Vijen Patel

Amongst the most successful VCs in consumer in the past decade has been Kirsten Green at Forerunner So I asked her all about how startups can navigate the 70% reduction in consumer investing & why now might be the best time for VCs to look harder at the category. I loved this discussion. I always learn something from Kirsten. Click below to watch / listen https://lnkd.in/g3kiMPD5

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As a VC, there are times when you have to choose between prioritizing returns and supporting the founders you work with. It’s not easy because we have a fiduciary duty to our LPs, which, in our case, are primarily non-profits, to maximize returns. At Eniac, we play the long game: if we do what’s best for our founders, it will ultimately benefit our brand, reputation, and relationships, which will be best for our LPs in the long run.

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I enjoyed going on Nick Telson-Sillett’s podcast, Pitch Deck by Forward Pursuit. Nick is a serial founder and investor (founded and exited DesignMyNight) so knows both sides of the table which always makes for an enriching chat. Some things we discussed: - The perceived power dynamic between VCs and founders can hinder productive conversations. - A compelling product demo can significantly influence investor interest. - Founders must focus on solving real customer problems to succeed. - Hiring standards are crucial for building a successful startup team. - Behavioural roadblocks can prevent the adoption of new solutions. - Validation from potential customers is key for pre-revenue startups. - The early-stage funding landscape has become more efficient and selective. - Pace of execution is a critical factor in attracting investment.

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I recently saw this metric from Carta’s 1Q24 VC Fund Report, which is very concerning. DPI... is nowhere to be found in earlier vintages that probably should start showing DPI. Funding early-stage projects is great, but ultimately, these venture dollars need to exit their investments and pay back their limited partners. That’s where the metric Distributed to Paid-In Capital (DPI) comes in. While managing a fund, we get interim measures during the life of the fund (e.g. IRR, MOIC), but ultimately, “you can’t eat IRR.” If you want to build a lasting venture capital organization, you need to start showing DPI for your fund. Keep in mind that this is traditional VC data from Carta, and is not strictly crypto venture. Crypto venture tends to get liquidity earlier (tokens) and things tend to go parabolic sooner (faster, more unicorns) - but I’d wager that the data here is somewhat similar for Crypto VCs… Not as much DPI as there should be from these earlier vintages. Read the full article, as well as a recap of all the crypto fundraising rounds for August, here: https://lnkd.in/g3eVJ-iF

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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The geek in me is always fascinated by "the craft" of different things The recent NBA Playoffs led me down the rabbithole of strategies, how the young Wolves thrashed the Suns and defending champions Nuggets, then in turn was beaten comprehensively by Mavs, who then was shut down by Celtics' excellent defense in the Finals (shout out to Jrue Holiday the true MVP in my opinion!). That was my love for the craft of basketball (and why I enjoyed listening to JJ Redick's podcasts) As for the craft of VC & fund management, I had a very interesting discussion with an LP with a global exposure who posed a very good question, "after this winter, can the SEAsian paper unicorns exit at real unicorn value?" - an existential question for all VCs, and got me thinking real hard. Since most historical SEAsian exits have been sub-$500m, can we really expect billion dollar liquidity events? If expected exits need to be adjusted to $250-300m, can the Power Law still work to get to 3x DPI in 10 years? With those adjusted assumptions in the fund models, what's the best portfolio construction strategy? So glad that many LPs write/talk about their opinions nowadays. Also to find more GPs write/talk about the craft, like this one I found on a fine Saturday afternoon. Yeah sadly geeks spend weekends thinking about work Here's to more discussions about the craft of whatever you do! 👷🏾‍♂️ #earlystage #venture #craft #portfolio

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Today, Two Chairs announces $72M of new funding to continue building a world where everyone has access to exceptional mental health care. Since late 2017, when Maveron led the Two Chairs Series A, the need for mental health services has grown considerably as our society has become lonelier and more isolated than ever. At the same time, our culture’s willingness to openly acknowledge these challenges is greater than ever. Sadly, the rapid growth of Two Chairs affirms the fact that our society is in desperate need of better mental health support. Two Chairs has built a business that believes clinical quality is the defining characteristic of success. Alex Katz has always emphasized the paramountcy of measurement-based clinical outcomes, which the team works tirelessly to achieve. In the process, Two Chairs has illustrated that embracing the ‘move fast and break things’ mentality doesn’t always work. Instead, Two Chairs opted for a different approach: they went slow to go fast. They built a proprietary algorithm that matches patients with the perfect therapist at the onset and hired a team of W2 clinicians oriented toward providing the highest quality care available. Even as the Two Chairs team has grown, their culture has remained small. This has enabled more intimate relationships within the team and between clients and clinicians. Reflecting on this milestone brings me back to the founding of Maveron and the values we hold dear. In 1998, my friend Howard Schultz and I founded Maveron to help entrepreneurs build companies that improve the lives of everyday people—their employees and their customers. There is perhaps no better example of this than Two Chairs. *** Thank you to TechCrunch's Marina Temkin, CFA for the great write-up. https://tcrn.ch/4aMt7yG

