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VC Cafe
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Weekly #FIRGUN Newsletter – October 18 2024
- Israeli culture continues to celebrate 'Firgun', which describes genuine, unselfish delight or pride in the accomplishment of the other person.
- Yahya Sinwar, responsible for the massacre of over 1,200 Israelis, is dead and 101 hostages remain a priority.
- Israeli startups have raised $7.4B in 330 deals in the first 9 months of 2024.
- Six new Israeli unicorns were created in Q1-Q3/2024.
- M&A in the first 9 months of 2024 reached $12.9B, despite the war.
- Elon Musk's SpaceX accomplished a historic feat, catching a 19-story tall rocket booster in mid-air.
- NVIDIA launched a new open-source 70B model that beats GPT-4o and Claude 3.5 Sonnet.
- Adobe launched its Firefly AI video model, Google launched new features for its increasingly popular NotebookLM.
- Voice AI remains dominant with Crunchbase reporting the continued demonstrated ascent of AI.
- The Israeli trail data loss prevention tech was acquired by unicorn Cyera for $162M.
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Saastr
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The Future of AI in SaaS Sales with Henry Schuck, CEO of ZoomInfo and SaaStr CEO Jason Lemkin
- SaaStr CEO, Jason Lemkin, and ZoomInfo CEO, Henry Schuck, discuss the transformative power of AI within SaaS.
- ZoomInfo has a difference because it recruit good people, and develops them into great people.
- Founders should spend 20-30% of their time soft recruiting execs.
- The best sales leaders are the ones that are even better recruiters.
- Founders need to get better at recruiting, hiring, and retaining an A-Team.
- It’s mission-critical to go multi-product on time – too early is bad but too late is bad too.
- If you want high net retention, develop high renewal rates and high upsells into using customer base.
- Don’t hire B-players, just hire A-players.
- AI will lead to a next level of transparency for leadership.
- Everything in post-sales is ahead of sales when it comes to AI.
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Medium
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Why the Capital Markets Union initiative is essential for European businesses?
- Closing the funding gap throughout the company and innovation cycle is good news for European companies.
- Fragmented capital markets limit Europe's ability to compete globally.
- Fragmentation hinders startups and SMEs' ability to raise cross-border funds.
- Europe's fragmented capital market contributes to a 'capital drain' as companies seek better funding options outside the continent.
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Saastr
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Dear SaaStr: What Happens When a VC Fund Invests in a Startup?
- As soon as a VC invests, the follow calculation begins: Can the company grow fast enough, and accomplish enough, before running out of money, to raise the Next Round at >=2x the price just paid.
- There is a certain amount of runway, a period of time that money lasts, and a “Zero Cash Date.” Knowing and sharing this date is crucial.
- If the criteria for raising the next round at a higher valuation may not be met, stress builds up for the startup and investors.
- Venture capital can be great for startups, but it is expensive capital, especially in the early days.
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Medium
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Beware of Unscrupulous Investors
- Startup founders often fall victim to unscrupulous investors who take advantage of their inexperience.
- To protect equity and maintain control, founders should thoroughly evaluate investors and negotiate fair terms.
- Beware of non-monetary contributions that may result in unfair dilution; prioritize cash deals or valuable non-cash investments.
- Founders should avoid giving up a large portion of their company in the first round of funding to maintain flexibility.
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Medium
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India’s Economic Ascent: Organic Entrepreneurship Trumps the PEVC Mirage
- India has the potential to emerge as a global economic leader by 2060-2070 per the author, who had predicted this in 2012 at a conference in the Indian Chapter of the Table Club in Udaipur.
- India’s educational prowess and intellectual capital, evidenced by recent triumphs at the Chess Olympiad, are key ingredients for long-term economic success.
- The author argues that India’s rich tradition of organic, grassroots entrepreneurship is the real backbone of its economy, rather than unicorn startups or PEVC funding.
- India’s democratic, free, and inclusive society fosters a diverse array of entrepreneurial ventures that are not centrally planned or overly dependent on PEVC funding.
- India’s young population and emphasis on education provide a significant advantage, as the workforce is not only numerous but also versatile and adaptable.
- Foreign investment, particularly from entrepreneurial investors committed to long-term growth and value creation, will be essential. Opening up to Foreign Direct Investment should be aligned with a similar increase in allowances for local top entrepreneurs to expand cross-border.
