Lizzie Guynn, and Laney Lewis are known for saying “lift, not lean.” They believe that their job as investors is not to create work for founders, but instead ask the right questions and help navigate to the best outcomes. Knowing Neil well personally, he's not only my go-to person for anything related to fintech but I can also highly recommend having him on your cap table - he's the kind of human you want to have in your corner during both good times and bad. Make sure to: ✉️ Pitch him at [email protected] ➡️ Follow TTV Capital on LinkedIn For more, check out our funder spotlight card below along with TTV Capital's profile on findfunding.vc (link in comments).

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KNOW YOUR REAL BUSINESS ECONOMICS • GAAP Revenue • Cash Flow • Cash • Contribution Margin • CAC • CAC Payback FUNDRAISING: PRESENT & SUBSTANTIATE FINANCIALS • Investor needs to know what your forecasts are • They need to believe them David Weiden, Khosla Ventures

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Carta’s H1 2024 State of Compensation Report confirms companies raising cash are leaner than ever. Startups closing seed fundings averaged ~5.3 employees (down from 6.9 in H1 2021) and Series A startups averaged 15.6 employees this year (compared to 17.6 in H1 2021). Check out the full report, including how equity is holding steady, here: https://lnkd.in/g7arPzAv. #H1 #compensation #equity #hiring #fundraising 

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I posted about Robinhood's earnings report and how it's lending company in Q1. Here's an update on Q2 (even more true today). Robinhood is $16 billion mkt cap and their revenue growth is coming from...lending. On top of the new credit card which is continuing to grow, Robinhood Gold (which has been around for years) drives most of their revenue growth and Gold monetizes primarily thru lending. They already have margin lending, which is increasing more than 30% yoy. Their new credit card will monetize not on interchange (giving 3% cash back means no net interchange revenue). So how will the credit card monetize? Lending. Net interest income on revolvers (ppl who carry a balance). Lending at Robinhood could be as big as rest of their business combined. So I'll say it again. If you invest in fintech, your best companies will one day monetize thru lending even if they don't start there, because lending is one of the most important monetization levers in financial services. https://lnkd.in/ggpfwWWQ

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Exit valuation multiples for PE-held SaaS companies are more varied now than at any point in the past decade. Top quartile EBITDA multiple performers are higher than ever (25.6x), while the lowest are back to 2016-2017 levels (13x). Solid underlying KPIs separate the winners from the losers. My team at OPEXEngine by Bain & Company partnered with Dania Shaheen Gutterson and DealEdge to analyze the connection between performance in sustainable growth. Our upcoming white paper includes analysis and benchmarks on the SaaS KPIs most associated with top-quartile exit value: Rule of 40 EBITDA Margin Revenue Growth Departmental expense ratios Magic Number R&D ROI I'm sharing the benchmarks and findings early before it's published broadly: 1. Comment "SaaS Value Creation" 2. Send a connect request if we are not already connected 3. I'll send you a DM with the link --- UPDATE: Thank you so much for the amazing responses. We are officially published! You can now download the paper on our website here: https://lnkd.in/eRkYbk55

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Great analysis by the AGC team on SaaS public company comps. It's worth a look as we recalibrate mid-way through earnings season. The analysis aligns with the broader Nasdaq equity performance, where the Mag 7 (or fab 4 now :-)) have shown more resilience than the rest of the market. #AGC #SaaS #EarningsSeason #Nasdaq #EquityPerformance

