Ben Grabiner

This post is great for Startmate, but don't ignore the headline: "9 out of 10 times VC loses money". This is a truth a lot of startup founders just don't get... when you take VC, you think you've made it... but *most of the time* a VC writes a check it goes sideways. Getting VC is NOT a magnificent milestone... it's the start of a very risky journey. Think about that: your investor comes to your board meeting... and 8 or 9 out of every 10 board meetings they go to they know "this company ain't gonna make it". I'm not against VC's and I had a terrific VC in my company, but I don't think enough founders *understand* the realities of venture capital, *particularly* in Australia, where the whole ecosystem is quite immature and a long way behind the US. #VentureCapital #fundraising #VC #startups #founders

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Decoding VC speak is often tough - many founders will hear a combo of “Come back to us when you have more revenue” or “Let me know once you have a lead investor” Much of this means “Tell me when it’s safe enough for me to make a decision because someone else has done the hard work” I talk about this and more in an article for our friends at Startup Daily https://lnkd.in/gnFvGFy8

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📢 Want a crash course in angel investing and venture capital? If you're interested in learning more about angel investing and the world of venture capital, we're hosting an intro series on this topic across multiple sessions, kicking off today! Sign up details below 👇

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Board Meetings for Seed / A companies should be open discussions on ideas and strategy 🗣️ All investors should have read the Board Pack in advance (and it should be sent 48 hours+ in advance). Specific governance / finance questions can be asked in an email chain or WA group beforehand. When the Board starts, nail any votes required in first 5 mins. Core focus of Board should = 2-3 key things that the Founders want to have a deep dialogue on, where the other members can be the sounding board. "This is our idea around our new marketing campaign. These are our channels." "We've narrowed down these three candidates for x role." "Here is prototype for our new product feature launching next month." "Here's the template for our Sales playbook for moving up market." "We a/b tested these two acquisition channels and have some preliminary data." No need to spend half the Board meeting talking about financials, the Board Pack will show if you've overspent, the reasons why and can be discussed async beforehand.

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Complete list of all active pre-seed & seed lead investors in NZ below. Thank you to all those who helped fill in the gaps. Quite a few people have reached out and said it was helpful, which is great. Next, I am thinking of creating the list of pre-seed & seed investors in NZ who follow and fill in investment rounds. As the list will be quite long, help would be appreciated. Please add in the comments. Aera VC AgriZeroNZ Blackbird Brandon Capital Bridgewest Ventures NZ Cure Kids Ventures Ecliptic Even Capital GD1 (Global From Day One) Hillfarrance Venture Capital Icehouse Ventures Maker Partners Motion Capital Movac Nuance Connected Capital NZ Growth Capital Partners NZVC Outset Ventures Pacific Channel Phase One Ventures Punakaiki Fund Quidnet Ventures Soul Capital Sprout Agritech WNT Ventures

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Why GP Carry Economics for Syndicates are Superior to Venture Funds Sharing #2 of 5 learnings Zachary Ginsburg posted via Last Money In Media yesterday on reflecting back after 500 SPVs completed. 500 SPVs is not a typo :) – “The carry economics are arguably far superior for Syndicate GPs than the carry economics for fund GPs. We previously put out an article discussing the economics of venture, and the reality is that while venture can be the best performing major asset class the returns are skewed to the top funds with the average fund barely returning 1x capital back. There is no major asset class that has dispersion of returns quite as high as venture capital. This underscores the benefits for Syndicate GPs. For one, it means the time to actually receive carry income can be extremely quickly. Despite starting Calm Ventures in 2020, we had one nice exit in 2021 (~10x outcome in 12 months). While the returns from that investment were only ~10% of the capital deployed to that point, we still received carry (over a half million dollars). In a traditional fund if you returned only ~10% of capital back, you would not be seeing a dollar in carry from that sale. To further underscore the GP benefit, as mentioned, around half of funds return <1x DPI. Meaning half of GPs aren’t seeing a dollar in carry from their funds. You can have a <1x fund in SPVs and still receive an enormous amount of carry distributions. To take the extreme case, let’s say we invest $1M each into 100 investments via SPVs over the course of 3 years - so $100M invested total. 99 of those investments go to zero and one 100x’s or returns $100M. While LPs in aggregate didn’t make any money (we received $100M in distributions and invested $100M), the GP actually makes almost $20M dollars (20% carry x $99M in returns on the single performing investment). It’s worth pointing out that while the carry economics are superior, the fee economics are substantially worse for Syndicate GPs, who often aren’t drawing any consistent income or salary.” Link to full post w/4 other key learning in comments. -- Powered by Sydecar and Forge, Last Money In Media is the most actionable venture capital newsletter. Written by Zachary Ginsburg and Alex Pattis, global syndicate leaders with 800+ SPVs closed.

