How Venture Capital Has Changed Since Covid-19

SaaStr

Q: How is Venture Capital difference since Covid-19? Every fund one way or another got used to investing over Zoom. At first, funds invested in founders they already knew. The next wave was adjusting and investing in founders they hadn’t met face-to-face.

What’s Really Happening in Venture Capital, Right Now

SaaStr

Q: Are Silicon Valley VC firms suspending or significantly cutting down on startup investments during this pandemic given the vast economic uncertainties of this time, or is it business as usual? First, come here from 20+ of the top VCs in SaaS and Cloud for FREE at our next big digital event, the next SaaStr Summit: The New New in Venture on May 27th. VCs have not fully adjusted to remote investing.

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Venture Capital in 2020/2021 and “The Postmates Effect”. I.e., It’s OK to Be #2 or #3 Now.

SaaStr

He said the biggest change in venture capital wasn’t investing over Zoom, or Cloud multiples, or even the pace of investing today. No, the biggest change in Venture Capital in 2020-2021 is what he called “The Postmates Effect” That Postmates was arguably #3 to Doordash and UberEats, and still was worth billions. Look at the dozen+ VC investments in second tier digital events software companies since Covid.

Just How Inaccurate are Quarterly Venture Capital Activity Reports?

Tomasz Tunguz

Each quarter, a group of analysts, including me, publish analysis on the trends in the venture capital market. Moving onto total dollars invested, the lines hug each other closely. The total invested in the seed market shows an uptick in the Q4 data.

Webinar: What’s Going On in Venture Capital Right Now with Byron Deeter, Bessemer Venture Partners

SaaStr

Next in this series is one of the community’s favorite speakers, Byron Deeter of Bessemer Venture Partners. Byron started off as a SaaS CEO and has invested in probably more SaaS IPOs than any other VCs, from Twilio to Sendgrid to oldies like Eloqua and Cornerstone OnDemand. Sign up here to join Byron and me on Thursday at 12:15pm where we do a deep dive on what’s going on in venture capital, fundraising and Cloud right now.

The Current State of Venture Capital and Cloud with Byron Deeter, Bessemer Venture Partners

SaaStr

Over 1,500 of you registered for an incredible deep-dive we did yesterday with Byron Deeter, Partner at Bessemer Venture Partners. Byron has invested in over a dozen Cloud unicorns and even more importantly, has been investing in SaaS and Cloud since the very earliest days. The agenda: What’s happening in venture today. When to raise capital.

Why Do Some People Consider Venture Capital a “Young Person’s Game”?

SaaStr

At least from very early-stage investing. It doesn’t take that long in venture to make a decent salary. Invest in seed round of Procore in 2003. Finally, today, that investment is worth a lot. So an incredible, hypothetical investment. Early-stage investing is often 14+ years to a material “profit” or carry check. The post Why Do Some People Consider Venture Capital a “Young Person’s Game”?

How do corporate venture capital firms different from conventional venture capital firms?

SaaStr

A few like Salesforce Ventures and GV are an exception, but let me explain: Corporate VCs often do not write a “second check”. Again, this is less likely with Salesforce Ventures and GV, etc. If you have a critical partner, it can help bond you closer if they invest. They can invest odd and smaller amounts, and sometimes, between rounds. But if the motivation to invest is in part or largely strategic, you won’t be pushed as hard on valuation.

What are the key differences between venture debt and venture capital?

SaaStr

Venture capital / equity is expensive. But … with few exceptions, it’s 100% risk capital. And VCs are OK in the end writing off up to 40% of their investments. Venture debt is relatively cheap. But whatever the terms, venture debt is much, much cheaper than equity / venture capital. But the thing is, venture debt has to also be much lower risk. The post What are the key differences between venture debt and venture capital?

How do venture capital firms determine when and how to help stalled or stuck portfolio companies?

SaaStr

Q: How do venture capital firms determine when and how to help stalled or stuck portfolio companies? And then generally reserve some extra cash if you are doing OK but not great, often another 25% more than the initial investment for a bridge or small second check if that gets you over the help. And almost any VC can afford to write off at least 20%-40% of their investments.

