Thomas Smale

**Exploding Myths: Not All Money Is Good Money for Startups** In the heady rush to secure funding, it's a narrative seldom challenged—that all investments are a boon. However, the right partnership with investors goes far beyond mere capital. In our recent analysis, the stark contrasts between strategic fit and merely financial injections come to light. A venture capital investor isn't just a bank but should be a partner that aligns with your startup's vision, growth trajectory, and ethos. They bring not just money but invaluable experience, networks, and guidance. As founders navigate these waters, remember that choosing an investor is as critical as they choose you. Compatibility in visions can mean the difference between scaling effectively or misaligned priorities leading to friction down the line. #StartupFunding #InvestorFit #StrategicInvesting #VentureCapitalInsights #venturebacked

9

3 Comments

5 key takeaways in the VC market from my trip to the UAE 🇦🇪 I recently returned from an engaging trip to the United Arab Emirates, a journey filled with client meetings, strategic partnerships, and groundwork for our upcoming launch in the DIFC. This visit has been nothing short of enlightening, offering a deeper understanding of the burgeoning VC and private equity landscape in the region. Here are my 5 key takeaways: 1. Investor Queries One prevalent question among investors is why seek funding in the UAE when markets like the UK and US are well-established? The answer lies in the unique strategic opportunities the UAE market offers, particularly in bridging Eastern and Western economic corridors. 2. Value to the Region UAE investors are particularly interested in how foreign businesses plan to integrate locally. Questions arise about setting up physical offices, serving regional customers, engaging in local M&A activities, and the broader impact these companies aim to have within the UAE. 3. Investment Dynamics There's a cautious approach among local investors who prefer not to lead investment rounds initially. They often seek reassurance through the presence of a lead investor, reflecting a risk-averse attitude typical of emerging markets. 4. Sustainability and Innovation Post-COP28, there's a noticeable increase in the emphasis on sustainability, supported by new regulations from entities like the Dubai Development Authority to ensure new developments adhere to stringent energy efficiency and sustainability standards. 5. Emerging Trends Alongside sustainability, sectors like AI and FinTech have seen significant interest and growth. These areas are rapidly becoming central to the UAE's economic diversification plans. While the UAE's economy and market are relatively nascent, the rapid development, entrepreneurial spirit, and favorable business regulations are positioning it as a formidable force in the VC and PE arenas. The UAE is not just a place to invest, but a thriving hub for initiating and scaling innovative businesses. As we plan our expansion into this vibrant region, we're excited about partnering with local investors and founders who share our vision for groundbreaking ventures. The UAE's dynamic market is ripe with opportunities, and we are committed to being a part of its growth story. If you’re an investor, entrepreneur, or industry stakeholder interested in the UAE market, I would love to connect and explore potential collaborations. #VCUAE #PrivateEquity #Innovation #Sustainability

48

VC fund GP: Interested in our fund? Me: How does the fund make money? VC: Exits and liquidity events. Me: I know how, I meant how are you literally going to facilitate those events happening in a timely manner and still getting above market returns within a 10 year fund cycle? VC: Crickets... Raise, allocate and wait is not a VC strategy. Getting money in is easy but to get your money out, there has to be opportunities to do so because you'll have little to no say or control after you allocate.