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Well-written and sourced article describing what's going in seed-stage venture market. At 9point8 Collective we tend to orbit the seed-stage (both ideating and developing companies to reach seed and helping post-seed companies refactor and scale in anticipation of A) and for many companies it's a critical inflection point which determines their long term success or failure. The main takeaways I was able to gather: 1️⃣ Many startups that raised seed rounds in 2021-2022 are struggling to secure Series A funding due to tighter market conditions and increased investor expectations. 2️⃣ Seed investors are becoming more cautious, leading to longer diligence processes and a preference for startups with strong traction or experienced founders. As a result, valuations have stayed relatively high even as deal flow reduces. 3️⃣ Startups are adopting various strategies to navigate this challenging environment, including cutting costs, raising bridge rounds or convertible notes, and M&A/acqui-hires. 4️⃣ Despite the challenges, there are opportunities for both startups and investors in this new landscape, particularly for those who can adapt to the changing market conditions. Investors are accumulating dry powder -- and with rates on the decline -- will be looking to deploy into companies with stronger fundamentals than their 2021-2022 counterparts.

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RETHINKING RETIREMENT We've been investing in the Future of Work since we launched BBG Ventures, targeting underserved segments like deskless workers (Anthill, OX) and solopreneurs (Topline Pro). Over the summer we spent time digging into another deeply underserved segment of the workforce: Boomers. By the end of this decade, the entire generation will have hit retirement age and, for the first time, Americans 65+ will outnumber those under 18. This has huge implications for every aspect of society, and it mandates that we start thinking differently about retirement. The question for all of us is this: Can we re-focus healthy Americans 60+ on a new phase of productivity, a “third act” that enables them to keep learning, keep earning, keep socially-engaged and contributing to the nation’s economic growth? And what role can AI play in helping every senior identify their unique skill set and personal priorities — and connect them with the right opportunities? We have some thoughts on how to make this happen, and we'd love you to give it a read, add your feedback, forward it to a founder who's working in this arena (or who you think might be intrigued), and share it! AgeTech has been too focused on death and decay; it's time we embrace longevity and give older Americans a way to keep working -- on their terms. cc: Carol Magalhães Isaacs, CFA Nisha Dua, Claire Biernacki, Drew Silverman Fennessy

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Great article from PitchBook on why domain expertise amongst VCs matters. TL;DR -- in verticals like healthcare, having investors with high amount of domain expertise can result in up to 40% higher odds of achieving an IPO, 20% higher chance of being acquired and 30% higher chance of an overall successful exit. Importantly, the marginal value of having investors with domain expertise varies by sector and stage, and is not uniform, so your mileage may vary, and generalist investors still have a very important role to play in the venture ecosystem. https://lnkd.in/dXpi8gzm Curious to hear from founders: Do you have examples of seeing specialist investors be helpful in unique ways that you can share? Or alternatively, do you have an experience with a generalist investor who has been more helpful than the specialists?

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LP Tip #5 of #50: Spend time to anticipate what off-book references may say about you. ➡️ GPs should assume that professional LPs will reach out to their own network to learn more about them.  ➡️ High net-worth (HNW) individuals and operators are not likely to spend as much time on references than professional LPs. In fact, I know many cases where HNWs and operators didn’t even reference the manager. ➡️ Each LP has its own approach to conducting references. ➡️ Opinions are my own.    ❓ If LPs are back channeling you, what do you expect people will say about you as an investor and person? Fund managers control on-book references because they select who an LP speaks with. And, these references typically give an LP a positive perspective of a fund manager. In contrast GPs do not know who comprises an LPs trusted network. They also cannot control what the back channel reference will or will not say. Below are two things you can control which can impact the back channel. 1️⃣ Control possible negative flags -  If you anticipate something negative to come up during references that may be  perceived as a potential flag by an LP it is best that you bring it up first rather than having the LP bring it up. I would bring up the things that you envision could derail your funding and that you expect the LP to discover.  2️⃣ Control how you show up  - Unfortunately, some managers do a great job of undermining their own professional reputation which impacts how well they will back channel. For example, I was having a follow-up meeting with a talented manager and they started to trash talk another investor to me in a way that was unsettling. I believe in giving people grace as sometimes people have off days. But I was struck that the fund manager was emboldened to share with me because I was a relatively new connection. I then began to wonder if they acted like this with other LPs. Other LPs verified that they had a similar experience and felt it showed a lack of  judgment. If this new manager lacks judgment on professionalism then I start to question if they lack judgment on many other aspects of running a fund. 

