Reid DeRamus

Rob's goals and progress on contactout and athena.vc 22nd July 2024 Last week: Monday - meetings Tuesday: QA pricing plans, admin,sign and mail company docs, pay capital call community moderation. Wednesday - Talk with deeptech founders, connect with influencers from alex brogan interviewRead about fusion, longevity and sam altman, peter theil investments Thursday - Read about helion, world coin, other sam altman investments. read btc and eth whitepapers, rain ai , lob, cocorobotics, running tide, hermes, boom Friday - Read fcp docs, eth whitepapers, sam altman peter thiel investments. What did I learn: https://lnkd.in/g3D8__Q2 what are the highest impact industries and technologies? study what top investors like sam altman and peter thiel have invested in: https://lnkd.in/gFeutEcM https://lnkd.in/g_ErBh7k lots of stuff from nuclear fusion, to longevity, to a better GPU than nvidia, universal basic income, growing seaweed to capture carbon, building the next google. https://lnkd.in/gYGjbEF2 should we start on researching how to build a better google especially google scholar for scientists: study futurehouse.org and similar and lots of scientists and deeptech founders about problems they face Jessicia Livingston's started a new podcast "Social Radar" interviewing YC founders. Her old book founders at work is really good too. The old YC content from PG, Sam, Jessica is way better than the current YC content. Going through all the startup school interviews from 2012, 2014, 2016 way better speakers. Next week: continue reading YC content write up founders curriculum

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Deal velocity in the early-stage market is on fire 🔥 We’re getting more inbound now than we’ve received in months - and I’m hearing that this is happening across the market. It’s not sub-par companies deciding to try and raise. These are generally companies led by great founders with traction and revenue who are focused on being efficient with the capital they are raising. Excited for the rest of 2024 📈, really hope founders and investors alike are able to keep this level of discipline.

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🔎 This is a well done analysis. 🔎 I gave a founder pretty similar advice yesterday about what to target and expect at the seed. And while I'm seeing founders raise seeds w/o any revenue, those founder are either repeat founders or strong pedigree founders (like AI Phd's with time at Google etc.). So for the typical founder, shooting for at least $250k in true ARR with 300%+ growth or more is a good target. And the more the more likely you are to raise funding. 🎯

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As we dive into 2024, the Series A fundraising landscape is becoming increasingly daunting. Investment standards are soaring, and fewer startups are making the cut. Series A investors are finding many seed stage companies too premature. The median valuation jump from seed to Series A skyrocketed from $19.5 million in Q1 2022 to $28.7 million in Q1 2024. Investors now demand stronger revenue performance, targeting $2 million to $3 million in ARR, up from $1 million to $2 million. Alarmingly, only 12% of Q1 2022 seed startups secured Series A funding within two years, down from 31.8% in Q1 2020. #venture #earlystage #seedtoseriesa #seed #seriesa #inspireglobalventures https://lnkd.in/gW4bkcNy

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The state of venture capital is wild right now. We are witnessing a surge of innovation across the spectrum: - Funds merging - VC doing PE - PE doing VC - Secondary funds - Buyout funds - Spin-out funds - Debt funds - Continuation funds - Infrastructure funds - GP turnover - Hard Tech surging - Family Office uptick

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1. Can't get enough of 20VC with Harry Stebbings. All startups can benefit from this show. 2. At the end of this episode, ServiceTitan CEO, Ada says this to being asked what aspect of leadership he would like to improve if he had a magic wand → "Be able to assess the real capabilities of a potential hire [...] that is so hard to do in the interview process." In Ada's words, being able to magically hire successfully would be company-changing. This is the magic wand we're working on at HiringBranch ✨ It is incredibly validating to hear (unprompted) that our startup is steering in the direction of providing "company-changing" value. Yay team HiringBranch and Stephane Rivard 💪

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Secondaries are becoming a super attractive asset class. Just this month, StepStone announced a new $3B+ fund dedicated to secondaries. Late-stage private companies are still trading at a discount relative to their 2021-2022 highs. But the venture capital advisor exemption requires firms to keep their secondary positions less than 20% of total investments. I think this will encourage fund managers to get creative with registration/legal structures in order to unlock greater exposure to secondaries as attractive deals come through. https://lnkd.in/e_3_xitM

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We believe in extreme vetting of our founders. You can't build a unicorn if you spend time on silly stuff, like seeing family and friends. Grow up, and focus on investor returns. #vc #startups #investment

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Seed investing is much harder than private equity or growth investing. But since the barriers are lower, and compensation structures can be worse, the talent density isn’t always as good. It’s actually really tough on founders. And the way to build a great founder community is to have a very talent dense pre-seed and seed investment community. Shiyan K. is a star, we need more of the same in Singapore.

