Henry Murray

Sharing a few thoughts from my annual migration for #SuperReturn #SuperVenture in Berlin. 1) This continues to be the best VC/LP/PE event annually. Many are at the conferences, and almost everyone has a representative in town. Any managers or LPs not in attendance should consider it next year. 2) The European emerging manager scene is on fire. I met with almost a dozen, some old friends, some new, all as sophisticated as their US counterparts with thoughtful strategies and impressive growing portfolios. 3) Europe lacks the concentration that SF provides the US. Many startup hubs, some larger, but everyone in Europe is spending way more time on planes than their US counterparts. 4) Nobody knows where the market is going, and fundraising has been tougher in the last 18 months than before, but most agree a lot of money is still being put into the venture ecosystem. That's resulting in a return to deal pace & valuation acceleration -- is FOMO back? TBD 5) In an ironic twist, there seems to be strong interest from US LPs in European managers, and from European LPs in US managers. What did you see? What interested you this year? Welcome thoughts. P.S. the conference logistics were tough this year. To all those that shared the burden, thank you. Let's hope next year is better. cc: Dale Chang Stephan Eberle Patrick Murphy Carmen Alfonso Rico 🍫Jaime Novoa Sebastian Blum Paul Pruijmboom Jasper Masemann Marie Schildt David York Lior Litwak Karey Barker Maximilian Claussen Ameer Awadiyeh Jonathan Heiliger Oana O. Philipp Moehring

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Last week I was asked at The Berlin startup conference: “Why did you not raise external funding with Hypofriend and what’s your advice to other founders?” Each story is different, here is ours: When we started we actually got to revenue rather early. We weren’t officially a mortgage broker. So we could only build calculators and then do lead generation for other mortgage brokers. Once we became a licensed broker, with our first key mortgage hire, we could combine our finance, marketing and tech background with their mortgage background to capture the full revenue. We had essentially proven the model but then Corona hit. Fortunately, as a company doing online consultations we were well positioned and managed to double business during this time. Over the years we had many conversations with VC investors from Sequoia to Accel and PE funds. In the end, we valued our independence too much. After 30 years at the IMF and World Bank Christian Mulder was also not ready to work for someone else again 🤓 That meant, that we had to focus on building a sustainable business model. Ultimately, money being tight led to innovation. That’s resulted in a lot of experimentation and optimisation! To this day, I am responsible for how are marketing euros get spent, to the last dime 🤓 Other startup founders may not have the luxury of getting to revenue quickly. Some startups are just much more capital intensive. If you’re building a B2C startup you have to have a low cost acquisition channel. When we started that was LinkedIn. I tested early on LinkedIn and used Facebook and Instagram marketing to do brand marketing. Those channels are now much more saturated. If I were starting from scratch now, I’d aim to build a community first, through WhatsApp, Telegram or Reddit. It’s also important to understand that building a family business is a different longer term path. That means we’ve still invested considerably into the business and we haven’t “taken money off the table”. We believe in our mission to help customers make smarter financial decisions across Germany and Europe. We’re staying true to that. If you’re not ready to commit the next 20 years of your life to a mission, don’t do it. So my advice is to think hard about the kind of company you want to build and who you want to build it with - and whether you can do it without raising external funding. It may be less grand - you won’t be on TechCrunch, but you’ll achieve freedom to spend your time as you like and build as you like. To me, that’s priceless 🙏

