👋🏾 Hi friends!

Well it’s been quite some time since we last caught up so firstly, I hope you had a great end to 2023 and that 2024 is off to a great start for you.

After a bit of down time in Italy, I’ve been back building for the last few weeks, catching up on all the bits and pieces that got left as pending at the back end of the last year and pushing forward to push towards doubling the business this year.

As part of all of this, I’ve also spent some time thinking about where I’m prioritising time and where I should be focussing to deliver on the ambitious plans I have for the year so there are going to be a few changes to the way this newsletter is going to work moving forward.

The first, and most major change will be in the cadence of the newsletter. I will be dropping down from weekly to fortnightly. As much as I love writing, the amount of time it requires to put together a truly valuable newsletter is quite considerable which leads me to the second change…

I’ll be condensing the newsletter so that it is more digestible and will be much more driven by what I am seeing in the startup market in general rather than specific, detailed essays around tech, startups, venture capital and finance.

But, nil desperandum!

For those of you that are still looking for a bit more of that detailed view of all the things I’ve learned from the last couple of decades as founder, CFO and CEO, sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

I’m a couple of chapters in and exploring all 100 of the lessons I posted that got 1m views, thousands of likes and hundreds of comments and shares online – and that was just a list!

Now let’s get down to business…

In this weeks Off Balance, I’ll be chatting about:

🎙️ Adam Liska on Nothing Ventured
💸 Fundraising in 2024

In this week’s Nothing Ventured, I spoke to Adam Liska, founder of Glyphic, a venture backed startup building an AI Co-Pilot for Revenue Ops. Adam comes from a deep background in AI from Facebook to Spotify to Google Deepmind with a few degrees and a PhD along the way!

As always, our Primer episode gives you a bit of background on how he got to where he is today, as well as where he’s going.

Also, if you have any feedback, or if there’s something you’re desperate to see me include, just reply to this mail or ping me online – I’m very open to conversations.

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Now let’s get into it.

Off Balance

Well 2024 is well and truly underway and I think we are going to see some further pain in the private markets this year, with consolidations – both in terms of capital providers as well as the businesses they invest in.

But if you’re a founder looking to fundraise right now, it might seem like an unnavigable environment and I’ve been having more and more discussions with founders facing issues raising.

It’s not always a fundamental issue in the venture, sometimes the VC has pulled back for completely unrelated reasons (they themselves are struggling to raise, or they have existing portfolio companies that need their attention or, as seems to be more the case, they are re-evaluating their strategy and thesis altogether).

My advice remains the same as always.

Raising in 2024

1. Make sure your narrative makes sense.
Never has it been more critical to ensure that you have a solid business case behind the venture you’re building. Too many founders assume that investors will just ‘get it’ but, with so many startups seeking funding right now, it is imperative that you have a story that not only stands out but makes sense.

2. Be flexible on valuation.
Don’t expect to raise at the inflated valuations of the early 2020s, those days were an abherration and the new normal we’re in is what normal always was. As a founder, you may have to accept that you are going to have to take a hit on your valuation, raise a flat or a down round to keep the business afloat but, it is worth noting that this is likely to be a one time window. If you don’t get to the milestones you need thereafter, it’s unlikely you are going to find a willing investor at the next round – whether it’s discounted or not.

3. A broken cap table is likely to be too much effort to fix.
There are lots of ways your cap table may be messy. Founders may have taken too much dilution, an accelerator or early investor has given predatory terms including full-ratchet anti dilution provisions, or overly cumbersome information rights or is exerting too much influence via board controls. You may not have left enough equity for your employees and a whole raft of other issues that mean your cap table is just too broken for new investors to invest the time to fix them. This is why it is worth ensuring that you get the right advice at early stages to make sure you aren’t taking investment on the wrong terms and why, it’s super important to know your investors. In some cases, an incoming VC may be willing to roll up their sleeves and help you fix the issues, but more often than not, it’s just too painful to deal with.

4. Long and short list your investors and make sure they’re investing in your space.
Investors aren’t going to throw money at you so you need to do your homework now more than ever. A lot of the ‘tourist’ VCs that were active over the last few years are starting to fall away and what we’ll be left with is a core cohort of ‘proven’ funds and allocators out there. So do your diligence. Make sure you have a long list of target investors skewed as far as possible to those investing in your space and then whittle that down to a core list of preferred investors who may be likely to lead your round. I’m still seeing a lot of founders defaulting to a spray and pray approach (RIP my inbox and DMs) with seemingly no idea as to who the investor is, the sort of cheque they may write and the sort of verticals they invest in. These are things that investors pay attention to, it is a signal amidst lots of signals that the founder is serious and understands who is actively investing in their space.

5. Plan for at least a 6 month process any sooner is a bonus but it’s not guaranteed.
I’ve recently spoken to a founder who hasn’t closed an investment for which they received a term sheet back in June 2023. Others who are going to raise with 3 months runway in front of them. Whilst it is still possible to close an investment in this sort of time frame, it’s far more the exception than the norm. Investors are slowing down, ensuring they are diligencing opportunities fully and there isn’t that pervasive air of FOMO (fear of missing out) that meant that term sheets were being handed out off the back of a deck and a zoom call. It will take time to raise in this environment, so plan for it.

And finally…

We’re entering a period where many founders will be asking themselves whether it’s time to draw a line – whether that’s exiting the venture to a strategic acquirer or, worst case, closing the business altogether.

There is NO shame in that.

Do it the right way, don’t throw employees under the bus, overcommunicate with your investors and you’ll likely walk out knowing there are people that would back you or work with you again.

Good luck to everyone raising right now, stay the course and if you can make it happen that’s great. And if not, just know you gave it everything 💪🏾

As always, my office hours are open, if you’d like to chat about this or anything else, just grab some time 😊.

I hope you found Off Balance #25 useful. As always, I’d love to get your feedback and understand the sort of topics you would love to hear about.

Just hit reply to this mail or drop me a line at [email protected] and let me know 😊

🚀And that’s a wrap for this edition of Off Balance – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.

📨 And if you think someone else might love this, please forward it on to them,

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That’s it from me so until next time…

Stay liquid 🙂

Aarish