Off Balance #37

👋🏾 Hi friends!

As election fever ignites passions in the UK (not entirely sure what is going to get ignited across the Atlantic), tribalism and the fight for the hearts and minds of the population is underway.

Sadly, from my perspective neither of the main parties are really giving me much hope for the future instead trying to galvanise the country around either adding VAT to private school fees or conscripting 18 year olds into National Service.

It’s going to be an interesting 6 weeks, that’s for sure.

Thankfully, I’ll be spending at least one of those weeks far from the madding crowd attending TOA Berlin 🇩🇪 

Actually, not just attending, I’ll be hosting their pitch competition, MC’ing a couple of the mornings and talking on a panel discussing Reimagining Work: The Future of Productivity and Value.

If you are thinking of heading over to join thousands of founders, investors, creatives and leaders – and of course l’il ol’ me – then enjoy a 30% discount on me – make sure you secure your place and book here 💪🏾

Look forward to seeing you there!

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

In this weeks Off Balance:

🎙️ Shwetank Verma and Henry Goodwin, Partners at Leo Capital on Nothing Ventured
⚡️ Who <really> holds the power in the boardroom?

Talking the India Advantage with Leo Capital 🇮🇳

In the latest episode of Nothing Ventured, I spoke with Shwetank Verma and Henry Goodwin, Partners at Leo Capital, a VC fund investing in early stage, technology centric opportunities investing anywhere from $500K – $2M in early seed rounds or pre-Series A rounds in India, South East Asia and now the Nordics.

Prior to joining Leo, Henry worked at various law firms in London and in Asia, ultimately as Partner and Head of Asia for Taylor Vinters and then as Partner at PwC Legal International setting up their TMT specialist team in Singapore. He worked with Octopus Ventures as their Venture Partner for SE Asia before joining Leo Capital as Europe lead where he is now launching their Nordic fund.

Shwetank is a Co-Founder of Leo Capital and prior to founding the fund, founded MyHealthMate which he exited to Ambicare Clinics. He also worked in the corporate innovation space with MetLife Asia in Singapore, where he led open innovation and partnerships with startups.

Top takeaways:

1️⃣ Stimulating the Early Stage Ecosystem in Singapore: Henry shared the concerted effort by the Singaporean government to stimulate the early stage tech ecosystem between 2010 and 2020. The incentives and the introduction of capital into the system have been pivotal in fostering growth and innovation in the region.

2️⃣ The India Advantage: Shwetank explored the India Advantage, emphasising the vast talent pool in India and the potential for Indian diaspora to create global impact.

3️⃣ Expansion into Europe and Nordics: Henry and Shwetank discussed Leo Capital’s expansion into Europe and specifically the Nordics in late 2023. They emphasised the importance of a global mindset and the strength of talent in the Nordics.

Beyond this, we spoke about:

🇸🇬 How Singapore is stimulating the early stage ecosystem.
🇮🇳 Talent in India is now global.
📈 How loss making startups can now list on the Indian stock exchange.
🌍 Launching in the Nordics and how smaller markets bring global mindsets.
🚀 Why becoming an entrepreneur has gone from shame to game on in India and the diaspora.

Listen on YouTube, Spotify, Apple or wherever you get your podcasts!

If you have any feedback on the podcast or the newsletter, just reply to this mail or ping me online!

If you like what I’m putting out, do give me a follow on LinkedIn and Twitter.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, importantly, tell me why you’d like to connect 💪🏾)

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

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Off Balance

For those of you who have been following Off Balance for some time now, you’ll know that there are two elements to raising capital from VCs – the economics of the deal (what is the valuation, how much is being invested for what % ownership) and then there are the control elements (what voting powers, what reserved matters, who gets a board seat and so on).

Currently we’re seeing throughout our client base that control starting to be exerted in a much stronger fashion as investors seek to push back on excessive spending or take a stronger line with poorly performing portfolio companies.

In some instances, that may well mean some pretty big shake ups in the organisation – including potential changes at the senior leadership level – so it is important for founders to understand board dynamics and scrutinise their shareholder agreements to see who is able to do what and when.

But I want to explore a slightly different point, one that many people don’t necessarily appreciate, and that’s who holds the actual power in the boardroom.

Who Holds the Power in the Boardroom?

This is quite the contrarian take, but do bear with me.

So you’ve set up your company, maybe you’re one of two co-founders, you’re both directors in the business and things are pretty breezy.

Then after slogging away fuelled by ramen, hope and stale coffee you start seeing some traction and decide it’s time to open up your cap table and invite some investors on board.

You go through a few months of rollercoaster emotions, one VC in the data room, another talking about diligence, more rejections than you can count, but the glimmering of hope.

Until finally you get a term sheet – and they’re willing to lead!

It all seems ok, the valuation is more or less as you expected, you’re going to have to carve out some additional equity for the team, which is fair enough and the investor want a seat on the board.

But of course they’re not taking the whole round. So you’re going to need another investor, and they will come in on the same terms.

Fast forward another month or two as dilligence is done and long form legals are inked and you finally have cash in bank and it’s time to put that money to work.

You file all the necessary paperwork and add the two Investor Directors to the board but now you’ve got a slight problem, there are now 4 of you on the board – what happens if you get to a deadlock?

Well that’s solvable through a number of ways, but maybe, to keep everyone honest, it’s worth bringing in an external Chair to run the board and hold the casting vote.

Wonderful, this feels like a pretty grown up place to be in doesn’t it?

You’ve set up quarterly, maybe even monthly board meetings, where you can strategise how you’re going to take over / disrupt / create the market / competition / industry.

This is going to add so much value to how you run things, finally you have the support you need on the big stuff.

But at some point, you wake up with this nagging question in your head. You’ve now got 2 co-founders, 2 investors and 1 non exec Chair on the board.

So who is running things?

Who actually holds the power?

Some might say it’s the Chairperson, after all, they hold the casting vote, they are able to change the trajectory of the business and influence the rest of the board as the neutral voice at the table.

Others might say it’s the Investor Directors, after all, it’s their cash on the line, and for lots of startups it’s their cash they’re going to rely on to some extent in the future – it’s really hard to convince new investors to come on board when you’re existing ones either don’t take up their pro-rata or don’t like where the business is heading.

You may even think it’s the CEO especially if things are going well (though it is always worth remembering, it’s probably going to be easier to replace the CEO than it is a board member – remember what happened to Travis Kalanick at Uber?).

But often it’s the last person you might imagine it to be.

So this is my contrarian take:

Having sat through 100s of board meetings from startups to corporates there is a truism that emerges…

The person (or potentially people) that hold the most power in a board meeting are the following:

📝 The person who sets the agenda.

