Tomer Cohen

"Editors note: Welcome to issue #2 of Transcriptions. Today, we’d like to present a conversation between Qasar Younis of Applied Intuition, and Bilal Zuberi of Lux Capital. We discovered Qasar recently, and find his focus and clarity of thinking to be admirable. What follows is a lightly edited transcript of their talk, first held at the Paklaunch forum." Link to transcipt: https://lnkd.in/gH4uBmPE

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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Want a front-row seat to the frontier of tech? We’ve got the role (or two) for you! We’re expanding our frontier-tech team at Blackbird by hiring a Frontier Tech Investments Associate and Foundry Fellows! Got questions? We've got answers... 1️⃣ What are the roles? 🧪 Associate = a full-time VC investment gig in our Blackbird Investments team, working directly with me. We’re looking for someone with a science and/or engineering background and more curiosity than they can handle. You’ll grow your own investment brand and practice, support our portfolio founders, and will help build Foundry, our early-stage frontier-tech accelerator. ✨ Foundry Fellow = a casual/contract gig in our Blackbird Investments team, ~15h per week for 3 months. The Fellowship is ideal for PhD students and ECRs who want to learn more about startups and VC. You’ll go deep on emerging areas relevant to your expertise (or curiosity!), get a front-row seat to groundbreaking companies in those areas, build out your non-academic network, and develop a solid writing practice. 2️⃣ Why are you hiring? We love frontier tech, and we’re ready to grow our team. 3️⃣ Wow, it’s so great that you’re starting to look at deep tech! Look, we get it: we don’t make a lot of noise about our frontier tech investing. Buuuut we’ve been deep-tech investors since we backed Tim Kentley-Klay to found Zoox back in 2014—we’ve been on incredible journeys with PsiQuantum (building the world's first utility-scale quantum computer right here in Australia!), Inventia Life Science (transforming drug discovery with high-fidelity cell models), Remedy Robotics (surgical robots for remote endovascular procedures), Opto Biosystems (minimally-invasive neural implants to treat cancer), and more. We believe that frontier technologies, and great frontier-tech investing, will be part of the solutions to the greatest problems humanity faces today. 4️⃣ When do applications close? May 31st at 11:59pm AEST. 5️⃣ I have more questions! I’m sure you do! Clare Birch and I are hosting an AMA to answer any and all questions about these roles. Want to know what a week in the life of our team looks like? What’s keeping us up at night? What our ideal candidate looks like? Come along and find out - registration link in the comments 👇 Apply for these roles: Associate - https://lnkd.in/gCfj4EUJ Foundry Fellowships - https://lnkd.in/gj6ATZVZ If you know anyone that we should meet, send me their details! Cameron Elise Ben Andrew Robin Joseph Adelaide James Olivia Lucinda Raghav Jesse Christie Mohamed Tom Amee Pablo Haya Loong Hon Joshua Benjamin Megan Harry Denzil Matthew Diana Daniel Tom Deanna Justin Amar Lilly Stone Thomas

