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

Off Balance #27

👋🏾 Hi friends!

I’ve just come out of a few days of intense meetings and whilst the work was interesting, I couldn’t believe I was in a place in 2024 that had the following restrictions:

Collared shirts.
Tie preffered.
Jacket preffered.
No trainers.
No denim.
Socks above ankle.

I literally had to dumpster dive my wardrobe to comply!

The plus side was I got to wake up every morning and enoy this view!

Oh, and on top of everything else, I’ve also been published in a pretty well recognised paper – check out the story below.

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:

🎙️ Nader Sabbaghian on Nothing Ventured
🗞️ Aarish on the Evening Standard

What do you do when enterprise deals are just taking too long to convert? Invent a new business model 🤯

I sat down with Nader Sabbaghian, Partner at 360 Capital a fund with 500m under management investing across Europe.

Nader took us through his journey into VC from founding and operating in the noughties where, in one of his ventures, they had to invent SaaS essentially as a survival strategy hosting product on off prem servers and charging clients monthly so as to sit in budget and avoid the daisy chain of procurement that goes hand in hand with enterprise customers.

In the episode we talked about:

➡ How mad you have to be to leave McKinsey & Company and join a startup in the early 2000s.

➡ Why as a VC, it’s better to hunt in your own backyard.

➡ Why it’s the right time to start a business and the right time to invest because there is a lot less nonsense out there.

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

Growing up in London, I would often head to my dad’s office in Warren Street. I always recall (other than writing stories on the office telex – if you’re old enough to remember what one of those was!) coming home on the tube and my dad picking up a copy of the Evening Standard as we walked into the station to read on his way home.

Now whilst print media is certainly in decline, there are a few names that are very much part of an area’s identity and, in London, I think the Standard is very much one of those.

As someone that loves writing, it’s always been a dream of mine to get published in an ‘actual’ paper, and a week or so ago, that dream came true 🤯 

Times are tough for startups. CFOs must adapt to survive

There is no doubt that times are tough out there fore startups, markets are turbulent, VCs have pulled back on investing, the wider economy is still facing some headwinds and, for CFOs working with startups, it’s not a simple period to be navigating.

I identified 5 areas where CFOs need to help move the needle:

Do more with less.

Revenue is the cheapest source of finance.

Get the deal done.

Communication is key.

Throw out the playbook.

In doing more than less, CFOs need to be managing the finances tightly and advising founders on where they may need to tighten spend, reduce headcount and do the tough job of rationalising the business. It is time to tighten belts and ensure businesses are as capital efficient as possible.

Revenue is obviously the best way to finance your business – and the cheapest. Startups need to prioritise finding and growing their revenue base as reliance on investors to fund their business has become less viable.

CFOs also need to be advising founders on their options when it does come to fundraising, you can’t expect every deal to be on the best terms and, sadly, you may have to accept less than ideal ones to move forward. CFOs need to walk the balance between ensuring those terms aren’t going to kill the business and making sure the business can move forward.

As anyone that has followed me for a while, you’ll know that I believe that Narrative > Numbers. In periods like this, it is critical that CFOs and founders are communicating regularly with investors and potential investors to make sure that there are no surprises so that when there is a need to call on the support of current investors they’re already dialled in.

Finally, what may have worked over the last several years may not work anymore. So it’s time to throw out the play book and work creatively to ensure the business survives and thrives – don’t get me wrong, by creative, I don’t mean in the Enron sense of the word, CFOs are, afterall fiduciaries of the business – but they may need to advise on switching up business models, pricing, hiring and finding alternative avenues to raise capital as they continue to build.

You can check out the full article here and I would love to hear your thoughts!

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

Gif by theoffice on Giphy

I hope you found Off Balance #27 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 #26

👋🏾 Hi friends!

I thought taking a break from writing would be a bit of a relief.

How wrong I was 😂 

Instead, I’ve just had a lot of thoughts squirrelling away at the back of my mind as to what to write about, and a slightly neurodiverse tendency to keep adding to that list and setting myself ever more grandiose projects to pursue.

