Scott Birnbaum

VC world can be cruel and unforgiving. With LPs more and more pushing for distribution and liquidity, fund managers in the mid-tenure of their fund with zero DPI and TVPI around 1.0 would have much more difficulty to raise new fund. The ability to fundraise is one of the crucial indications and validation of the job for VCs. Key highlights from the article below: Thirteen percent of venture General Partners (GPs) no longer plan to raise another fund due to LP pullback. This rate has doubled since H1 2023 when only 6% of GPs had no plans for another fund. Nearly 44% of venture firms surveyed in mid-2023 had previously postponed their fundraising plans due to concerns about overexposure to the asset class. Many emerging managers entered venture capital in 2019 or 2020 when the LP market supported more funds. However, slow exits in the first half of 2024 have led to challenges in raising second funds without significant cash distributions to LPs. Some venture GPs are now actively participating in the secondaries market to demonstrate returns. Despite the challenges, GPs who secured fresh capital remain optimistic. They expect the 2023 and 2024 vintages to be the strongest return years since 2019. 🚀📈 #VC #VentureCapital #Fundraising #LPs #EmergingManagers #TechInvestment #MarketTrends #CountdownCapital #IndustryInsights #JetVentures #JetInvestment‍‍‍‍‍‍

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Are you better off being an angel investor or an S/EIS fund investor? When you’re thinking about making early-stage investments for the first time, you have a choice of two main options: Invest directly into startups or invest into funds that invest a portfolio of startups for you. * Direct (Angel) Investing: You select and invest in individual startups, taking on the tasks of sourcing, decision-making, and managing your investment. * Fund Investing: You invest in a fund that invests and manages a portfolio of startups for you, handling the sourcing, investing, and management on your behalf. There’s a romantic notion attached to the idea of investing in startups - we can play Dragon’s Den and discover the next Reggae Reggae Sauce. For every Reggae Reggae Sauce, though, there are 100 other startups that fail along the way. The first rule of startup investing, whether you do it directly or through funds, is that you need to build a portfolio of companies to cope with inevitable losses. Investing directly into startups as an angel investor suits those with access to credible, high-potential startups. It’s a hands-on role that requires active involvement to source the startups. Further, most of the best startups have minimum investment amounts of £10k or £20k, which means direct investors often need a lot of available capital to properly manage risk by investing in a portfolio of companies. This doesn’t need to be done all at once, but that is the mindset every good angel investor should have when setting out on the journey. Fund investing, on the other hand, suits those who prefer to invest indirectly, relying on the access, experience, and skill of the Fund Manager to invest and manage the investments for you. It’s a hands-off approach, with investors not involved in management and simply kept updated on a regular basis. Because funds pool your money with others to invest in a portfolio of startups in one go, this can be a more effective way of managing risk while investing smaller amounts. Most SEIS and EIS funds have £10k minimums for investors, meaning you could build a portfolio of 10-20 companies for just £10k, rather than needing to invest £10k into 10-20 separate companies as a direct angel investor. Whichever approach you choose should depend on your resources, access, interests, and time. Regardless, though, a key principle to follow is to not be reliant on the success of just one or two companies; instead, build a portfolio of startups to manage risk and cope with inevitable losses along the way. Which one is best for you? Let me know if you’d like to chat. Capital at risk. For professional investors only.

