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When to sell?
Venture capital isn’t just about picking the right horses. It’s also about helping them jump over dozens of hurdles, watching them win a bunch of races — and knowing when to stop betting on them and cash in the winnings.
How exactly to do that last part is a matter of some debate among Europe’s seed funds these days.
Oliver Holle, managing partner of Vienna-based seed investor Speedinvest told Amy Lewin earlier this year he wished his firm had “sold more” when up rounds were bountiful. (His portfolio includes unicorns like wefox and GoStudent.)
“We’d settle on selling 20 or 30% of our shares, or say ‘Let’s make sure we at least have our money back’. In hindsight, that’s not good enough,” Holle said.
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Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms
Alpha Partners, SignalRank and now SaaS Ventures help seed VCs pay for shares when big VCs try to price — or push — them out
Lee Edwards, partner at Root VC, has a saying at his firm that “pro rata rights are earned, not given.” That may be a bit of a stretch since pro rata refers to a term that VCs put in their term sheets that gives them the right to buy more shares in a portfolio company during consequent funding rounds to maintain an ownership percentage and avoid dilution.
Still, while these rights are not exactly “earned,” they can be expensive. One of the latest trends in VC investing these days are funds dedicated to helping seed VCs exercise their pro rata rights.
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By Christine Hall
Founders have all manner of support to help them get up and running with their businesses. VCs, less so — until now.
Early next year, advisory firm Mountside Ventures is launching Europe’s first VC fundraising accelerator. It’ll take on 15 emerging managers and “help them become better fundraisers”, says Jonathan Hollis, the firm’s managing partner. “It’s not to help investors become better investors; it’s to identify and connect them with relevant LPs.”
There are, according to data platform Dealroom, around 2,500 active VCs in Europe; only 275 of those have raised their third fund.
#emergingmanagers#investment#VentureCapitalists ##VentureCapitalists#limitedpartners#generalpartners#LPs#GPs
This week's Pitch Reviews newsletter is out!
Top Performers: Discover active raising startups like Pacha, which soared with a 491% revenue growth from 2022 to 2023, alongside other high achievers like Original Brands and Our Bond.
New Show - Investment Roundtable: Tune into our newest series where our VP of Product, Brian Belley, and a panel of investment experts explore startup success factors and the nuanced dynamics of equity crowdfunding.
Exclusive Webinar: Don’t miss our upcoming webinar on October 2nd with Arrived, a Bezos-backed real estate platform. Learn about their approach to real estate investment and how you can benefit from current market conditions.
Pitch Review: This week, we review StartGlobal, a comprehensive platform that simplifies launching and managing US-based LLCs, attracting notable investors and showing promising growth.
Read the full newsletter here for the latest insights: https://buff.ly/4d6BCFt
Summary:
Early-stage VC firm Kearny Jackson has secured $65 million in capital commitments for its third fund. The bi-coastal firm primarily invests in B2B SaaS and fintech infrastructure.
Key takeaways:
Kearny Jackson emphasizes time to value for its portfolio companies and has a mix of LPs from various backgrounds including Sequoia and Marc Andreessen.
The larger fund size gives the duo more leverage to execute their strategy of gaining more ownership in their portfolio companies.
The firm has made notable investments in companies like Motherduck, Cortex, and Comulate with its first two funds.
Counter arguments:
Some may argue that the smaller ownership stake targeted by Kearny Jackson may not be as favorable to founders.
The firm's reliance on LPs for funding may limit their ability to make riskier investments.
Big news from Index Ventures! We’ve raised $2.3bn in new funds—an $800m venture fund and a $1.5 billion growth fund.
Across nearly three decades of investing, this latest announcement is possible because of a strong foundation built by exceptional entrepreneurs, incredible LPs, and a team of investors, strategists, and operators all deeply committed to our craft. 108 Index-backed companies have reached a valuation of $1 billion or more, 23 have surpassed a $10 billion valuation, and 57 became publicly traded companies.
I look forward to seeing what the next generation of entrepreneurs will create. I can only imagine it will be even better than what I can envision today :)
https://lnkd.in/gDxiN8ig
Don’t invest unless you’re prepared to lose all your money. This is a high-risk investment, and you are unlikely to be protected if something goes wrong.
Take 2 mins to learn more. https://lnkd.in/eHKmnFQk
🌟 Pioneering Progress at Haatch: The First SEIS Fund on Crowdcube 🌟
Last year, Haatch became the first-ever SEIS fund to raise on Crowdcube, setting a new standard and still holding the record for the most raised on the platform. This was more than just a funding milestone—it was a step toward democratizing venture capital, putting Haatch’s innovative approach at the heart of everything we do. Here’s why we broke new ground and what drives us:
🔹 A Commitment to Access: Venture capital should be accessible to a broader audience. Haatch is passionate about enabling retail investors to join the world of professionally managed funds alongside their direct investment portfolios.
🔹 A Diverse Investor Community: Our larger, diverse investor base brings valuable perspectives and support for our portfolio companies, which helps accelerate their growth and development.
🔹 Innovation at Scale: By lowering the minimum investment to £2,000, we not only met the FCA’s guidelines but also made investing in ~15 innovative companies accessible, expanding venture capital’s reach and impact.
📊 The Results Speak for Themselves 📊
• 223 investors contributed close to £700,000 to our SEIS Fund.
• We backed trailblazing companies like Social Tip, Attelas, Prolius, adclear.ai, TalentMapper, and Turing Biosystems.