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A Marketplace Meltdown: Can marketplaces thrive at scale without cheap VC money? Marketplaces are falling behind. Perhaps no sector is suffering from the ZIRP blowback more. Out of the indexes we track, the Marketplace group scores dead last in 8 out of 10 metrics (including EV / NTM Revenue and Rule of 40). Theoretically, every incremental customer should be easier to acquire in a marketplace model, thanks to the beauty of network effects. If you can crack the chicken or the egg problem, there are a myriad of tailwinds you can harness for growth, elevating you from many of the GTM frictions inherent in B2B SaaS. But we’re seeing the opposite - marketplaces are grappling with a P&L that doesn’t flow without cheap VC money to subsidize the network effects that initially got them to scale. I mean, how much did Uber raise before going public? Like $20 billion? And they limped to FCF positive after 20 quarters of burning cash in the public markets. And not without raising fees first. I was in Boston and a taxi was 25% cheaper than Uber. Five years ago it would have been 50% more expensive. Airbnb seems to be the only one of the lot accelerating through the malaise. They’re the cream of the crop when it comes to marketplace financial profiles. And even they went through some backlash two summers ago during “Cleaning Fee Gate”, where they were publicly shamed for padding their margins via dubious cleaning fees. Marketplaces are like flying a complicated fighter jet. You move the take rate up, you move the shipping fee down, you change the fees by source… and the net effect is you push liquidity to where you need it so customers continue to return. And it’s a lot easier to push things where you want them with subsidies… “You haven’t take a ride in a while… $5 off your next trip!” “Refer a friend, and get $10 off your next order! “Join as a host and never pay for chargebacks!”… Some of these marketplaces were built in a mirage of cheap VC money and are now grappling with the unit economics of trying to deliver a steak cross town for less than a 30% rip. The lack of recurring revenue doesn’t make it easier to make a case for many of these models. Customers may be re-occurring (making purchases more than once) but not contractually recurring (buying at an agreed upon price at predictable times). And if you don’t have that comfort at the top of the P&L, you’d at least want the free cash flow generation at the bottom the sleep better at night. Yet none are a beacon of profitability. I want marketplaces to bounce back in a real way (hell, I work at one!). But for many, the only way they’ll break out of a rut is by getting back to basics - providing a service that is 10x better than an offline experience, with math that hangs at the single transaction level. That’s the stuff that makes the wheel turn. Here's this week's report on Valuation & Efficiency Benchmarks. Get them each Sunday by subscribing to mostlymetrics.com

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Big arms and skinny legs? The P&L for Fintechs is in many ways inversed compared to traditional software models… They have massive COGS, which burdens their gross margins more than other business models (61% median gross margin for FinTechs vs 75% Median gross margin across the 109 tech co’s we track). BUT they don’t require nearly as much OPEX when you dig into S&M and R&D. In fact, once you get past the COGS line, they RIP at scale. There are heavy tolls paid in the form of bank, brokerage, and credit card processing fees, but they they need less people to generate revenue once the core infrastructure is in place. How do I know? Revenue per head for FinTech’s is 1.5x that of the larger basket of companies we track (+$600K) and their CAC Payback Period is under a year. I guess skipping leg day can work out. --- Each week I share an update on valuation multiples in tech TL;DR: Multiples are DOWN week-over-week. -Top 10 Medians: -EV / NTM Revenue = 13.4x (-0.6x w/w) -CAC Payback = 18 months -Rule of 40 = 49% -Revenue per Employee = $502K Get the full report at mostlymetrics.com

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𝐕𝐂𝐬 𝐀𝐫𝐞 𝐂𝐚𝐥𝐥𝐢𝐧𝐠 𝐌𝐨𝐫𝐞 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐢𝐧 𝟐𝟎𝟐𝟒 VCs make capital calls when they are asking Limited Partners (LPs) for a portion of their committed balance in the fund. When an LP commits to a fund, the money is not required all at once, rather over time via capital calls. In 1H24, $7 billion of capital was called on Carta, up from $5.4 billion in 1H23, signaling that there may be more capital available to fund startups in 2H24. #vc #venturecapital #lp #limitedpartner #fundmanagers #capitalcall #carta

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Introducing our first VC Fund Performance report (https://lnkd.in/g2N6tPU6) – new data for emerging VCs with data thru Q1 2024, based aggregated and anonymized metrics from 1.8K+ venture funds using Carta Fund Administration. A key data point includes declining graduation rates – 31% of companies that raised a seed round in Q1 2018 made it to Series A within two years; only 15% of Q1 2022 seed startups did so in the same timeframe. Don’t take it from me - check out George Hammond’s take in this Financial Times story: https://lnkd.in/gDZqhwXu #startups #venturecapital #emergingmanager #fundperformance

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this is the best explanation for why contingency recruiting only works as a numbers game. also explains why triplebyte’s original model failed. from Patrick McKenzie on Byrne Hobart, CFA's podcast last week: --- "I think the fundamental reason we [Starfighter, a coding challenge taken by 60k+ engineers] didn't successfully get candidates hired before we ran out of money wasn't that they wouldn't have been hired eventually. It was that we had a difference of point of view with respect to the market and how contingency recruiters are supposed to work. We were primed to work with all the candidates and contingency recruiters because I thought, as a CEO, 'This is an easy thing for you to buy. You already give this relationship away to people who you say are idiots. You think I'm not an idiot, and you think I have a different point of view here. Give me the legal agreement that you have with your other contingency recruiters, I will bring the candidates.' But what happened when we introduced resumes to our clients was that the people reading the resumes were running the typical recruiting process. They expected, 'Okay, a contingency recruiter should give me 10 resumes. I'll down-select to two, interview them, and expect to hire between 0.2 and 0.5 people.' What I thought would happen was that we were bringing the most talented technologists we could identify—people already over-indexing for massive enthusiasm and skill in technology. If I introduce them directly to a client that I think trusts me, there has to be at least a 25% chance they hire them, right? There's an order of magnitude difference between those two numbers."

