Paul Orlando

Big announcement below! 👇 Let's talk about the current state of GP-LP affairs: 🤯Emerging VC managers have absolutely exploded over the past 5 years. 📈 At the same time, more and more data has surfaced that shows that emerging VC firms tend to outperform larger, established firms. 🤔 All of this has made it intriguing but tough for LPs to know where to direct their attention. 🛍 GPs frequently meet LPs at conferences who are window shopping but not committed to the asset class or emerging managers. 🧾 And both crews get overwhelmed by transactional convos. So Sydney Paige Thomas and I created Abundance. Abundance is a private, nomination-based retreat for active LPs and top emerging GPs to form new experiences together and build lasting relationships. Why Abundance? Abundance is knowing that there is more than enough for more than one to succeed. And a single win within a community is a win for the community itself. The journey of an emerging VC manager from 1st close to final close or Fund 1 to Fund 2 is (1) communal and (2) requires an abundant mindset. LPs look for structure and confidence to feel comfortable investing in early VC firms. Yet many of the feeds we scroll and conferences we attend reinforce inherent power dynamics and transactional thinking, which allows scarcity mindset to creep in for emerging GPs. Some of the best events I’ve attended have been intentionally non-transactional, e.g. Camp Hustle, Recast Summit, and other GPs’ AGMs. The fundraising success stories we see usually involve a community (usually of other GPs & LPs) coming together to support and open doors for the emerging GP. We designed Abundance to be an immersive gathering that fosters these connections. Starting tonight, ~100 GPs and LPs are descending upon Seattle for the inaugural Abundance retreat. This has been under wraps for months and I can’t wait to see it come to life! Thanks in advance to our awesome sponsors who were the earliest believers in this vision: Sydecar, Amazon Web Services (AWS), Gunderson Dettmer, & Zelda Ventures. And shoutout to my dad Ed Illig for logo design & Halle Kaplan-Allen being the first sponsor to say yes 🤩 Presented by The Council Capital & Symphonic Capital.

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At Forum we look at thousands of deals each year across our Accelerator and Pre-Seed funds but only end up investing in a little over 1% of those startups.  As an early stage VC, I am in the business of saying no to nearly every startup I meet, and while there is nuanced rationale for many of the startups I pass on, a vast majority of businesses that don’t meet the qualification to get funded typically fall into one of two buckets. ▪ First time founders have a tendency to go out to market too early to raise pre-seed capital ▪   I’m sure most founders have heard some iteration of this from VCs that ultimately pass on their business.  In some cases it's a blanket excuse covering up for other pass reasons- perhaps a VC doesn’t believe in a team or isn’t bullish on the market opportunity - but in many cases founders simply haven't proven enough to the market to warrant an investment. I meet many teams with an articulate vision for the product that they want to build, but they either haven't performed enough customer discovery to prove demand for their initial wedge product, or need to raise pre-seed capital to build out an MVP.  In those cases, pre-seed investors are unwilling to underwrite those risks.  To be default fundable, teams need to be able to keep costs low, perform extensive customer discovery, and ship some version of an early product - pilots and early paid customers are key. A huge piece of this is having founding engineering talent on the team. ▪Not every startup is a venture opportunity ▪ By definition, a venture backed business is solving a problem within a market opportunity so massive and so desperately needed, that its growth rate is off the charts.   It spreads like a weed, absorbing almost unlimited amounts of capital to fulfill demand within its customer base.   Each year there are maybe 20 companies launched that ultimately have venture scale outcomes. The bar to reach this rarified air is unfathomably high and the reality is the vast majority of founders simply aren’t building for opportunities that have the potential to be one of these generational companies. Many startup founders view VC as the only viable option for capitalizing their business, but not every great business is a venture business, and most successful founders never take VC dollars.  In order to reach an IPO/acquisition large enough to generate venture returns, a startup needs a credible path to $100s of millions in revenue. This is the standard by which early stage opportunities are evaluated. The flip side to this, and I share this feedback often with founders I meet that are building interesting business in non venture markets, if you are able to scale to $10- $20M in revenue that can be a massively successful outcome for a founder.  There are investors who focus on these type outcomes, namely lower middle market PE shops, and the typical path to those deals is a bootstrapped business or a friends/family capital raise.