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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We have an another lineup of star investors for MELT. Let me introduce 23 amazing VCs and Angels ! ☞ Stedde Capital Sector: Biotech, B2C, B2B ☞ The Collective Sector: Fintech ☞ Muivona Capital Sector: Healthtech, Legaltech, Retailtech, AI, E-commerce, B2B ☞ Touring Capital | AI SaaS Fund Sector: SaaS, B2B, AI ☞ Forum Ventures Sector: Fintech, Climate tech, Govtech, Legaltech, Cybersecurity, AI, B2B, SaaS ☞ Plain Sight Capital Sector: Fintech, Insurtech, Retailtech, Legaltech, Govtech, Adtech ☞ Fantastocker INC Sector: Fintech ☞ Biran Capital Sector: Fintech ☞ Lynx Ventures Sector: Fintech, Proptech, Legaltech, AI ☞ CLNM Capital Sector: Fintech ☞ Brilliant Minds Sector: AI, Fintech, Climate tech, Retailtech, Biotech, Neurotech ☞ Woodside Capital Partners Sector: Adtech, E-commerce, B2B, B2C, SaaS ☞ Generous Ventures Sector: Fintech, Healthtech, Climate tech, Edtech, Insurtech, Proptech, Agtech, Govtech, Legaltech, Retailtech, Biotech, Adtech, Mobility, Cybersecurity, AI, B2C, Gaming, Web3, Robotics, AR/VR, Neurotech, Spacetech, B2B, E-commerce, SaaS ☞ 615.vc Sector: Spacetech ☞ seedlabs co / Harvard Sector: AI ☞ Bullpen Capital Sector: Fintech, Healthtech, Climate tech, Edtech, Proptech, Insurtech, Agtech, Govtech, Legaltech, Retailtech, Adtech, Biotech, Spacetech, Gaming, Web3, Mobility, Robotics, Cybersecurity, AR/VR, Neurotech, AI, B2C, B2B, SaaS, E-commerce ☞ Connecticut Innovations Sector: SaaS, B2C, B2B ☞ Matr (Matter) Ventures Sector: Fintech, Cybersecurity, Healthtech, Climate tech ☞ Sanctor Capital Sector: Web3, AI, AR/VR, Gaming ☞ Clockwork // 171 Ventures Sector: Fintech, AI ☞ W Ventures Sector: Fintech ☞ BASE64 Capital Sector: B2B, SaaS, AI, Cybersecurity, Robotics ☞ Conscience VC Sector: Healthtech, AI, B2C Founders x Investors Dynamic Network 『MELT』 6/3 5pm https://lu.ma/ldbfgkez 【💎VIP Sponsored】 ​Bradley Kam ​・Founded 2 companies Unstoppable Domains & Talkable ・Raised over $70M ・Unstoppable Domains recently raised $65M in a Series A round led by Pantera Capital, reaching a $1B valuation. Aquibur Rahman ​Founder of Mailmodo, has received funding from Sequoia and is an alum of Y Combinator S21 ​Nathan Stevenson ​CEO and Founder of ForwardLane Inc. has been featured by Forbes, the World Economic Forum, and American Banker ​Rene Anziani & Leevar Williams ​Founded by MIT alumni, APrime Technology Technology is an elite team of experienced engineers, product managers, and data experts intent on helping startups build innovative products that matter. Our customers operate in complex, data-driven, highly regulated industries such as quantitative finance, healthtech, fintech, and edtech. We have received 400+ registrations. ​・76 VC and Angel Investors ​・280+ Founders/CEOs ​3 Series D companies ​2 Series C companies ​6 Series B companies ​35 Series A companies ​15 Pre-Series A companies ​106 Seed companies ​146 Pre-Seed companies ​26 Bootstrap companies ​50+ Executives Meet at us MELT!

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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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Check out my recent post on why President Trump is the forcing function for us to solve the “Missing Middle” and catch the industrial Tsunami of onshoring coming to the US!

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💡 Fundraising doesn’t have to feel overwhelming. 💡 For many early-stage founders, raising capital can feel like an uphill battle: too many questions, not enough clarity. How do you simplify the process? How do you optimize your approach to make every step count? On November 22, join Wildtree Ventures for a free 2-hour workshop designed to help you #ThinkLikeAVC and take the guesswork out of fundraising. This interactive session is all about helping early-stage founders like you unlock the secrets to successful fundraising. What you’ll gain: ✅ Strategies to streamline your fundraising journey ✅ Insights into how investors think and make decisions ✅ Real-world tools to secure the funding you need to grow This workshop isn’t theory—it’s about actionable learning that will save you time, energy, and frustration. We’re hosting this session because we believe that incredible startups shouldn’t stumble over fundraising—they should thrive with the right tools and guidance. 👉 Seats are limited—secure your spot now! [Link to Register] Let’s simplify, optimize, and demystify fundraising together. See you there!

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Today, we’re announcing our second fund of $450m to support our mission of partnering with early stage software companies that leverage technology discontinuities into go-to-market advantages. This marks the next chapter in our firm’s evolution. Since we launched Theory Ventures in 2023, we’ve gathered a wonderful team : Lauren DeMeuse, Spencer Farrar, Andy Triedman, Rafa Jara Simkin, Amber (., Arjun Mishra, & Kristin Beach. We have partnered with 8 marvelous founding teams, all using data to power the next wave of innovation across the Modern Data Stack, Artificial Intelligence, & Web3. We’ve grown our fund size to match the needs of founders in this market : average Series A rounds have increased 42% since our launch, a reflection of the growth potential of these software categories. I’m grateful to our team, our founders, & our limited partners for the continued support, & to Allie Garfinkle for sharing more about Theory (https://lnkd.in/gmD7zjSP).

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A new era of deep tech has emerged. First time funds will raise “unheard of” amounts of capital to fuel next gen deep tech startups - producing outsized, superior returns for LP’s compared to the rest. Prudent investors will act on this data and shift investment strategy as LP’s or risk being left behind savvy wealth managers and CIO’s / FO’s who saw this trend begin 4 years ago.

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Kettleborough VC has been active for ~6 years, invested in ~30 companies, gone through ~80 funding rounds, witnessed ~12 exits including ~4 instances of partial principal erosion, seen ~4 seed to $100M journeys, tracking ~29% XIRR across the portfolio. A couple of IPOs from the portfolio surely seem very much in line ahead.