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Venture-backed founders sign up for a binary outcome: Go Big or Go Home. Which is why it is so puzzling to see so many of these founders pivot away from growth to "sustainable" low-growth profitability, according to Tim Doyle, founder of Eucalyptus. Low-growth, sub-scale venture-backed companies have no future -- even if they are able to turn a small profit. Don't waste your life force building a zombie company! -- It was heaps of fun getting some of Tim's hot takes in today's BONUS episode of The Startup Podcast, with me and Chris Saad.

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Many Aussie/Kiwi founders eventually face the decision of: what market should I go to next? Often, the answer they land on is the US. The key decision points then become: 1) when should I enter the US? 2) how should I break in? I spent the last 2 weeks with US VCs in San Francisco and New York, exploring those two questions and understanding what they've seen work and what they've seen fail. If you're in the early stages of building a venture scale business, I wrote the below as a simplified guide for thinking through those two decision points: https://lnkd.in/gY2JzByV

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Yesterday was my 5 year anniversary at Lightspeed! Some cool milestones the last 12 months include 2 early port cos hitting multiple $100Ms ARR and 2 portfolio companies doing m&a. But the really long feedback cycles in VC are brutal. Super humbling in how they divorce milestones and real achievements, inputs and outputs. It’s super easy to satiate yourself on the vanity metrics of VC. (Hot take: TVPI is vanity. Don’t get full early. You can’t eat markups. We all fear the zombie unicorn!). One of the biggest differences from operating imho. Half a decade in and still feel like I have so much to prove and learn. Which I really love. VC is a strange, beautiful craft. Full of contradictions: - You need to be founder friendly, but also drive difficult board conversations. - You want to have unique insights, but also not overthink it. - You want to be early, but not too early. - VC is really hard to do well, but not hard to do. - You can't help but pattern match, but the best investments break all patterns. I’ve said it before but VC is the endless game of introspection, getting to ground truths, constant learning and getting in trouble with exceptional people. Thanks to the incredible founders who trust me to be your partner. Always stay gracious. Here's to the next 5 years in VC!

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Seasoned startup and product builder Chris Saad on why a typical American user from the west coast is often worth about "five to ten times more" than an Australian user. We explored the fundamental differences between the Australian and American startup ecosystems - mindset, regulations, taxes, social safety nets, sophistication of investors, geography, talent density, capital availability, and so on. Check out the full conversation in episode 434 of the Future Squared podcast.

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Recently I was asked for some input on running a startup accelerator. Since I don't live in NZ, and I now work in growth capital not VC, that freed me up to be pretty candid. Here's what I wrote: Aus and NZ are innovative nations by nature, yet the incubator and accelerator model has been a copy&paste of American/Cambridge and Israeli models that have done nothing to stem the 80% fail rate. Rather than address this systemic failure, we have normalised failure by saying “well startups are just inherently high risk” That’s partially true, they are like high performance motorcycles : deadly in the hands of a rider who does not know how to ride it. But there's a big caveat: that's only true if you don't train the rider (founder) VCs meanwhile simply go unicorn hunting and stack more companies in their portfolio so that the binomial equation has more chance of yielding a return rather than address systemic failure. And so the façade continues: 80% fail. Of the 20% who “succeed”: 80% scrape themselves over the finish line saying “never again”. The 20% of the 20% then get rockstar-entrepreneur gigs lecturing to novice entrepreneur about how to succeed by copying their “sacrifice everything” model, no knowledge is actually passed on, because they are not skilled in knowledge transfer, and not able to abstract out what caused them to succeed vs what causes other entrepreneurs in a different context to succeed. Compare that to what happens in sports: ex-players value the art of learning to pass on knowledge, going through a long apprenticeship before they emerge, sometimes a decade later, as a successful coach of others. By contrast, in the world of tech startups, we have no ecosystem-wide emphasis on skill development of the founder, or helping them cultivate the mindset and habits they will need to run a company, grow a company, pitch, sell, lead, and scale the next generation of leadership so that they don’t become the bottleneck to growth. In short, we have a culture of complete neglect of growing the most important assets: the founders, even though Bill Campbell transparently demonstrated in his coaching of Steve jobs, Jeff Bezos and Eric Schmidt that treating founders like high performance athletes and giving them real coaching, not light touch mentoring that you’d be chastised for giving a 5th grade soccer team, was the recipe for scaleable success. So if your accelerator simply seeks to answer the question “how would I treat my founders if they were high performance athletes I wanted to win on the global stage” it will be better than 99.5% of the world’s incubators and accelerators.