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Want to exit as an early-stage founder? Yes, it is possible. But it requires a different approach to typical M&A dealmaking. A bit of context… I get 5-10 messages per week from relatively early-stage founders (traction, but not massively profitable yet) who are looking to exit. There are many reasons why - one of several projects, need more stable finances, tapped out and unsure what to do next. Etc. This also applies to relatively small businesses (sub-£5M revenue), owner-operated with a good team where the motivation may be a life-style change or retirement. Now. To be blunt and honest, in 90% of cases there isn’t an exit path - usually because of mis-match in expectations. (Eg: “We’re just one small investment away from building a $BN+ company”) But. Most of the time you can salvage a £1-10M outcome over a 12-36 month period. How? By treating it as an investment case to deliver an outcome for a specific target company. For example: You have a software product that helps insurance companies manage supply-chain risk. Let’s say the business does £500k revenue and covers costs. Your average M&A Advisory would try to sell the company based on the revenue/EBITDA and (after many months of false hope) fail to do so. They will get offers - but rarely ones you want to accept. My advice - and what I always recommend founders / owners do below 1M EBITDA - is to approach specific targets with an investment case to deliver outcomes. For example: Making / saving a target insurance company Z benefits over an agreed timescale with milestone payments. Becuase taking supply chain risk. This is a multi-million, even billion, sized problem that all wrestle with - and invest significant CapEx and OpEx into annually. If you can solve that - or deliver X saving … you get Y. Sounds fair, no? This is a very standard deal in enterprise consulting land. And beats shutting the venture down and feeling like you’ve failed. No. It’s not the all-cash deal from Google. Yes. It will require work to implement. Yes. It is a viable path for most owners / founders to realise a good return for creating value in a relatively de-risked way. See. What many founders / owners overlook is that the most valuable thing they have created isn’t IP … software … their service offering … etc … It’s actually their understanding of the problem, how to solve it, and a team who can solve it. So. If you are in this situation and looking for an exit. But aren’t really acquirable yet, why not give this a go? First step is putting together a short-list of targets who you might approach and are already investing in the problem (bigger is better). Hope useful. I wish someone had given me this advice on the dozens of early-stage ideas I walked away from over the years! #exitstrategy #founder #openequity

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How to right-size your DeepTech fund in Europe? 1. "Opportunity vs. Necessity". Balance opportunity and the necessity to stay on the right track. You need to manage both to be successful. 2. Capital constraints. The last two generations of venture funds are around $100-200M. Deploying even $20M in a successful company can be a struggle. 3. Multi-stage approach. Most firms pick up first checks at seed, seed plus, and sometimes Series A. Transitioning to Series B and C requires more capital. 4. Hardware challenges: In hardware, you can't just do the seed and leave it at that. The ecosystem isn't fully developed, and capital is key. 5. Growth opportunity funds: Growth funds help right-size venture opportunities. They are often invested in late-stage rounds. 6. Focus on signals: Don't just top up capital; focus on the right signals. Avoid making early investments to prevent underperformance later. 7. Late-stage investments: Investing at late Series B and C stages is common. Look for an outside lead investor writing a big check. 8. Proven product: By late-stage, companies should have a proven product and market. They should have initial customers and sales. 9. Limited hardware companies: Challenges and capital intensity limit the number of hardware companies in portfolios. 10. Capital intensity: Capital intensity is a major challenge in deep tech. Learning how to manage it effectively may be the most important thing you can do for your fund. What do you think? Join the conversation below. 🔽 #VentureCapital #StartupFunding #Fundraising #Europe #diversity

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At our VC firm, we don't just fund companies, we fund your existential crises. Every investment comes with a complimentary philosophy book. #vc #startups #investment

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The highest valuation in a financing round might be attractive but often it is not the option you should chose. Because it will hurt you later. 1.) With an established valuation you also create an expectation for the exit price. E.g. if you raise at 50m you need to build a 500m company - ask yourself how feasible that is in your industry with your model 2.) The highest bidder might not be the best fit for you in terms of know-how and/or on a personal level. Given you will be "married" to your investor for a longer period of time a 100% match is important. 3.) Often raising at a more aggressive valuation takes longer, so you will put the money to work later than with a less competitive but faster round. It is worth asking yourself if some or maybe all of the additional dilution of a lower priced round will be offset by putting the money to work earlier and spending less time on fundraising. 4.) The high price might come with additional asks that can hurt you later 2x liq pref, additional guarantees.... So don't raise the price at all cost