• This fund partnered with some of the most recognized names in venture capital: Notion Capital, Ada Ventures, Octopus Ventures, LAUNCH, and more.
What’s next for Haatch? 📈 Continuing to push boundaries and lead with innovation. We’re excited to keep shaping the future of venture capital—one pioneering step at a time.
#Innovation#VentureCapital#Crowdfunding#SEIS#DemocratizingVC#Haatc
Co-Founder & General Partner Haatch. Investing in B2B SaaS companies at Pre-Seed & Seed.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more. https://lnkd.in/dKZdekcn
Why would a fund like Haatch raise money on Crowdcube? This was the number-one question I received last year when we became the first-ever SEIS Fund to raise on Crowdcube (and we still hold the record for most raised on Crowdcube to this date).
The answer 👀
1. We're passionate about democratising access to venture capital
2. We want to enable retail investors to invest in professionally managed funds alongside their direct investment portfolio
3. We want to help portfolio companies move the needle, and having a large, diverse investor base with different views, perspectives and support is only a good thing
The result 🏆
1. 223 investors invested just shy of £700,000 into one of our SEIS Funds
2. We managed to bring the minimum right down to £2,000; not only is this the FCA limit, but it's also a sensible minimum when investing in ~15 companies
3. We backed companies like Social Tip, Attelas, Prolius, adclear.ai, TalentMapper, Turing Biosystems and more!
4. This single fund alone invested alongside funds including Notion Capital, Ada Ventures, Octopus Ventures, Creator Fund, January Ventures, Episode 1 Ventures, LAUNCH & Portfolio Ventures
So, what is next 📈
We're back; head to https://lnkd.in/dsp_8W9v to learn more and join our early access!
[Edit: April fools 🙃 ]
Introducing the world's most diversified private market investment vehicle: Harmonic's Fund of Fund of Fund of Funds is finally live!
We're making it possible to get broad exposure to all the best startups by signing just one check. Wild response from our early testers:
"In an industry dominated by bad ideas that sound like good ideas, the FoFoFoF is a revolutionary reversal of the status quo. After all, why try to beat the market if you can simply be the market?" - Geri Kirilova
"When one invests in a VC fund, one is both hunter and prey. But by investing in a FoFoFoF, I feel like I'm not just the Apex Predator... I also get to be the Apex Prey." - Jay Kapoor
“FoFoFoF is an investor in our funds, and because FoFoFoF offers risk-free returns, we can just take their capital, apply 10x leverage, and invest it right back into FoFoFoF. Talk about a free lunch! Internally we're calling this our "ouroboros initiative" and we couldn't be more excited about it.” - Leo Polovets
"With our investors being part of FoFoFoF, it’s like playing 4D chess with partnerships and exposure for Buildstock. As we aim to 10x our revenue in the mystical world of endless fund layers, we're not just selling construction materials—we're stacking up strategic alliances like Legos" - Kathryn Thiele AIA CSI
--
find out more at
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more. https://lnkd.in/dKZdekcn
Why would a fund like Haatch raise money on Crowdcube? This was the number-one question I received last year when we became the first-ever SEIS Fund to raise on Crowdcube (and we still hold the record for most raised on Crowdcube to this date).
The answer 👀
1. We're passionate about democratising access to venture capital
2. We want to enable retail investors to invest in professionally managed funds alongside their direct investment portfolio
3. We want to help portfolio companies move the needle, and having a large, diverse investor base with different views, perspectives and support is only a good thing
The result 🏆
1. 223 investors invested just shy of £700,000 into one of our SEIS Funds
2. We managed to bring the minimum right down to £2,000; not only is this the FCA limit, but it's also a sensible minimum when investing in ~15 companies
3. We backed companies like Social Tip, Attelas, Prolius, adclear.ai, TalentMapper, Turing Biosystems and more!
4. This single fund alone invested alongside funds including Notion Capital, Ada Ventures, Octopus Ventures, Creator Fund, January Ventures, Episode 1 Ventures, LAUNCH & Portfolio Ventures
So, what is next 📈
We're back; head to https://lnkd.in/dsp_8W9v to learn more and join our early access!
The gold rush into venture by 'tourist VC's' from 2018-2021 has created a massive liquidity mismatch between fund sponsors and their LPs. The managers are focused on vanity metrics such as MOIC while investors are hoping for liquidity. When your fees are a percentage of AUM, this creates a powerful incentive to push your head in the sand and hope fair value eventually catches up.
I think Sara Ledterman is spot-on here. Accounting firms all over the world will be FORCING managers to take write downs over the next 12 to 18 months. Opportunistic buyers of these assets should be in a fantastic position to acquire early-stage equity in future unicorns at fire sale prices!
Senior Correspondent at Business Insider, investigating the tech industry with a focus on VC and startups
NEW FROM ME:
During the middle of 2023, Sara Ledterman, managing partner of 3+ Ventures, was calling around to emerging managers to ask about the health of their portfolios when she discovered something alarming: Some of the limited partners (LPs) who had committed to fund their investments were walking away.
"Some of them just decided there's not really a repercussion for defaulting, so they just defaulted," Ledterman found.
She found hundreds of VCs have LPs in default and now 3+ is buying up those positions, but it has to be done quietly.
"If you're a VC, you don't want the optics of LPs selling down their stakes and bailing out of funds, so it all has to be done discreetly," said Matt Krna.
https://lnkd.in/g5nBzzCy