✍🏾 The person who writes the minutes.

Why is this the case?

Because if you set the agenda you direct the flow of the meeting. You shepherd people in the direction you want the discussion to go.

You can tackle hard topics tangentially rather than head on and steer the conversation towards the outcomes you’re looking for.

People rarely question the format, progression or detail of the agenda so, once set, it is quite easy to steer the board meeting in the direction you want to.

Don’t get me wrong, this doesn’t mean you can steamroll the meeting, if you try and do something that is clearly contentious, be prepared for push back.

But all other things being equal, setting the agenda gives you a great deal of power to influence the flow of your board (or any other) meeting.

The second powerful role is held by the person writing the minutes.

Your role is to record salient points from the meeting and the pertinent actions that arise.

Think about this for a moment. You are writing the definitive record of a meeting that people will refer back to over subsequent months, if not years.

You essentially dictate how people ‘remember’ the meeting in the future.

In fact, it may not even be the case that the people referring to your minutes would have even been present at the meeting because board members change on a regular basis.

The other thing about minutes is that very few people truly understand how to write a good set of them. Most people default to some university style notes with lots of Person A said x and then Person B responded with y – much of which is peripheral to the actual core message that needs to be recorded for posterity.

I have, over time, gotten very good at writing minutes, mainly because I have spent A LOT of time in board meetings over the years. The trick is to write short form notes in the meeting in the style of your finished minutes and then condense and circulate within 48 hours of the meeting having wrapped up – this allows for maximum contribution to ensure that the record is straight.

When I wrote about this topic on LinkedIn a while ago, a lawyer came back with this comment:

Now I’m by no means suggesting that every person that sets the agenda or writes the minutes has some sort of Machiavellian desire to hijack the meeting for their own purposes, simply that most people would assume that power only ever sits in the hands of the people either making the decisions or investing their cash.

The reality is that you’ll almost always get others’ inputs into both the agenda and the minutes.

But how you write the way the meeting flows and what the outcomes were is more powerful than most people understand.

Gif by FTX_Official on Giphy

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 #37 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #36

👋🏾 Hi friends!

This week’s short and snappy edition is all about the super cool team at the super cool SuperSeed – an early stage B2B venture fund. Check out the conversation I had with founding partners Mads Jensen and Dan Bowyer, hope you love it as much as I loved recording it!

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

From boy bands to venture investing 👨🏻‍🎤

Check out the latest episode of Nothing Ventured where I spoke to Mads Jensen and Dan Bowyer, the amazing investors behind SuperSeed a seed fund investing in technical founders who are transforming how the world works and helping them hit their first million.

Prior to founding SuperSeed, Mads was co-founder and CEO of Sefaira, a company developing software for sustainable and high-performance building design whilst Dan built and exited 2 startups as well as having spent time as a boy band member and host on children’s TV.

Some top takeaways from this pod:

➡️ Hunger for AI in Business Transformation: Mads and Dan highlighted the massive interest and hunger in how AI is transforming businesses. With AI becoming more prevalent, there is a fundamental shift in how businesses are perceiving and utilising this technology to drive innovation and growth.

➡️ Need for European Nasdaq: The discussion touched upon the idea of creating a European Nasdaq to support tech businesses in Europe. The lack of strategic buyers in Europe often leads to companies seeking exits in the US. Establishing a European Nasdaq could provide more opportunities for companies to grow and scale within the region.

➡️ Focus on Building Big Independent Businesses: While the goal is for companies to build big independent businesses, the reality often leads to exits to US trade buyers. This trend highlights the importance of companies being structured to work with US markets and partners to achieve significant growth and success.

They also talked about:

🚀 How Dan and Mads went from a boy band and IBM to raising a fund.
? Whether there is a lack of risk appetite in Europe
📈 How European venture was only 2 – 3bn a decade and a half ago and we’re now 10x of that.
🏎️ Speed of sale speed of scale

Check it out!

Else listen on Spotify or Apple

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

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

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I hope you found Off Balance #36 v. 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 hello@emergeone.co.uk 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.

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

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #35

👋🏾 Hi friends!

It’s been a sunny week in London, though sadly, having been in meetings all weekend I didn’t really get much of a chance to enjoy it 😢 , even more frustratingly, I also managed to miss out on the spectacular light show that the country got to experience on Friday and Saturday evening as the Northern Lights came to the UK. Fortunately some of my neighbours got snap happy, so check out this incredible shot from the weekend 🤯 

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

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

🎙️ Ash Arora, Partner at LocalGlobe on the Nothing Ventured Podcast
🇪🇺 eu/acc – what’s the movement all about?

Why Ethereum is the Hugging Face of Blockchain…

In the latest episode of Nothing Ventured, I had a wide ranging and fascinating conversation with Ash Arora, the youngest Partner at LocalGlobe, a UK-based venture capital firm that focuses on seed and impact investments leading their web3 and blockchain practice.

Before joining LocalGlobe, she was Investments Lead at Polygon Labs leading the $100Mn Polygon Ventures’ Fund where she focussed on early-stage web3 startups with global LPs across the US, and Europe.

Three takeaways from this episode that are worth thinking about:

1️⃣ We are Soooo Early in Blockchain and AI

Ash noted that we are still in the early stages of both blockchain and AI technologies and adoption. Despite the hype and excitement around these fields, there is still a lot of infrastructure work yet to be done. The challenges of security, scalability, and cost have not yet been fully addressed, leading to immense potential for growth.

2️⃣ The Heisenberg Uncertainty Principle in Blockchain

Ash introduced the concept of the Heisenberg uncertainty principle in blockchain, drawing parallels to the famous physics principle. She discussed that in blockchain, it’s challenging to achieve security, scalability, and cost efficiency simultaneously. This fundamental problem underscores the need for innovative solutions and infrastructure development to overcome this trilemma.

3️⃣ Blockchain Use Cases and Real-World Adoption

We discussed the importance of real-world adoption of blockchain technology, focusing on practical use cases like land registry on-chain. While the technical aspects of implementing blockchain solutions may be feasible, the legal and regulatory frameworks need to evolve. The intersection of code as law and traditional legal structures presents a complex but promising landscape for adoption.

Beyond this we talked about:

🐇 How Ash went from knowing nothing about VC to going down a 3 month rabbit hole writing a paper on Bitcoin for Citi
🪙 Getting into crypto because she was restricted from investing anything else whilst at Citi.
🤷🏾 How 99% of the crypto community back in the day didn’t know what they were doing.
🎡 Feeling at home in London after landing for the first time for 20 rounds of face to face interviews with LocalGlobe.
🤝 Choosing LocalGlobe having 7 job offers in her pocket and using her 50+ question framework!