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Fundraising is a numbers game. But not just because most investors will say no. (though they will) The other reason is it takes some level of volume to find the best possible investors for your company. In the best case scenario, you don't want to just raise money you want to raise from the best investors possible. Unless you already know a ton of investors (and sometimes even if you do), you'll need to meet a lot of folks to figure out: - who you vibe with most - who sees the world similar to you - who shares your values - who understands your market the best - who else already shares or can get to the conviction you have on the opportunity you're pursuing - who's network can be uniquely helpful to what you're building etc. This is one of the times when cringe statements like "investor 🤝 founder partnerships are like a marriage" or "fundraising is like dating" bares some truth. You're not marrying your VCs. And fundraising is def not the same vibes as dating in most ways. But it is an evaluative process and it takes reps to find your people. When we were raised, I was surprised at how many investors I liked in general that didn't feel like good fits for the specific company we were building.

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🔔 Founders: Is your phone buzzing during family dinner... again? As business owners, we often feel the pressure to be available 24/7. But is this sustainable? Let's discuss some key questions: 1️⃣ How do you handle after-hours calls and messages? A) Always respond immediately B) Set specific "office hours" C) Delegate to a team member D) Other (share in comments!) 2️⃣ What's your biggest struggle with work-life balance? • Constant interruptions • Difficulty delegating • Guilt when not working • Something else? Have you successfully implemented any strategies to reduce founder dependency in your business? Share your experiences and tips below! Let's learn from each other and build healthier, more sustainable businesses. #BusinessOwners #WorkLifeBalance #Entrepreneurship #pitchourway

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When is the best time to sell your SaaS company? Over the past months, I spoke to many SaaS founders who told me that they are waiting for a better market environment before actively seeking an exit. They all hope to achieve a better (financial) outcome at a later point in time. If you have patience and everything is going well, this is a legitimate strategy. But many of them have wanted to sell for a long time - and simply can't stop chasing the carrot. They all have some reason why they want to exit: liquidity needs, new projects, health issues, more focus on family,... But they think they're missing out if they sell now. I can understand it, but it seems pretty foolish. You just can't time the market. From my experience, this has backfired more often than it led to the desired gain. The typical revenue curve of a SaaS business looks a bit like an S. The values of the Y axis can vary greatly though. As you can see from the chart below, if you want to optimize for enterprise value (EV), you should sell when you are growing the fastest. I think almost nobody does that - hard to time and quite difficult psychologically. On the other hand, the longer you wait, the greater the risk that you won't be able to maintain growth and your EV will even start to decline. That means you no longer have leverage in M&A conversations. Independent of the market. Why do I know? Because I sat on the other side of the table a couple times - and I felt really sorry for the founders. My advice: ➡️ Give personal reasons a higher priority and don't try to time the market. ➡️ Sell when there is still some juice left and don't wait until growth stalls.

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Very smart insights from Dirk Sahlmer on how fickle timing can be when thinking about selling your SaaS business One wrinkle I would add to sellers is that some buyers can be flexible with what the final deal structure can look like. It does not always need to be cash straight up for all your equity. If you're confident that there's growth to be had, you can always roll some equity or incorporate earnouts (make sure they are reasonable/attainable for you!), and basically split the difference. You can take some $ today, and keep some exposure to that future upside. It does not need to be all or nothing!

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78% of startups can’t even pay back their investors. How do you avoid becoming one of them? I got to chat with Fabian Tausch of the popular Unicorn Bakery podcast about the common pitfalls founders face, how to avoid them in the first place, and what to do if you find yourself stuck. This one’s for you if you want more insight on:  🤔When to use intuition vs. data when making decisions, 💰When and how to raise capital, 👥Choosing the right investor Plus, startup questions you want to know but may be afraid to ask, including, “Is it even possible to be successful in my early 20s?” #UnicornBakery #Startups #Entrepreneurship #Capital #Investors #DecisionMaking 

