The venture capital market is slowing down, which means startup founders are looking for a smaller pool of money.
According to Carta, the number of seed deals funded fell 41% between Q4 2021 and Q1 2022, and dollar volume followed, from $2.62 billion to $1.81 billion, a 31% drop.
In this environment, teams that successfully complete a fundraising round will have shorter runways than planned, meaning partnering with an investor who understands the business well enough to add value is more important than it was a year ago.
Because a founder’s pitch is the first step on that journey, we interview active investors to learn more about what they’re looking for and how they prefer to be approached.
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For our latest outing, we asked each of them to name a pro forma pitching practice that they think the founders should retire from. Notably, angel investor Marjorie Radlo-Zandi said entrepreneurs who beautify the size of their market are sabotaging themselves.
“Don’t be tempted to overestimate your market size and its infinite potential,” she said. “We call blatantly inflated numbers ‘hand waving’. Exaggerating makes you appear less credible to investors. Not all investors expect to invest in the next unicorn.”
Thank you so much to everyone who took part:
- Christine Tsai, CEO and Co-Founder, 500 Global
- Marjorie Radlo-Zandi, Angel, Launchpad Venture Group, Branch Venture Group
- Clelia Warburg Peters, managing partner, Era Ventures
- Anarghya Vardhana, partner, Maveron LLC
- Frederic Huynen, partner, and Wijnand Bekker, associate, HPE Growth
If you already have an established network, this article probably isn’t for you. But if you are a first time founder and getting ready to start raising money, please read and share.
Thank you so much for reading and I wish you a nice weekend!
Senior Editor, MovieUpdates+
Study the basics of customer churn to establish customer and revenue benchmarks
Whether it’s a neighborhood gym or a SaaS decacorn, any business that depends on recurring revenue keeps a close eye on its churn rate.
Churn “is complex and confusing,” said Sid Jain, senior analyst at ChartMogul, but for startup companies, it’s one of the few real-time metrics that can help founders run experiments and collect feedback quickly.
Jain explains the differences between customer and revenue churn, shares formulas for calculating benchmarks, and answers the question, “What’s good monthly customer churn?”
Dear Sophie: Can a startup sponsor a graduating co-founder?
On Tuesday, April 26 at 2:30 PM PT / 5:30 PM ET, Sophie Alcorn will answer questions about immigration law for startups during a Twitter Space hosted by Senior Editor Walter Thompson.
The conversation is open to everyone, so ask your questions on Twitter and click here to get a reminder when the chat starts†
What are the visa options for a US university graduate who wants to start a startup together after graduation?
Can the newly founded company or other co-founders sponsor the recent graduate?
— Forward-looking founder
Fraud-as-a-service: Scammers use encrypted messages to undermine BNPL revenue
Consumers have enthusiastically embraced buy now, pay later – and so have online scammers in recent years.
Using secure messaging apps that serve as dark web marketplaces, cybercriminals target retailers and BNPL providers using stolen data.
“The only way to stay ahead of these scams is for BNPL vendors to ensure they have the right defense strategy in place to fight fraud on their own platforms and networks,” said Brittany Allen, trust and security architect at Sift.
10 IP and commercial contracts loose ends to tie up before approaching investors
A persuasive pitch is not the first step on the fundraising path.
Before approaching investors, founders should perform due diligence on themselves to ensure they are aware of any liabilities related to their intellectual property.
“Waiting to address these issues during a financing period can cause delays, result in time-consuming and expensive remediation and, in the worst cases, lead to lower valuations,” said William Wilson, partner at Goodwin Law.
In a guest post from TC+, he identifies 10 potential pitfalls “and steps startups can take to better prepare for these issues.”
Submit your questions to a MovieUpdates+ Twitter Space with Immigration Lawyer Sophie Alcorn
On Tuesday, April 26 at 2:30 PM PT / 5:30 PM ET, I’ll be hosting a Twitter Space with Sophie Alcorn, a Silicon Valley-based immigration attorney and author of Dear Sophie, a column that appears on MovieUpdates+ every Wednesday.
We discuss relevant issues for tech workers and founders considering opening a store in the US, including H-1B visas, international student founder trajectories, what to do if you’re not selected in the green card lottery, and information for Ukrainian IT members community affected by the ongoing Russian invasion.
This space is open to everyone, so click through to set a reminder for the chat and submit your immigration-related questions so we can ask them during the Q&A.
4 questions every CISO should ask about the metaverse
The metaverse is still taking shape, but is already a headache for cybersecurity professionals.
Technology that puts users in virtual, immersive environments where they can transact could deliver unprecedented benefits, but it will certainly create a threat attack surface of gargantuan proportions. In preparation, CSO/CISO David Fairman says organizations should be able to answer the following questions:
- Can we protect PII (and other sensitive data) in the metaverse?
- How can I authenticate users?
- Can we protect users from bullying, harassment and exploitation?
- Can we manage this kind of fast-growing attack surface?