Eric Edelstein

$109Mn in funding just went bankrupt in two days On December 27th 2024, an accounting SaaS specialised in helping SMEs with their bookkeeping suddenly sent a notification to all their users (+35K SMEs) that their platform would be made inaccessible by the 30th of December (2024). "Luckily" the company informed its users they would be able to download their data until March 2024 and recommended that each customer apply for a tax exemption - because, well, they wouldn’t be able to do it through the platform and if you’ve ever done corporate accounting it doesn’t just take 2 days… 😳 They notified their users on Dec 27th that they'd need to restart their yearly tax process and find a new bookkeeping system, in 2 days. It’s INSANE 🤯 This is the story of Bench (600 Employees), a company that raised a $60Mn series C in 2021 from names like Bain Capital Ventures and Spotify, amongst others. So, what happened? Well it’s not exactly clear but a culprit on everyone’s lips are Bench’s investors. 3 years ago, they fired (badly) the founder of the company to replace him with a “more experienced” person. For anyone who’s in Venture Finance or that read Blitzscaling (C. Yeh & R. Hoffman, 2018), it’s logic:  Founders rarely are great CEOs and to maximize the chances of through-the-roof valuations, at a certain point, you need corporate experts to turn the startup into a corporation. This however, might be the greatest example of how NOT TO DO IT. It seems you can definitely take the founder out of the vision but would you take the founder's vision out of the company? As a founder, I always thought if that happened to me, it would have felt like someone taking my child away from me. As a marketer, I learned business is a human to human relationship and just as you should boast your founder in the early stages, you shouldn’t discredit him in the later ones. Never underestimate the founder... As the fox in Jean de La Fontaine’s Fable goes: “I guess this lesson’s definitely worth the cheese, isn’t it?” Yeah, a $109Mn cheese 🦊 P.S. Ian Crosby successfully rebuilt a company after being ousted and exited to Mercury this year. Kudos to him and his entrepreneurial determination 😎 Update: On the 31st, Employer.com announced it was acquiring Bench for an undisclosed amount and that operations would continue. Netflix Is already working on a miniserie (Not true. Don't know. Maybe?) Update 2 (8/01/25): Apparently the financial difficulty came from a poorly executed shift to AI in the last year leading to internal inefficiencies and sending the company into tilt. #LessonsFromVC #Entrepreneurship #Startups #VentureCapital

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💡 Imagine a VC fund that shares the detailed data on their investment fund 📈 When founders approach investors for their rounds, they end up on dozens on VC websites stating the obvious, leaving founders behind with many unanswered questions on the VC. "Venture capital is one of the most opaque industries, and while there are reasons for this, it often leads to some shady tactics that frustrate founders" .... Imagine that startups could found a full breakdown of the VC & their fund: their investments, their tickets, their domains, exits, mean valuation, ... ✔ Today there is a VC that has taken this route of total fund transparancy by launching their VC Dashboard instead of just another VC website "Founders’ time is scarce and so they are looking to access enough data to understand three things: - Are we “good” investors; - Are we the right investors for them, and; - What are the chances we'd invest in a company like theirs This will inform their decision of engaging with us or not." Bold and interesting move & breaking some rules by Unruly Capital Stefano Bernardi , we might need a new hashtag for this: #vcinpublic 😎 🔗🔗🔗 Link to their post and the VC Dashboard in the first comment (recommended) ps: I 💜 the "ADD COMPANY" button to submit a pitch, things can be simple 😎

