Mike Krenn’s Post

Ugh, I just looked at a company that's raising $3 million dollars or so, that is completely un-investable. The team is fantastic, the product is promising and if they can pull off what they are trying to do, is going to revolutionize their industry. They are making great progress. And then I saw the cap table. They got completely fucked by their investors: The company is raising $3m, and has raised a total of about $3m to date - but the founders only own about a third of the company. Which is a huge red flag to any serious institutional investor. If this company has ambitions of becoming a multi-billion-dollar company (they might!), the founders need to stay in the game. Instead, predatory investors at the early stage have bled the company dry of 66% of the equity in the company. In the US, a similar company would probably have done a SAFE angel and pre-seed round. Maybe an accelerator. And the founders would have had upwards of 70-75% of ownership in the company as they go and raise their $3m seed round. As an investor, doing an equity land-grab is ludicrously short-sighted: You virtually guarantee that your investment cannot become a multi-billion dollar company; at some point, the company will get an offer to be acquired, and the founders will want to take it, because it's their only chance at a decent payday. At that point, the investors will have to say 'yes,' and accept a mediocre outcome. Or they have to block the M&A, and completely ruin the motivation for the founders to keep going. I wrote about this a while ago, too - but it's been a while since I saw an actual cap table spelling this out in such horrible detail. I can't help but feel sorry for the founders, and angry with the investors. This is amateur hour, and it means that there's basically no chance of success within the ecosystem.

Finding the right investors and understanding what they want to see from founders and businesses is an all too familiar struggle for many SaaS leaders... luckily, these investors insights have come straight from the source 👀 ⤵️ Tae Hea Nahm, Co-Founder and Managing Director Storm Ventures, described how companies can unlock high growth by finding go-to-market (GTM) fit. In practice, a company with GTM fit has: 🏃♀️ Found urgency amongst it’s ICP 🎯 Nailed their go-to-market fit model 🏆 Built a repeatable go-to-market playbook to find and win customers over and over again Telling a story beyond the numbers: investors from NotionVC, Bessemer Venture Partners, Point Nine, and Dawn Capital shed some light on how to do this successfully.  💬 Make sure the data points you share add value to your narrative 🤝 Show a deep understanding of your ICP and how you can sell to them We've got a cracking lineup of investors joining us in Austin next month to share their insights on funding in 2024. Sessions include: 🚀 How to execute a successful pivot to grow: Creating a new product category - Mary D'Onofrio (Partner at Bessemer Venture Partners) and Ev Kontsevoy (CEO at Teleport). 💸 From $0 to a $3B valuation: Unconventional secrets behind Remote’s growth - Christine Esserman (Partner at Accel) and Marcelo Lebre (Co-Founder, CEO and President at Remote). 🔥 How to scale your technical SaaS startup beyond $50M ARR - Casber Wang (Partner at Sapphire Ventures) and Kyle Hanslovan (Co-Founder and CEO at Huntress). ✅ Lessons from over $50B in exits: What makes a business worth more? - Thomas Smale (CEO at FE International, Inc.). 👾 Building successful products in the AI era - SC Moatti (Managing Partner Mighty Capital). 📊 A comedy of ARRs: How to approach fundraising in the profitability over growth era - Brandon Gleklen (Principal at Battery Ventures). https://lnkd.in/evWKYZ8M #SaaS #investorinsights #SaaStockUSA #funding #fundraising #ARR #growth #product #startups #scale

these results seem to be inconsistent with the venture capital consensus that has existed for several decades. It will be interesting to find out what mechanisms cause this result and more about the dynamics of founders, creating a new venture

This is why it’s critical for founders to get seasoned advice before adding anyone to the cap table. Don’t care if that’s a startup coach, a mentor with multiple startups under their belt, or an unbiased investor (aka not in the deal). Don’t know any of those types of people? Reach out to an accelerator you might like to participate in one day. If the MD can’t spare an hour to chat with you, why the hell would you apply later? Reach out to another accelerator and you WILL, with just a bit of outreach, find someone who can help. Need help for your own early fundraising? Send me a DM and I’ll absolutely give you a hand.