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I recently saw this metric from Carta’s 1Q24 VC Fund Report, which is very concerning. DPI... is nowhere to be found in earlier vintages that probably should start showing DPI. Funding early-stage projects is great, but ultimately, these venture dollars need to exit their investments and pay back their limited partners. That’s where the metric Distributed to Paid-In Capital (DPI) comes in. While managing a fund, we get interim measures during the life of the fund (e.g. IRR, MOIC), but ultimately, “you can’t eat IRR.” If you want to build a lasting venture capital organization, you need to start showing DPI for your fund. Keep in mind that this is traditional VC data from Carta, and is not strictly crypto venture. Crypto venture tends to get liquidity earlier (tokens) and things tend to go parabolic sooner (faster, more unicorns) - but I’d wager that the data here is somewhat similar for Crypto VCs… Not as much DPI as there should be from these earlier vintages. Read the full article, as well as a recap of all the crypto fundraising rounds for August, here: https://lnkd.in/g3eVJ-iF

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USC just posted a nice writeup of the Incubator's run up to 250 companies. Nice brief on the program, which includes hundreds of founders, many funding rounds, acquisitions, funded accelerator participants, grant awardees, and more. Thanks to the many people who have been involved over the years, as founders, mentors, investors, supporters, and more. Looking forward to the next cohorts... (Article link in the comments)

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Venture Capital Fundraising Deck Template: Carta and Kauffman Fellows present a comprehensive venture capital fundraising deck template to guide General Partners (GPs) in attracting limited partners (LPs). Here’s what to include: 1) Background: Highlight the unique qualifications and track record of your team. LPs are investing in the people as much as the strategy. 2) Differentiators: Showcase what makes your fund stand out—whether it’s your access to networks, industry expertise, or proprietary methodologies. 3) Investment Thesis: Present your vision for the market, future trends, and how your fund will capitalize on these opportunities. 4) Track Record: Include metrics like IRR, multiples, and past successful investments to demonstrate your fund’s potential for generating returns. 5) Terms: Outline the economic terms, including fund size, management fee, carried interest, and target raise. PS. check out 🔔 for a winning pitch deck the template created by Silicon Valley legend, Peter Thiel https://lnkd.in/ejp-Bhnu

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An interesting article below, that demonstrates out how San Diego is punching above its weight.  And how Connect's strategy and execution over time, contintues to be central to that success. The article describes the current state of the market in Seattle.  (And i love Seattle.) It's a market that we tend to track with relative to venture fundings.  They used to kick our butts, we outraised them each of the last three years.  This despite the fact they have 3x as many funds there, and 9x the amount of resident capital there. (per pitchbook) Some key takeaways:  * They continue to compare themselves to SIlicon Valley. Instead, we leverage our proximity. *They whine there's not enough local investors (see note above - they have more than us). We bring over 200 VCs to SD annually! * They say founders are not connected with one another. We bring CEOs together regularly, in a variety of ways - private dinners and through our Springboard program. * They say they need to elevate their image on a national & international stage. Why we created and continue to build Five.Ten.Thirty (aka Inno Day).  * And the last paragraph - they need to concentrate on making their region a great place to live. Our mantra: "It's about Better, not Bigger." (See XEO, TL Fund). THANK YOU FOR ALL OF YOUR SUPPORT. WE ARE ON A MISSION TOGETHER!!!  (Comments, whining, suggestions on SD always welcome.) https://lnkd.in/g6Rq_f2Y

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Nathan Beckord has been a valuable resource to me and the various startups we're mentoring through NeoTerra Ventures and/or funding through NeoTerra Capital LLC. Startup valuations can be very subjective and can be calculated and justified by a variety of means, however knowing the "market rate" is also important when setting a valuation for a round of funding. In the end, the company is worth what an investor is willing to pay for it, which is the final determination of the venture's value in its current state of development. #startups #vc #funding #valuations

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118 VCs (one hundred eighteen!) are gathering in San Diego next week - to meet with 30 SD startups. But it's so MUCH bigger than just those 30 co's. It brings VCs back - when they see quality companies. It helps those who are next-in-line and adjacent. It enables us to send deal flow all year 'round. It attracts talent and other companies. It inspires entrepreneurship. Connect is working for SD. Together, we're building the best damn innovation ecosystem on the planet. Year over year. Five.Ten.Thirty.