Of course, some of this happened whilst I was in the midst of some form of fever dream over the last couple of weeks when I got hit with a particularly nasty virus so maybe those thoughts will pass – though so far they haven’t quite made it out of my cerebellum.

It’s been an interesting couple of weeks in startup land – firstly I managed to coral a few of the EmergeOne CFOs out for a fun night of bowling, booze and banter – though all my beers were 0%.

The evening started with one of the team ordering an IPO instead of an IPA and you can imagine where it went from there.

Whilst I am a massive advocate for people working wherever they are most able to get their energy from, I do believe that there is a real need for human connection to elevate our thinking and explore new ideas.

So this evening was great to just exchange thoughts and think about what more we could all do. Check out our smiling faces below!

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:

🎙️ Duncan Clark on Nothing Ventured
👼 Financial Promotions Act – changes incoming, what it means for UK angels

In last week’s Nothing Ventured, I spoke to Duncan Clark, founder of Flourish.

Flourish is a data visualisation platform used by companies and journalists alike which he took through to exit to Canva where Duncan leads the European team.

Check out the episode 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

This quote by Amit Kalantri really rang true this week as the UK government sets out to make some changes to the regulations around who can invest in high risk, private companies (aka startups) from the 31st of January.

The tl;dr is that it’s anticipated that these changes will disproportionately impact the ability of women and minorities to participate in the ecosystem.

If you feel strongly that this should not be the case, please join the other 1,700+ people who have signed this open letter to the chancellor.

Protection Should Not Lead to Exclusion

The Financial Promotions act, which is the piece of legislation we’re talking about, was last reviewed in 2005 and exists primarily to ensure that retail investors (but more generally all investors) are covered by regulations “which seek to ensure consumers are provided with clear and accurate information that enables them to make informed and appropriate decisions.”

But the changes, due to come into place on 31st January 2024, are aimed at changing the exemptions around who can invest in early stage, risky assets like startups.

Here’s the breakdown:

Certified High Net Worth Individuals Before Amendments:

Income of £100,000 in the last financial year and net assets of £250,000 throughout the last financial year.

Certified High Net Worth Individuals After Amendments:

Income of £170,000 in the last financial year and net assets of £430,000 throughout the last financial year.

Self-Certified Sophisticated Investors Before Amendments:

Worked in private equity or in the provision of finance for small or medium sized companies in the previous two years.

Served as the director of a company that has an annual turnover of at least £1m in the previous two years.

Made more than one investment in an unlisted company in the previous two years.

Self-Certified Sophisticated Investors After Amendments:

The criteria of having made more than one investment in an unlisted company in the previous two years has been removed and to satisfy the the criteria as a director, the company must have an annual turnover of at least £1.6m in the previous two years.

On top of this, there is an increased compliance requirement by way of investors having to sign a compliance statement in a prescribed format to confirm their eligibility.

So what, you may say?

After all, the rules seem to be working to protect individuals from making investments in companies where they may lose some or all of their money given the risky nature of startups – and that’s a fair point.

But the bit that isn’t fair is that this will ultimatley unduly impact women, minorities, and those living outside of London.

These tables make it clear – at least as far as the male / female divide is concerned, link to the original article here:

The impact of the new rules on qualifying as a High Net Worth Individual (HNWI). Research by Marla Shapiro (HERmesa) and Roxane Sanguinetti (Alma Angels) using data from the Survey of Personal Income 2020-2021.

The stats around investment into women and minorities are quite clear, less than 2% of capital finds its way into businesses founded by women or minorities and, overwhelmingly, the people that fund these sorts of businesses tend to come from similar backgrounds.

So, if you’re someone who this impacts or who feels this is unjust, I’d again urge you to sign the open letter and I would love to hear from you and understand your own experience as an investor and how this might impact you.

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 #26 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 #25

👋🏾 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.

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

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 😊.