Listen on YouTube, Spotify, Apple or wherever you get your podcasts!

If you have any feedback on the podcast or the newsletter, just reply to this mail or ping me online!

If you like what I’m putting out, do give me a follow on LinkedIn and Twitter.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, importantly, tell me why you’d like to connect 💪🏾)

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

Off Balance

There is a bit of a movement going on at the moment – you may have come across it on Twitter / X – lots of folks with a variation of e/acc or 🇬🇧/acc or some variation on that theme in their bios.

And while the movement is already a couple of years old, I thought it would be valuable to unpack what’s going on from the lens of eu/acc which has struck a chord with people throughout the European ecosystem.

eu/acc

To understand eu/acc (or any other ?/acc) you first need to understand the overarching movement that surfaced in 2022 and gained momentum in 2023 amongst prominent people throughout the tech ecosystem.

That movement is e/acc or Effective Accelerationism.

The concept of effective accelerationism (e/acc), posits that civilization should align with the universe’s inherent tendency towards increased energy utilisation and entropy.

e/acc draws on principles from physics, suggesting that life and societal structures like capitalism are manifestations of these thermodynamic processes, optimising energy extraction for growth and replication.

e/acc advocates for a laissez-faire approach, arguing that open, competitive systems are better at evolving and adapting than those tightly controlled by top-down regulations.

This perspective envisions a future where human limitations are transcended, advocating for a dynamic and flexible framework that encourages innovation and evolution towards greater complexity.

It’s proponents summarise it themselves as follows:

Stop fighting the thermodynamic will of the universe
You cannot stop the acceleration
You might as well embrace it
A C C E L E R A T E

Notes on e/acc principles and tenets – Beff Jezos and Bayeslord

At a broader level, e/acc is a progression of accelerationism (developed by British philosopher Nick Land and since fallen out of favour due to perceived or actual racist views including nods to eugenics and far right undertones). It is also a push back against the effective altruism movement which proposes a much more cautious approach towards AGI (artificial general intelligence) which it frames under ‘longtermism’ and again, e/acc is also a response to the degrowth movement which expounds a philosophy of reduced economic activity and consumption.

Now, while you only have to head over to Reddit to get a feel for the pop-pyschology vibes of the movement with plenty of physicists and PhDs showing their disdain for the movement as slightly nonsensical, probably the best quote I have seen about it is from this article in the New York Times:

Julie Fredrickson, a start-up investor, said that e/acc is “a fun shorthand for a future that prioritizes progress and solutions.”

Kevin Roose

Because what e/acc really is, is the seed of an idea that people can take and interpret how they want to. It has allowed for a plethora of sub /acc movements to take off, and this is where my interest really lies.

European Accelerationism

Let me preface this by saying the following:

I think it sucks that the UK exited the European Union.

I think that the European Union has some significant challenges and issues.

The ecosystem in Europe is not homogenous (which is kind of the point).

On 30th April 2024, Andreas Klinger (formerly CTO of Product Hunt, Head of Remote at AngelList and currently investor at Remote First Capital) posted a blog entitled: Dear Europe, please wake up – eu/acc.

In it he uses the the general objective of the e/acc movement but in a European context arguing for certain changes that could take Europe out of its (perceived and actual) malaise on the pathway to startup and technological growth.

The first part of his essay deals with probably the most prevelant problem in the European startup ecosystem, one that comes through in the podcasts I’ve recorded with VCs across Europe – though never as explicitly, nor providing the ultimate rationale, as Andreas does, as being the self doubt that Europe has driven by tropes and memes driven predominantly by our US counterparts.

🇪🇺 Dear Europe, please wake up – eu/acc

If you live in Europe (the continent not the political organisation the EU) and have spent any time in the tech and venture ecosystem, I’d warrant that you have come across at least one of these statements either overtly or in meme form at some point online.

Andreas makes the case against each one whilst accepting that to some extent there is no smoke without fire and that, the continuing ‘belief’ in these tropes has the potential to become a self fulfilling prophecy.

He suggests that all the big themes – tech, AI, space-tech, climate etc. are all already being tackled in Europe. We don’t lack the ambition. Instead, according to Andreas, what causes us the most problem is friction.

And because of that friction, he proposes two issues that need to be tackled to help ‘unleash’ European accelerationism.

Creating an EU Inc.

Teach English as early as possible.

Europe has 750m people, the EU 450m all spread across over 40 countries. That means 40+ different legal systems, regulations, corporate law, employment law, tax regimes, customs, cultures and, of course, languages.

And as many investors I have attested to, one of the reasons that it is so hard to invest in certain jurisdictions is the bureaucracy that goes with that. Andreas talks about investing in a German GmbH as an example, requiring notaries, physical presence and all sorts of other friction that makes sure investors think twice before parting with their cash.

Norway has recently shocked the startup ecosystem with tightening of rules around their exit tax which would levy 37.8% on unrealised assets over Euro 43k that had been built up in the country. This has very specific and costly implications for founders looking to scale up and out of the country whose population currently stands at just under 5.5 million people.

So the case for an EU Inc is a strong one, if founders (and importantly investors) had a standard vehicle they could set up wherever they were based in Europe, this would lead to a far smoother process to launch and raise capital.

It is no surprise that in the US, the Delaware Inc has become the vehicle of choice for investors, and, as Daniel Glazer stated in my interview with him, it is with good reason that if you are a European based startup looking for US investment pre Series B, you are likely going to have to flip to a Delaware topco. Investors simply don’t want to have to figure out the regulations that will bind them in some other jurisdiction.

A Europe wide structure would definitely remove some of those challenges (though this would need to be tested over time as case law is explored and precedent is formed).

The case for teaching English from an early age is also not that controversial (at least in principle if not in practice). It is understandable that individual nations do not want to lose their cultural and linguistic heritage but the reality is that English is the lingua franca of tech, business and – especially in the venture ecosystem – the US is the most likely destination for growth.

As a linguist myself, you will never hear me arguing against the value of learning second and third languages, it expands horizons and allows for better understanding of those from other cultures and backgrounds.

But English, especially in Europe, comes with connotations. The backlash against linguistic imperialism is real. We have all heard the stories of the French wanting to ban ‘le weekend’ from the vocabulary in the early 2000s, and it still surprises me when I travel to Italy how few people have a functional understanding of English outside of the cities.

This has real implications if you are building in the venture space, you will rub fewer shoulders, glad fewer hands and generally struggle to expand outside your home nation.

