Care. 'Ecosystem' #39
A weekly guide on tech news and early stage fundraising. Aiming to open access to the venture industry for less networked founders and junior VCs.
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Hello and welcome back to ‘Ecosystem’, issue #39!
In this newsletter, you will learn:
Invaluable advice on evaluating angel/venture deals - as shared in the latest #EcosystemGiants session
Secondary fundraising - how to move from seed to series A?
More about the winners from Coinbase’s big debut on Wall Street (who made a 2,200x return on invested capital?)
PR 101 for startups
What is a pre-seed round and how to raise one?
Thank you for coming back to the ‘Ecosystem’ newsletter for yet another week; and for continuously choosing it as the read on tech news and early-stage fundraising! Greatly appreciate your feedback - it does help to drive the project forward! :)
"The ‘Ecosystem’ newsletter and events are rich of insights and practical tips to break into the VC/Startup world. I like that I can have a snapshot of what's happening in the ecosystem in my inbox every week." - Yoann Demont, Founder and COO, Pop & Rest (PS. also currently fundraising)
Long-term readers know I try to personalize the intro section and whenever possible, share a resource in the area of self-improvement/awareness. One of the best videos I came across this week, that you may find of interest too (especially if like me, enjoy learning about psychology/neuroscience!) 👇
As lockdown measures are being eased across (some) countries in Europe and we are re-adapting to normal life once again, adding this as a reminder to be kind - to yourself and those around💙.See you next Sunday! 👋
#EcosystemGiants
This week at #EcosystemGiants, we got to hear from an incredible speaker - Elmar Broscheit (Managing Director, Macquarie Capital and angel investor - in German unicorns Tier Mobility, Gorillas!). It was an honour to get his advice on evaluating early stage deals, as well as tips on getting started in venture.
Few memorable takeaways from the conversation:
One good investment leads to the next
“I was an early investor in Tier Mobility – that came about because one of the Lieferando founders was involved (CTO of Lieferando became the CTO of Tier Mobility). Then one of the early employees there became the COO at Gorillas. I had worked with him as an angel investor and he approached me to ask if I was interested in investing. I then met the founder and after an hour discussion, it was clear that I wanted to be involved in the business in some form. One good investment usually leads to the next and you can build a portfolio on this basis.”
But how do you spot/get access to that first very good investment?
“Your first investment is obviously the hardest – a lot of hassle and groundwork is necessary. And I think in particular, nowadays, because venture capital has become very competitive - you have to be close to the entrepreneurs, going to events and networking is super important. I also mostly work with people I know from beforehand, and invest in companies where I know the team for a long time. I also don't make 100 investments a year – but a few very selective bets, and try to make big bets. So far this has worked out quite well. You have to become part of the ecosystem - that's very valuable.”
And how do you assess such deal?
“I look for a big market or for a macro trend in a big market; a working business model (traction – does the company generate growing revenue and customers?) and a good team. The earlier you invest, the more important is actually the team, because the business model might pivot a couple of times. If you invest at a later stage, the market is more important because if you have a working business model, the size of the market is what defines how big this business can ultimately be. An average team in a growing market and a working business model can have fantastic outcomes. But at the earliest stages, the team has to be very agile to find the product market fit and the right mix.”
Time management and prioritization
“The hardest part in life in general is to prioritize and spend your time well. Venture is such a power law game. One investment might make the total difference and that's why it is very important to be focused. When you find something that you think is special, and really have a deep belief, you have to execute very quickly and be super committed, concentrated on this opportunity.”
Supported by community partners:
Startups Magazine, ParlayMe, Kaiku
Who is the next guest #EcosystemGiants guest? She is one of the most impressive women in venture and a personal role model*. Stay tuned for an email next week :)
*One of the causes I care about the most is educating and empowering the next generation of young (female) leaders. And as such, very glad to have had my teenage sister, Kalina, not only watch but help in the set up of the sessions (and big shoutout to her for the good work, as I know she’s reading!). Who was the first person who helped you discover the world of tech innovation and venture?