Gif by YTheLastMan on Giphy

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 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

The Lowdown #16

👋🏾 Hi friends!

And here we go, one last edition from me before I sign off completely for the rest of the year.

Whatever you are doing during the festive period, I hope you are able to get some down time and spend the holidays with people that give you energy – be they loved ones, family, friends or someone else altogether!

I will be sipping a 0 alcohol beer and enjoying some traditional Tuscan fare on Monday and I’ll be toasting what has been a rollercoaster of a year for me – from running out of cash in the startup I launched in 2021 to doubling down on my CFO consultancy, meeting great people along the way and working with some amazing startups, 2023 is definitely a year I won’t be forgetting anytime soon.

Wishing you all the best for the New Year, and for now, thanks for having signed up and tuned in to this ever evolving newsletter that has kept me just a little bit… Off Balance 💪 🙏 

(ignore the beard, I don’t think I’m going to be fooling anyone as Santa this year 😂 )

This week on Nothing Ventured, I spoke to Matthew Stafford, Co-Founder of 9Others and early stage investor.

Here’s what you can expect:

➡️ Why founders and entrepreneurs need a safe place to share.

➡️ Purposefully building a business that doesn’t scale.

➡️ Why Matthew doesn’t invest in first time pitches from founders he is meeting for the first time.

➡️ Building relationships with no expectations.

Check it out!

Last year I wrote a series of posts listing 100 lessons I’ve learned from almost 20 years as a CEO, CFO and more recently founder, it was one of those things I just wanted to get out there and I posted it as I was about to get on a plane and head off to Zanzibar with 40 odd of my nearest and dearest.

Little was I to know that it would go absolutely crazy hitting a combined 1m impressions and thousands of likes and hundreds of comments and shares.

Next year I will be reskinning the format of Off Balance to dig into those lessons in more detail and am excited to get writing.

So I thought it would be fitting this year to write another bunch of lessons one year on, so in today’s Lowdown, you’re going to get…

🧑‍🏫 50 lessons from 12 more months as a CEO, Founder and CFO

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 “Lowdown” 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 🚀

The Lowdown

1. Raise capital because you need it, not because you can.

2. All the modelling in the world won’t save a flawed idea.

3. Go out and talk to your g-d d-med customers.

4. Leadership is showing, not telling.

5. The first time I feel nothing letting someone go is the last time I’ll do it.

6. Just because I can work from anywhere doesn’t mean I should.

7. But work where you get energy.

8. Find investors that understand you, not just your business.

9. 1% a day isn’t the way, but consistency is.

10. Have skin in the game.

11. Building a funded startup is getting paid to learn.

12. Often it’s learning what doesn’t work.

13. Bootstrapping means you have to learn what does.

14. Treasury management is suddenly ‘a thing’ (it always was).

15. Radical candour != being abrasive, empathy wins.

16. Do what you’re amazing at doing, passion emerges.

17. Success is different for everyone.

18. There’s never been a better time to leverage technology.

19. Ask and you shall receive. Don’t ask and you don’t get.

20. Helping others is a great way to understand your own thinking.

21. Leverage capital, people, tech and media but don’t abuse them.

22. You have to work at everything. All the time.

23. Remove negativity from your life.

24. Abundance comes when you realise you don’t need everything.

25. We stand on the shoulders of giants.

26. But it’s all relative.

27. When you know you’re onto a winner, ride it till the end.

28. Focus everything you do back on to one singular goal.

29. Doing everything means you’ll end up with nothing.

30. Cash, still, trumps everything.

31. You don’t have a business unless you have processes.

32. Trust is the most valuable coin in the world.

33. Never accept mediocrity, from yourself or those around you.

34. A players lift everyone up, B players lift themselves, C players drag down.

35. Be open to every possibility, that doesn’t mean you have to try them all.

36. Bad customers suck time and energy and kill your business.

37. Quitting drinking was transformational for me, it might not be for you.

38. Therapy was transformational for me, it will be for you.

39. Growth only begins when you start getting uncomfortable.

40. Every day you’re still alive is another day to make a difference.

41. A team is more than a group of people, it’s a machine, keep it tuned.

42. Wealth is not something you should only measure with money.

43. Zero interest rates were an abherration, let the normal times roll.

44. A career is for other people.

45. Expect things to go wrong, that way they’ll go less wrong than you thought.

46. Write for yourself first, there will always be an audience somewhere.

47. If you have to shut down, don’t drag it out.

48. 0 risk = 0 reward.