Why are early-stage #investors important to #innovation and the #startupecosystem? Our VP, Mitra Miller, shares her perspective in this excellent article in InnovationMap. HINT: They bring much more than a checkbook... With Natalie Harms, Samia Ahsan, Eric Alfuth, Eric Schneider, CFA, Rezwan Mirza #angelinvesting #angelinvestor #angelinvestors #houston #htown

In a market defined by investor caution, it's more critical than ever for startups to have a realistic purview of what's required to gain the confidence of investors. How do you gain that confidence? Apply for the University City Science Center's Capital Readiness Program by Feb. 2nd to give your startup the best chance of success in raising a first round from institutional investors. ➡ https://lnkd.in/eJsStBnc Technical.ly https://lnkd.in/eu4Th29t

Stats alert! Maelle Gavet of Techstars did the work to uncover a #startup #statistic that is critically important to #vc investors and #angelinvestors and even #familyoffice investors: #SoloFounders are statistically (2.6x) more likely to be successful than Startups with CoFounders. @YCombinator won't invest in solo Founders. #WomenFounders are more likely to get to higher revenue quicker, profitability quicker, exit quicker and higher exit multiples than male Founders and yet got only roughly 2% of the venture capital in 2022. @Ycombinator had only 11% women in their recent cohort. Here is my humble opinion having been in both roles: It's not that the 'founding' Team can't have key roles, it's that the tough decisions have to reside with someone who takes the fall if they don't pan out. And fighting, disagreeing or developing resentment over them can become toxic. Dgmw, note that Jack Welch (Leader of Leaders) always said the best Leaders surround themselves with people who will challenge their beliefs and welcome it - take in all the data - make a decision and explain to their Team why they made it, then take the hit if it tanks. With Jeff Bezos this was called the 'disagree and commit' principle. Another counterintuitive stat: a 60-yr-old Founder is 3x more likely to build a successful Startup than a 30-yr-old and yet @YCombinator invests in an outsized number of 20 something Stanford University grads, and of course the MAMGA (formerly FAMGA) alums. So why is @YC successful then? I've said it over and over: 1. they pre-seed fund the Company (over 50% are idea stage) 2. they 'traction' the Company within their massive network 3, they lead the Company's seed and bring in the co-investors who are key investors with massive powerful networks. Here's the thing: City of Houston is well-positioned to do this better due to the amount of Industry, Fortune 500's that are here, capital here (in search of a non-oil identity) and Startup spirit. Sooo, a CTA for Houston ecosphere participants: LFG People already making a dent: Staci LaToison Sunny Shuoyang Zhang, PhD The Artemis Fund Carrie Colbert Ion Houston Jon Lambert The Cannon Community Impact Hub Network Halliburton Labs gbeta Houston. Willy Verbrugghe. I don't mean to omit people - who else? Houston Angel Network has started but more work to be done. What can we do to make this happen and play into the stats/numbers? Who should lead the charge? Thoughts? Women control 86% of all purchases (old stat - not sure the current?) so having more women Founders funded, and more

Are you a solo #founder worried that starting the journey alone could be a disadvantage? Don't. The stats are in your favour 😎 Of course, we all need support on the way, but starting on your own if you don't have suitable #cofounders could end up being a good thing. So next time when someone tells you it's not, pull this one out - I for sure will bookmark it ;) #startupjourney #startupsuccess

😀 Myth and reality.... Interesting statistics about solo vs team. I have met so many co-founders who could not collaborate any more after only few months. (that is usually the end of the startup). 🔝 Maybe the right setup is not always the team and data seems to indicate that a solopreneur with an ability to orchestrate a strong network of partners in her / his ecosystem could prove to be better. ❓ Would you say it is better to wait (forever ?) until you can find the perfect associate(s) or would you rather start solo and see how it goes ? #success #entrepreneur #founders #startups #myth

The North West of England has all the key components to build venture scale businesses – those that drive technological innovation, create employment, expand globally and deliver outsized investment returns that can be recycled back into innovation. But companies are failing, with just over 38% of companies set up in Manchester in 2015 still being active five years later. A cohesive approach is required to support venture scale startups and scaleups – one which facilitates access to information, networks and capital to allow these businesses to begin, develop and grow. That’s why KPMG | Acceleris are excited to launch the Wired for Growth taskforce. The mission is to identify the steps we can take as a collective to drive venture scale growth in the region. New report: Wiring the North West for venture scale growth - download here: https://lnkd.in/eK3-zh3C We posed questions to local leaders, founders and key influencers from the tech ecosystem in the North West. We’ve taken their voices and distilled their views to create our first report. It includes our thinking so far on how to accelerate the growth and funding of ambitious startups in the North West. Read the report to discover: - A playbook to guide founders through the stages of business growth and venture funding - Our recommendations for how the region’s ecosystem can better support founders - Our five-point plan for building a more thriving ecosystem for North West founders.