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Up to series A, all that TAM, SAM, SOM stuff in pitch decks is 💩. Sure, put it in the doc if you must. Lots (and lots) of advice says you should. But I challenge you to find any VC that gives it any more than 3 seconds of attention. Or thinks it is anything other than a work of fiction. And I guarantee none of them has had their investment decision influenced by it. So, whether you put it in or not, don’t spend too much time on it and focus your attention and impact on other things. Such as team, mission, metrics. Pretty much anything else in the pitch deck templates!! #founders #startups #vcfunding

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2 active fund offerings from the Echelon Fund team who have been killing it ever since their cohort at The Fund School. https://lnkd.in/gVd-dhfY sidecarportfoliofund.com This presentation of Echelon Fund, LLC and Sidecar Portfolio Fund (the “Company”) is for information only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe for any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The information contained herein is subject to change without notice and is based on publicly-available information, internally developed data, third party information and other sources. The third party information has not been independently verified. While the Company may not have verified the third party information, nevertheless, it believes that it obtained the information from reliable sources and has no reason to believe it is not accurate in all material respects.

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The entrepreneurial journey is one of grit, passion, and unwavering belief. I'm truly excited about what Raj Shekhar Singh, Jyotika Gupta , and Sudarshan Ravi Jha are building with z21 Ventures. Their vision resonates deeply with me. As a founder, I know firsthand the rollercoaster of highs and lows that come with building something from the ground up. It's a path that tests you in ways you never imagined, but it's also incredibly rewarding. We've been fortunate to have exceptional investors like Sumir Chadha and WestBridge Capital in our corner. Their support went beyond just capital - they've stood by us through our triumphs and, more importantly, our setbacks. That kind of belief in your vision is invaluable. I'm hopeful and confident that Raj, Jyotika, and Sudarshan will create similar transformative experiences for a new generation of purposeful founders. They understand that true innovation often comes from those daring to challenge the status quo, those driven by a desire to make a real impact. To all the founders out there: Your journey may be hard, but it's worth it. Stay true to your purpose, embrace the challenges, and remember that your ideas have the power to make meaningful change in the world. With supporters like z21 Ventures backing you, there's no limit to what you can achieve. Let's build a future where innovation thrives and where purposeful entrepreneurship creates lasting positive change. The road ahead may be tough, but with determination and the right support, anything is possible.

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🚀 Brian Clough was a blinkin' genius in football management terms. Love his quote "We had a great team on paper. Unfortunately the team were playing on grass". And yes - it's one of those annoying "This thing happened and here's what you can learn from it" posts. But it's true. Sales projections, market sizing and GTMs are all good and great. And important. But building a startup almost never works like you thought it was going to. You're not building your startup on paper. You're building on grass. And that's what the investor is looking for - do you have a plan B, a Plan C? Do you have what it takes to interpret the data objectively, pivot and still execute the 💩 out of your business? Video in the comments! Psssssst. Do you want to join the nearly 200 people signed up to watch me roast 3 investment decks LIVE? Join me on Thurs Sep 5th to see how investors actually view decks. Direct, candid and no holds barred. Sign up https://buff.ly/3XpMEB8

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Great time on the Embracing Erosion podcast w/Devon O'Rourke! We talked about: 🚀 How to scale a company from concept to 9-figure exit 🔄 How to break away from the traditional consulting model and apply product approaches ⏩ Why it’s important to iterate quickly and often with messaging 💸📈What signals are important to pay attention to when investing in startups and much more!

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We just made Entrepreneur Media! THE NEW FRONTIER Dive into how Ascend Venture Capital's innovative strategies are redefining the game and what this means for the future of venture capital 📈💡 Read more here: https://lnkd.in/gd2nn5Hv #VentureCapital #Investing #Innovation #Finance #Entrepreneurship

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"At Coolwater, what we're trying to do is work with people that really want to do this. Who actually wants to be a fund manager? It's not an easy job." Winter Mead the founder and managing member of Coolwater Capital, knows of what he speaks. #venturebacked #vcbacked #venturecapital #leadership #ceo #founder #operatingsystem #peakos

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