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I'm very proud to see Crimson Education, founded by Jamie Beaton, Fangzhou Jiang, and Sharndré Kushor, cement its place in New Zealand's small stable of tech Unicorns. It's exciting to see an ANZ edtech focused on K - 12 education excel on a global stage. It's a proof point that the region can produce successful tech businesses beyond B2B SaaS. Crimson's journey has intersected with mine in curious ways. I remember spending the summer break with Jamie and Richard when they were applying to US universities; I must have proofread dozens of iterations of personal statements. I was then one of Crimson's first tutors in 2013, and recruited several others from ANU to support Crimson's expansion into tutoring HSC subjects. I remember having pizza with the team in Fangzhou's Unilodge dorm room, in between the information sessions they hosted for highschool students. From these humble beginnings, it's incredible to see Crimson grow into a world leader in college admissions consulting and online high school education - while accelerating to over $100m USD in annual turnover. At various times, I've heard Crimson cop criticism for creating a 'hack' for getting into elite universities. Having worked closely with a number of Crimson students - I think what Crimson really does is expand students' horizons, help them to hone in on what they're great at, and raise their ambition. Ever since he was 17 years old, Jamie has believed that the world could be his oyster. His optimism and energy is infectious; spending time with Jamie always raises my ambition too. It's marvelous to see him scale his superpower via the business he's built in Crimson Education. More about the raise in this article by Paul Smith -

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A great overview of regulation and how it drowns our economy and innovation. This is worth the time investment, unless you run the woke media organization in Australia.

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How do investors price pre-seed rounds?  This is perhaps one of the most misunderstood aspects of fundraising.  Oftentimes, founders want some framework to better understand what market value is when raising capital into their business.  Public equities and later stage privates have a well defined matrix of revenue/margin profiles that dictate valuation, surely there must be some framework for arriving at a pre-seed valuation. So how do investors price startups that are pre-revenue, or have maybe one of two early customers? In reality, pricing is more a byproduct of a VC fund’s portfolio construction model than any metric of the underlying business.  VCs model out portfolios to include a certain number of companies with an ownership target in each startup.  There are variations to portfolio construction, and the chosen strategy will have a direct impact on the types of rounds a fund will participate in. For example, an early stage fund might raise a $60M fund to lead investments in 30 companies and target 12.5% ownership.   After management fees, there is ~$48M in investable capital.  Assuming a fund holds back ~30% for reserves(this number varies across funds) that leaves ~$30M to invest in initial checks.   In this case a fund must average $1M checks at $8M valuations to reach their intended ownership target of 12.5%.   When you are in diligence with a fund, they are first and foremost trying to get to a yes on the investment opportunity.  When arriving at a valuation though, the math outlined above is the determining factor, more so than any multiple of revenue on the business, or the stated desires of where a founder wants to raise capital.  At the end of the day, a VC is trying to arrive at a valuation that works within their portfolio strategy. This means they are very unlikely to price a deal at $15M cap given the aforementioned portfolio construction, as they would either not own enough($1M = 6.67% ownership) or have to cut too large a check( $1.875M = 12.5%). The thing that is most likely to move an investor off their target valuation is another investor in the picture that is driving the price higher, but even then there are upward bound limits of how high an investor is willing to price a deal. I always advise our port cos to ask an investor early in conversations what their ideal check size/valuation is to make sure there is alignment with the founder's objectives.    