Obviously this is not always the case and you can be successful without learning or being fluent in English, but when all is said and done, as Andreas states, doing so provides optionality for future generations whilst standardising media and networks as opposed to maintaining disperate and patchy nodes across the ecosystem.

Just a few days ago Andreas launched https://eu-acc.com/ alongside a Discord which quickly garnered several hundred members with the starting ambition to tackle the issue of the EU Inc.

I have interviewed many VCs across the UK / European ecosystem and beyond and there is something quite enticing about what Andreas is proposing. Not just because there should be so much more optimism around tech in Europe, not just because we want to ensure we don’t fall behind the USA, China and other emerging ecosystems like India, Israel and elsewhere but also because his approach is to work with regulators and standardise rather than attempt to overturn or antagonise. Collaboration is always a better way to effect change if you can.

But also, I am attracted to it because (unsurprisingly) Andreas doesn’t approach this with the techno-libertarian overtones that the US advocates of e/acc seem to promote.

And as he says, if the EU could adopt the Euro across the bloc then anything is possible.

What do you think, does he make the case for European accelerationism and do you subscribe to the thesis?

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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 #35 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #34

👋🏾 Hi friends!

As promised, every other week for the time being, I’ll just be dropping a short edition of Off Balance into your inbox, showcasing my latest Nothing Ventured podcast in case it had slipped your attention (in which case what are you doing?! Subscribe wherever you get your pods so you never miss another episode 💪 )

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

Queering Venture Capital 🌈

In this episode of Nothing Ventured, I sat down with Christian Tooley, the founder of i³ investing, the first, and only, registered organisation in the U.K. and Europe solely dedicated to queering venture capital – for both LGBTQ+ founders & investors.

His ‘day’ job is at Bain & Company where he leads a team across EMEA for Bain’s Venture Ecosystem focussed on venture capital as a service. Christian is an Ada Ventures angel a fellow of the Newton Venture Program and was previously a scout with BACKED VC.

Here are three key takeaways from my conversation with Christian:

Intersectional Incredible Founders: Christian highlighted the importance of supporting intersectional incredible founders who bring a unique perspective and resilience to the entrepreneurial journey. How by focusing on diversity and inclusion, we can foster innovation and create a more equitable startup landscape.

Unlocking Queer Capital: Christian shared insights into how i3 Investing is partnering with Crunchbase to spotlight LGBTQ+ founders and provide them better access to capital. By creating a platform for queer entrepreneurs to connect with investors, Christian believes it is possible to begin to bridge the funding gap and support diverse businesses.

Historical Perspective on LGBTQ+ Entrepreneurship: Christian challenged the notion that LGBTQ+ entrepreneurship is a recent phenomenon, citing examples from ancient cultures where diverse gender roles and identities were accepted. By acknowledging the historical presence of queer individuals in entrepreneurship, it is possible to combat stereotypes and promote inclusivity in the startup community.

In this episode, we also talked about:

🤑 Taking the dusty world of consulting into the sexy world of venture.
🧑🏽‍💼 Whether you take the corporate out of corporate venturing.
💸 Angel investing with Ada Ventures in post product, pre revenue companies in the UK.
🏳️‍🌈 From the day job to the gay job – launching i³ investing
⚧️ Unlocking queer capital.
🙋🏽‍♀️ Defining Intersectional Incredible Founders.
🤝 Partnering with Crunchbase to put a spotlight on your diversity.

Check it out!

Else listen on Spotify or Apple

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

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

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I hope you found Off Balance #34 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 hello@emergeone.co.uk 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.

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

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #33

👋🏾 Hi friends!

I recently I’ve been getting a little philosophical, so much so that I’ve changed up my daily journalling routine to give myself a bit of an additional challenge.

I’ve gotten back into journalling over the last couple of years, but, breaking from the norm, I find it very difficult to do this by hand – apart from anything else, being left handed, I find it increasingly difficult to read my own handwriting 😬… So my default is to use Notion for my writing (also given that I typically journal in the evenings and in bed, I give a bit of consideration to my long suffering wife and keep the lights off!).

Recently I decided to take advantage of the AI assistant in Notion and have been getting it to prompt me with a philosophical question that I can write about. It’s really useful to challenge my thinking on topics that I maybe have considered but not given a lot of time to. Check out one of my questions and answers below, let me know what you might have added or changed 😀 

In other news, my latest article for the Evening Standard went live a few weeks ago discussing the reality of venture in the context of the UK’s Future Fund, launched during the pandemic to assist early stage businesses with financial support at a time where businesses were facing an existential threat to their survival. My tl;dr? It’s too early to talk about whether this was a success or failure, but one thing is for sure, we’d have fewer businesses in the ecosystem had the scheme not been put in place.

Read the full article here.

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

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

🎙️ George Askew and Sam Ettelaie – Co Founders of Thema on the podcast
☠️ Survivorship Bias in Venture Capital

Founders – if you think you had it tough, try raising a fund…

In this episode of Nothing Ventured, I sat down with George Askew and Sam Ettelaie, Co Founders of Thema, which supports and enables emerging managers to launch venture capital strategies, providing them with an all-in-one package.

Thema also acts as a strategic cornerstone limited partner, writing first tickets of up to £5m, offering operational and regulatory support, office space, and curated LP insights.

Prior to founding Thema, George founded several startups before working with a number of funds including Force Over Mass Capital and Cell Capital whilst Sam spent over half a decade with the British Business Bank where he led and supported investment in funds like Ada, Concept, Dawn Capital, Seedcamp, JamJar and many others.

In this episode we talked about:

➡️ Is fund structuring and regulation really cool?

➡️ How Thema is acting like a catlyst for LPs.

➡️ 486 funds signing up within 6 months of launching.

➡️ Only 6-8% operator VCs in the UK vs 60% in the US.

➡️ LPs have come back to the market and started engaging with funds.

➡️ Is the lack of patient capital having an impact on the ecosystem.

Listen on YouTube, Spotify, Apple or wherever you get your podcasts!

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

Off Balance

How much does survivorship bias impact us?

I think about this a lot in terms of venture.

For example, did a specific startup become successful WITH funding from a16z or BECAUSE it got funding from a16z – i.e. did a16z’s success and reputation essentially boost an unremarkable business further than it should have otherwise gone?

(I’m using a16z as an example, but it could be any recognised fund).

There are quite a few instances of survivorship bias in venture capital, obviously coming down to the fact that it is a game of outliers.

Here are a few I’ve been thinking about more recently sparked by how I’m seeing the landscape and ecosystem changing at the moment.