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The most important fundraising KPI: 1st pitch → 2nd meeting conversion rate Is yours low? (< 30-50%) Something is wrong. Here's how to diagnose your issue and fix it: There are two types of potential problems... 1️⃣ Investor targeting 2️⃣ Pitching 𝐈𝐍𝐕𝐄𝐒𝐓𝐎𝐑 𝐓𝐀𝐑𝐆𝐄𝐓𝐈𝐍𝐆: The most common issue is targeting the wrong investors. Usually you're reaching out to investors that focus on a different stage or industry. Do some research on the investors that didn't convert to a second meeting. The most important resource: their portfolio page. Ignore the "about" section, or their blog. That's mostly about marketing to potential investors in their fund. Instead, look at what they've actually invested in and the stage at which they invested (Pre-Seed, Seed, Series A, etc.) Remember: trust the portfolio, not the thesis. __ The other main issue is unclear outbound messaging. Investors think you do one thing (industry, business model, tech, etc.) but you actually do something else. I recommend sending your outbound email template to 5+ friends that don't know anything about your startup. Ask them: • What kinds of customers do you think we serve? • What benefits do you think we provide for them? • What product features do you think we have? • What technologies do you think we use? If more 20% of your friends answer these questions incorrectly, you need to write new outreach emails. 𝐏𝐈𝐓𝐂𝐇𝐈𝐍𝐆: The most common issue is just that your pitch is weak. Usually because you aren't telling a story. You're just sharing disconnected data. The best pitches are stories that foreshadow the only possible outcome: your startup's tremendous success. It feels inevitable. The easiest test to figure out if you're telling a story: try connecting the main idea of each of your slides with "but," "so" or one of their synonyms. If the natural link between slides is "and" or if you can move the order around, you don't have a story. Chronology matters in storytelling. Go back to the drawing board and try to write your inevitable success story. __ Maybe your overall pitch isn't weak. But VCs may still be spotting a red flag when you pitch. It turns them off right away. If you think this might be your issue, it's important to start asking questions. Most pitches have time for you to ask questions at the end. Here's my go-to to diagnose this issue: "What would you need to see in order to get excited about investing in <<STARTUP>>?" If they tell you a primary KPI that you need to improve, then you've probably identified the issue. The other possibility: They try to avoid giving you a specific answer. If they're evading your question, you NEED to dig in to get to the bottom of it. Your fundraising success may depend on it. —— Was this helpful? 👍 like and ♻️ repost it to help other founders!

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This guide outlines the funding journey from Pre-Seed to Series C and beyond: - Pre-Seed: Focus on concept, team, and initial validation. - Seed: Prove market fit and scalability. - Series A: Demonstrate revenue growth and user base. - Series B: Scale operations with solid financials. - Series C+: Prepare for major expansion and exit strategies. Insight: Each funding stage builds on the previous one. Early rounds focus on validation and product-market fit, while later stages emphasize scaling and financial stability. The goal is to show continuous growth and potential to attract investors. Subscribe to ‘Siliconnector’ Telegram channel for insights and news from Tech world and Silicon Valley: https://t.me/siliconnector

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99% of VC will pitch to their investment committee. This is why knowing this is a game-changer: When you get to a later stage in the fundraising process. An investor will have to pitch internally to their IC. All to decide if they want to give you a term sheet. Now... Not everyone in the IC will have seen you before. So a VC has to create an "IC paper" to give a run-down of their thoughts on you and your company. This will have thoughts on why they are excited. And also why they are anxious. This can be a game-changer for how you pitch yourself to investors. Because having a IC paper example to look at before your fundraise allows you to see how an investor: - Analyses you - Gets excited to invest into you - Speaks about your company internally Luckily for you: I am giving an example away for free! All you have to do is: → Like this post → Comment "Memo" → Connect with me And i'll send you 100+ examples of it! Let me know what you think.

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The success of a Fund boils down to DPI (distributions back to LPs in relation to how much capital was deployed). The industry often gets infatuated with TVPI, which accounts for paper gains. However, these numbers are frequently not worth the paper they are printed on. Knowing when to stick or twist is always a challenge, so I favor a balanced approach: the third-third-third strategy. Sell a third of the investment at the first opportunity. Gradually sell the second third. Hold onto the final third for potential upside. Even this model needs adjustments based on market conditions, requiring a mix of aggressive selling or patience. The real issue for LPs is the industry's recent obsession with maximizing TVPI without enough attention to DPI. This can lead to portfolio imbalances and potentially disappointing (or zero) cash returns. 🎙 Listen to my full episode of Fintech Leaders with good friend Miguel Armaza for more on data as the new gold, secrets behind successful VCs, and the importance of founder-market fit: Spotify: https://spoti.fi/3KitB4b Apple: https://apple.co/4bXmmuC Youtube: https://bit.ly/3Vh4HIz

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Location Matters. US-based SaaS companies often see higher multiples than their European counterparts. Why? Several factors come into play: 1. Access to Capital: Deeper pools of capital in the US 2. Market Size: Larger, more homogeneous domestic market 3. Growth Focus: Greater access to capital enables investors to favor growth over profitability 4. Tech Ecosystem: Strong networks of talent, capital and knowledge However, economic shifts can level the playing field. During downturns, European companies' focus on profitability can become more attractive to investors. Are you leveraging geographical advantages or considering strategic relocations? #FutureOfWork #SaaS #Technology #EdTech #HRTech #WorkTech #WellbeingTech #MergersAndAcquisitions #InvestmentBanking

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Simplifying the Asset Purchase Agreement (APA) in Micro SaaS Acquisitions // What is an APA? - Buyers acquire specific assets, avoiding unwanted liabilities. - Common in Micro SaaS to select valuable assets and minimize risks. // Key Components: - Purchased Assets: Codebase, customer lists, etc. - Liabilities: Buyers avoid seller’s debts. - Payment: Often a mix of cash, seller notes, and earnouts. Understanding the APA helps guide smoother acquisitions. Here if any Founders are considering an exit...