22

413 investors are looking for more deal flow & 492 are ready to share their deals. These are registration numbers from our Angel & Accelerator Online Conf: 1,500+ regs, incl. 384 Angels, 99 Syndicates, 99 LPs, 249 VCs, 695 Founders, 130 Accelerators, 100 Family Offices, 137 Exited Founders, & 251 Venture Studios. August 28th on Zoom – 4 hours of content & networking 50+ speakers: VCs, Accels, Venture Studios, Family Offices, & Startup Founders You can register for free or buy a paid ticket with the benefits below. Reg link: inniches.com/angel – The networking base of investors & founders who are open to networking (85%+ of registrants). You can filter angels, syndicates, founders, family offices, LPs, and other types of participants. Emails, LinkedIn profiles, and other info that participants provided, such as investment thesis, check sizes, etc. – Investors can get access to: 1) startup decks (310+ submitted by founders as of now)  2) list of investors who can share their deal flow with others & 3) those who are looking for more deal flow from other investors. It can help find co-investors for your SPV deals or syndicates. – Startups will get access to 3 additional 1.5-hour group workshops to help you secure at least 10 calls with investors. The host is Haje Kamps, who has (1) written 100 TechCrunch Pitch Deck Teardowns, (2) coached 70+ founders to raise $200M+, and (3) authored 1,300+ articles for TechCrunch and other media. 10+ investor calls are guaranteed; TechCrunch publication is not guaranteed 😁. – Investors will get access to 2 additional 1.5-hour group workshops to help syndicate leads & VCs attract 10+ co-investors in their SPVs and to help angels source & evaluate 10+ deal flow partners, led by Jed N., the founder of Angel School, who's created a network of 1,300+ angels & led syndicate deals of up to $1M. – Featuring your profile (investor or startup) on a small networking list, which will be delivered to hundreds of participants. – Recordings from parallel sessions. These benefits are available to those who buy tickets for the conference. You can also join live for free, have fun, learn, network, and get chances to win books. At the last conf, we gifted 31 to active participants. New speakers joined since the last announcement: Gené Teare @ Crunchbase, Ronald Diamond @ Diamond Wealth, Amir S. @ SINOFY , Yousuf Khatib @ NuBinary, Luke Naude-Lorentz @ MOHARA, co-host Subham Panda @ Xartup, Dr. Oleg Demidov @ Beyond Earth Technologies, Kristina Vukas @ Plot Twists, Yuri G. Rabinovich @ VNTR Capital, Michael Saloio @ Huddle, Luis Andrés Enriquez Arias @ Bridge Latam, Morgan Polotan @ Monashee Investment Management LLC, Odera Nonyelu Ume-Ezeoke @ Limbic Capital, Marcus Börner @ AlphaQ Venture Capital, Angelo Robles, @ SFO Continuity, Alan Smithson @ Unlimited Awesome, John Milanovich @ Family Office Club, Anmol Goel @ Gacs Ltd, Alex Visotsky @ Business Booster. More on the website.

437

48 Comments

If you're running a SaaS Business - you need to see how different growth paths could impact your bottom line. I have created this 𝘚𝘢𝘢𝘚 𝘍𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘔𝘰𝘥𝘦𝘭 𝘚𝘤𝘦𝘯𝘢𝘳𝘪𝘰 𝘈𝘯𝘢𝘭𝘺𝘴𝘪𝘴 template for just that. What makes this template powerful: - Instant visibility into best-case vs. worst-case scenarios - Compare up to 3 different high & low-case projections - View results monthly, quarterly, or yearly - Zero complex formulas - just plug in your numbers - Perfect for investor presentations & strategic planning The best part? It's 𝗙𝗥𝗘𝗘 for my LinkedIn community! Here's how to get yours: 1. Connect with me 2. Comment "Model" below 3. I'll DM you the template Happy Modeling!

27

26 Comments

Valuation multiples step down at each new round …and that’s completely normal 👀 These drops are not a sign of weird times or a broken system ARR multiples are supposed to go down over time Because eventually they have to trend to the public multiples ✅ Now… As long as your revenue stays on the venture scale path → your revenue multiples will keep dropping → but your overall valuation will go up So if you’re going to raise capital… I think it’s important to understand that the multiple you raise at isn’t what you’re actually worth TODAY ❌ It’s the multiple you’re worth assuming you hit those FUTURE venture scale expectations (once you hit $1M ARR, can you get to $100M ARR in 7 to 10 years?) Which basically means that once you hit $1M ARR... You’re growing at 10% month over month for the next 24 months straight before starting to slow down to 2x year over year growth So even though Seed to Series A sees the biggest drop in multiples, that 10% mom growth will still drive up your valuation ----------------- But here’s the thing… If you’re growth slows to less than 2-3x between Seed and Series B → or sub $10M in ARR Your multiple doesn’t just drop to the Public Index (currently at 6.4x) It’ll actually fall below that index (closer to a 1-3x multiple) Because the acquirer is now arbitraging between they pay for you (1-3x multiple) and what they’re worth (6.4x multiple) ----------------- So what can you do? Focus on the milestones that’ll fuel your growth → instead of fundraising rounds or paper valuations And keep your cap table as light as possible until you’re ready for step 3️⃣ 1️⃣ Problem Solution Fit 2️⃣ Go to Market Fit - unlocks Series A 3️⃣ Scale PMF #1 - Series A use of funds 4️⃣ Scale PMF #2 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my free Unlock your Series A session on how to navigate VC expectations in this market