Survivorship Bias in Venture Capital

Overestimation of returns – We know that data around VC performance tends to overindex towards successful funds whilst down playing underperforming ones – or worse looking at averages when the whole game is one of outliers. This leads to inflated expectations both in upcoming VCs as well as the startups and founders that look for their funding.

Failure is more common than perceived – We all talk about 90% failure rates in venture but the reality is that what we see are the highly visible success stories. This leads to a miscalculation and underestimation of the true risk involved. This means that many founders end up building businesses with rose tinted glasses because they only see the companies that survive, noone really talks about the thousands upon thousands that didn’t.

A skewed perception of industry viability – If all the stories you read are about incredible software businesses, and all the reporting gives at least the illusion (if not the reality) that these are highly lucrative – bolstered again by the few outlier success stories, one can get headfaked into thinking that ANY software business should follow a similar trajectory. But most don’t even get to profitability let alone an exit.

Misguided advice – Exited founders have been on one journey. The expectation that what worked for them will work for you is not rational. And let’s face it this advice often fails to account for market timing, luck, and other factors that simply aren’t replicable.

Overconfidence – All of the above leads to an overconfidence across both founders and investors that is often misplaced. But whilst an investor can build a portfolio to hedge that risk, sadly founders only have one shot at any given time. So whilst being confident is necessary, overestimating ability is likely to end in tears.

All of this to say, don’t believe the hype, play your own game, not anyone elses because their journey is unlikely to be the same as yours.

Gif by netflix on Giphy

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 #33 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #32

👋🏾 Hi friends!

Sorry for the radio silence on my end, I’ve been having a fairly busy month, on top of which a few health concerns in my family have had my full focus over the last couple of months – thankfully all clear now and moving forward.

I have also (again) been thinking about what value actually looks like with this newsletter, how often I should really be sending it out and what is it that people want me to talk about.

So, I’d love for you to reply to this mail and tell me what it is that you want to hear more about from me.

One thing I will be doing is sending this out at least once a week, but only doing something long form every other week. The one constant will be a quick review of the latest Nothing Ventured pod so you can ensure you don’t miss out on a single one.

So today’s edition will be a catch up on all the pods that have gone out over the last several weeks, and I’ll be back to writing my thoughts, opinions, advice and research on venture from next Tuesday!

Thanks for your support and hope you find a pod sparks your interest 😀 

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

In today’s Podcast Only editition, you can catch up on a few of the conversations I’ve been having around the tech and venture ecosystem over the last few weeks:

🤑 Jack Kuveke on shitposting and crazy ICOs.
🧑‍💻 Francesco Perticarari on the rise of deeptech.
🏭 Renan Devillieres on investing in operations.
🦠 Nik Sharma & Mo Alomari, using NASA’s playbook to build BioCorteX.
🫀 Mohamed Abou-Alam on building Precision Cardiovascular.
🇹🇷 Enis Hulli on building 500 Emerging Europe, part of the 500 Startups family.
🤖 Sean Williams on using LLMs to build bidtech at AutogenAI

If you like wild rides and crazy stories, then you should definitely check out this episode of Nothing Ventured I recorded with Jack Kuveke founder of Raise Your Seed Round and author of Jabroni Capital, the newsletter as reliable as your lead investor.

He talked to me about how he decided to start writing comedic posts on LinkedIn to deflate some of the hubris associated with the venture ecosystem, raising a huge ICO and fleeing Eastern Europe!

Spotify, Apple

If, on the other hand, deeptech is more your cup of tea, the watch this episode in conversation with Francesco Perticarari General Partner at Silicon Roundabout Ventures a specialist fund investing in engineer-led, deep tech entrepreneurs.

We talked about the rise of titans over unicorns, how defence and strategic supply chain repatriation are driving the growth of deeptech building and investing and why the European ecosystem needs to be more joined up, not less.

Spotify, Apple

How about something a little more old school? I spoke to Renan Devillieres founder of OSS Ventures a startup studio building & investing in the future of operations. OSS ideates, tests, builds, and invests in great ideas to change the future of the organizations who provide physical services to the world.

We talked about how only 0.7% of VC flows to operations based businesses even though 50% of the work force works in these companies and they drive 25% of GDP and how walking into Tesla factory caused him to have the epiphany that this was the future of manufacturing.

Spotify, Apple

Next up we had Nik Sharma and Mo Alomari Co-Founders of BioCorteX, a techbio backed by Hoxton Ventures and Sofinnova Partners providing actionable insights for future therapeutic development.

We talked about the $2.6bn per asset cost of drug development, how BioCorteX is building the worlds largest biology graph with billions of data points and how they are borrowing from NASA’s playbook to develop their proposition.

Spotify, Apple

The following week I spoke to Mohamed Abou-Alam, CEO of Precision Cardiovascular, a medical devices venture in the business of predictive maintenance of one’s heart.

We talked about taking tech from the industrial space and translating it into the body, the difficulty in quantifying impact to LPs and how to keep the team malleable as you scale.

Spotify, Apple

After a couple of operator stories, I went back to my roots and spoke to Enis Hulli, General Partner at 500 Emerging Europe – part of the 500 Global (previously 500 Startups) family, a pre-seed and seed fund based out of Istanbul and London and investing in the best companies from Emerging Europe to help them scale globally.

Our discussion ranged from how listening to VC podcasts while installing air conditioning led him to angel investing and launching a fund, how information and access asymmetries requires boots on the ground to invest at pre-seed and seed and why Americanising your culture as a startup founder in Emerging Europe is so important.

Spotify, Apple

Finally, I spoke to Sean Williams, Founder and CEO of AutogenAI, a generative AI startup backed by Blossom Capital and Salesforce Ventures with a mission to revolutionise proposal preparation, enabling companies to create compelling, evidence-based submissions fast.

Sean talked about learning lessons by falling over himself, how managers are paid to make up numbers and then they’re paid to deliver on them and linguistic engineering and the different between argument and rhetoric and it’s application to LLMs.

Spotify, Apple

And there you have it, a few weeks of Nothing Ventured wrapped up for you with a bow!

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

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

Gif by nbcthevoice on Giphy

I hope you found Off Balance #32 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 hello@emergeone.co.uk 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.

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

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #31

👋🏾 Hi friends!

I hope you had a relaxing break over the (long) weekend and a Happy Easter to those that were celebrating 🐣.

I managed to spend a few days spending time with loved ones and dipping into writing here and there.

I’m excited to have another article being published (soon I hope!) on the Evening Standard, if you haven’t read my last two, check them out here.