Why has Skype co-founder Niklas Zennstrom’s venture capital firm raised over 800 million to back European startups?

SaaStr

Q: Why has Skype co-founder Niklas Zennstrom’s venture capital firm raised over 800 million to back European startups? 20m x 20 initial investments = $400m. another 50% for follow on investments (another $400m) = $800m. Just 20 investments have taken it all up. The post Why has Skype co-founder Niklas Zennstrom’s venture capital firm raised over 800 million to back European startups?

How Revenue-Based Financing and Venture Capital Funding Work Together

OPEXEngine

As Chief Credit Officer at Lighter Capital, I work behind the scenes grappling with the data that informs all of our decision-making regarding financing deals, from revenue-based financing (RBF) to term loans and lines of credit. Similar to a venture capitalist (VC), I try to understand where startups are in their life cycles — and where they can expect to go. Is RBF simply an alternative to venture capital funding? Lower-cost capital post-VC funding.

How Developed is Global Venture Capital Market?

Tomasz Tunguz

Just where is the US venture market relative to the rest of the world? The chart above shows the compound annual growth rate of venture investment rounds A through D in ten fastest growing venture markets plus the US from 2010-2016. It’s wonderful to see the expansion of venture capital across these geographies and especially at very healthy growth rates. in investment is 6% of the US market. invested in 2016, with a growth rate of 19%.

How do venture capital general partners resolve investment choice disagreements? If a number of partners think a certain startup is a good portfolio candidate and others don’t agree, what happens?

SaaStr

The more junior the partner, or investing professional, the more she/he needs others to buy-in. Smaller investments (measured as a % of fund size) often don’t require as much buy-in. An investment < 0.5% Most funds believe the best companies were less obvious investments. Are any of her investments “hot deals” yet? The post How do venture capital general partners resolve investment choice disagreements? It varies.

The Decentralization of Venture Capital

Tomasz Tunguz

To thrive, venture capital firms must perform three things well: raise capital from limited partners, source companies to invest in, and pick the best opportunities. In the last decade, venture firms have experimented with decentralized sourcing. Each represents a different type of effort to scalably uncover new investment opportunities. The investment decision process is decentralized: each anonymous investor votes.

How hard is it to raise venture capital? If you have solid traction and a great team, are your chances significantly higher than 0.05% and will you find at least one investor if you keep hustling?

SaaStr

Q: How hard is it to raise venture capital? The overall odds of raising venture capital may be 0.05%. According to YC, “Each batch of YC companies raises about $250M of seed capital in the weeks following Demo Day.” That’s $250,000,000 in seed capital in each YC batch. >50% of each YC batch does, or can raise capital. VCs go to their demo days just to find companies to invest in. Find a way to go 24+ months without VC capital.

The Midas List Live (Video + Transcript)

SaaStr

A discussion about venture capital and the effects Covid-19 has had on in the industry. Nicole Quinn, general partner of Lightspeed Venture Partners and Ann Miura-Ko, co-founding partner of Floodgate and I’ll hand it over to you. We primarily invest sort of series A stage.

Raising Funding During COVID with Homebrew Partner Satya Patel (Video + Transcript)

SaaStr

I’m here to talk to you today about raising capital in today’s environment, particularly at the seed stage, so we’ll touch on the Series A stage as well. That’s a good place to start, to understand the actual landscape in which you are trying to raise capital.

Declan Kelly Joins Techstars Investment Team

TechStars

Kelly will help Techstars increase connectivity between startups and the global venture community to fuel innovation and growth. With 11 Techstars mentorship-driven accelerator programs in Europe and the Middle East, Techstars has a portfolio of close to 350 companies and invests in nearly 110 startups in EMEA annually. Declan has been a significant connective tissue between startup founders and the global venture community for years,” said Cody Simms, partner at Techstars.

Are VCs Still Investing?

Point Nine Land

At the same time, tech companies are better off than any other industry, and, to answer the question posed in the headline, VCs are still investing (we’re one of them). startup technology venture-capital saas covid19The state of fundraising in the spring of 2020, in 12 simple charts At last week’s virtual SaaStr Summit I did a presentation about “Fundraising During a Pandemic”.

