Rocky Yip

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

5

The secret—if it ever was one—is out on private equity fondness for vertical software. While PE-backed acquisitions were down 50%+ from a peak in 2021, vertical buyouts have continued to grow, and the fervor seems to be gaining steam. In today’s essay, we will pose an answer to one question: is PE a viable path to exit for a venture-backed startup?

55

4 Comments

This is quite interesting advice and also quite a non-consensus view in the B2B software world. Cross-border founders who are considering the US vs International incorporation question should consider this as valuable input.

12

1 Comment

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

9

VC firms have top-notch outbound sales most of the time I’ve seen. If you don’t reply, they follow up with on-point stats, social proof, what differentiates them, mention any upcoming relevant events they might be sponsoring, etc. When you do reply with any form of objection, they actually take the time to address it head-on. Contrast this with many SaaS sales folks who reach out - almost always non-sensical targeting, mention things that are not relevant to you, and then if you reply with an objection, they either ghost you or ask to get on a call to talk, without addressing the objection. And then still send you a “I didn’t hear from you, did you get eaten by an alligator” message 🥱

20

6 Comments

Valuations are starting to (only slightly) be in check. Investors looking for revenue, quality of revenue, margins, and repeatable GTM. This has the best founders focused on what matters, and reaching out to their Boards and advisors for real advice and guidance. Good stuff.

129

5 Comments

I've been a bit surprised recently with the number of decent-sized software businesses (i.e. $15M+) that don't have a legitimate VP of Finance or CFO on their leadership team. I think some product and/or industry-expert founders and CEOs view finance as simply "accounting" vs. a strategic partner to help them properly scale the business. This seems to particularly be the case with first-time CEOs. They likely haven't seen "what good looks like" when it comes to a finance leader and the positive impact they can have, so they hire an outside firm or individual to manage their finances...treating it like a "necessary evil." The role is far more critical than that. I've found that the right CFO is a fact-based, unemotional partner and sounding-board for the CEO, and an invaluable resource to other members of the leadership team as they determine strategy, budgets, etc. Plus, referring back to another recent post of mine (https://lnkd.in/eTjvqdnv), having the right CFO allows your company to better represent itself and speak the language of your investor / buyer. P.S. I was fortunate to have two strong partners as CFO at Daxko. Jonathan Sides and Winston Gillum both made a world of difference!

173

17 Comments

WHAT DOES A PERSON IN A "VC PLATFORM” ROLE DO? The term is confusing, lacks definition, and is different at every firm but the important fact is that adding these people to the team is driving higher investment returns. (VC Platform Global Community) BROAD ‘PLATFORM' DEFINITION: Pre-investment drives community, brand, and operations. Post-investment provides support to portfolio companies, including networking, mentorship, strategic guidance, marketing, and partners, to accelerate growth and success. VENTURE STUDIO PLATFORM ROLE The key difference between a ‘Platform’ role in a Venture Studio and a VC Fund is the timeframe. A Venture Studio Platform is involved from the startup concept, right through to exit. A VC Platform does not work on the concept.  Follow for more as we develop and craft the Nobody Studios portfolio. #VentureStudio #VCplatform #venturestudio

16

The Information just broke news of Stripe and it's bold $1.1B acquisition of Bridge. This is exciting and a very bold move that Stripe plans to move further into #crytpopayments and the ability, operationally, to simultaneously speed up #payments and lower costs. What do you think? #management #venturecapital #privateequity #capitalmarkets #fintech https://lnkd.in/gvhjG22g

2

🔎 A graph every VC manager should be following right now. PE's exit to investment ratio has hit a ten year low Most LPs invest a multiple of their VC allocation in PE. The less liquidity coming from larger buckets, the less divestments that can be made into the asset class 🔮 Similarly if this starts picking up, the allocation doors could start to re-open... #VC #venturecapital

169

12 Comments

The largest acquisition in crypto history occurred just last month: Stripe's $1.1B deal for Bridge. This isn't just a headline—it's a signal of how payment rails are evolving at the intersection of crypto and traditional finance. This week at Lw3 in Dallas, I’ll be speaking on why this acquisition is more than a milestone—it's a glimpse of the future. Crypto-native payment rails are no longer a niche experiment; they’re becoming foundational to global commerce. At Reciprocal Ventures, we’ve been investing in the crypto payments ecosystem since the early days, partnering with pioneering companies like Coinflow Labs, Higlobe and True Markets. This space has been at the forefront of innovation, and we’ve seen firsthand how scalable, efficient, and transparent payment rails are reshaping the way value moves in a digital-first world. I’m excited to explore what this acquisition means for the growth of this ecosystem and why it's only the beginning of a broader wave of innovation and opportunity. If you’re at Lw3, come say hi. I'll be with Steven Feldman — we’d love to connect and share ideas.