69

5 Comments

Great presentation of the laws of gravity in Venture Capital and startups

5

Valuation multiples step down at each new round …and that’s completely normal 👀 These drops are not a sign of weird times or a broken system ARR multiples are supposed to go down over time Because eventually they have to trend to the public multiples ✅ Now… As long as your revenue stays on the venture scale path → your revenue multiples will keep dropping → but your overall valuation will go up So if you’re going to raise capital… I think it’s important to understand that the multiple you raise at isn’t what you’re actually worth TODAY ❌ It’s the multiple you’re worth assuming you hit those FUTURE venture scale expectations (once you hit $1M ARR, can you get to $100M ARR in 7 to 10 years?) Which basically means that once you hit $1M ARR... You’re growing at 10% month over month for the next 24 months straight before starting to slow down to 2x year over year growth So even though Seed to Series A sees the biggest drop in multiples, that 10% mom growth will still drive up your valuation ----------------- But here’s the thing… If you’re growth slows dramatically between Seed and Series B → or sub $10M in ARR Your multiple doesn’t just drop to the Public Index (currently at 5.7x) It’ll often fall below that, often closer to a 1-3x multiple (or more likely a 4-6x EBITDA multiple) ----------------- So what can you do? Focus on the milestones that’ll fuel your growth → instead of fundraising rounds or paper valuations And keep your cap table as light as possible until you’re ready for step 3️⃣ 1️⃣ Problem Solution Fit 2️⃣ Go to Market Fit - unlocks Series A 3️⃣ Scale PMF #1 - Series A use of funds 4️⃣ Scale PMF #2 -- ♻️ Repost to help a founder in your network Click 'visit my website' at the top of this post to register for my Seed to Series A session -- *Note that a huge jump in Series D & E+ valuations in Q2 2024 are based on a low number of deals (35 and 19) compared to Seed (492), Series A (415) and Series B (185) skew the multiples for those rounds much higher this quarter

144

40 Comments

Navigating Seed-Stage Fundraising: Key Insights Understanding seed-stage fundraising is crucial for any startup founder. Here’s a concise look at the landscape, based on data from 1,271 priced seed rounds between April 2023 and March 2024. Top Players: - SaaS leads in deal volume, showing strong investor interest. - Healthtech and Fintech are also in the spotlight, with Healthtech now surpassing Fintech. High Valuation and Cash Raised: - HR startups stand out with the highest median pre-money valuation and cash raised. - Transport and Renewable Energy also show high valuations, indicating significant potential. AI’s Impact: - AI influences multiple sectors and would top every chart if tracked separately, highlighting its transformative potential. Benchmarks: - Median pre-money valuation: $13M. - Median cash raised: $3M. Industry Clusters: Analytics, SaaS, and Healthtech form significant clusters around median values. Biotech and Cybersecurity also perform strongly. Lagging Sectors: DTC Retail, Food, and Personal Products lag in both valuation and cash raised, potentially exploring alternative funding methods. Deeper Insights: -Industry Disparities: Significant variations exist, with Healthtech showing increased investor confidence. -AI’s Dominance: AI offers diverse investment opportunities across industries. Decline in Seed Volume: -Most sectors see reduced seed funding, except for AI. -Alternative Funding Strategies: Some founders are exploring revenue-based funding instead of traditional VC routes. Takeaway: Navigating the seed-stage funding landscape requires strategic understanding and adaptability. This evolving environment offers unique opportunities and challenges for both investors and founders. If you're on this journey, let’s connect. I’m here to help you navigate these complexities and improve your chances of securing funding. #startups #entrepreneurship #venturecapital #investing #finance #crossborder #inovexus #startup #VC #earlystage #angleinvestor