- India must balance its approach to foreign investment, being cautious about allowing unfettered foreign investment from short-term traders and foreign portfolio investors.
- Sustainable, revenue-driven growth rather than chasing unicorn valuations is key to building an economy that not only competes globally but also provides widespread prosperity for its people.
- India’s economic future is bright, positioning its pieces wisely in the grand economic chess game of the 21st century with a focus on organic growth, patience, and strategy.
- India will achieve a remarkable endgame by 2060-2070, emerging as a global economic leader based on millions of entrepreneurs who build their businesses one step at a time.
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Medium
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Emerging VC Talent: Edition 4, Alex Chung
- In the fourth edition of Emerging VC Talent, Alex Chung, Associate at Chai Ventures, shares insight on his professional background and career journey so far. Chung believes that both an athlete's mindset and grit and perseverance are vital to a founder's or investor's success. He is bullish on women in capital allocator roles and investing in women founders, stating that there is a massive wealth transfer taking place. Chung also anticipates that new companies will emerge and cater to an evolving consumer profile. The increased time spent on fundraising and securing capital can take time away from deploying capital, though junior professionals have the opportunity to add significant value by building relationships and sourcing LPs. Chung's mentor advised him to do research before speaking with someone and always send a thank-you note.
- Chai Ventures is a pre-seed and seed stage fund investing in women-led companies solving critical problems with businesses that deliver impact at scale across the high-growth sectors of better world, health and wellness, and human connection. Chung's career path has not been linear, but his curiosity to understand what excites people has always guided his choices. Chung's innate curiosity about consumer behavior has always guided his career choices. Chung believes that women are increasingly leading areas of spending and income, and in many countries, including the U.S, more women are graduating from college than men.
- Chung is training for the NYC marathon and states that sticking with something and putting in the reps will eventually lead to results. He notes that their fundraising journey at Chai Ventures involves talking to a set number of people each week and hitting specific milestones, focusing on doing a few things well rather than taking on too much at once and executing poorly. Chung anticipates that the emergence of a new class of companies will cater to an evolving consumer profile, and cherishes the opportunity to secure buy-in from his team and create value for those invested in.
- Market crashes have created difficulty in the private markets, especially for LPs whose capital is tied up in alternatives like PE and VC. Chung recommends building relationships with junior professionals at fund-of-funds, especially folks you may have alumni connections with, and setting up informational chats. He believes that meeting people in person is invaluable, leveraging LinkedIn, and a well-crafted cold message can go a long way.
- Chung is optimistic about women-led companies driving innovation in areas they understand best. Chung believes that the decision-making process for women is very different from the decision-making process of men. Women often seek more data points, recommendations from friends and online reviews, even for simple purchases like buying a pair of jeans.
- Chung champions Mimikai and Landing, the two companies he had strong conviction, and focused on figuring out how to genuinely be helpful and create value for these companies post-investment. Chung's mentor advises him to do research before speaking with someone and always send a thank-you note.
- More broadly, for junior people in venture, the increased time spent on fundraising and securing capital can take time away from the “fun” work — deploying capital. Chung thinks that junior professionals have the opportunity to add significant value by sourcing LPs and building relationships without overstepping, making themselves invaluable contributors to the fundraising process.
- When it comes to larger decisions, like investing or buying a home, Chung notes that preferences for women become even more pronounced. Chung is interested to see how macroeconomic trends will influence the market and what new companies will emerge. Chung believes that the same principle applies to growing a firm: focus on doing a few things well rather than taking on too much at once and executing poorly.
- Chung believes that junior folks in VC will be interesting to see how junior folks in VC respond to the increasing competitiveness for access to capital. Insights from professionals at fund-of-funds can create lasting relationships, build your network, and help navigate the fundraising process.
- Chai Ventures is committed to providing guidance for women in capital allocator roles and investing in women founders, Chung notes. In consumer behavior, Chung believes that women are increasingly leading areas of spending and income.
- Chung's mentor advises him to do research before speaking with someone and always send a thank-you note. Chung focused on creating value for companies by securing buy-in from his team and his investment's mission.
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Medium
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Perks of Silicon Valley: Webvan Style
- Webvan and Amazon took different paths in the world of delivery.
- Webvan's failure can be attributed to premature expansion, high overhead costs, poor financial planning, and the immaturity of the e-commerce market.
- Amazon's success stems from gradual scaling, technological prowess, careful capital management, and a customer-focused strategy.