126

6 Comments

📊 Attention startup founders! The FDIC is considering new regulations for popular fintech companies. Having advised hundreds of startups on efficient growth, I know how crucial it is to stay ahead of regulatory changes. Remember, diversification in banking relationships is always a smart move. Want to learn more? Check out our balanced analysis - link in Healy Jones' original post. 🏦🔍 #Fintech

10

There's a clear bifurcation when it comes to tech multiples. The median tech company is trading at 5.0x forward revenue, which pales in comparison to the top ten median of 13.2x. Here are the qualities of leading tech co's: -Still growing double digits (preferably high teens to low 20%'s) at scale (+$1 billion in revenues) -Strong gross margins, approaching 80% -Profitable, and on a path to generate +25% operating income The market is rewarding companies with predictable, durable revenue at scale, and some level of profits to reinvest back into growth. Contrary to popular belief, it's really hard to trade above 10x. It's a multiple reserved for the cream of the crop. Of the 109 companies I track each week, only 17 are above that mark. Get the weekly update (for free) by subscribing to mostlymetrics.com

86

4 Comments

Interesting new surrvey about the VC industry by PitchBook: 13% of VC firms are not planning to raise a new fund and 27% of VC firms have been pushed further thier plans to raise a new fund. That means a 40% decline. No wonder that startups are haveing tough time to raise funds. See article below. https://lnkd.in/exYYyCPu

4

1 Comment

The Council's first SPV of 2024 is down in the books and oversubscribed. Running SPVs where we have pro rata or extra allocation in fund deals is a muscle we are building pretty late in the game as a firm. As a solo GP with a tiny team, it's crippling to think of the extra work required and risk of not meeting platform minimums to run an SPV. But 7 of our port co's have recently raised follow on funding where we had pro rata. These are awesome deals for our LPs, angel members, and syndicate community. We simply can't afford to let them slip through the cracks. These allocations are only becoming more valuable as our firm grows, so we must start NOW! Proud to say this one went off without a hitch and our syndicate community is small but THRIVING. Wish us luck as we keep building. Note our SPVs are now on Sydecar. The best way to get access is to know someone on The Council Fund team and be on our SPV email list. **What's an SPV?** An SPV is a Special Purpose Vehicle. It allows multiple angel investors to pool together into one larger investment into a company. This helps the founder keep paperwork and investor relations to a minimum (less names on the cap table = simplicity!). When people say they're investing with a "syndicate" or they are "syndicating a deal," SPV is the entity and process by which they do that. A "syndicate" is like a community of people that invest via SPVs together.

62

10 Comments

🗞️ Breaking News: Red Ventures Selling CNET at a huge Loss❗️ Context: Red Ventures, the privately held digital media and marketing juggernaut based in Fort Mill, South Carolina, is selling CNET, one of the largest tech publishers on the web, to Ziff Davis for just $100 million. For context: Red Ventures bought CNET for approximately $500 million. Reason for the Sale: Total traffic to CNET has dropped by a staggering 50% over the last three years. The main driver behind this decline is a 68% drop in organic traffic (loss off Google rankings and traffic). Tables turned: This sale is a stunning turn of events for CNET, which once bought Ziff Davis (then a tech magazine firm) in a deal worth roughly $1.6 billion - more than two decades ago. Catch Up: - Ziff Davis trades publicly with a market value of $1.94 billion. The company lost about half of its marketcap over the course of the last 48 months. Strategic rationale: If Ziff Davis is able to ink a content licencing deal with Google, Bing/Microsoft or ChatGPT (or else e.g. X.AI) - like Reddit did - it might turn out to be a very smart deal …

5

1 Comment

A few spots left for this awesome workshop with Justin Gray of In Revenue Capital. Every successful founder I know learns to develop and maintain high performing relationships. This is a skill like anything else and can be developed. Founders, if you want to build a high-growth company, learn to build high-performing relationships. This workshop will help you do that. Hope you can join us.

15

🌟Innovative VC Firm Overcomes Exits Drought with Secondary Sales🌟 ⛵Navigating a challenging landscape where exits are scarce, Santa Barbara Venture Partners (SBVP) has pioneered a novel approach to sustain its growth and attract investors for its second fund: secondary sales. Instead of waiting for traditional exits like IPOs or acquisitions, SBVP opted to sell shares of its portfolio companies, demonstrating its ability to generate returns for investors and stand out in a competitive market. 🎤According to Dan Engel, founder and managing partner of SBVP, these secondary transactions have been a game-changer, sparking investor interest and bolstering the firm's credibility. By leveraging its recent successes, including a lucrative stake in sports-betting company DraftKings Inc.' acquisition of digital lottery app Jackpocket, SBVP seized the opportunity to return profits to its limited partners (LPs) and pave the way for its second fund. 💡Engel highlighted the challenges faced by young VC firms in raising subsequent funds, particularly amid a downturn in exit activity and heightened investor scrutiny. With traditional exit routes becoming increasingly elusive, the pressure is on for firms to demonstrate tangible returns and establish a track record of success. ✨"For us, secondary sales have been a game-changer. They've helped us return profits to our LPs and attract investors for our second fund," said Dan Engel. 💰For SBVP, the decision to pursue secondary sales was driven by the need to provide liquidity to LPs and validate its investment thesis in the eyes of prospective investors. By strategically offloading portions of its holdings in high-performing portfolio companies like Bark Technologies and Rad AI, SBVP not only generated substantial returns but also bolstered investor confidence in its ability to deliver results. ⚠Despite the complexities and potential stigma associated with early share sales, Engel emphasized the importance of prioritizing investor returns and seizing opportunities to unlock value for stakeholders. With a focus on profitability and transparency, SBVP remains committed to its mission of delivering sustainable growth and maximizing returns for its LPs. 🔍 "Returning profits to our investors is our top priority. By strategically selling shares, we're proving our commitment to delivering results and driving value for our stakeholders," added Engel. As SBVP continues to explore secondary transactions and expand its investor base, the firm stands as a testament to innovation and resilience in the face of market challenges. 🚀 ✅ Looking to raise capital for your #fund and increase the international pool of your LP #investors?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments?   ▶ G+QUANT's link for inquiries and fund decks: https://lnkd.in/gjC_EuTE #VCInnovation #SecondarySalesSuccess #InvestorReturns #ValueCreation 

2