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Insightful breakdown from my great Partner Omri Amirav-Drory on the simple factors that really separate the top 1% of investors from the rest, and how more operators should become investors! https://lnkd.in/gEiZdT2h

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Team San Diego! I though you may find this as surprising as I did...we are not alone. Read this quick article from Jon Prentice's (Silicon Valley Bank) interview with with James Newell (Voyager Capital), published in GeekWire on Seattle's innovation ecosystem....they lament the SAME issues as we do in San Diego: * Lack of angel investors, (Especially, it calls out, given the local giant tech co's) * "We need low-conviction check writers." * Lack of "cachet associated with being an angel investor" - We have similar efforts (as described in the article) to drum up angel activity: NuFund Venture Group and, Interlock Capital (read the article and you'll see why the Interlock effort is tops as relates to "paying back into the ecosystem") Connect.org strives to 'connect' innovative companies with investors of all types (angel, VC, PE...) - just see "Innovation Day". Their Springboard program provides another great way for experienced entrepreneurs to give back through mentorship...as for the companies going through Springboard: "Ask for advice, and you often get $$" Your thoughts on the article or San Diego innovation ecosystem? https://lnkd.in/gfwq6mfq

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The “founder mode” talk from silicon valley shows, more than anything, an ignorance of best practices in managing effectively a growing, large company and a lack of discipline in reading solid, time-tested books on business/management/leadership. Drucker writes almost 50 years ago of how a leader must not just “skip-report” but should cut immediately underneath and go to the front of the battle lines for intel. In the case the leader can’t make it, the leader should like a good military general, send an aide to bring intel back. But under no circumstances should a leader rely solely on the direct subordinate’s reporting. This seems like what is amorphously/poorly articulated as founder-mode. Perhaps let’s call it traditionally recommended best practices of management.

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An Insiders View: How To Raise Money From VCs As entrepreneurs, we often find ourselves at the crossroads of innovation and funding. Bob Dahlberg's recent presentation provided profound insights into securing venture capital, emphasizing the strategic approach needed to attract the right investors. Key Highlights: 1) The VC Mindset: Understanding what venture capitalists look for is crucial. They are not just investing in ideas but in potential market disruptors with scalable models and robust teams. 2) The Art of Attraction: Your startup must showcase a clear value proposition, market potential, and a strong team to stand out in the crowded VC arena. 3) Strategic Relationships: Cultivating relationships with VCs is likened to dating—requiring time, effort, and strategic alignment to forge successful partnerships. Advice for Entrepreneurs: -Be Prepared: Know your market, your competition, and have a clear execution strategy. -Choose Wisely: Not all money is equal. Look for VCs who bring not only capital but also guidance, connections, and a genuine interest in your success. PS. check out 🔔 for a winning pitch deck the template created by Silicon Valley legend, Peter Thiel https://lnkd.in/ejp-Bhnu

