Angel investor Elad Gil's blog post emphasizes the importance of building a relationship with venture firms before asking for capital. According to the blog, most founders try to "build relationships" 2-3 months before their upcoming funding round, which is a mistake. Instead, founders should establish relations as early as possible, preferably six to 12 months in advance. Background: - Gil recommends that founders should choose the partner they want to work with and meet with them as early as possible.
- Additionally, founders must carefully select their partner, as the first partner they meet will likely be the point of contact for all future deals.
- Choose 4-5 investors you want to stay in touch with and then meet with them every six months to a year.
- Gil cautions founders that VCs may want to meet more frequently for introductions or engagement, but it is OK to decline.
- A post by Greg Dickens suggests that startups should use a bottom-up estimate to give actual business growth projections while pitching to VCs.
- Dickens adds that pitch decks must have realistic projections, rather than random arbitrary numbers, to gain the trust of VCs.
Share your thoughts: - What are the best ways for startup founders to build credibility with VCs?
- How early did you start establishing relationships with your investors?
- Do you have any tips to share with other founders?
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According to The Information, venture capital firms are warning their portfolio companies that the venture funding drought will continue through 2024 as a result of the fall of FTX. Arjun Sethi, co-founder of Tribe Capital — which backed FTX — wrote to portfolio companies to emphasize that none of them were immune from present macroeconomic and microeconomic challenges. More: - Venture capital firms Electric Capital and Dragonfly Capital cautioned their respective startups to prepare for increased regulatory scrutiny going forward.
- Crypto startups will be heavily impacted, according to the two venture firms, as they advised founders to be ready for "second-order fallout."
- Tribe advised portfolio companies to consider "deep cuts" to expenses and layoffs.
- 2.6% of Tribe's capital was deployed into FTX.
Zoom out: - FTX's fallout has impacted several notable institutional venture firms like Sequoia Capital, Paradigm, and SoftBank, which have marked down their $278M, $214M, and $100M investments, respectively, to zero.
- Singapore's sovereign wealth fund Temasek and Canadian pension fund, the Ontario Teachers' Pension Fund, had invested over $200M and $95M into FTX, respectively.
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Pitchbook's data shows that median sizes of U.S.-based venture capital funds have grown by 38.9% in Q3 2022 compared to the same time last year. The median fund size was $50M in Q3 2022. Over the past four quarters, U.S.-based funds with less than $250M of capital have outperformed larger funds, according to Pitchbook's 2022 Global Fund Performance Report. More: - Critics argue that large fund managers are rewarded based on accumulating assets rather than maximizing returns, resulting in anomalous fund performance.
- Typically, large fund managers charge a 2% management fee for the investments.
- The rising median valuations of venture capital funds indicate that venture fund capital commitments "have yet to dry up" despite having fewer opportunities to invest.
- Exit opportunities have also dwindled, with the cumulative value of exits this year totaling $29.9B, a stark contrast to the $670.4B worth of exits recorded in the entirety of 2021.
Zoom out: - Last week, Swedish venture firm EQT Ventures closed its $1.1B fund to invest in U.S., U.K., and Europe.
- The fund size is 66.7% larger than its predecessor.
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Emerging fund managers are raising funds from international investors, namely wealthy individuals and family offices, according to Business Insider. The article notes that international investors back emerging funds since they don't have access to the top funds from Bay Area or New York-based institutional investors. Research from Silicon Valley Bank Capital and Campden Wealth found that family offices in several global nations are more keen to invest beyond their home countries than North American family offices. More: - On average, North American family offices plan to invest 30% of their capital abroad and 70% within their home countries.
- Chicago-based Deciens Capital's managing partner, Dan Kimerling, has been soliciting investors from the U.K. and Japan since 2017.
- The firm has raised $190M across two funds in the last five years.
- Hustle Fund cofounder Elizabeth Yin tapped international investors across Singapore, South Korea, Japan, and Taiwan while raising the firm's second $33M fund.
- Jenny Fielding, The Fund's general partner, recently reached out to an Italian fashion house for an investment into the firm's new early-stage-focused fund.
- She says, "We looked abroad not because we have a global focus but out of necessity," since the venture funding pullback is making it difficult for venture capitalists to raise new funds.
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J.P. Morgan invested in actor Kevin Hart’s venture firm, Hartbeat Ventures, at the end of last month. The Wall Street bank is the first institutional investor in the fund. J.P. Morgan has reportedly committed the maximum allocation from its Project Spark program. More: - The bank launched the Project Spark program in March last year, an initiative to invest in diverse, minority, and female-led emerging alternative managers.
- The project’s scope was expanded to include veteran-led startups in June this year.
- J.P. Morgan made an initial commitment of investing $25M in five or more funds.
- Hartbeat Ventures intends to back startups focused on media, technology, and financial inclusion.
- The firm participated in Series B rounds of Snackpass, Ready Player Me, and Therabody.
- Hart’s media and entertainment company Hartbeat nabbed $100M funding from private equity firm Abry Partners in April earlier this year.
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Venture firm NEA general partner Liza Landsman joined fintech startup Stash's board of directors. Stash co-founder and CEO Brandon Krieg is positive that Landsman's "experience across tech, finance, and retail, and commitment to keeping customers' needs front-and-center, will help guide us on our mission as we support Americans on their journeys to stronger financial futures." More: - Landsman has been named as Stash's independent director.
- She is the board's second independent director after Jon McNeill, a former Lyft executive.
- Former LPL Financial executive Kate Ring joined Stash's board earlier last month as a chief compliance officer.
- Landsman was formerly the president at Jet.com and has held executive roles at Citigroup, BlackRock, and E*Trade Financial.
- Stash has been backed by Coatue Management, Todd Boehly's Eldridge Industries, LendingTree, and T. Rowe Price.
- The automated personal investment app recorded $125M in annualized recurring revenue.
- The platform has 2 million active subscribers.
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Quick Hits: - Apis Cor holds the current Guinness World Record for the largest 3D-printed building on Earth. Invest in the future of construction.*
- MVM Partners received $500M in capital commitments toward its sixth healthcare fund. The firm intends to invest between $30M and $60M in each company.
- General Catalyst led a $90M Series E funding round into the virtual clinic platform Maven Clinic. The round saw participation from CVS Health Ventures, Sequoia Capital, Dragoneer Investment Group, and Lux Capital.
- Autonomous flight networks developer Aura nabbed $75M in funding, $55M of which was provided by new investor Fortress Investment Group. The remaining $20M was given by existing investors Mudrick Capital Management and Tracker Capital Management.
- KKR is leading a $48M Series C funding round into Indonesian digital ID authentication and signature platform Privy. Other participants in the round include MDI Ventures, GGC Capital, and Singtel Innov8.
- Blackbird and Prosperity7 Ventures co-led Australian cell-based meat company Vow's $49.2M Series A funding round.
- Philippines-based venture capital firm 917 Ventures enlisted the help of 500 Global to scale its portfolio companies. 500 Global, a global venture capital firm with over $2.7B in AUM, will conduct a 10-week accelerator program for 11 of 917's portfolio startups.
*This is sponsored content.
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 |  | Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot. | | | | Editor | Aaron Crutchfield is based in the high desert of California. Over the last two decades, he has spent time writing and editing at various local newspapers and defense contractors in California. When he's not working, he can often be found looking at the latest memes with his kids or working on his 1962 and 1972 Fords. | |
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