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💡 Helpful benchmarks for SaaS leaders to consider. Thanks for sharing Dirk. #saas #fundraising #corporatefinance #technology #startups

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Navigating Seed-Stage Fundraising: Key Insights Understanding seed-stage fundraising is crucial for any startup founder. Here’s a concise look at the landscape, based on data from 1,271 priced seed rounds between April 2023 and March 2024. Top Players: - SaaS leads in deal volume, showing strong investor interest. - Healthtech and Fintech are also in the spotlight, with Healthtech now surpassing Fintech. High Valuation and Cash Raised: - HR startups stand out with the highest median pre-money valuation and cash raised. - Transport and Renewable Energy also show high valuations, indicating significant potential. AI’s Impact: - AI influences multiple sectors and would top every chart if tracked separately, highlighting its transformative potential. Benchmarks: - Median pre-money valuation: $13M. - Median cash raised: $3M. Industry Clusters: Analytics, SaaS, and Healthtech form significant clusters around median values. Biotech and Cybersecurity also perform strongly. Lagging Sectors: DTC Retail, Food, and Personal Products lag in both valuation and cash raised, potentially exploring alternative funding methods. Deeper Insights: -Industry Disparities: Significant variations exist, with Healthtech showing increased investor confidence. -AI’s Dominance: AI offers diverse investment opportunities across industries. Decline in Seed Volume: -Most sectors see reduced seed funding, except for AI. -Alternative Funding Strategies: Some founders are exploring revenue-based funding instead of traditional VC routes. Takeaway: Navigating the seed-stage funding landscape requires strategic understanding and adaptability. This evolving environment offers unique opportunities and challenges for both investors and founders. If you're on this journey, let’s connect. I’m here to help you navigate these complexities and improve your chances of securing funding. #startups #entrepreneurship #venturecapital #investing #finance #crossborder #inovexus #startup #VC #earlystage #angleinvestor

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The fundraising market for VC funds is on track for its worst year since 2015. The shortage of IPOs has meant a lack of liquidity to LPs, causing less appetite for new fund commitments. The last two years have felt a bit like a "venture stalemate." Will it change in 2025? My latest article in Forbes includes predictions from leading Limited Partners (LPs) across the US and Europe, including institutions, fund of funds and family offices. Read below (link in comments) to see what they're expecting for venture capital in the year ahead. 🔮 Aakar Vachhani Fairview Capital Hana Yang Allocate Adam Marchick Akkadian Ventures Anu Adebajo Daryn Dodson Dominic Maier AVP Layne Johnson Screendoor Julie Pulda, CFA Ballentine Partners, LLC Albert Azout Level Ventures Charlotte Palmer Mark Schmitz equation January Ventures

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What if you want more details about funding rounds (e.g. for comparisons)? See the original source of funding news on shipshape.vc We aggregate data from the web to save you time, and we've just released a feature that lets you read the original news story. #capitalraising #startups #fundraising #founders #venturecapital #investors #vc #vcfunding #technology #startup #tech

