Andrew Rea

Bold prediction for 2025: Investors will pay founders to access their venture data. Founders own their data and grant access to investors for a fee. This shift promotes transparency, trust, and efficiency in fundraising, while giving startups a new revenue stream.

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Should you go into VC straight out of undergrad? Here’s my take 👇 For early stage investing, I think you can learn everything you need to on the job so no prior experience is absolutely necessary, though it could be helpful. So from the pure day to day tasks perspective, I think you should be fine right out of school. However, I think there are two major things that put you at a disadvantage with no prior work experience: 1. You don’t have a robust network, you’re starting from scratch. 2. You haven’t learned how to be a full time worker in the workforce. For 1. VC is all about networks. In order to see the best deals, to diligence companies, to help portcos and so much more, you need a robust network. Often times, the best VCs have the best networks. Out of undergrad, you’re starting from zero so the ramp will be harder. For 2. Often times working at a VC firm is like working at a startup esp at the early stages. As someone learning how to navigate the workforce for the first time, it’s helpful to have more structure to your days w clear tasks to complete. VC is often more autonomous & self starting than that. Going from undergrad straight into VC, you can lose the opportunity to adjust to being a full time employee in a structured setting. So my overall sentiment on undergrad to VC is you can do it, but there are advantages and disadvantages to doing so. Generally you’d probably benefit from getting other work experiences under your belt before jumping into this world. This is just my opinion though. Open to all discussion! #venturecapital #startup #founder #hiring #recruiting

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I recently reviewed a term sheet with a portfolio founder for a priced seed round from a new investor. We’d led their pre-seed round and there was a specific provision in the seed term sheet that the founder was adamant about pushing back on - founder revesting. and my advice surprised him. I pointed out that not only was this term not harmful, in fact it was beneficial and meant to protect him in the long run. Often times, included in early stage term sheets is a provision requiring founders to revest their shares - typically another 4 years. The purpose of this is to mitigate the potential for "dead equity" on a cap table. When a departed founder owns a meaningful stake but is no longer actively working on the business it can be demotivating for the remaining founding team and also make raising additional capital very challenging. The initial reaction for most founders is to push back on this term - and logically it makes sense - they've already vested a fair amount of equity and don't see why they should start over. The longer you sit in a VC chair you tend to see every iteration of founder dynamics play out. Founder departures are fairly common- they happen for all different reasons/circumstances, but in nearly all cases founders should want the lions share of the equity to be in the hands of the individual founders that are still meaningfully contributing to the success of the business as it scales. Sheel Mohnot at Better Tomorrow Ventures recently wrote a great piece related to this topic, focused on initial founder vesting schedules. He recommend founders set an 8 year vesting schedule at inception, which I think is an interesting direction seasoned founders could head in.

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IMO it's pretty crazy for a founder to demand a minimum check size of $50k early days. Most people's appetite for venture is around 5% of their NW. If they are taking venture even remotely seriously they'll need to make 30 bets (100 is what they should be doing). So calling $50k means you're suggesting they have $1.5m for venture and they then have a NW of $30m... Founders should cop the admin of smaller checks from people who are more strategically aligned and proactive angels more often.

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When you're scaling a DTC brand from $5m to $30m, don't try to optimize for lowest cost of capital when you raise debt financing... The lenders out there who can offer the lowest cost of capital usually can't offer the capital flexibility and deal terms that you need as you scale. Low cost of capital lenders don't love DTC. It scares them because there is little to no A/R and inventory is a riskier collateral base. As such, they'll either offer you way too little capital availability or their offer will come with hefty protective provisions that feel punitive. Non-bank lenders tend to be the best fit for a DTC-heavy brand that is scaling profitability beyond $5m in annual sales. Traditional bank lenders, which offer lower cost of capital, tend to become a better option after you hit $30m+ in annual sales. Obviously, there are always exceptions to this rule, but the advice I'm offering here turns out to be true most of the time in my experience. __ Want more tips like this? Consider reposting or giving me Jon Blair a follow.