When a VC Investment Fails, Does That Mean It Was a Bad Investment? Probably Not

SaaStr

With venture capital investments that fail, is the problem most often with the entrepreneur or was it a bad investment by the VC? The earlier stage you invest, the more often some of them just … don’t work out. Bill Gurley’s answer to How much money did Benchmark capital lose on Webvan? Especially when you invest early. Now imagine you invested in say Zoom and own 11%–12% like Emergence and Sequoia do.

Janet Bannister on human-centered investing

TechStars

Canadian VC Janet Bannister, a partner at Real Ventures, loves investing in “conscious founders” who are trying to make the world a better place. Her style of “human-centered investing” prioritizes people and relationships, and investing in smart, self-aware, teachable entrepreneurs. . Today, Janet Bannister is a Partner at Real Ventures, but when Founding Partner John Stokes—aka J.S.—first Why would I go into Venture Capital?” Real Ventures.

Connecting Women VCs: Building Community and a Better Future

TechStars

Our mission with the global directory of women in VC is to give women around the world the tools to better find each other, connect, and collaborate,” said Jessica Peltz-Zatulove, co-creator of the Women in VC directory and Partner at MDC Ventures. “We Accelerators Diversity Stronger Together investing venture capital WomenFemale investors have always kept discreet lists of other women angels and VCs.

Venture Capital for the Rest of Us

Mucker Capital

We took everything we learned in the preceding decades spent inside and outside the Valley and applied it to venture in L.A. in terms of how we invested in and worked with portfolio companies. If venture capital is only about finding brands and checking boxes, Silicon Valley has to be the easiest place in the world to be a VC. Over the last two years, we naturally started investing more and more outside of California.

Is Seed the new Series A? (Video + Transcript)

SaaStr

Since 2010 we’ve seen more startups, funds, and capital than ever before, but with this drastic increase, investors are seeing unexpected new trends reshaping the future of the industry. Join this panel of investors from Connect Ventures, Blossom Capital, Dawn Capital, The Family, and Indico Partners as they provide an overview of the current investment landscape, and discuss whether the seed stage is emerging as the new Series A. Pietro Bezza, Connect Ventures.

The Coming Wave of Venture Capital and What It Means for Your Startup

Tomasz Tunguz

The second quarter of 2014 is the sixteenth largest by capital deployed sinced 1995, making it a top quartile quarter, but to break into the top five, that figure would need to triple. Nevertheless, we will see a spike in the next six months as firms begin investing from new funds. Which startup sectors should expect to benefit from this surfeit of capital? Each quarter, the National Venture Capital Association and Thomson Reuters gather data on the VC industry.

Why would an investor invest in a pre-revenue company?

SaaStr

Q: Why would an investor invest in a pre-revenue company? If you don’t understand it, it’s hard to understand how early-stage venture capital works. And de-risk the investment. If someone else is going to do the deal, you may need to invest now. You are worried you can’t get enough ownership unless you invest now. The earlier you invest, the easier it is to get your target ownership. The post Why would an investor invest in a pre-revenue company?

Loom: Love at first sight

Point Nine Land

There is this idea in the VC community that investors usually know after the first meeting (or maybe even after the first five minutes) if they want to invest in a company. Every once in a while, though, you see a deck, try a product, or talk to a founder, and you know immediately that you just have to invest in this company. When we found out about Loom in February 2017, we knew almost immediately that we wanted to invest. venture-capital startup seed-investment saas

Founders: Please don’t allow anyone to screw your early backers

The Angel VC

We’re trying hard to make venture capital a little more human , and we really mean it when we say that we aspire to be good VCs. I further assumed that the company wants to raise $40M and that the existing investors will participate with an investment of $10M, so $30M come from the new investor. Oh, I forgot, that’s not possible because you have to own 20% of the company to make the investment worth your while. financing vc venture capital

The growing dissonance between two business models (SaaS and VC)

The Angel VC

In our weekly investment team call earlier this week we decided to pass on two early-stage SaaS startups that were both on track to grow from zero to $100k in MRR in their first 12 months of going live. Had I seen a SaaS startup with this growth curve in my first 2-3 years of SaaS investing (in 2008-2010) I probably would have asked “where do I have to sign?”. And chances are that it would have been a good investment. saas venture capital

Career Decisions: What To Look For In a Software Startup

Kellblog

In venture capital (VC) land, you should view investors as long-term partners in value creation. Their investments give them contractual rights (e.g., inside rounds) and strong reputations such that other VCs are willing and eager to invest behind them in future rounds [5]. Say a company has consumed $50M in capital but has only $5M in ARR to show for it. ” Your upstream investors have a big impact on who is willing to invest downstream. [6]

What makes fundraising so stressful?