One of the things I find incredibly frustrating is that writing is a creative process – even when you are writing non fiction – and it is hard to schedule in times for creativity. So I am having to find ways to create environments in which I can be creative, especially when it comes to writing the book.

If you’ve got a hack, I’d love to hear from you!

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

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

🎙️ Charles Sidman – Managing Partner of ECS Capital Partners on Nothing Ventured
📈 Carta’s European Data Insights unpacked

Would you spill your most intimate thoughts to a robot bartender? Has AI become a cult or a religion?

These were just a couple of the issues touched upon in this episode of Nothing Ventured where I sat down with Charles Sidman – Founder and Managing Partner of ECS Capital Partners, LLC.

Charles has an incredible background from building computers in his youth to 20 years as Professor of Molecular Genetics, Biochemistry, and Microbiology and a decade as Professor of Management at the University of Cincinnati before moving first into angel investing and now raising a fund.

In this episode, we talked about:

➡️ Moving from academia into venture to be able to influence the world better.

➡️ Getting to an exit within 6 weeks.

➡️ Diversity in and the interaction of the system is what matters.

➡️ Complexity science and the intersection with personalised medicine

➡️ Angel activity can be incredibly rewarding, just not necessarily financially.

Check out the episode on YouTube, Spotify, Apple or wherever you get your podcasts and don’t forget to rate, subscribe and like 💪🏾

Check it out and let me know what you think!

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

Off Balance

It’s quite easy to find trend data on startups in the US, but slightly harder to find the same quality of information on what’s going on in the ecosystem this side of the Atlantic.

Thankfully, the team at Carta have released their European Data Insights report which gives a snap shot of the European startups within their data set of 41,000 total companies tracked as of 31st December 2023.

So let’s take a look at what the report tells us and maybe, some of the reasons why.

State of European Private Markets

The first thing to note is that this report is quite a bit smaller than their more all encompassing State of Private Markets report which is able to highlight trends from a larger and more robust data set.

As such, there are fewer insights given that there are, presumably, fewer European companies on platform being tracked.

This is not particularly surprising.

Carta’s main product (cap table management) was almost entirely geared towards US incorporated companies and it wasn’t until August 2022 that they acquired Capdesk, the UK and European equity management platform.

The reality is that equity management in Europe is – as with many products over here – understandably fragmented. In the UK you have alternative products such as Vestd, whilst in Europe you might use Ledgy.

This is unsurprising as, certainly in the UK, one of the principle reasons to use a cap table management system such as Carta or Vestd is to manage employee option schemes, track vesting, issue documents and ultimately file with HMRC. Unlike the US which has a common modality for issuing options regardless of which state the company is incorporated in, in Europe differing legal implications means most solutions will solve for one country in the first instance and then potentially expand out into other regions – it is a great example highlighting the problem of scaling in Europe where localisation requires ongoing development of essentially new systems to handle this diversity even if the core cap table management product should remain static irrespective of region.

The other reason is also simply that there are fewer startups over here than there are in the US and hence a smaller pool of companies from which data can be extracted and, let’s face it, for most companies, until things get pretty complex, it’s unlikely that they will move from the default solution for so many problems – Excel.

But all of this is to set the scene as far as the availability and volume of data is concerned. What of the actual insights?

Pre-Seed Ascending

Tracking 1,070 rounds between the first quarter of 2020 and the last quarter of 2023, Carta’s data suggests that both the average and median round size at pre-seed has grown 40% year on year.

Carta’s suggestion as to why this has happened is that the total number of rounds has contracted meaning there is more capital chasing fewer deals leading to larger amounts of capital deployed – £1.165m on average with a median round size of £880k.

Pre-seed, in the UK at least if not across Europe, is an interesting beast. Given the preferential tax treatment angel investors receive via the SEIS and EIS schemes, we typically see fewer VC led rounds at pre-seed as compared maybe to the US (though this may also be a quality driven issue). If there are fewer rounds to participate in but investors want to ensure they receive their tax breaks, it follows that they may invest more in each round they participate in.

It has always seemed to me, that the tax efficient investing, whilst a great way of promoting early stage investing has two unintended consequences:

It has the effect of inflating valuations at very early stages as investors are more comfortable paying a higher price if they are driven by the tax benefit.

Similarly, it is likely that there are more businesses raising a pre-seed that probably should not because, again, investors may be being driven by the tax benefit over and above the feasibilty of the venture.

Whatever the actual reason(s), the fact that there is more capital available to these startups during the earliest rounds is no bad thing, it means (hopefully) that runways will extend and the ability to get to PMF is strengthened.

Seed Descending

Conversely, Carta reports that there were 26% fewer seed deals in 2023 compared to 2022 and that median round size had dropped by 14% YoY to £1.868m though it is still up 56% since 2020.

Following on from my comments above, this makes some sense. If one assumes that in the UK and Europe VCs are typically first coming to the table at seed rather than pre-seed, then this is the first time these startups are taking on institutional investors.

And institutional investors should be more diligent in their approach than angels (2021 and 2022 notwithstanding!).

As VCs have started becoming far more selective around the metrics and traction of the companies they deploy into as well as an emergent narrative around backing businesses that demonstrate scale coupled with capital efficiency, it is unsurprising that they are investing less than a year ago in any one deal.

Let us also not forget that the last couple of years have also been traumatic for founders and many are pushing back on raising too much capital (which in turn inflates valuation) and taking too much dilution at the earlier stages.

A healthy approach to cash and runway management means that founders are likely to take on less capital whilst continuing to hit their milestones.

Series A Feeling Pain

The median Series A is down 21% year on year though is up 27% from 2020. Again this is unsurprising in the context of the wider pull back in venture capital.

There has been an uptick of 13% in terms of the volume of rounds since 2020 but this is probably a lot lower than one would expect given that in 2020 many, if not most, investors were sitting on their hands waiting to see how the pandemic would play out.

Again, the drop from the heights over the last few years is a natural outcome of investors demanding much higher thresholds to qualify to raise a Series A coupled with the aforementioned push for capital efficiency. Founders are again finding themselves in a position where either pro-actively or by default having to do more with less (or at least less than would have been the case in 2021 and 2022 when both average and median round sizes peaked.

Series B Flat(ish)

At Series B, the data tells a mixed story. The median round size is up 6%, however there has been a huge 40% drop in deal volume in 2023.

It is simply getting harder to raise a Series B if the business is not performing as it should. As one of my guests once said, if Series A is all about product market fit, Series B is all about Go To Market fit and if a venture has not solved that playbook, is not showing significant growth, they are going to find it harder to raise their B round.