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Announcing: $300M raised for The General Partnership's Fund II When we launched The General Partnership, we aimed to redefine venture capital partnership and closing this second fund is one more step toward that vision. Working with Daniel Portillo and our team of industry veterans, we've shown that true partnership goes beyond capital. Our approach is unique: We offer customized support for each company's needs - recruiting, product and engineering, GTM and Capital. We give founders the resources they need with capital and by deploying experienced recruiters, engineers, designers, and GTM leaders to work with leaders at each startup. We maintain alignment with founders through our Sweat Equity model. To our founders: Your trust validates our model. We're committed to driving your success through hands-on work, not just checks. To our LPs: Thank you for believing in our vision. Your support enables us to continue redefining VC and supporting the best as they build their companies. With Fund II, we're doubling down on supporting founders from formation to breakout stages and if you’re a builder, Let’s run it back! More here from Dan Primack and Axios https://lnkd.in/gcn9U9s5 And our note on TheGP II here: https://lnkd.in/gTJ8pyZu

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Super helpful #Startup #Equity Calculator to determine the equity for early hires, thanks to Pear VC head of talent Matt Birnbaum! Thanks for sharing Pejman! 🙏🏼 You can read more here How to structure startup equity for early hires: https://lnkd.in/ggmpT5-Y Google Doc: https://lnkd.in/gjsvths6

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The Trends I’m Seeing in VC and PE-Backed Companies as a Fractional Advisor. One big shift I’ve noticed is earlier involvement in mentoring pre-seed and scale-ups. Previously, I’d typically step in at Series A or later. But now, I’m being asked to guide companies at much earlier stages. The market is so competitive that founders want to lay solid foundations well before investment lands. It’s a smart move - preparing for growth and scaling in today’s challenging environment requires clear strategies and strong operational frameworks from the start. Catch the full episode: https://lnkd.in/e_JfxnzS #FractionalAdvisor #VC #PE #Startups #ScalingUp

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"Small funds may have more incentive to produce higher returns The alignment of incentives between GP and LP varies drastically based on fund size. Managers of smaller funds who have invested substantial personal capital demonstrate an unwavering commitment to lucrative returns, while managers at the helm of colossal funds, buoyed by significant management fees, may exhibit a diminishing drive. This constitutes an almost incontrovertible structural benefit of managing a small VC fund. Furthermore, fund managers of established funds may, over time, raise larger subsequent funds and grow more risk averse. This can present a sub-optimal outcome for their LPs and, by virtue, manifests a bad omen for VC investing." https://lnkd.in/gHKgea4e

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Dan Primack had some pointed criticism for #VC yesterday in his Axios Pro Rata newsletter (a daily must read IMO 😤). In short, the model doesn't work if it can't produce exits for LPs. Don't blame public markets (which are at all-time highs) for the lack of liquidity either. 📈 💸 Instead, this is a "liquidity drought of your making" where "...swinging for the fences on every pitch, rather than taking the single or double that's available" is the only way out when you invest at "sky high valuations." 😰 "A whopping 37% of "unicorns" are being held for at least nine years by VC funds, including 13% that are past the 12-year mark." 😳 ⌛ Is he right? Is VC at a dire inflection point? Or is Primack prematurely hitting the panic button? 🚨 https://lnkd.in/dts92pXr

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Building on the success of Rocket Studio with Simon Kirby and Pivotal with Dominic Joseph we decided to merge with Impact Counsel, led by the awesomely talented John D., Erim Jones and Robert Fok earlier this year. We’ve combined our significant and complimentary skills, experience and passion for growing amazing businesses to create a new breed of VC - Creative Capital Ventures Group (CCV). Fund 1 is focused on Sports, Media & Entertainment. Joining us on this exciting journey is media titan Tom Rogers (ex CEO Tivo & CNBC). We have also assembled a mighty team of Venture Partners bringing their expertise into our team, with the legendary Harvey Goldsmith leading our Immersive Entertainment category, and Cam Blackwood (Platinum award winning record producer) and his team at Rezonate heading up Music Rights acquisition. Creative Capital Ventures is designed to disrupt traditional VC models and accelerate the growth of innovative start-ups. We’ve already secured €18 million in commitments and are raising €35 million in total to fuel the next generation of game-changing businesses. What makes CCV different? •⁠ ⁠Founder-Led Expertise: Our team comprises serial entrepreneurs and operators who have built, scaled, and exited successful companies. We know what it takes to drive rapid growth. •⁠ ⁠Speed Scaler: Through our unique venture studio model, we’re not just funding companies—we’re actively accelerating their growth, shrinking the timeline from seed to exit. •⁠ ⁠Industry Focus: CCV focuses on high-growth sectors like Sports, Media, Entertainment, and Lifestyle, with a unique emphasis on IP acquisition to drive returns in stable asset classes. If you're interested in learning more about how CCV is reshaping the venture capital landscape, let’s connect!  More updates to follow! #VentureCapital #Innovation #Entrepreneurship #Startups #ScalingFast #CreativeCapitalVentures https://lnkd.in/eiuWVtvT

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