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Wondering how do you optimize your 1 hour pitch with a VC firm? Here are two things you shouldn't do: 1. Don’t just explain what's on a slide. But try to dig deeper into the “so what”. This is applicable to any topic - product, market, team, roadmap. Articulate - why you, why now, why this product in this market or with this technology. Always surprises me how most of the time goes in just explaining a bunch of charts and slides without the “aha” 2. And don’t skip your homework on the VC—understand their history, what they invest in, and use that to maximize your interaction time. These details can make all the difference and help you get the best out of your first meeting. Arkam Ventures #founders #startups #pitches #winning

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Want to stand out in a VC screening call? Ask thoughtful questions. Why it matters: 1. Shows you've done your research 2. Demonstrates genuine interest 3. Helps you understand if they're a good fit Go beyond "What's your check size?" Get specific to that fund and even the person you’re talking to. Remember, it's not just about us evaluating you - you're evaluating us too. What's the best question you've asked (or been asked) in a VC meeting?

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Hiring for an early stage startup is tricky because if you can afford to go get the logo executives coming out of corporate, they can't typically take the instability of the startup grind... ... and then if you hire only what you can afford, which is typically not very much or anything other than equity, you tend to get people who already have jobs or side hustles or even their own startups who can't always give your startup priority. Then you have the "I'll come on board once you go raise a million bucks" people who know that investors won't get involved without a solid team and leadership in place. Some settle for part time workers, contractors and consultants, but they never move over to permanent. So what do you do knowing that one bad hire can totally kill your young company? I hate to say it, but the only sure thing when it comes to this stuff is that there is no sure thing and you're going to have to grind it out just like everything else.

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One job of a lead investor is to work closely with founders to raise the follow-on round. Over the last 14 years, I’ve helped raise a ton of rounds, and one thing is almost universally true: founders always overestimate the chances of each investor converting. Most walk out of an initial pitch feeling like they have a 33%-50% chance when it’s really 1%-10%.

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The only thing that is guaranteed in the fundraising process. It will take you more time than you think... I had the chance to assist in the fundraising process with: - Founders that raise $100m+ before - First-time founders that don't know the rules - GP that are looking for Limited Partners for a $1b fund Guess what? 100% of them are postponed the deadline that is set up for closing. It's a live thing with a lot of changes and news that can prolong the process. (similar to marketing and tech development) Don't want to be a pessimist, but... You play a risky game if you open new rounds, without proper investor relations and want to raise in the next 3 months cash to cover runway. Be prepared for the worst and add 30% longer durations from the ones that you make to be the worst-case scenario. What is your experience with deadlines when it comes to raising funds?

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I’ve built a DTC brand to $50M. If I had to restart my entire journey from square 1 and hire a dream team to scale a brand to 8-figures... This is exactly how I’d do it: If your revenue is under $1M, As the founder, you are responsible for driving the business to success, but you need a team that supports you. I’d start by hiring a strategic paid social expert on a fractional basis to coach you on finding success in the channel. This will set up a foundation for your business since you’d be learning the skills needed to grow in your primary marketing channel instead of hiring it out. Then, with that knowledge, run the business yourself - you’ll be acting as the head of growth until you reach $1M. You need a system to support you in this role, so you should hire on: - A paid search marketer to run Google ads (under $1k/mo) - A CRM marketer to execute email strategies on a fractional basis for about $2k or less per month - A graphic designer for landing pages, emails, and ads, plus an offshore designer to iterate on those designs and save on operating expenses - A video editor for UGC ads that convert well for paid social Once you hit seven figures and start aiming for that $10M mark, You’ll have a bunch of new responsibilities that’ll eat up a lot of your time, like - finance, - supply chain, - and operations At that point, you can’t be the head of growth if you want to scale up. You won’t have the bandwidth. Instead, you’ll need to bring on a fractional head of growth who can manage things the way you used to—leading the marketing strategy and having freelancers report directly to them. You don’t need to make a ton of new hires to move from $1M to $10M. You might just need to adjust hours for your freelancers up to account for the size of the business. This is where SO MANY founders get stuck because they think, “I’m growing, so I need to expand and hire full-time staff.” But moving from $1M to $10M simply follows the same strategies you used to go from $0 to $1M. Only when you’re looking to scale from $10M to $50M+ should you start exploring new marketing channels. You might want to invest in affiliate marketing or SEO. You’ll also have enough work to potentially convert these roles to full time: - Head of growth, - Paid social media buyer, - and your CRM marketer Stop trying to over-complicate the hiring process when you go to scale. The few fractional workers who prove their value and competency from the beginning can be converted to full time at a later date (if they're open to it), and that should be only AFTER your business exceeds $10M. Anything before that, focus on the few roles that’ll drive results to grow you to that mark.