Innovation Ecosystem Updates
Trending. All eyes on ... Coinbase, the first major cryptocurrency company that went public in the US and the 7th biggest new listing of all time (Fortune). Who won and who got rich from its landmark Nasdaq debut? (hint: A16Z and Union Square are the two largest outside investors!) via CNBC. Plus, read how a $300K seed-check in Coinbase became a $680M ‘Golden Ticket’ in the ‘Funder’ section below. More crypto, Digital coin ‘Doge’ (that started out as a joke in 2013!) spikes 400% in a week; and is now worth $40BN (CNBC). One of the youngest women to take her company public, Katrina Lake (Founder and CEO, Stich Fix) to step down as CEO (WSJ). Amazon CEO Jeff Bezos penned his final shareholder letter before handing off to Andy Jassy - a selection of key takeaways (inc the retail giant’s response to the coronavirus pandemic, impact on job creation and efforts to combat climate changehere (ZDNet) or a summary Twitter thread here. Amazon is also launching a $250MN venture fund to invest in Indian startups that focus on helping SMBs come online and sell online in the key overseas market (Techcrunch). And more capital for early stage companies - leading London-based seed investor LocalGlobe and its Series B sister fund, Latitude, raise $370M across two new funds ($150M and $220M, respectively) via UKTN. Across the Pond - a new $175M early-stage VC fund - Footwork to invest in consumer tech ventures; founded by renowned solo capitalist (you have to readhis VC essays!) Nikhil Basu Trivedi and former Stitch Fix executive Mike Smith (Forbes).
Massive rounds. Four months after its $2BN raise, self-drive automaker Cruise secures a new $2.75BN cash injection from backers including Walmart at a valuation of $30BN+ (AutoNews). Two year post launch, Kim Kardasihan’s shapewear brand SKIMS raises $154M in Series A funding at a post-money valuation of $1.6BN, led by Thrive Capital(NY Times). News from Europe, German e-commerce company Berlin Brands Group with $240M in debt financing (its first outside capital!) to accelerate global acquisitions strategy. A large series B round with no participation of a formal VC firm, co-led by entrepreneurs - B2B payments startup Routable bags $30M in funding from brothers Sam Altman (CEO, OpenAI and former president of Y Combinator), and Jack Altmam (CEO, Lattice); with participation from Flexport, Airbnb Co-founder Joe Gebbia, and Salesforce founder Marc Benioff (Techcrunch). Plus a rather large first institutional round - Atlanta/Paris-based restaurant payments startup Sunday comes out of stealth with $24M (!) in seed funding (UKTN).
Scoop: Defense technology startup Anduril Industries rumored to be raising a new round of capital set to double the company’s valuation to between $4BN-$5BN (The Information).
Acquisitions. Indian e-commerce company (and Amazon rival) Flipkart to buy online travel firm Cleartrip for reportedly ~$40M (Skift).Public software firm best known for its CAD and 3D modeling tools, Autodesk buys Upchain, a Canadian startup that offers a cloud-based product life cycle management (PLM) service to accelerate cloud data transport (Techcrunch). Vox Media snaps up podcast company Cafe Studios (Co-founded by former Manhattan U.S. attorney Preet Bharara) as part of a bid to expand its growing audio business (WSJ). Microsoft doubles down on healthcare and conversational AI, acquiring publicly traded speech recognition company Nuance Communications in a $19.7BN deal(inc debt) via HIT Consultant. More on whythe purchase is indeed a big deal(TechTalks).
Sustainability. $9T financial management firm Blackrock and $313BN Singapore investor Temasek formDecarbonization Partners, a joint commitment of $600M to back companies working to reduce carbon emissions (CNBC). Apple and partners (Conservation International and Goldman Sachs) launch a pioneering carbon removal initiative - a $200M ‘Restore Fund’ to invest in projects tackling climate change and plant millions of new trees around the world (Apple). Swedish seed stage VC firm Pale Blue Dot closes a €87M debut climate tech fund (Sifted). Dutch VC firm Rubio Impact Ventures’ Impact 2020 report - insights on their impact methodology and highlights of portfolio companies’ impact achievements.
