Hey — It's Nico.

This newsletter contains:

• 5 resources for founders.
• 5 startup news.
• 1 failed startup.
• 1 hot startup.

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What to read this week?

🧠 Typeform Co-founder discusses disruptive growth and the significance of user experience.

🙌 Reforge discusses how to build an AI product people actually want.

💯 Honeycomb.io addresses the unspoken challenges in building products with LLMs.

👀 Andrew Gazdecki on 5 ways to make your startup more attractive to buyers.

👂 The All in Pod talks about the debt ceiling, Nvidia, the state of VC, startup failure & more.

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What happened this week?

📈 Pear raises $432M for Seed Venture Fund.

💰 OpenAI raises $175M for Startup Investment Fund.

👀 JPMorgan is developing a GPT-based service that gives investment advice.

🤖 Figure announces a $70M Series A funding round to build its humanoid robots.

👎 Taxfix, a German accounting startup, slashes 120 jobs.

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Failed startup story: Arivale

Arivale, a Seattle-based wellness startup that aimed to revolutionize personal health and wellness through advanced genetic testing and tailored coaching, shut down in 2019.

Founded by Leroy "Lee" Hood, a known figure in genomics, the company set its goal to pioneer a new field of "scientific wellness". Arivale had an impressive journey, raising over $50M. However, it unexpectedly ceased operations, laying off its entire workforce of approximately 120 employees.

In Between the Lines:

Arivale strived to offer wellness and nutritional guidance based on individual genetic, blood, and microbiome test results. Their services, which included complex medical data collection and processing, turned out to be too costly compared to what customers were willing to pay.

In a blog post, the CEO wrote, “We believe the costs of collecting the genetic, blood and microbiome assays that form the foundation of the program will eventually decline to a point where the program can be delivered to consumers cost-effectively. However, we are unable to continue to operate at a loss until that time arrives.”

This pricing issue was coupled with the high cost of attracting new customers. They also found it challenging to persuade potential users of the long-term value of their offering, which required lifestyle changes based on genetic data.

Lessons Learned:

Arivale's journey serves as a valuable guide for startups, imparting two vital lessons.

The first underscores understanding and managing costs. Startups must thoroughly evaluate their cost structure before launch.

Based on this, startups can set a price that reflects the cost and the value delivered to the customer. If costs are high and pricing flexibility is limited, startups may need to explore alternative business models to ensure profitability.

The second lesson emphasizes being able to recognize market demand. Market research is a non-negotiable factor in the early stages of a startup. Understanding the market demand for your product or service can help guide your business strategy.

In Arivale's case, despite having a scientifically advanced service, they struggled to convince customers about the product's value and necessity.

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Hot startup of the week: Bene Bono

Bene Bono, a French-based food waste startup, has recently raised €7M in funding to fuel its mission to combat food waste.

The company operates a unique business model, saving organic fruits and vegetables that supermarkets reject for aesthetic reasons. They offer them to consumers via a subscription model, creating a direct link between organic farmers and consumers. The company will use the funding to expand into Barcelona.

In Between the Lines:

The startup has identified an intersection between reducing food waste and fulfilling consumer needs and has innovated by repurposing organically grown produce usually rejected by supermarkets due to their aesthetics.

An additional layer of innovation is in their pricing model, offering these fruits and vegetables at approximately 30% cheaper than the standard market price. This creates a unique value proposition that aligns with the increasing consumer interest in sustainable and affordable food options.

Connecting organic farmers and producers directly to the consumer is a great and innovative approach. This direct distribution model not only ensures all harvested produce finds a market, reducing food waste but also fosters relationships between consumers and producers, supporting local agriculture.

Lessons Learned:

Bene Bono's decision to expand to Barcelona provides a clear example of strategic location choice's impact on startup success. As the city was declared as the World Capital of Sustainable Food in 2021, Barcelona offers an ideal environment for Bene Bono's mission and business model.

Barcelona’s heightened awareness and interest in sustainable food practices will likely accelerate the startup’s acceptance in the market.

The lesson for other startups is to consider market characteristics, consumer attitudes, and the regulatory environment when choosing a location for expansion. A location that mirrors the company's values and mission can boost consumer acceptance and company reputation and potentially unlock regulatory incentives.

Moreover, being situated in a hub known for sustainable food practices, such as Barcelona, offers opportunities for partnerships and collaborations with similar businesses, organizations, and individuals. These partnerships can help accelerate growth, enhance the impact of the startup’s mission, and contribute to a stronger and more resilient business network.

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Cheers,

Nico