This is also a factor of the number of funds deploying at Series B and beyond here in Europe which is well documented. As this article from Forbes states:

Carta’s data further supports this view around the difficulty at Series B showing that the median number of days to raise a Series B is 760 days (from having raised their Series A) whilst the time between a Seed and A round is only 1.5 years.

Overall, the data paints a picture of a contraction in the number of rounds though generally a positive story in the amount of capital being raised in any individual round on average. What startups and founders must internalise is that the bar to raise from venture capital funds today, and most likely well into the future, has been lifted.

What this is likely to mean is that the businesses that do manage to raise a round have gone through a more robust selection process than we were seeing in 2021 and 2022 and, one would hope, are therefore much more likely to have promising and concentrated outcomes than over the last few years.

Check out the original report here.

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

Gif by siliconvalleyhbo on Giphy

I hope you found Off Balance #31 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #30

👋🏾 Hi friends!

I got a little distracted today so apologies this is landing in your inbox a bit late this evening!

It’s been an interesting few weeks, not least because I found my face plastered on advertising units across a certain North London borough 🤩 

A massive shout out to Launchpod Studios where I’ve been recording Nothing Ventured since the beginning of 2023 and who organised this awesomeness and, to Jolt for agreeing to put my (somewhat) smiling face on their charging stations for the next few weeks.

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

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

🎙️ Monik Pham and Reem Wyndham – Founding Partners of Pact on Nothing Ventured.
⏰ Vesting and Reverse Vesting Explained

Don’t just think about diversity, think about cognitive diversity too 💪🏾

I sat down with Monik Pham and Reem Mobassaleh two of the founding team, alongside Tong Gu, behind Pact an early stage VC fund investing in pre-seed and seed stage tech companies addressing the most pressing issues facing future generations across Access, Betterment and Climate.

In this episode, we talked about:

➡️ How unusual to have 3 women come together to found a fund.

➡️ Relevant diversity and cognitive diversity.

➡️ How Monik built a fund at 23 and how that inspired her to do it bigger and better.

➡️ Spending a year talking and deploying their own capital before launching Pact.

➡️ Mixing commercial and impact metrics to understand how one drives the other.

Check out the episode on YouTube, Spotify, Apple or wherever you get your podcasts and don’t forget to rate, subscribe and like 💪🏾

Check it out and let me know what you think!

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

Off Balance

It’s been a pretty bizarre Q1 so far, and even with only a couple of weeks left, I decided to take a look at what might be happening in the world of VC that might explain what I’m seeing.

It’s not a massively detailed analysis by any stretch of the imagination, but it certainly supports what I have been feeling for some time now, I just didn’t have the numbers to back it up…

What’s the story in venture land?

Anyone else found the start of 2024 has been a REAL grind?

I’m hyper focussed on providing support to venture back tech startups and, I’m not gonna lie, this year has started out tough.

🛑 It’s not that we aren’t great at what we do.
🛑 It’s not that founders and startups don’t need our services.
🛑 It’s not even that there has been a bunch of competitors spring up.

It’s simply that fewer businesses are securing funding right now so there are just fewer businesses out there that might need our support.

Let’s put it into perspective.

In the first quarter of 2023, there were 398 deals listed on Crunchbase for startups that had raised a Pre-Seed, Seed, Series A or Series B in that period.

The equivalent number for Q1 2024?

202

Even accepting that we’re not at the end of the quarter and that some deals get announced well past actual investment date, we’re at ~50% of deals funded compared to last year.

Just in case, I checked out deals announced in the period from 1st Jan to 18th March 2023 so I could compare like for like – that was still 355 deals. 2024 is still looking like it’s tracking 44% lower on a like for like basis.

There are a couple of ways you can look at this drop.

There is less cash out there.

There are fewer startups looking for funding.

There has been a change in approach by VCs in what they’ll fund.

It’s widely known that there is a surfeit of capital out there yet to be deployed so I think we can discount that straight away.

I don’t know that there has been a drop in company formation, It may be that some companies have decided to bootstrap and not rely on external funding though I doubt that would account for a 44% drop.

No, the reality is that VCs have really modified their approach to company financing. And from what I am seeing, they are looking for:

➡️ R&D heavy businesses (hardware, deeptech, AI etc.) that can create moats.
➡️ Breakout traction which is an early signal of growth potential.
➡️ Untapped or underserved markets with massive $ value.
➡️ Ventures that can scale without tonnes of new capital.

And this means incredible businesses with immense potential, exactly the sort of companies we love to work with.

Excited for where things are heading 🚀

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

Gif by abcnetwork on Giphy

I hope you found Off Balance #30 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #29

👋🏾 Hi friends!

It’s good to get a win now and then in life and, after much lobbying from various groups, some of which I have been part of and inputted into, it looks like the government is going to reverse the pretty myopic decision to increase the thresholds to angel investing in the UK.

I certainly got on my platform, such that it is, and hopefully made my voice heard, if you missed the article I wrote for the Standard, you can find it here.

But obviously the news isn’t about any one person, it’s a win for the tech ecosystem and especially for female and minority investors as well as the companies they back. It’s great to see that reason won the day here.

You can read about the reversal here:

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

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

🎙️ Massimiliano Magrini – Founding Partner of United Ventures on Nothing Ventured.
⏰ Vesting and Reverse Vesting Explained

From launching Google Italy to launching his own fund…

I sat down with Massimiliano Magrini, Founder and Managing Partner of United Ventures, a multi stage fund based in Milan and Rome, investing in founders and startups from base camp to summit. He is the author of Fuori dal Gregge (Away from the Herd) where he explores the nature of startups and their relationship with large companies, the digital revolution and its consequences alongside the role of Venture Capital and inclusive and meritocratic organisations and systems. Prior to founding United, Massimiliano was Country Manager for Italy for first AltaVista and then Google.

In this wide ranging conversation, we talked about:

➡️ Launching Google in Italy just 4 years after the company was founded.

➡️ How search engines proved the value of putting tech into the hands of consumers but were never intended for the end user.

➡️ Why all markets outside of the US are exporters of technology.

➡️ How the changing attitudes to globalisation are impacting the venture ecosystems.

➡️ Why you cannot be an island, all ecosystems need to be connected.

➡️ How serendipity leads to innnovation.

➡️ Founder DNA and how Massimiliano captures this in his book, Fuori dal Gregge (Away from the Herd).

Check out the episode on YouTube, Spotify, Apple or wherever you get your podcasts and don’t forget to rate, subscribe and like 💪🏾

Check it out and let me know what you think!