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Eric Newcomer from Newcomer just broke more details around the Bolt financing. To Eric Newcomer's credit he tried getting to the bottom of who the investors actually are and why it makes sense. In short, though, it does not since they (i.e., the "investors,") refused to answer basic questions. Any existing investor that lets this deal go through should have a very serious discuss with their #LimitedPartners about why they still have a job. What do you think? #management #venturecapital #privateequity #fintech #capitalmarkets

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Tech valuation multiples rebounded in a big way last week, with the Top Ten Median moving up nearly a full turn to 13.2x forward revenue. But that's not what caught my eye - the efficiency metrics of the top tech companies remain head and shoulder's above the rest. CAC Payback Periods are 15 months, compared to the median of 19 months across the 109 companies we track. And Rule of 40 (measured as Revenue Growth % + EBITDA Margin %) is 50! I'd be remise if I didn't mention my favorite metric: Revenue per Employee. The companies garnering the highest valuation multiples have a median output of more than HALF A MILLION dollars per employee ($527K). I've also broken these efficiency metrics out by sector cohorts for your benefit. Are any of the sectors more or less efficient than you'd think? Get the full weekly report by subscribing to mostlymetrics.com

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The Information just broke news that Anthropic has floated a $30B - $40B valuation for a new funding round right now. Anyone not in the know should clearly see than a huge discount to OpenAI at $150B round shows how far ahead OpenAI is perceived to be. What do you think? #management #Venturecapital #PrivateEquity #CapitalMarkets #AIFinancing https://lnkd.in/gR8cZg6Q

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A lot of fintech acquisitions this week. This is probably the new normal for a while (versus a blip). Some thoughts #1 -- a lot of companies have to sell 2021 high was 3 years ago. Now for a lot of startups, it's acquire or shutdown. But there's also a bit of silver lining.... #2 -- more acquirers There are more acquirers now than say 12 or 24 months ago. At peak we had about 1,000 unicorns. Roughly 1/3 are today still unicorns and in good shape to raise up rounds. That means those 300+ companies can make acquisitions now, but were unable to do so over the last 2 years while they focused on profitable growth. Most of the acquisitions they do will be more acquihire, but some will be modest outcomes for investors and founders. So modest outcomes are back on the table. that's great. helps the ecosystem recycle capital and talent. but a big big problem remains. #3 -- massive acquisitions are very hard Crackdown by the FTC on large mergers will is making the types of acquisitions that can generate true venture style returns harder than ever. A lot of the energy seems to be focused on preventing Google, Meta, Amazon, Microsoft from doing those large acquistiions. But it's also true in fintech (see Plaid). If you're looking for one area where the next presidential election could change outcomes in venture markets, it probably has more do with anti-trust enforcement than anything else. Another reason why having IPO window open back up matters more than ever.

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Startup decks vs Business plans. It's accepted that a startup needs a deck. Dax Dasilva of Lightspeed Commerce made an important point on 20VC. Writing a business plan - including financial projections - is an important step. It requires discipline. It provides a rigorous framework for thinking deeply about the problem you're trying to solve. Harry Stebbings countered that he doesn't even want to see a deck since it's all dreams. We spent a lot of time and energy on our business plan with the expectation that we would show it to no one ever. The business plan was part of our roadmap for the company. We researched customers - including having 50+ conversations. We wanted to understand them: their background, their interests, their presence on social media. We also wanted to understand how they were evaluated by leadership and how integrated they were with the business of the company they were protecting. We researched pricing both with potential customers and other products in our industry to find out if OpEx or CapEx was a better fit. How did they buy today? How would they like to buy? We did market research to understand the verticals and map the right entry point - we were wrong but that doesn't reduce the value of the research. We looked at competitors in depth to understand what they were seeing that we weren't. Dax is right. This is an invaluable document that should be updated every year - the company is changing, the market is changing, there's more feedback about price and ICP. It's not for sharing with the outside world. It's a map for driving forward. Decks won't get you investment - VCs invest in people. We make decks but we know they don't tell our story. The deck is a calling card. Dax and Harry are both right. https://lnkd.in/e25M82xY