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💸 ➡️ 🧠 Time to dive back into some REAL work, after a fun week chasing LP in Berlin. Look forward to connecting with AI experts, founders, and corporates to discuss "Autonomous Transformation" for legacy industries. #ai #automaton #aisummit

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These 5 German start-ups have the fastest growth in 2024. Follow the companies to stay updated on their progress: Mondu - Rasied $122.1M ↳Buy Now Pay Later solutions that enable any B2B company to grow quickly and safely. Upvest - Rasied $94.5M ↳The investment API finmid- Rasied €35.6M ↳Financial services infrastructure for software businesses RobCo - Raised $60.5M ↳Robotics to Solve Labor Shortage Flower Labs - Rasied $23.6M ↳Training AI on distributed data This is good proof that the German ecosystem is rapidly growing. Which businesses would you feature on this list?

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Let's talk about time and speed in Venture Capital. Founders don't have time - they always have short runway, need to close a round soon, and want to progress with a term sheet quickly. VCs use time as an asset - VCs take their time, to learn more, to de-risk, to see if they miss anything else or another company in the market, see if others will invest and they could follow. The best VCs are the ones that align with founders on the time axis. They want to move quickly to be first to invest, and allow their founders to be first as well. #venturecapital #founders #fundraising

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I spent two hours yesterday scrolling social media about the #GPT4o (what a weird name) release—and feeling gutted that my app has not been updated yet. Axel C. ‘s post this morning is the first smart, thought-out critic I read. (See below with more sources 👇). He warns against the coziness we are supposed to feel with human-facing AI algos. We run the risk of slowly disengaging from our social life. *** My reaction to all the promo videos was: “Why do they all ask a machine how it feels?” Have you noticed how all the OpenAI employees start the conversation with “Hey ChatGPT, how are you?” I’m not convinced by the answers I got on X (see pic below). OpenAI is trying to make ChatGPT become another “friend,” but there’s a risk it’ll soon become the closest one—and for some, the only meaningful one. Sam Altman on the All-In Podcast referred to it as a personal assistant, a Jarvis-like figure. But I agree with Axel, it’s not how it feels. *** I use ChatGPT several hours per day. It helps me write parts of blog posts (although I spend considerable time editing, I don’t like its style), answer daily life questions, and discuss research-related concepts during my morning walk. But I noticed I have to fight off an urge to have it think in my place. Thankfully, I had over four decades of doing it alone before the bot arrived. Will it be the same for our kids? I teach my 6 yo to think about answers by herself before asking ChatGPT (“Why do giraffes have long necks?” was her first question). How long before we outsource our thinking to this affable, human-like companion? As I graded my students yesterday, it was obvious some used AI to write their essays. They missed an opportunity to reflect, train their memory and brain cells to come up with a creative answer. The “blank page effect” is a powerful exercise to improve your thinking power. How long will we make the intellectual effort to write something novel in a world where the instant answer is at the tip of our fingers? *** The main risk with AI is not that it destroys us, it’s that we gradually do it ourselves by submitting our thinking and personal companionship to it. It’s a strange feeling to be elated and worried at the same time. #ai #itscomingforus

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Let's talk first 100 days, post acquisition in private equity and how much of a missed opportunity it has become. Traditional Way: - Loads of assessments, every department needs to be studied and assessed - Strategic Planning for the first 3 years with a roadmap - Master communications internally and externally - Systems/Process optimizations for scale But when you get to that 100 day shareholder meeting, all you have is historical data and a theoretical plan, you've wasted an entire quarter on discovery. Leaving you on the back foot. Even if you map out 3-5 things to test and learn right away, you will have trend data on that first quarter educating how the business reacts to your hypothesis and changes made. Try altering some low hanging fruit to see immediate wins or losses you can document. Build your plan & roadmap off those learnings so you can move forward. Make your 100 shareholder meeting a continuation of the due diligence you've done to acquire that company and have that point become your hypothetical second quarter QBR.