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In addition to building our own VC practice at AAF Management Ltd., we’ve invested in 37 VCs since 2017. Here is what, I believe, it takes to build a multi-vintage, early-stage, venture franchise: 𝟭- 𝗦𝗵𝗼𝘄 𝗙𝗼𝗰𝘂𝘀: hyper-focused GPs build longevity and consistency in their businesses. If you pitch LPs saying you will invest in early stage consumer but end up doing late stage consumer that’s a massive red flag. Stay germane to your mandate and strategy. 𝟮- 𝗔𝗿𝘁𝗶𝗰𝘂𝗹𝗮𝘁𝗲 𝗮 𝗨𝗻𝗶𝗾𝘂𝗲 𝗩𝗮𝗹𝘂𝗲 𝗣𝗿𝗼𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻: the market is crowded with venture firms, articulate your differentiated value proposition to LPs and founders. Don’t try to be everything to everyone. Focus on 1-2 value propositions to your stakeholders and execute them with excellence and defensibility. 𝟯- 𝗚𝗲𝘁 𝗕𝗲𝘁𝘁𝗲𝗿 𝗮𝘁 𝗦𝘁𝗼𝗿𝘆-𝗧𝗲𝗹𝗹𝗶𝗻𝗴: we tell stories everyday. Raising capital for a fund and building your venture firm requires that same story-telling skillset. Tell consistent narratives to the market to help build your own brand as well as your firm’s brand. 𝟰- 𝗟𝗲𝘃𝗲𝗿𝗮𝗴𝗲 𝘆𝗼𝘂𝗿 𝗦𝘂𝗯𝗷𝗲𝗰𝘁-𝗠𝗮𝘁𝘁𝗲𝗿 𝗘𝘅𝗽𝗲𝗿𝘁𝗶𝘀𝗲: if you possess subject-matter expertise in a certain vertical, domain or industry, you already own a defensible moat. Accentuate that to your advantage when building your firm, raising capital from LPs and winning deals from founders. 𝟱- 𝗠𝗮𝗶𝗻𝘁𝗮𝗶𝗻 𝗮 𝗖𝗼𝗹𝗹𝗮𝗯𝗼𝗿𝗮𝘁𝗶𝘃𝗲 𝗡𝗮𝘁𝘂𝗿𝗲: early stage venture is a highly collaborate asset class. Keep your ego at the door, you will never be able to do everything it takes to build a firm alone. Leverage LPs, partners and founders for deal flow sourcing, diligence and overall industry best practices. 𝟲- 𝗙𝗶𝗻𝗱 𝘆𝗼𝘂𝗿 𝗣𝗿𝗼𝗱𝘂𝗰𝘁-𝗠𝗮𝗿𝗸𝗲𝘁-𝗙𝗶𝘁: in quintessential startup vernacular, ideally find your product-market-fit by the time you launch your second fund. You need product-market-fit before you scale your AUM, grow your team and carry more fiduciary responsibility. 𝟳- 𝗞𝗲𝗲𝗽 𝘆𝗼𝘂𝗿 𝗣𝗮𝘁𝗶𝗲𝗻𝗰𝗲: early stage VC investing is a marathon. Patience will reward you personally, professionally and financially. Build mental, physical and psychological stamina to endure the inherent ebbs and flows of your entrepreneurial journey. 𝟴- 𝗧𝗵𝗶𝗻𝗸 𝗟𝗼𝗻𝗴-𝗧𝗲𝗿𝗺: early stage VC investing is the archetypal long-term financial asset. Think in 10 year increments for your firm’s grand vision, think in 4 years for a given fund’s investment period and think in quarters when reporting material updates on your portfolio to your LPs. 𝟵- 𝗛𝗮𝘃𝗲 𝗙𝘂𝗻: if instant gratification, short feedback loops and a constant need for reaffirmation is what you are looking for in a career then early stage VC investing will not fulfill you. Have fun building, and as Naval Ravikant once said: "𝙗𝙚 𝙖𝙣 𝙤𝙥𝙩𝙢𝙞𝙨𝙩𝙞𝙘 𝙘𝙤𝙣𝙩𝙧𝙖𝙧𝙞𝙖𝙣." Finally, and most importantly, be authentic and true to yourself. #firmbuilding #entrepreneurs #VC

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How To Assess Product-Market Compatibility, as discussed by a16z & Sequoia Capital. Discover more at https://buff.ly/4bJnqSi Gain insights into determining the fit between your product and the market with expertise from leading venture capital firms. #ProductMarketFit #StartupInsights

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"Platform" in VCs often feels undefined, and different at every firm. But one thing is clear: firms with dedicated platform teams are seeing higher investment returns. What is 'Platform' in VC? Think of it as a support engine for portfolio companies. Platform teams accelerate growth by providing: 1) Strategy & Growth 2) Talent Partner 3) Marketing & Brand Partner 4) Business Development & Partnerships Lead 5) Community Manager 6) Operations & Scaling Partner 7) Fundraising & Capital Advisor Platform in Venture Studios vs. VC Funds: The big difference? Timeframe. Venture Studio Platform: Involved from concept to exit, guiding startups from the very first spark of an idea. VC Platform: Steps in after the startup is funded, focusing on scaling and growth but not the initial concept phase. Both play critical roles—but understanding these distinctions helps founders and investors make the most of their platform relationships.

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Don’t reply to VC feedback. It’s rare to get feedback, but if you do, that doesn’t mean it’s a two way conversation. Most of the time VCs don’t have the time to give feedback to every rejection. So if you are lucky and get feedback, it’s very very unlikely that: A) It’s the full story B) They want to hear your reply to it Just offer to add them to your future investor newsletter, and move on. The only caveats: 1) You know the VC really really realllly well 2) They ask you a direct question - not a rhetorical one! Learn the difference. #VentureCapital #Founders #Startups #Fundraising #Investment

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