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Attention SaaS CEOs and VC Investors Too many startup CEOs are doing half the work for the R&D credit and not actually getting the refund. Crazy how often I see this happen to folks who think they've done all the steps (spoiler - step 3 gets missed too often)! Here are 3 simple steps to follow: 1️⃣ File every year for the first 5 years in business and allocate R&D spend into the analysis. 2️⃣ Pay a flat fee for the analysis (not a % of the credit). A qualified Tax CPA can handle this for a reasonable flat fee—I’m happy to recommend some we know that do a good job. 3️⃣ Claim the credit! Too often, companies do the work but fail to enter it into their payroll tax system (tools like Gusto/Rippling make this simple). It's literally enter one number from your return into payroll but this step gets missed all the time - since unprofitable companies usually claim it against payroll taxes (vs federal income) At Amplēo, we’re NOT an R&D shop or a Tax firm, but we help our clients as fractional professionals to make sure they get these steps right. If you’re unsure about your process, we’re happy to point you in the right direction. Tag a VC or startup CEO who can pass this helpful advice along to the companies they are involved with.

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Did you know about the 40% Rule that private equity (PE) firms use to assess a company's financial health -- and why hitting it can dramatically boost your valuation? The 40% Rule combines your annual revenue growth (%) and your EBITDA margin (%). If the sum is 40% or higher, it signals a well-balanced business with both growth and profitability. This benchmark affects valuation multiplier. Companies that hit or exceed this threshold often command HIGHER valuation multiples during investment rounds or acquisitions. Typical scenario I have seen many time at established Fintech companies: ▶️ You have a stable client base and reliable recurring revenue, but your growth has stalled. ▶️ Your product lags behind competitors in UX and features because you missed the window to modernize. ▶️ Your sales team struggles to close deals, and attracting top sales talent is nearly impossible -- they don't want to pitch a legacy product that consistently gets rejected. Without growth or strong profitability, you're likely falling below the 40% mark. For instance: ⛔ If your revenue growth is 5% and your EBITDA margin is 20%, you’re at 25% -- well under the target. ✅ But if you can boost revenue growth to 15% and EBITDA to 25%, you hit 40% -- making you far more attractive to investors and acquirers. 💡 Why does this matter? When you hit the 40% threshold, PE firms and buyers often value your company at higher EBITDA multiples, reflecting confidence in your ability to sustain performance. In some cases, these multiples can increase significantly, adding millions to your valuation. How to get there: 1️⃣ Invest in growth: Modernize your product, focus on innovation, and outpace competitors. 2️⃣ Enhance profitability: Streamline operations, improve efficiency, and eliminate waste. 3️⃣ Strengthen customer retention: Upsell to existing clients and deepen relationships. Hitting the 40% Rule isn't just about meeting a financial benchmark -- it's about unlocking the potential for exponential value. Are you ready to cross the 40% line and take your valuation to the next level? Let’s discuss how you’re tackling the challenge! #ruleof40 #legacy #relaunch #valuation #growth

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BluWave has a deep bench of 800+ interim CFOs that allow us to quickly and expertly connect private equity firms and their portfolio companies to the exact-fit interim CFOs they need.    In one case study example, a PE firm came to us in need of a stopgap interim CFO for their automotive operations portfolio company. Here's the details of how we helped:   The Situation - Needing to make a leadership change in their portfolio company, a PE firm came to us in urgent need of an interim CFO who could focus on the portco's cash flow and working capital optimization while the search for a permanent CFO was underway. Given the protfolio company's industry, the PE firm not only needed an interim CFO with financial acumen, but one with the ability to handle a complex operational landscape and turnaround skills.   How BluWave Helped - Thanks to BluWave's deep network of exact-fit interim CFOs, we quickly connected them with a select few interim CFOs with the exact experience they were looking for.    The Outcome - The client selected their preferred interim CFO from our presented options. Their leadership marked a significant turning point for the automotive manufacturer, helping them tighten cash flow, meet reporting requirements and guide them through a crucial transition period.   When you need an exact-fit, PE-grade interim CFO, contact BluWave and we'll be ready to support.   #interimCFO #interimchieffinancialofficer

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