šš¾ Hi friends!
Well itās 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, Iāve 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, Iāve also spent some time thinking about where Iām 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 changeā¦
Iāll 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 Iāve 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 š.
Iām 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 letās get down to businessā¦
In this weeks Off Balance, Iāll be chatting about:
šļø Adam Liska on Nothing Ventured
šø Fundraising in 2024
In this weekās 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 heās going.
Also, if you have any feedback, or if thereās something youāre desperate to see me include, just reply to this mail or ping me online – Iām very open to conversations.
If you like what Iām 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 āOff Balanceā and, more importantly, tell me why youād like to connect šŖš¾)
Donāt forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what weāre doing – you can find links to these (and more including my Office Hours) right here!
Now letās get into it.
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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 youāre a founder looking to fundraise right now, it might seem like an unnavigable environment and Iāve been having more and more discussions with founders facing issues raising.
Itās 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 youāre building. Too many founders assume that investors will just āget itā 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.
Donāt expect to raise at the inflated valuations of the early 2020s, those days were an abherration and the new normal weāre 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 donāt get to the milestones you need thereafter, itās unlikely you are going to find a willing investor at the next round – whether itās 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 arenāt taking investment on the wrong terms and why, itās 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, itās just too painful to deal with.
4. Long and short list your investors and make sure they’re investing in your space.
Investors arenāt going to throw money at you so you need to do your homework now more than ever. A lot of the ātouristā VCs that were active over the last few years are starting to fall away and what weāll be left with is a core cohort of āprovenā 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. Iām 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.
Iāve recently spoken to a founder who hasnāt 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, itās far more the exception than the norm. Investors are slowing down, ensuring they are diligencing opportunities fully and there isnāt 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 thatās 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 šŖš¾
As always, my office hours are open, if youād like to chat about this or anything else, just grab some time š.
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I hope you found Off Balance #25 useful. As always, Iād love to get your feedback and understand the sort of topics you would love to hear about.
Just hit reply to this mail or drop me a line at [email protected] and let me know š
šAnd thatās a wrap for this edition of Off Balance – Iād appreciate your feedback so just reply to this email if youāve got something youād like to say.
šØ And if you think someone else might love this, please forward it on to them,
š§ Finally, if youāre a fan of the Nothing Ventured podcast, please donāt forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.
Thatās it from me so until next timeā¦
Stay liquid š
Aarish