- While Webvan's vision was bold, it lacked the necessary infrastructure and financial discipline, whereas Amazon revolutionized the delivery industry over the course of decades.
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25 Likes
Medium
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Introducing The Venture Variety Show: A Podcast that Delves into the Future of Venture and Startups
- Introducing The Venture Variety Show: A Podcast that Delves into the Future of Venture and Startups
- The Venture Variety Show is a podcast that explores the world of venture and startups and their interactions with media and platforms.
- The podcast features conversations with various voices from the venture community, including marketers, coaches, artists, entrepreneurs, and investors.
- Listeners can find The Venture Variety Show on Spotify, YouTube, Apple Podcasts, or by subscribing to the Substack to be notified of new episodes.
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17 Likes
Medium
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‘For Want of a Domain, the Business Was Lost’
- A domain broker recounts a story of a client who may lose their entire business due to not securing their brand matching dot COM domain.
- The client operated on their brand name dot IO domain, which was a natural fit for their business vertical.
- A hacker took advantage of the availability of their brand matching dot COM domain and conducted a successful phishing campaign, leading to a data breach and loss of trust.
- Failing to secure the most recognized and trusted domain extension, the dot COM, is a major security risk that many organizations overlook.
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Medium
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SF Tech Company Made Renovation Declares Bankruptcy Amid Customer Complaints
- San Francisco-based startup Made Renovation, which promised a tech-driven approach to bathroom remodeling, declared bankruptcy on October 16, 2024.
- The company’s downfall, marked by customer dissatisfaction and financial troubles, filed for Chapter 7 protections that revealed $146,000 in assets against $19.2 million in liabilities.
- Founded in 2019, Made Renovation sought to simplify the bathroom remodeling process by offering design templates and connecting clients with contractors.
- It targeted tech-savvy homeowners, promising a seamless, digital-forward experience.
- According to SF Gate: Made Renovation quickly ran into trouble. Customers accused the company of poor service, subpar contractor performance, and inadequate communication.
- Made Renovation’s downfall highlights the risks of rapid scaling without a solid foundation, yet under the hood, it lacked integrity and common sense.
- The company’s tech-driven approach was unable to rise above its operational inefficiencies due to lack of leadership.
- TriplePoint Capital, the firm behind much of Made Renovation’s debt, has faced its own challenges.
- Made Renovation’s failure is an example of poor judgment and a lack of key business values.
- The situation also raises questions about accountability — how a company can mismanage millions of dollars in venture funding, amass $19.2 million in liabilities, and ultimately leave its customers and employees (the people in the real world) in the lurch.
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TechCrunch
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Subscription management firm Zuora agrees to be acquired for $1.7B
- Subscription management firm Zuora has agreed to be acquired by private equity firms GIC and Silver Lake for $1.7 billion.
- The all-cash deal is expected to close in Q1 2025, subject to approvals and customary closing conditions.
- Tien Tzuo, Zuora's CEO and chairman, will continue to lead the company.
- Zuora offers tools to help companies keep track of subscription payments, pricing, and accounting.
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16 Likes
TechCrunch
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Eclipse opens an NYC office with plans to bolster its presence on the East Coast
- VC firm Eclipse has opened a second office in New York's Soho neighborhood.
- The firm aims to invest more on the East Coast and focus on sectors like manufacturing, supply chain, healthcare, and infrastructure.
- The expansion was driven by the rise of startups addressing legacy industry issues and the strong industrial history of the Northeast region.
- The New York office will also facilitate closer collaboration with existing portfolio companies and provide easy access to Washington D.C.
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Insider
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Inshur provides embedded insurance to ride-hailing companies like Uber. Check out the 16-slide pitch deck used to secure $19 million.
- Insurtech startup Inshur has secured $19 million in Series B funding.
- The startup offers AI-enhanced vehicle insurance for clients like Uber and Amazon Flex.
- The funding will be used to scale the team in the US and develop product offerings.
- Inshur has embedded insurance into apps, making it accessible for on-demand drivers.
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21 Likes
Medium
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Why Most Fundraising Pitches Fail within the first 5 minutes
- Lack of clarity in the pitch can cause investors to lose interest.
- Entrepreneurs often fail to understand the specific interests of investors, leading to an ineffective pitch.
- A weak opening can create a negative first impression and hinder the success of the pitch.
- Pitches that lack a compelling story and focus too much on numbers and technical jargon lose investor engagement.
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