49. Fractional isn’t the future for everyone – but it is for us.

50. Control your emotions, building a business requires strength.

Bring on 2024 🚀

And finally, as we get into the last hours and minutes before most of the west signs off for Christmas, I thought this summed it up pretty well 😂 

That Friday feeling

— Wall Street Memes (@wallstmemes)
Dec 22, 2023

🚀And that’s a wrap for this edition of The Lowdown – 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 #24

👋🏾 Hi friends!

Hello again from cold but sunny Tuscany 😀 

As promised, this week’s Off Balance is going to be a little (ok, a lot) shorter than normal as I unwind and reflect on the last year as well as plan for the year ahead.

Not that it hasn’t been a pretty busy December all in all, but sometimes you just need to stop being ‘productive’ and start getting strategic in your thinking.

So as you get the turkey in the oven and take that extra glug of wine to deal with your in-laws / sibling / cranky uncle, take a step back and give yourself a pat on the back for everything you’ve managed to get done this year which – at least in startup land – has been a pretty crazy one all in all.

Now let’s get down to business…

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

❓️ Planning a strategy as a first time solopreneur
❌ 10 things CFOs see founders doing that they REALLY shouldn’t be

Also, in this week’s Nothing Ventured, I spoke to Matthew Stafford, Co-Founder of 9Others, an offline social club hosting small, intimate dinners where entrepreneurs can – over a good meal and no doubt a bit of liquid courage – ask each other the answers to the questions that have been keeping them up at night.

Matthew also invests in early stage businesses and has a golden rule not to invest if it’s the first time he’s meeting the founder who is pitching.

As always, our Primer episode gives you a bit of background on how he got to where he is today – pheasant beating and all 🦃 

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 🚀

How can did I add value?

This week I decided to try and add some value to someone who’s business has been transformational in my life.

Me.

Yes, I decided to sit myself down and give myself a bit of purposeful direction 😂 

There is an old saying, “physician, heal thyself” that comes from the Bible (Luke 4:23) and is one of those sayings that rings very true to me.

I spend a lot of time helping others out with their businesses or giving advice on their personal situations, but rarely take the time to do the same for myself.

It’s also true that it’s much easier to give advice than to take it, and even easier to second guess one’s own advice.

That’s why having mentors and coaches in your life can be a game changer.

Whilst I have lots of people whose wisdom I am able to draw upon, I’ve always defaulted to reading as a way to ingest the learnings of others – after all, we stand on the shoulders of giants.

At the moment, I am reading The Go To Market Handbook for B2B SaaS Leaders written by Richard Blundell, Paul Watson and Chris Tottman. I have known Chris, founding partner of Notion Capital, for a while, but had my first conversation with Richard only recently with a view to getting the three of them on the pod.

They’ve scaled and exited, failed and restarted multiple times and have really learned what works in the world of B2B SaaS – even if the term didn’t exist when they were doing it.

Now, my business isn’t actually a SaaS business, it’s a services business and as a result, I’ve always found it difficult to really hone in on our value proposition.

After all, the sort of things CFOs do is many and varied (just read all the posts I’ve written on them!)

But whilst I was reading the book, I had a bit of a mini-epiphany…

What if I flipped my thinking.

What if I thought of the business as a software business and our CFOs as a product solving a pain point for our customers.

You may ask why that’s necessary, after all, I could probably come up with a value proposition without going through a contorted thought process. But as I mentioned, service led businesses often get into all sorts of projects, but software solutions (at least the really great software solutions) tend to solve one problem (initially at any rate) incredibly well.