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Founders, you're missing out on your biggest multiplier. Scaling feels like an uphill battle. Resources are stretched thin. Growth is slower than you'd like. But there's a game-changer at your fingertips. Leverage. 1. Leverage through technology: - GitHub automated collaboration for millions with code written once. - Canva created features that add exponential value without extra cost. 2. Leverage through capital: - AWS used initial funding to build infrastructure that startups rely on. - Shopify invested in growth to accelerate their trajectory. 3. Leverage through people: - Stripe hires engineers who automate, reducing manual workload. - Slack's small team built a product used by millions without massive expansion. Why does this matter? Because leveraging technology, capital, and talent lets you do more with less. It scales your impact. Cuts your costs. Boosts your growth. So ask yourself: Are you obsessing over leverage? Because if you're not, you're leaving massive growth on the table. #BrainDumps | BrainDump #105

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SaaS Valuation Reality Check: Facing the Music Carlsquare's latest Software sector report for Fall 2024 brings some hard truths for the SaaS market. Key Takeaways: • Premium Valuations are Tough: Without top-tier performance, don’t expect valuations over 7-8x. • Growth vs. Profitability: Growth is in demand, but acquirers, especially PE firms, are wary of cash-burners. • Profit Focus for Low-Growth Companies: For growth under 10-20%, valuations lean toward profit multiples. For micro-cap SaaS deals, valuations may be slightly lower, particularly for sub-$25M transactions. Small, profitable SaaS companies often trade at 1.5-4x revenue, with profitability a big factor. Subscribe to ‘Siliconnector’ Telegram channel for insights and news from Tech world and Silicon Valley: https://t.me/siliconnector

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Treat your startup like a food truck, not a fancy rooftop restaurant. 1. Don’t overthink features. Focus on one killer feature and keep your MVP lean. Think more like a food truck, less like a fancy eatery. 2. Launch a landing page. Test your messaging and demand with a fake button on your landing page. Measure clicks to see if there’s genuine interest before building out more features. 3. Use a waitlist to collect emails and focus on early adopters. Don’t unveil your MVP to the general public immediately. Set up a waitlist and gague demand/ feedback while refining the MVP. 4. No-Code MVPs. Test your idea without heavy investment. Iterate and build a more robust version once you have a basic version running. 5. Get first customers by doing things that don’t scale. Manually onboard your first customers. Learn from their feedback. This hands-on approach is invaluable at the start. 6. Build in public. Instead of pitching with a deck, show your momentum. Build a community, generate buzz, and demonstrate your product’s potential. People want to join a project with visible traction. Building an MVP is about delivering value and iterating based on real user feedback. Start lean, test early, and grow from there.

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I receive a handful of these messages each day. Breaking into VC is HARD. And it is easier when you have guidance and resources. I wish I had the capacity to speak with every one of you about your journeys. But since I can’t speak individually to all of you, I have decided on the one to many approach of posting VC insights and recruiting help daily across my channels. I have also launched a newsletter that goes one step further by providing weekly deep-dives on various topics related to landing your dream role in VC, faster. Most recently, I released a Premium+ offering that allows you to get on a zoom with me and other aspiring VCs looking for help breaking in. The Premium+ offering: ✔️ Annual Subscription to Newsletter ✔️ Join a VC Demystified Cohort Zoom Call with Nicole DeTommaso (~15 ppl) ✔️ Submit Questions to Nicole DeTommaso ✔️ Get Responses Live on Zoom **Important: This Is For Aspiring VCs Looking for Help Breaking in. This is NOT for founders** Link --> https://lnkd.in/gvK3_KJ6 Given I get asked to speak live often, I launched this offering to be able to do that scalably. As always, I will continue to post on my socials daily to help open as many doors as possible for other people. Let’s land you that dream VC role! 🪄 #venturecapital #vc #startup #founder