Wins for women. 12 ladies featured in Forbes’ 20th Annual 2021 Midas List(up from 11 in 2020)*, the ranking of the world’s top 100 venture capitalists. Congratulations to Luciana Lixandru (Sequoia) for her debut and returnees Sonali De Rycker (Accel), Mary Meeker (Bond Capital) - more on the fantastic female investors recognized here. 👏 Mary Meeker is also listed as one of 100 Most Influential Women in U.S. Finance in Barron's second annual list; alongside VC investors Kirsten Green (Forerunner Ventures), Aileen Lee (Cowboy Ventures) and Managing Director at International Monetary Fund, Kristalina Georgieva. 👏 Kerry Baldwin (Founder and Managing Partner of IQ Capital) appointed as the new Chair of the The British Private Equity and Venture Capital Association (BVCA)’s Council 👏
*In conjunction with the annual Midas List, TrueBridge and Forbes co-published the Brink List of up-and-comers to watch in venture - big congratulations to the powerhouse women on there including Sarah Cannon (Index Ventures) and Reshma Sohoni (Seedcamp). 👏
Funder
“Avoid falling for the misconception that a Series A is a “larger” seed round. You’ve had more time and resources to finetune your product, test product-market fit and build a superstar team. As such, the expectations will be different; where five pilots previously were great, your VC will now want to hear all about conversion to paid contracts, feedback from customers and the reason for any churn.Whereas the seed stage is sentiment- and vision-driven, Series A is about metrics and whether you’ve achieved them or not.”
Only 19% of seed companies go on to successfully raise Series A secondary fundraising. Jeevan Sunner (Associate, Playfair Capital) lists the key factors to consider when convincing your current investors to reinvest
Getting a seed-stage check to generate a return of more than 2,200x its invested capital? Garry Tan (Founder and Managing Partner, Initialized Capital) on how the early bet in Coinbase tuned into a stake valued at $680M
“Let yourself smell the roses along the way. These journeys in venture are so long. You have to smell the roses.”
Luciana Lixandru (Partner, Sequoia Capital) reflects on her career in VC (inc leading UiPath’s series A round in 2017!) and shares her views on the European early stage landscape in a conversation with Brent Hoberman (Co-Founder and Chairman Founders Factory, Founders Forum, firstminute capital)
Founder/Operator
“Getting started is necessarily the hardest step, but humans are momentum creatures by nature. You will encounter the most resistance when you haven’t taken a step at all - but once you get started and get the ball rolling, nothing will stop you.”
Justin Kan (Founder and Host, The Quest podcast; who also founded Twitch) shares the lessons learned going through the first YC batch
Ashley Camerini (CEO, Rumble) on the importance of a good morning routine, overcoming fatigue and finding work/life balance
Twitter Highlight
Alex Garcia, CEO and Founder, Hustle
Startup of the week
Up your chess game with tips from legendary players
KasparovChess is a content subscription platform making chess accessible for professionals/lovers of all skill levels. Founded by world chess champion Garry Kasparov, it features documentaries, podcasts and interviews between experts and known players in the chess community (envisioned is a strong focus on users forming connections online, in a private Discord group).
Tweet @kasparovchess to share they were featured in ‘Ecosystem’!
Do reach out to me if working on a product advancing one or more of the United Nations Sustainable Development Goals.
Startup Go-to Resources
How to hire an independent board director
What is a pre-seed round and how to raise one?
All about PR - a launch checklist and the 10 rules of media relations to follow as a founder - as advised by Lightspeed Venture Partners
Top 10 mistakes first-time SaaS founders make - and how to avoid them
5 ways to build a $100M business - an infographic by Point Nine Capital
Why do you startup? A fantastic short essay by Ruby on Rails creator, David Heinemeier Hansson
50 Best Pitch Deck Examples from YC & 500 Startups
How should a bottom up company think about B2B pricing and packaging? via A16Z
The perfect series A deck - a template by Creandum
All about valuations
Not all startups become unicorns. Sahil Lavingia (Founder and CEO, Gumroad) on the failure to build a billion-dollar companyThank you for reading another ‘Ecosystem’ newsletter! What feedback do you have for me (likes/dislikes)? I would greatly appreciate if you share this with contacts (founders, tech operators & investors) who may find the content helpful🖤 Connect with me on Twitter