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If your startup competes with a large incumbent, how can you win against their superior resources? More importantly, how can you sustain advantage over time? Most pitches don’t answer these questions at all. I offer a new strategy framework, the Can’ts and the Won’ts, that does. ¶ Can’ts and Won’ts are two types of differentiators. A Can’t is something your competitor isn’t able to do. A Won’t is something they have important reasons not to do. ¶ In common parlance the word “can’t” is used loosely, but for our purposes we mean it strictly. “They can’t match our science because we have the PI and an exclusive license” is a potentially valid Can’t. “They can’t match our price because it would crater their stock price” is not - they 𝘤𝘢𝘯 do it, but they choose not to because of expected consequences. That’s a Won’t. ¶ When you’re up against a powerful incumbent, Can’ts are hard to defend. The larger the market, the more this is true. Won’ts, conversely, tend to be more sustainable. Let’s see why. CAN’TS: Suppose your team of five engineers has built something clever, and the competition doesn’t have it. They can’t meet your customers’ needs the way you can. Yay! But hold on… as soon as you get big enough for them to notice, they can assign fifty engineers and catch up fast. In fact, that may be an optimal strategy for them - let lots of startups try things, then fast-follow what works. Or suppose you have a patent, so the competitor can’t do exactly what you do. Well… many patents can be worked around, especially if the other guys are sufficiently motivated. Ultimately, 𝗖𝗮𝗻’𝘁𝘀 𝗰𝗼𝗺𝗲 𝗳𝗿𝗼𝗺 𝘀𝗰𝗮𝗿𝗰𝗶𝘁𝘆. Ask yourself, how scarce is what we have? and for how long? Try a red team exercise - if you were the incumbent, how would you overcome that scarcity? WON’TS: While Can’ts come from scarcity, 𝗪𝗼𝗻’𝘁𝘀 𝗰𝗼𝗺𝗲 𝗳𝗿𝗼𝗺 𝗮𝗯𝘂𝗻𝗱𝗮𝗻𝗰𝗲. The competitor is holding onto something valuable, and they’d have to loosen their grip on that something to chase you down the rabbit hole. The magic of a Won’t, like the magic of a great poker bet, is that it forces the competitor to make a tough decision. If they can crush you without putting their existing business at risk, that’s not a Won’t; but if you can force them to choose between one and the other, then you’re onto something. Strategy wonks out there may recognize the overlap with other competition frameworks. i) Disruption Theory says the incumbent won’t participate in a lower-margin market until it’s too late. ii) Blue Ocean uses Won’ts to build advantages that can ultimately be turned into Can’ts. iii) Porter’s “What is Strategy” is a system of self-reinforcing choices (ie Won’ts) that together create a defensible Can’t. So, if you’re into that sort of thing, I offer the Can’ts and the Won’ts as a sort of Grand Unified Theory of competitive strategy. If you’re not, just take it, standalone, as a way to make yourself robust against a competitor’s countermoves.

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There is this weird spot with pitch decks. Ideally a pitch deck exists to support a “pitch”. Yet, many (including VC) ask for a deck as an informational deliverable. It would seem that these 2 decks should be different.

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Awesome new initiative Aviel Ginzburg!! When Sean Sternbach and I launched Venture Out, Aviel and Pablo Brown-Rodriguez were silent cofounders. Aviel freely shared his words of wisdom from years of building community in Seattle. He and Chris DeVore were the first money into our community, followed quickly by Flying Fish Partners, Liquid 2 Ventures, M12, Microsoft's Venture Fund, and a huge list of Seattle angels. After growing to 1200+ members in <3 years, running multiple pre-preseed accelerators, a few learnings about building great community and the Seattle Founder Ecosystem: In the early days, no one knows what they are doing. Seek outside advice and guidance from people just ahead of you. Unicorn founders and tech moguls have great stories, but the woman who left amazon six months ago, launched an MVP, and crashed through her first 2 dozen investor discussions will have golden advice. Be open, honest, and vulnerable. Our best events and discussions happened when people let their guard down. No one will spend their life (which a startup requires) to build your idea. They might build something similar and tackle the same problem, but only your life experience and decision-making will make the difference. Share ideas often. Give first. As a ~10 year Techstars mentor, I saw this as the best part of the community. In my opinion, they have lost this completely. Don't come into a community and take. Give all you can, even when it feels counterproductive. Something might eventually come back that changes your life and direction. Even if it never does, you will 1000% feel great about the decision. Play long-term games with long-term people. Naval Ravikant was the first person I heard say this. Surround yourself with committed doers, makers, and visionaries. There are a lot of want-entrepreneurs in the world (which is a good thing; we need more people to take risks), but spend the most time with people in the ring, putting their time behind what they are doing. Learn how to give advice and direction without being evangelical, condescending, or a jerk. Learn to be direct but helpful. It's what you want on your journey, so invest in being a great thought partner for others. A final few notes: 1) No, you likely will never get paid the same amount or make as much money as a founder as you would as an L7/L8 at Amazon. If that is why you are starting a company, you're already in trouble. But knowing Aviel, he is already filtering for this 😂 2) You will likely learn in 6-18 months in the ring as a founder, than the rest of your life combined. Start to write, share your experience, find a therapist, and get ready to unpack a LOT as you go. The only way to make space for new information is to process it, store it, and then let it go. 3) The relationships are the most important part of the journey. I will always remember meetings with Matt Ehrlichman, Asha Sharma, Kyle Sandburg, and Matthew Neagle and the rest of the Porch Group team. Go Aviel!!!

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