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Imagine you’re meeting a VC today and pitching your company. Now, also imagine the VC goes home tonight and tells his or her spouse about the meeting with you. How do you think the VC would (or should) describe your product to the spouse? Remember, this is for someone who doesn’t have any context, and probably doesn’t have time to listen the whole story. If you can think of a story version that's plain and simple -- how you want the VC to describe your product to the spouse -- perhaps that version should be your pitch in the first place?

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FOUNDERS STOP DEMOING On net, early stage founders should stop demoing their products on the first sales call. I've watched dozens of Fathom videos of pre-seed and seed stage founders I've invested in, and its the number one culprit for wasting time and derailing your sales motions. Your product demo is SACRED and should only be shown to qualified buyers. In complex sales, the goal of your first sales call is NOT to sell, but determine whether you are talking to a qualified prospect: an influential champion at a company with a real usage case, that will actually buy your product in a reasonable amount of time. Demoing can incite an excitable stakeholder with no power, and organizations with no real need, to progress a deal. This false sense of progress creates an escalating sense of sunk cost that makes it hard for founders to abandon the deal. You end up spending a ton of time in follow up hell chasing a bad prospective design partner. In the early stages, all you have is time and resource costs. Don't squander it chasing bad customers. While its tempting to use slides or a product demo as a crutch, it completely derails your ability to run a productive "discovery" call. FOCUS on the conversation and if necessary prepare a list of 20 questions, sequenced by batches, that unlocks true understanding of the stakeholder's role / power, their organization buying process, and whether they may have a real usage case and urgency to make a purchasing decision in the next 2 quarters. If they don't, throw them in your nurturing campaign and move on. Your time is better spent focusing on setting more meetings.

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At Angel Squad, we like to see if a company has the ability to get to a $1B valuation. One of the ways we do this is by “bottom-up” market sizing. Assuming a 10x revenue multiple for a B2B SaaS company, we want to see how a company can achieve $100M in annual revenue. For subscription-based companies, we’d divide $100M by the company’s average annual contract value to find how many customers this company needs to reach $100M in annualized revenue. Once we find how many customers are needed, does it seem realistic? How many customers are in the overall market? What percentage of the market does the company need to control to have enough customers to reach $100M ARR? This is just one of the ways we evaluate a company before we decide to invest.

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Mastering the SAFE note 💸 If you're an early-stage founder, get familiar with SAFEs. 89% of all the money raised in pre-seed rounds went through SAFEs instead of convertible notes in Q4 2023. SAFEs don't neatly fit into the debt or equity category, and they don't accrue interest. This will prepare founders to approach investors and secure funding through a SAFE Note: 𝗙𝗶𝘃𝗲 𝗗𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝘁 𝗧𝘆𝗽𝗲𝘀 - Fixed Conversion at a future date - Valuation Cap, no discount - Discount, no valuation cap - Valuation Cap & Discount - MFN (Most Favored Nation) 𝗘𝘅𝗮𝗺𝗽𝗹𝗲: 𝗦𝗲𝗲𝗱 𝗥𝗼𝘂𝗻𝗱 📈 Investor invests $25,000 with a $5m Valuation Cap, 20% Discount. - Pre-money valuation of the company $10m - Number of Shares= 2m - Share Price= $10m/ 2m= $5 𝗢𝗽𝘁𝗶𝗼𝗻  1️⃣ (Discount) - Share Price after discount: $5 * (1 - 20%) = $4 - Total Number of Shares: $25,000 / $4 = 6,250 shares 𝗢𝗽𝘁𝗶𝗼𝗻  2️⃣ (Valuation Cap) - SAFE Investor choosing $5m valuation cap - Share Price= $5* ($5m Valuation Cap/ $10m pre-money valuation)= $2.50 - SAFE Investment= $25,000 - Total Number of Shares= $25,000/ $2.50= 10,000 - SAFE Investor will apply the Valuation Cap option; $2.50/ share. - Finally, the total number of Shares for SAFE Investor= 10,000 - Share Price at Seed $5 - Share Value of SAFE Investors= 10,000*$5= $50,000 - SAFE Investment= $25,000 - Unrealized Return= (($50,000- $25,000)/ $25,000)* 100%= 100% 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 2️⃣ - VC Firm Invests at a Pre-Money Valuation = $6 Million - Total number of shares 2m - Share Price= $6 m/ 2m= $3 𝗢𝗽𝘁𝗶𝗼𝗻 1️⃣ (Discount) - SAFE Investor Choosing Shares at 20% Discount - Share Price= $3*(1-20%) = $2.4 - Total Number of Shares= $25000/ $2.4= 10,417 𝗢𝗽𝘁𝗶𝗼𝗻 2️⃣ (Valuation Cap) - SAFE Investor choosing $5m valuation cap - Share Price = $3* ($5 Million Val Cap/ $6 Million valuation) = $2.5 - Total Number of Shares= $25,000/ $2.5= 10,000 - SAFE Investor will apply the Discount; $2.4/ share. - Total number of Shares for SAFE Investor= 10,417 - Share Price at Seed = $3 - Share Value of SAFE Investors= 10,417*$3= $31,251 - SAFE Investment= $25,000 - Unrealized Return= (($31,251- $25,000)/ 25,000)*100%= 25% The higher the Valuation Cap in the SAFE round, the better it is for the Founder, resulting in a lower dilution of Equity provided the Founders are confident to close the next round at a higher than the valuation cap. 𝗠𝗙𝗡 𝗖𝗹𝗮𝘂𝘀𝗲 - Let’s say SAFE A has an MFN Provision. - If a new SAFE B is issued, the company has to tell SAFE A about it. - If the terms of SAFE B are better than SAFE A, SAFE A can ask for the same terms as SAFE B. Thanks to the Venture Crew for the math illustration.

