Hot in Enterprise IT/VC - What's 🔥 in Enterprise IT/VC #289
What's 🔥 in Enterprise IT/VC #289Why lead investors matter + simple portfolio triage for seed investors
Once we cycle out of this 🐻 market, perhaps we can all focus on going back to basics starting with round construction. These are the times I encourage founders to remember that the relationship between investors and founders is a marriage that one should enter carefully. During the last two years, both sides optimized for speed, FOMO, and price over relationship. Moving forward, I hope we can learn from this current correction and come to a more balanced approach and take the time necessary to truly find the right partner and not just capital. To that end, I hope that founders have a lead investor and an experienced one at that. One that can help them feel like this when everyone else is panicking. Founders need investors who CHEER when times are tough, CHALLENGE when things are looking too good, and CHILL when founders sometimes need downtime. These r the times when founders hope they picked lead investors w/ a steady hand who r in it for the long term.
Party rounds sound great initially, but many investors just view those as options - when times get tough, they aren't ready to do the hard work + 🪓 🪵 w/founders What I saw in multiple downturns in the past was that those that optimized for as many influential firms and angels on their cap table were also the same companies that did not have great stewardship and governance as no one had enough skin in the game to view the investment as more than an option. If anything is to be learned from seed 1.0 when everyone was a seed investor, don’t do party and headless rounds because when times get tough, no one will own enough or care enough to step up and help… Secondly, when choosing a lead investor, I highly suggest founders ask their investor what the cash reserve strategy is to help support founders on the way up as well as when times are tough…assuming they are doing what they need to do 🧵 There has been lots of discussions about VCs and reserve strategies as of late - all I can say is that these are the times when healthy reserves (1/2 or more of fund) and rolling up sleeves to do the real work will help separate out the good vs. great Finally, seed investors, I hope you are triaging your portfolio and monitoring cash and operations from the top down so you never feel like you’re in panic mode. A great and simple start is that you should have a list of companies triaged by runway in months: < 12 mos <18 mos <24 mos >24 mos. Along side that, you should also have a sheet Pre-PMF <$1M ARR <$5M ARR <$10M ARR >$10M ARR The second set of metrics will allow you to align runway to stage of company. Armed with this data, you can constantly triage and help founders think through milestones to get funded and prep them well in advance of where we are today. With simple monitoring you would have already figured out who is best positioned to raise an outside round now, who you should invest more into proactively and double down to save founders time from a raise and give more room to hit milestones, and finally figure out which teams need tough ❤️. Remember creating new categories is brutal and rule #1 is to never run out of 💰. What seems like a crazy market is actually an increasingly sane one. The lesson is to build businesses that don’t require hype to drive your conviction, ensure you always have money in the bank, and if possible use cash flow to fuel growth vs. unending investment rounds. The spigots are now closed for anything past Series C and folks are adjusting to round sizes at Series A. If you’ve already been well prepared and have plenty of runway this is going to be great time to hire A+ talent and build your business while many pullback. May next week be mostly in the 🟩 📈. Scaling Startups
Enterprise Tech
Markets
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Older messages
What's 🔥 in Enterprise IT/VC #288
Saturday, May 7, 2022
Stay calm and carry on, growth at all costs is over, the prudent ones can keep building 🏗️
What's 🔥 in Enterprise IT/VC #287
Saturday, April 30, 2022
Building in a 🐻 market and getting ahead while you have the 💰
What's 🔥 in Enterprise IT/VC #286
Saturday, April 23, 2022
Miami 🌴 Tech Week 🔥 - some observations - need more founders!
What's 🔥 in Enterprise IT/VC #285
Saturday, April 16, 2022
Developer first & PLG founders - quality before quantity, no 🪄number to get to Series A
What's 🔥 in Enterprise IT/VC #284
Saturday, April 9, 2022
Bitcoin ⚡️ Miami - traditional finance everywhere...and IT Spend 📈
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