The Angel VC

More often than not, raising venture capital is a huge distraction for the founding team. The vast majority of startups fail, VCs can invest in only 1% or less of the startups they see, fundraising involves a lot of relationship-building, it's a complex process – that's all pretty obvious so I won't elaborate on that. If you are a founder or CEO and have raised venture capital it would be awesome if you could participate in the survey.

What animals are WE hunting?

The Angel VC

This power law distribution of venture returns, which Peter Thiel has spoken about extensively , is what makes it almost impossible to return a large fund without hitting one or more outliers. According to Aileen Lee’s research , only 0.14% of venture-backed tech startups become unicorns. We can make around 30-40 investments with our fund, so statistically the chances of hitting a unicorn are very low. investing unicorns venture capital

The Journey to Series A?—?a look at our “Seed-to-A conversion rate”

Point Nine Land

If a seed investment is the equivalent of an MQL and a Series A represents an SQL, we want our MQL to SQL conversion to be as high as possible. :-) Because there are no generally accepted standards for what constitutes a seed round or a Series A round, Dealroom developed clear definitions for each type of round, went through all 22,000 financings, and re-labeled rounds whenever needed. We didn’t include our current fund, PNC IV, as most PNC IV investments are just a couple of months old.

KPIs for VCs

The Angel VC

If you're new to the world of venture capital, LP is short for "Limited Partner" and means the people and funds which have invested in our fund. But there is a connection between quantity and quality, and since we're using Zendesk to track each potential investment it's easy to monitor this number (for what it's worth, we're currently at deal #3,773 since we started using Zendesk about two years ago, and in the last 30 days 148 new ones have been added).

Ten Questions Founder CEOs Should Always Be Able to Answer About Their Startups

Kellblog

I decided to write this post to help entrepreneurs ensure they have their bases are covered when speaking to angel investors, seed firms, or venture capitalists. Why are you and your team the best people to invest in? And ditto for marketing: e.g., we’ve got a big increase in programs budget in the second half of next year but we won’t release that money until we’re sure we’ve correctly identified the right marketing programs in which to invest.

Expanding My Investment Thesis to Run the MetLife Digital Accelerator powered by Techstars

TechStars

Today, I start my next adventure in startup investing – I’m the new Managing Director of the MetLife Digital Accelerator powered by Techstars. My objective is to give the startups I invest in tremendous support in acquiring customers and fundraising from investors. Read on to learn more about my investment thesis or skip to the bottom to watch the AMA to learn more. My Mental Model for Investing in Startups. Early-stage startup investing is my ????

A closer look at the 6 things to pre-empt 90% of Due Diligence

The Angel VC

There is not one number which will determine if investors want to invest. Mamoon Hamid of Social+Capital has coined the term "Quick Ratio" for the ratio between added MRR and lost MRR, and he's looking for companies with a Quick Ratio of > 4. financial plan saas software as a service venture capital

Four (more) things we look for in SaaS startups

The Angel VC

Since then we've looked at hundreds of SaaS startups and have gained additional insights through the work that we've been doing with the SaaS startups that we have invested in. investing point nine saas software as a service venture capitalMore than two years ago I wrote about what we look for in early-stage SaaS startups.

Avoiding the Ten-Year Stock Option Trap (and Other Stock-Option Considerations)

Kellblog

In addition, if you file a section 83b election within 30 days (and the grant was not in-the-money) then you pay no tax at exercise time and incur tax liability only when you eventually sell the shares, which if it’s more than a year away, results in long-term capital gains tax treatment [13]. Note to the wise: while it’s often the case, you cannot assume the preference stack is simply the amount VCs have invested in preferred stock.