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

Off Balance

I struggle with people who suffer from the Dunning-Kruger effect…

There’s a conversation going on in one of my whatsapp chats where someone has received a message from an individual who is convinced of his knowledge even though it’s demonstrably (and googlably) disprovable.

So let’s talk about vesting.

When you Vest, is that always Best?

Most people are aware of standard vesting which is where your shares (or more likely options) vest (become acquirable) on the completion of some milestone.

Typically this milestone is time based as follows:

➡ You are issued say 1,000 options day 1.

➡ 25% vest on a one year cliff.

➡ The balance vest equally on a monthly basis over 3 years.

This means that of the 1,000 options, you can’t exercise (acquire) any of them for 1 year.

At the end of the first year, you have the option (the clue is in the name) to acquire 250 of them, but the balance 750 remain untouchable.

Instead, from the end of the first year, approximately 21 shares vest every month and become available for acquisition.

What this means is that your options to acquire equity in the business you’re working with is tied to the amount of time you work in that business.

Often, there will be an accelerated vesting clause if the company exits before the vesting period has ended allowing you to exercise all your options on an exit and hence participate in the success of the business.

Occasionally you might see milestone based vesting, often the case with sales people, where options vest based on a particular event (achieving x sales in a quarter for example).

Most companies stick with the relatively simple time based vesting.

The one that most people aren’t aware of is Reverse Vesting which can have considerable impact, especially to founders.

When an institutional investor comes into the business (for example a VC), they may include a reverse vesting clause as part of their terms and is predominantly time based.

This means that a founder who starts with 10,000 shares and a 4 year reverse vesting clause can only keep those shares if they stick around for 4 years.

If they decide to leave the business after, say, 2 years, then 50% of their shares would be clawed back.

This is to protect investors from co-founder relationships going sour, or founders leaving the business early and carrying a large percentage of ownership and voting rights.

On their departure, if they retained this ownership, the cap table would have a lot of ‘dead’ equity on it, i.e. shares issued to someone who has not fulfilled sufficient enough an obligation to the company to warrant having them.

It seems unfair and a lot of founders resist, especially if they have already spent several years building their business. But it makes sense from the investor perspective to ensure they don’t have a key man risk that causes them problems in the future.

Hope that clears that up 🙂

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 #29 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish

Off Balance #28

👋🏾 Hi friends!

Crazy how quickly a couple of weeks can go by when you’re knee deep in the thick of things.

I’ve been busy writing, prepping for some fundraises, speaking with clients and generally trying to grow – despite some of the headwinds we’re seeing with startups at the moment – more on that below.

Oh, and on top of everything else, I’ve had my second story published in The Standard – check out the story here.

I’m knee deep in writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so 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 few 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:

🎙️ Harry Slagel and Lucy Adams, Founders of Martee’s on Nothing Ventured.
📉 What you might want to do if things are getting tough in your startup.

Trying to build an impactful venture?

Watch this podcast 👌🏾

In this episode of Nothing Ventured, I sat down with Harry Slagel and Lucy Adams – Co Founders of Martee’s – who are building the tool to predict and manage demand to get fresher, healthier food to consumers.

In this wide ranging episode they talked about:

➡️ Harry building his first business in lockdown, scaling to 1m revenue and ultimately exiting.

➡️ How Lucy and he met – turns out LinkedIn has value beyond posting clickbait.

➡️ Building an impact driven business in the food sector backed by Founders Factory and Nesta, making an acquisition and pivoting from stores to demand forecasting.

➡️ What are accelerators good for and why they love the ones they are working with.

Check it out and let me know what you think!

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.

If you like what I’m putting out, do give me a follow on LinkedIn, Twitter and Instagram.

(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, more importantly, tell me why you’d like to connect 💪🏾)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing – you can find links to these (and more including my Office Hours) right here!

Now let’s get into it.

This edition of Nothing Ventured is brought to you by EmergeOne.

EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.

Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.

If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.

If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀

Off Balance

I’m having more and more conversations with startup founders that are struggling to see any kind of light at the end of the tunnel. The days when they could raise funding at the drop of a hat are long gone and when you’re coming to the squeaky end of their runway and all attempts to grow enough to unlock their next milestone have come up short, it may feel like there’s no hope left.

And whilst there is no shortcut to survival, here are some of the things I would do to give the business the best chance of surviving to fight another day.

What do you do when your running out of cash – and time…

There are no magic bullets…

I’m often asked how to turn things around in a struggling startup and there is, sadly, no easy answer.

Even harder to answer this question when the business has a few months of cash left, has been overvalued in previous rounds and is struggling to raise additional finance and may have more staff than it can support.

Here are some of the top of mind things I would do if I were brought in as a hail mary…

🔪 Cut costs deeply – this means working out what is the absolute minimum cost base you can work with to keep the business going, service existing contracts and at least maintain, if not grow.

✂ Fire underperforming clients – we all know there are clients out there that are not profitable. We may have brought them on to juice top line growth but who take a massive amount of time from an account servicing perspective. They likely came in at low prices and are sweating the business for whatever it can. Get rid of them. Nicely, but quickly. Focus on the clients that are adding value, not destroying it.

🔻 Shrink the product line – analyse your products at an individual level, see which ones are generating value at low or marginal acquisition costs, shed the products that are low value, even if they are features you think need to exist – you can always reinstate when things are on a surer footing. Not only will this allow you to work on the valuable products, but it will refocus the team on one, not multiple things.

📈 Increase prices – seems obvious but many founders and sales teams are reluctant to do this as they feel it will increase churn. But if a client doesn’t see the value in paying a legitimate price for your product or service, then the likelihood is that they weren’t a client you wanted to keep.

🤝 Restructure your debt – not just pure debt, renegotiate contracts with suppliers, ask for discounts or defer payments onto a plan so that you can better manage your cash flow. I’ve had to do this with banks as well as with vendors in various businesses. They won’t want to have to write off your debt altogether.

🌁 Find a bridge – go to your existing shareholders (and others) and see if they will bridge you, maybe not with an investment but with a repayable working capital loan. Secure it by writing it as a convertible or payable on some milestone.

📊 Micro manage your cash flow – you need to be monitoring cash on a weekly basis as a minimum and more likely daily. Every debtor needs to be accounted for, every payable understood. You don’t want surprises, do a daily standup and check in on where things are. Painful, I know, but this is business, the hard things are what make the differences.

But as I said right at the top… There is no magic bullet. All you can do is fight for survival get to a place where things are stable, generating surplus cash flow and you aren’t hemorrhaging cash.

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 #28 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 hello@emergeone.co.uk 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,

🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.

That’s it from me so until next time…

Stay liquid 🙂

Aarish