So I started thinking about all the issues that our customers face and what it is that we do to solve them.

That’s everything from managing cash flow and burn, to dealing with investors and financiers, navigating the board, setting up KPIs and metrics, regular reporting, dealing with EMI schemes, R&D claims and a plethora of other things.

And I tried to narrow those down into the essence of what it is that we are solving.

Then I tried to think about our customers – founders – and what intrinsic pain they face that we are there to solve for.

Now let’s face it. Founders face multiple pain points on multiple fronts, but ultimately the one that keeps them up at night (at least in the earlier stages of their business) is whether they can keep the lights on. Do they have enough fuel to keep the furnace burning and, more prosaically, are they going to make payroll this month.

The pain that they have is, simply put, will they have enough cash tomorrow to keep the business running.

So I went through a couple of iterations and then (because I’m that sort of a guy) plonked it on LinkedIn to try and get some feedback.

And here’s what I ended up with after to’ing and fro’ing with helpful folk online as well as my own team:

I’d love to get your thoughts on whether this makes sense, if it speaks to you about something you’ve been or are going through and can relate to viscerally?

I’m going to keep on working on it and narrowing it down further until I have the gotten to the pure essence of what it is we do – watch this space!

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

Created by AI using DreamStudio

Off Balance

As we had into the uncharted territory of 2024, I thought it might be worth taking a look at a few of the things that startups really need to be focussed on over the coming twelve months to give them the best chance of success.

So here are my top five issues startups are going to have to deal with in 2024.

5 Things Startups Need to Think About in the New Year

Economic Uncertainty and Market Volatility
As the global economy continues to see volatility, bouncing around like a kid on a trampoline, startups have to prepare themselves for some pretty unpredictable market conditions.

Not least the end of the zero interest rate period and an expectation that high(er) interest rates are here to stay.

This means they are going to need to ensure they really nail their financial planning and forecast as well as possible so that they will be able to navigate this shifting landscape and changing economic scenarios.

They will need to ensure they reserve sufficient capital to make sure they can weather downturns and keep an eye out on how inflation and interest rates might impact their own businesses internally as well as their customer base externally.

Cash Flow Management
It goes without saying, therefore, that tight control over cash flow remains a critical challenge for all startups. They are going to need to ensure they optimise their burn rates such that they are able to grow efficiently and without wasting capital.

This means planning to make sure that spending is focussed on delivery of their strategic goals and milestones whilst maintaining enough reserves to see them through the longer fundraising cycles we’ve been seeing for more than a year now.

In turn, it means they are going to need to pay more attention to their finance operations, ensuring that they manage working capital tightly controlling both their receivables as well as payables to avoid unexpected cash shortfalls in the event that targets aren’t met.

Regulatory Compliance and Tax Changes
It’s dry, I know, but as we’ve just seen with the aborted Adobe/Figma acquisition, regulators (especially here in Europe) are keen to put their stamp on how tech progresses.

Further regulation on AI is another key area where governments will be sure to be looking and startups in this space need to be conscious of what these changes might mean for their services.

As startups scale, they’ll also need to be conscious of shifting tax requirements. We’ve seen some of those issues arise as a result of Brexit in the UK, but as well as this, I would not be surprised if we see further tightening of tax rules in general – again, the changes to the R&D Credit scheme in the UK are a good example of this – many startups found themselves short of cash at a critical point in their cash cycle having planned for receipt of these credits only to have had them challenged by HMRC (or denied altogether). I’ve taken to advising the startups we work with to remove them from their projections altogether and to treat them as a bonus if they are ultimately paid out.

Fundraising and Capital Structure 
The VC and general investment landscape is continuing to evolve. As I flagged in last week’s Lowdown, there is currently $4 trillion of dry powder waiting to be deployed, but this does not mean it’s going to necessarily find its way down into the majority of startups.