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GLP-1s are here to stay. Where are the new product entrant opportunities? Where are the surprising tailwinds? Some thoughts (and I want yours!!): 💖There will be persistent demand for DTC prescription & delivery outside of covered by insurance segment. Microdoses will be normalized. Brands that de-stigmatize within different user populations have a leg up. Looking at you Midi Health! 🧪 Lot of movement amongst biotech investors I know around new delivery modes like implantable slow release. Game changer. Pay attention to investments from Julia Moore. She is very smart on this category. 🍔Sources say WalMart is already feeling the pain on declining food sales. But there will be CPG opportunities!! 🥩If you spend time on GLP-1 tiktok (and I have done a deeeep dive this week) you’ll see tips and tricks that ALL hit a few key areas: 1. Protein. Here to stay. 2. Fiber!!! The new hero ingredient. 3. Water soluble supplementation, specifically green powder and hydration / electrolyte powders. 💰Since GLP-1s are done in 3-12 month “journeys” and have massive sticky behavior change cues, the above are candidates for subscription and bundling. Good for startup economics! This is also an under-utilized influencer population. Good CAC / LTV arbitrage opportunities. 👗With so many across the economic spectrum losing massive amounts of weight, low cost subscriptions for every day clothes should get a tailwind. Tailwinds for brands like Nuuly. Do you agree? What did I get wrong / miss? Who is working on products surrounding the GLP-1 revolution? __________ 👋 I’m Kate, co-founder & GP at Baukunst. Currently leading pre-seed rounds with $500k-$2m in companies at the frontiers of technology and design. Follow me for more 5am musings on building a VC firm, startups, and work / life integration.

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Founders should ask investors questions the same way investors ask them. It’s the only way to get a feel of their culture, speed, blind spots, and set expectations right. - What do you look for in a startup? Do they tend to invest to founders with certain backgrounds, like SF or Stanford types? Do they prefer less risky, revenue-generating services? - Are you the decision-maker? If not, how does the process work? Do all partners need to reach consensus? This gives you a sense of the decision speed and the number of meetings ahead. Will you present to all partners? And if your contact is your “champion,” you’ll know if you need to equip them to pitch your deal internally. - How many startups do you invest in per year? If they’ve already invested in 1 and only have 2 slots, with 10 other deals on the table, your chances may be low. But if they invest in 10 a year and need 5 more in the next three months, that’s a very different scenario. - When and what was your last investment? This will help you understand their thesis and how frequently they invest. - Do you follow up on your investments? - Have you invested in other startups in our space? Knowing this can tell you if they can introduce you to strategic partners or investors. If you get a 'no' without clear feedback on why they’re not investing, revisit these answers—they’ll give you the gist.

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When you're scaling a DTC brand from $5m to $30m, don't try to optimize for lowest cost of capital when you raise debt financing... The lenders out there who can offer the lowest cost of capital usually can't offer the capital flexibility and deal terms that you need as you scale. Low cost of capital lenders don't love DTC. It scares them because there is little to no A/R and inventory is a riskier collateral base. As such, they'll either offer you way too little capital availability or their offer will come with hefty protective provisions that feel punitive. Non-bank lenders tend to be the best fit for a DTC-heavy brand that is scaling profitability beyond $5m in annual sales. Traditional bank lenders, which offer lower cost of capital, tend to become a better option after you hit $30m+ in annual sales. Obviously, there are always exceptions to this rule, but the advice I'm offering here turns out to be true most of the time in my experience. __ Want more tips like this? Consider reposting or giving me Jon Blair a follow.

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