26

All-In-One Guide to Negotiating a Venture Capital Round. Founders often ask me these three questions while raising a VC round... → How long does it take to negotiate a term sheet? → Who should open the negotiation on valuation – VC or entrepreneur? → What are the top tips for entrepreneurs preparing for a term sheet negotiation? So here's my answer - It shouldn’t take more than a week, or even just a few days, to negotiate a term sheet. That is — once a VC decides they truly want to do a deal. There really aren’t many variables these days for seed to Series A deals, really just price and how much you are raising/selling. Most of the rest of the terms are much lower drama than they used to be. Most VCs aren’t trying to control your board and your company in the early days anymore. (If they do, that may take longer to work out). So what are the tips to get the best deal - → Who goes first isn't crucial. Just ask about their terms directly. It's not a game, it's about finding a match. → Multiple offers are your real leverage. Having options or not needing money helps. Running out of cash puts you at a disadvantage. → Don't ask for more than VCs can give. Be aware of their check size ranges. Flexibility in funding amount can help close deals. → Address potential issues upfront. Offer solutions, especially if you're overfunded. No surprises by the time you reach term sheets. → Ask about the VC's ownership target. Most have minimum stake requirements. Knowing this can prevent wasted time. → Be clear about your stance on board seats. Some VCs expect seats for larger investments. Know your comfort level and communicate it. → Be aggressive, but not overly confident. VCs want committed founders who are partners. Show interest in a long-term relationship. → Listen carefully before countering hard. Some VCs have room to negotiate, others don't. Push too hard and you might lose the deal. → Don't get hung up on minor terms. Focus on price, ownership, and control. Let your lawyer handle the small stuff. → Time can work in your favor if you're growing. Fast growth can improve your terms. No need to rush if you don't need immediate cash. → Use tight deadlines cautiously. They can speed things up or backfire. Be prepared for VCs to walk away if too pressed. → Get your existing investors on board. Their support can make fundraising much easier. Address any issues with them before approaching new VCs. Alexander J. Davie & Casey W. Riggs from Riggs Davie PLC have shared a detailed guide for negotiating VC round. Check it out.... 👇 If you found this helpful, please like, comment, and share to help other founders in your network! Check out my free newsletter for more insights: https://lnkd.in/da9F4f5q . #startups #investment #vc #funding #founders #venturecapital #negotiation #round #fundraising #founder #startup #guide #startuptips #fund #money #startuplife #founderlife #jobs #startupnews

93

8 Comments

💥 New Deals Added to DealDirect! Project "Winged Normal"... 💥 Another of our non-executive members has added this incredible (off-market) opportunity to our DealDirect platform today: 🔥 £8m Revenue Business: Seeking a 100% sale. A leader in its field. Additionally, another business is seeking M&A advisers and legal support. This listing is currently being reviewed by our team and will be released on DealDirect later this afternoon: 🔥 £6m Revenue, 30 Staff: UK based service business. With a £2m investment offer already on the table, this UK-based business with an international presence is also interested in speaking to further potential investors. Their non-executive is acting as initial point of contact. Check out DealDirect for more details and see how you can get involved. Explore more at https://lnkd.in/eha-9Zxq Mike Critchley Sarah Mann Garrick Bruce Steve Benson Victoria Bauer Paul Cunniff Oli Connolly David C. Kay Kennedy Tim Marlow #DealDirect #MergersAndAcquisitions #BusinessGrowth #OffMarketDeals #InvestmentOpportunities #Advisers #VirtualNonExecs #ExclusiveDeals

17

1 Comment

Wow, Don Mal’s journey is a real eye-opener! Scaling to $100M ARR in such a competitive space is no small feat. What stands out is his smart move to build on Excel, a tool everyone already loved. His focus on lead gen from the get-go and using his past experience to land big clients shows how crucial it is to play to your strengths. It’s a great reminder that success often comes from understanding what you’re best at and sticking with it #startups #entrepreneurship #venturecapital #founders #salesstrategy #businessgrowth #marketinsight #VC #VentureCapital #Business

1

Currently Fundraising this fall? How do you find the right VC firm for you? Here’s some simple tactics that can help you take more accurate shots? Know your sector, stage, investment criteria and over all alignment - Visible.VC is a great resource to find the firms who are looking for you. Cold outreach isn't dead. Make sure your pitch deck is ready and ask for your feedback and something specific about your business. If you want a warm intro, please provide a concise blurb, pitch deck (less than 13 slides) and a clear objective of the meeting with why you should be talking to this person/firm. Persistence is key, if someone doesn’t reach out doesn’t mean they don’t want to talk. VCs get tons of emails and linkedin messages. Make yourself top of mind with an old faithful follow up. Remember, finding the right VC is a two-way process. While you're evaluating them, they'll also be assessing your startup's potential. Be prepared to clearly articulate your value proposition, market opportunity, and growth plans when you do secure meetings with potential investors. #fundraising #venturecapital #startups

31

3 Comments

How do you drive value when fundraising? In the absence of a clear guide, many founders and their boards will chart a steady and linear progression in value, supported by revenue or profit growth, starting at the implied valuation of the initial investment and heading towards a target valuation with valuation reference points to validate this approach. In determining the target value it is worth remembering that business values for scaling growing businesses are typically derived by considering three different methodologies - find out more in this article. https://lnkd.in/ejvNHabQ #fundraising #valuecreation #investments