VCs whom I talk to on a weekly basis are all becoming massively more selective around the sorts of businesses they’ll back and even starting to bet on businesses they think will be able to survive and thrive without the need for multiple financings throughout their life cycle.

The changing environment also means that founders and CFOs alike are starting to look at their capital stack differently, taking on debt in some instances where it’s appropriate and reducing dilution where possible.

Term sheets are also becoming more protective to investors with liquidation preferences and enhanced control provisions (I recently had one seed stage founder tell me an investor was asking for quarterly audited numbers – I am hoping they had misunderstood but in this market? Who knows!).

Technology Integration in Finance
It goes without saying that startups will need to start thinking about how to leverage more software tools into their finance stack. These tools will have a number of roles to play.

Firstly improving efficiency and reducing costs from the need for manual intervention through automation and more connected process flows.

Secondly ensuring better real time data analysis and reporting so that the business can course correct as data dictates rather than waiting until the monthly numbers are other before making a decision.

All in all, it’s a brave new world out there for startups and I’m excited for the sort of innovation we’re likely to see as well as the path that founders and startups will take in this changed funding landscape sat amidst broader changes in the ecosystem and global markets.

Whatever else it’s going to be, 2024 is going to be an interesting year in the venture ecosystem and I can’t wait to see what it brings.

Gif by theoffice on Giphy

I hope you found Off Balance #24 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

The Lowdown #15

👋🏾 Hi friends!

Well that was an experience.

One and a half days driving the Tesla down from the UK to Italy, I’m not entirely sure I’d do it this way again 😂 

The highlight of the journey was entering Italy and being faced with fog for the next 100km or so – in the dark… It took me a good hour before I was able to untense every muscle in my body.

For anyone who has driven on an Italian motorway, you know how ‘fun’ that can be as the guys in the car behind you come up almost bumper to bumper and start flashing their beams at you to get out of the way – well that + fog = a waking nightmare!

Somewhere south of Milan

This week on Nothing Ventured, I spoke to Josh Bell founding and General Partner of Dawn Capital.

Here’s what you can expect:

➡️ There’s still capital out there for emerging managers.

➡️ Why diversity leads to better investment decisions and how Dawn baked it into their hiring strategy.

➡️ The S/EIS trap, what it means for founders looking to raise Venture Capital.

➡️ Dawn’s story and the journey to raising their latest $700m fund.

Check it out!

This week will be a bit of a reduced edition as I wind down a little for the festive season and there was one bit of news that sums up everything I’ve been thinking for the last year – that we’re going to see a massive shift in the private markets over the coming year(s).

🤑 4 trillion dollars waiting on the sidelines

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 “Lowdown” 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 🚀

The Lowdown

There’s no lack of cash, so why is fundraising so tough?
This article from the FT says it all. There is currently $4 trillion of ‘dry powder’ (undeployed capital) in the market and that’s a pretty big number – and big deal.

Clearly there are a few things at play here, not least the fact that with rising interest rates, when your risk free return is no longer 0% (or near as damn it), you maybe think twice about pumping your money into much riskier assets (like startups).

What I think is likely to happen is a bit of a rebalancing. Sure we’re still going to see some crazy deals being done (because venture gonna venture), but I think we’re going to see some of those LPs and GPs getting more strategic and nuanced about where they deploy their capital.

My bet is that we’re going to see a lot of M&A and secondary activity as VCs try to exit some of their positions whilst startups simultaneously find it ‘harder’ to raise (the caveat here is always that breakout businesses will always find funding – it’s the ones that aren’t quite able to reach escape velocity that will be rolled up).

However the dice land, it’s good to know that there remains this level of capital awaiting a home and it will be interesting to see how it changes the attitudes, and allocations, of VC managers.

Check out the full report by BlackRock here.

And finally, as companies scramble to figure out how to keep going, this little meme caught my eye!

SME penny company getting ready for its IPO 😂

— Finance Memes (@Qid_Memez)
Dec 11, 2023

🚀And that’s a wrap for this edition of The Lowdown – 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