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F*ck the Feedback. Want to stall out on your fundraise and be taken out of action for a month?  Start listening to all the feedback that non-investors to give you. Yeah - I’m talking ‘bout you… Non- investors - the founders who are a few steps ahead of you, the gatekeepers to the warm intros, the well meaning investors who won’t be investing, the VC you meet who just needs to give you feedback so he can not give you a clear “no.” There’s a time for feedback, advice and revisions from trusted contacts.  And there’s a time to lock and load and kick off your fundraise. Once you’re in fundraising mode, and on a schedule, use this. “Ah, interesting! Thank you so much for that great feedback. I never thought of it that way. You’re so smart!” And then write it down to revisit it AFTER you close your round. Fuhgeddaboudit and get to the next meeting. A gatekeeper is telling you that you need to work on your storytelling before they will intro you to their investor? FIND ANOTHER WARM INTRO source. Don’t spend the next month focused on storytelling and revising your deck. At this point, your deck is good enough. You’re not selling the deck. You’re selling equity in your company. Keep going. Keep creating traction. Keep generating news. Keep meeting with the real potential investors. And f*ck the feedback.

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About Resilience - According to Carta Q1 2024 had the highest number of down rounds in the last 5 years and Q1 was flat for VC investments (like the last 2 quarters) with only $16.3B raised. Only $16.3B sounds like a lot was raised. But I guess it is perspective since the most raised in a quarter in the last 5 years was $67B. When I see numbers like that the first word that comes to mind is "resilience". I guess it comes out of my experiences of founding a company as well as seeing companies that I counsel who have succeeded with the ups and downs of the private markets. There is a fine line between rapid growth and disaster. I found that line to be resilience. As famed general and Roman emperor Marcus Aurelius wisely noted, "the impediment to action advances action. What stands in the way becomes the way." Growing too fast and need money; not growing fast enough and need money; or need money for a new product - these obstacles are almost inevitable in a start-up. The ability to adapt, learn, and iterate in the face of adversity is resilience. All these challenges ultimately become part of your and your company's DNA and are part of your way. It makes you and your company stronger when stretched or starved. Your altered path and plans are now your way. It's hard now, I have been there but it will get better, it always does and there seems to be a bit of light at the end of the tunnel. Staying in the game so you can play the game is what resilience is. [edited to add Carta article link at the request of some] https://lnkd.in/gkdfhi6B

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How do I know if my idea is a good one? Ask your customer. But most founders don't do this. Instead they ask, - Their friends, families, and colleagues about the idea. - Asking investors about the idea: Investors could offer unique perspectives, however, opinion does not equal validation. Their primary concern is potential return, not necessarily idea viability. - Showing the prototype to the wrong people: Asking someone who is not one of the target customers about the prototype when they are not experiencing the problems being solved can lead to misleading insights. - Listening to words not actions: "Great concept," "I love the idea," "This is so cool," "I think I will pay for it" is not validation. Where is their action? Did they use the prototype? Did they pay for it? To truly validate the idea, founders should speak directly with target customers to understand their pain points, needs, and preferences through interviews, surveys, or focus groups. However, even most founders fail in conducting interviews and surveys properly. So, we have shared a framework in the attached PDF. It includes: 1. Ways to Validate Startup Ideas 2. Customer Discovery and how to do it? 3. Building Hypothesis and Validating it 4. Rule: You are not allowed to talk about your idea! 5. Customer Interview Guide  6. Where the magic happens #1  7. How to Interview? 8. Number of question and no. of customers to speak? 9. Asking yourself: …Is it a Really Big Problem?  10. Customer Segments - Divided into 3 phases. 11. Customer Validation 12. Case Studies: B2B, B2C & B2B2Cetc. That's it. If you find this helpful - please like, comment & share so that it reaches founders . 👉 Check out my free newsletter for more insights: https://lnkd.in/dKZQKHg2 . #startups #startup #funding #founders #investors #entrepreneur #idea #entrepreneurship #vc #venturecapital #angelinvesotrs #ideavalidation #founder #mvp #ycombinator #validation #framework #startuptips

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