7

1 Comment

This guide outlines the funding journey from Pre-Seed to Series C and beyond: - Pre-Seed: Focus on concept, team, and initial validation. - Seed: Prove market fit and scalability. - Series A: Demonstrate revenue growth and user base. - Series B: Scale operations with solid financials. - Series C+: Prepare for major expansion and exit strategies. Insight: Each funding stage builds on the previous one. Early rounds focus on validation and product-market fit, while later stages emphasize scaling and financial stability. The goal is to show continuous growth and potential to attract investors. Subscribe to ‘Siliconnector’ Telegram channel for insights and news from Tech world and Silicon Valley: https://t.me/siliconnector

11

2 Comments

M&A From the Plane…Maybe it is time for me to stop flying. Part 3 Today is the final post on issues facing a founder as they contemplate selling their company. We have already discussed a business that is overly reliant on the founder as well as when a business owner’s personal identity is totally derived from their business. The final hurdle is seen by business owners when they think about selling is burnout. Other than age/health related reasons, burnout is the leading reason why my owners put their companies up for sale. Burnout is real and is a significant factor in the decision to sell a business. If you're feeling overwhelmed and unable to maintain your level of commitment to the company, it may be time to consider a change. However, it's important to take a step back and evaluate the situation before making a snap decision. • Consider the financial performance of your company • The potential impact on your employees and stakeholders • Your long-term career goals If the decision to sell is based on a temporary feeling of burnout, it may be worth taking a break or finding ways to recharge before making a permanent change. If your business has become all-consuming and you're feeling tired and experiencing burnout, it's important to take a step back and reevaluate the situation. Here are steps you can consider: 1. Take a break 2. Seek support 3. Reassess your goals 4. Evaluate the business 5. Loss of motivation 6. Decreased productivity 7. Increased stress 8. Physical symptoms 9. Decreased satisfaction 10. Negative attitude 11. Disconnection Let’s look at these in a bit more detail ⬇️ #MergersandAcquisitions #MandAFromThePlane #sellingyourbusiness ============== 🆘 When is the right time to sell your business? DM me to discuss 🔔 To see more M&A content ring the bell on my profile

5

M&A From the Plane…Maybe it is time for me to stop flying. Part 3 Today is the final post on issues facing a founder as they contemplate selling their company. We have already discussed a business that is overly reliant on the founder as well as when a business owner’s personal identity is totally derived from their business. The final hurdle is seen by business owners when they think about selling is burnout. Other than age/health related reasons, burnout is the leading reason why my owners put their companies up for sale. Burnout is real and is a significant factor in the decision to sell a business. If you're feeling overwhelmed and unable to maintain your level of commitment to the company, it may be time to consider a change. However, it's important to take a step back and evaluate the situation before making a snap decision. • Consider the financial performance of your company • The potential impact on your employees and stakeholders • Your long-term career goals If the decision to sell is based on a temporary feeling of burnout, it may be worth taking a break or finding ways to recharge before making a permanent change. If your business has become all-consuming and you're feeling tired and experiencing burnout, it's important to take a step back and reevaluate the situation. Here are steps you can consider: 1. Take a break 2. Seek support 3. Reassess your goals 4. Evaluate the business 5. Loss of motivation 6. Decreased productivity 7. Increased stress 8. Physical symptoms 9. Decreased satisfaction 10. Negative attitude 11. Disconnection Let’s look at these in a bit more detail ⬇️ #MergersandAcquisitions #MandAFromThePlane #sellingyourbusiness ============== 🆘 When is the right time to sell your business? DM me to discuss 🔔 To see more M&A content ring the bell on my profile

2

It’s becoming more and more challenging for startups to make the leap from Seed to Series A. Carta’s recently published VC Fund Performance Report found that only 15% of startups are reaching a Series A round two years after their seed round – compared to 30% in previous cohorts. The slowing of this so-called ‘graduation rate’ marks the toughness of the current environment for startups, and also underscores the importance of developing a sustainable financial model that isn’t reliant on outside capital. If you need help optimizing your startup’s financial strategy, get in touch with the team at G-Squared Partners today: https://hubs.ly/Q02NvKgk0 #gsquared #gsquaredpartners #gsquaredCFO #chieffinancialofficer #cfo #accounting #fractionalcfo #ceo #virtualcfo #business #entrepreneur #parttimecfo #smallbusiness #chiefexecutiveofficer #finance

7