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How to pitch: The company has zero traction —> “We’re early” You only have 2 customers —> “We’re working with design partners” You currently have no revenue but hoping some pipeline finally closes —> “we’re on track to exit this year at $3M ARR” You’re in the natural kill zone of a FAANG —> “We view them as partners rather than competitors” There’s no way the tech can actually work —>“We’re manifesting the future” And of course: One of your developers uses Co-Pilot to write some front end code —> “We’re an AI company”

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About to go live... Startup Studio portfolio VC fund. $8.5 mil. with room to oversubscribe. All deals warehoused and ready to allocate. Built in equity on day 1. Low 1 time management fee. $35k minimum investment. 506c so accredited investors only. GP's are personally invested. Multi tiered exit strategy in place. Liquidity options available at year 2. *** This presentation of 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.***

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Let the wave begin! Pioneer Fund company Recall.ai *grew their revenue 10x* in the past year, has 300 enterprise customers, and just raised a $10M Series A led by Ridge Ventures. David Gu and Amanda Zhu dropped out of college at age 19 to start the company. They've grown it exponentially with a tiny team. They make it easy to build meeting bots that are cross-platform. They're aggregating all these different APIs into one unified API, the way Twilio did with cell phones. At first it "sounds" easy to build a meeting bot -- just integrate with the Zoom API. But in fact there's a huge long tail of things you need to build, security and privacy pitfalls, automations, transcription complexities, integrations, the calendar invites where someone is using Google Meet or Teams, staying up-to-date with the libraries, etc etc. Recall takes care of all of that. It's WAY easier to build on top of Recall.ai and focus on the features that make you unique. Congratulations to the Recall team!

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Alex Edelson is the Founder and General Partner of Slipstream Investors. Before starting Slipstream, he worked at QED Investors, a top fintech-focused venture capital firm with $4.3 billion in assets under management. Alex joined as Nigel Morris's Chief of Staff and became the Chief Operating Officer and General Counsel. He previously worked at a fintech startup and spent seven years practicing law. Alex holds a J.D. and B.A. from the University of Michigan. You can learn more about: 1. How LPs evaluate emerging managers 2. How to build a successful VC fund 3. Portfolio construction, thesis building, and fund strategy #LP #limitedpartner #VC #investor #venturecapital ➕ Follow me and hit the bell 🔔 icon on my profile to be notified of every post

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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.

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That one time I got a ton of value out of being rejected by a VC: In early 2015, we went out to raise Mode’s Series A. I met Mike Dauber through a friend who was an exec at Platfora, where Mike was on the board. Mike had just left Battery Ventures to start Amplify Partners. His experience and Amplify’s focus seemed to match perfectly with what we were up to at Mode. My co-founders and I went into his office for a one-hour conversation. I don’t recall speaking with him too much beyond that, but he was kind enough to give me a phone call and break the news to me live. Here's roughly how it went: “We like the company, but we think this deal will be too expensive for us. We are really just set up to do seed deals.” “What do you think the right price is for this round?” “$28 million pre-money” Back then, $28m was a pretty good Series A — and certainly beyond a seed round — so it felt like Mike was being honest with me. And I had heard “no” enough times at that point to recognize that he didn’t have to give me a number. So I asked him for more thoughts, and he was very free with them. But the number turned out to matter the most. Because a couple weeks later, we had a term sheet on the table and another one coming. The first one was at $20m pre-money. We bet on Mike’s guidance and told the second firm that we were looking for $28m. And that’s what we ended up with. Maybe we could have gone higher, but we certainly wouldn’t have thought to go 40% above our other term sheet without an expert giving us some indication that it would be reasonable. So when I was prepping my deck for the Series B a couple years later, the first person I called was Mike. Not because I wanted him to invest. I was 100% certain he wouldn’t. I just wanted his opinion on my pitch; on the company. Once again, he gave me direct, actionable feedback that made my pitch better, and ultimately helped me get a great round done. It was a bit more critical this time -- it certainly didn't feel as good as hearing "your deal will be priced to high for me." But that made it all the more valuable. I can’t stress enough how rare this is. Especially as a CEO, it’s very difficult to find people who will tell it to you like it is.

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