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How Dovetail grew to a $970M (Australian) valuation in 5 years—and created a new SaaS category: I chatted with 4 members of their team, and 4 UXR leaders, to learn the details. 1. Product-led growth, design-led company Dovetail's business model is decidedly product-led growth. The company relies on the product, and inherently viral features like research reports, to acquire, convert, monetize, and retain users. But design-led is its culture. CEO and co-founder Benjamin Humphrey has been in the details of the design since its beginning. And the product "feels" like it as a result. 2. Creating a hub for a neglected persona Rewind to 2016. While engineers had JIRA, Designers had Sketch, PMs had Google Docs, and analysts had Tableau, User Researchers had... nothing? Their workflow was a mess of hopping between different software. Ben had lived it as a product designer at Atlassian. There was a plethora of software focused on how to build, but there was almost nothing about what to build. So, after proving out the idea with an MVP, he recruited his Atlassian Engineer friend, Bradley Ayers, to join him. 3. Mastering the PLG motion Dovetail excels in all layers of PLG: → Acquisition: they don't use any outbound sales, focusing on product acquisition → Core problem communication: the home page emphasizes improving how you make product decisions → Reduced friction: its onboarding is focused on a standard walkthrough, but it is 10 steps → Activation: Dovetail has an intuitive product, examples, and templates to take you from setup to habit → Retention: as a system of record, the product gets stickier as more (qualitative) data is put in it → Monetization: the free plan has unlimited functionality, but only 1 project → Expansion: it has a natural growth of free users, who eventually become editors 4. Creating powerful, reinforcing growth loops Dovetail 2 two core loops: • More paid seats helps them build a better product, which helps UXRs succeed, which drives more UXRs and paid seats                                 • UXRs succeed, driving collaborators to join, which go from free to paid seats As well as 2 ancillary loops: • The more paid seats, the more it can invest in inbound sales • The more free seats, the more expansion products like Channels (to analyze customer support data) it can build 5. Building towards a category of one While there are competitors in the research insights space, Dovetail is building out its own category. It's not quite transcription. It's not quite a hub for research. It's that and more. This has helped it create its own, new category in SaaS. As Benjamin, still the CEO, told me: "We're building a system of record for all insights... It's a friggin' long, 20-year journey. You need to be a little nuts to have that level of ambition. "

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Meet Cheryl Kellond 💎, a 3X founder, having previously built Bia sport, the #1 rated fitness wearable on Amazon, and Apostrophe, which she scaled to $10M in ARR. Now she's building Play Money!, an investment platform enabling everyday angels to build a diversified startup portfolio without making angel investing a full-time job. Cheryl and I share a passion for unlocking angel dollars to get more capital to underrepresented founders, so I couldn't be more excited to highlight her and what she's building! In this episode we chat about: 💫 How and why she started investing with just $1.5-$2.5K checks 💫 The most common mistakes angel investors make 💫 Raising $20M during her career from investors like M13 💫 + so much more Check out our full conversation here: https://lnkd.in/gpNbjzSm #invest #venturecapital #startups #vc

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Which international VC has invested most actively in NZ? Here's the slide we prepared recently for our Investor Masterclass. Let me know who I'm missing. Four more sessions coming up including: Valuation, Terms, Governance, and War Stories. Join the fun by registering here: https://lnkd.in/ghJJpdR4

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🎊 Big News from Our Team at Titanium Ventures! 🎊 Today, we’re thrilled to share that we've evolved from Telstra Ventures to Titanium Ventures! Why Titanium? Because it captures the essence of who we are and aspires to be—a firm that supports exceptionally strong and resilient entrepreneurs, those who thrive under pressure. Titanium is not just a metal with the highest durability and strength-to-weight ratio; it represents the extraordinary capability and determination of the leaders we back—leaders who consistently punch way above their weight. Our commitment remains steadfast: to unearth and scale the most promising ventures in AI, digital, and software sectors. With 99 investments, including 12 IPOs, 17 unicorns and 42 liquidity events, we’re just getting started. Holding almost US$1B in funds under management and having returned US$678M to our investors, we are more driven than ever. This is more than a name change—it’s a reaffirmation of our promise to accelerate the extraordinary, fueling the growth of standout disruptors. We've been doing this for over a decade, and it's what our investors and founders expect us to do for many more to come. Here's to the next chapter in our journey with all of you! #VentureCapital #Innovation #Entrepreneurship #TitaniumVentures

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