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🌟Innovative VC Firm Overcomes Exits Drought with Secondary Sales🌟 ⛵Navigating a challenging landscape where exits are scarce, Santa Barbara Venture Partners (SBVP) has pioneered a novel approach to sustain its growth and attract investors for its second fund: secondary sales. Instead of waiting for traditional exits like IPOs or acquisitions, SBVP opted to sell shares of its portfolio companies, demonstrating its ability to generate returns for investors and stand out in a competitive market. 🎤According to Dan Engel, founder and managing partner of SBVP, these secondary transactions have been a game-changer, sparking investor interest and bolstering the firm's credibility. By leveraging its recent successes, including a lucrative stake in sports-betting company DraftKings Inc.' acquisition of digital lottery app Jackpocket, SBVP seized the opportunity to return profits to its limited partners (LPs) and pave the way for its second fund. 💡Engel highlighted the challenges faced by young VC firms in raising subsequent funds, particularly amid a downturn in exit activity and heightened investor scrutiny. With traditional exit routes becoming increasingly elusive, the pressure is on for firms to demonstrate tangible returns and establish a track record of success. ✨"For us, secondary sales have been a game-changer. They've helped us return profits to our LPs and attract investors for our second fund," said Dan Engel. 💰For SBVP, the decision to pursue secondary sales was driven by the need to provide liquidity to LPs and validate its investment thesis in the eyes of prospective investors. By strategically offloading portions of its holdings in high-performing portfolio companies like Bark Technologies and Rad AI, SBVP not only generated substantial returns but also bolstered investor confidence in its ability to deliver results. ⚠Despite the complexities and potential stigma associated with early share sales, Engel emphasized the importance of prioritizing investor returns and seizing opportunities to unlock value for stakeholders. With a focus on profitability and transparency, SBVP remains committed to its mission of delivering sustainable growth and maximizing returns for its LPs. 🔍 "Returning profits to our investors is our top priority. By strategically selling shares, we're proving our commitment to delivering results and driving value for our stakeholders," added Engel. As SBVP continues to explore secondary transactions and expand its investor base, the firm stands as a testament to innovation and resilience in the face of market challenges. 🚀 ✅ Looking to raise capital for your #fund and increase the international pool of your LP #investors?   🤝 Need warm #LP introductions?   📝 Selling #secondaries to increase liquidity?   🧐 Looking for co-investments?   ▶ G+QUANT's link for inquiries and fund decks: https://lnkd.in/gjC_EuTE #VCInnovation #SecondarySalesSuccess #InvestorReturns #ValueCreation 

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Super helpful article and accompanying doc with a #Startup #Equity Calculator to determine the equity for early hires, thanks to Pear VC head of talent Matt Birnbaum! Thanks for sharing Pejman Nozad! 🙏🏼 You can read more here How to structure startup equity for early hires: https://lnkd.in/ggmpT5-Y Google Doc: https://lnkd.in/gjsvths6

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In our latest episode on the Practical Nerds podcast, Patric and I talk about our earned learnings on how founders (and other VCs) should choose the right (Co)Investors for their startup (Construction-tech or otherwise). Which of these do you agree with ? What did we miss ?

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Kudos to Zuck for taking aim at VP titles, the proliferation of which is inversely correlated to how lean a company is and how fast it can move. Hope more CEOs follow in his footsteps. It’s also an appropriate time to reshare my old article on Titles. It’s a call to arms to be very thoughtful and intentional about Director / VP titles and avoid them for as long as possible. https://lnkd.in/g4zQkEr

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Starting a new fun project with Victor Lee - an AMA series with early stage founders. There are many podcast shows featuring successful, famous entrepreneurs. But what about those who are still relatively early in their journey, perhaps just one step ahead? The zero-to-one founders who have recently cracked the product-market fit and raised Seed or Series A capital. They may not have figured out everything yet, but they have fresh, relatable tips and advice to share. We’ll invite early-stage founders for a one-hour AMA session. Afterwards, we’ll create a public webpage featuring each Q&A session with media clips and transcriptions. This will be 100% free and open to the public. Our first AMA (June 11 1pm PST) will feature Will Drewery, whose company (Diagon) recently raised $5.1 million in Seed funding. We’ll get to know Will better and cover topics such as tips on raising funding in this tough environment. It will be a fun AMA, and you can register for free using the link below. RSVP now!

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As we dive into 2024, the Series A fundraising landscape is becoming increasingly daunting. Investment standards are soaring, and fewer startups are making the cut. Series A investors are finding many seed stage companies too premature. The median valuation jump from seed to Series A skyrocketed from $19.5 million in Q1 2022 to $28.7 million in Q1 2024. Investors now demand stronger revenue performance, targeting $2 million to $3 million in ARR, up from $1 million to $2 million. Alarmingly, only 12% of Q1 2022 seed startups secured Series A funding within two years, down from 31.8% in Q1 2020. #venture #earlystage #seedtoseriesa #seed #seriesa #inspireglobalventures https://lnkd.in/gW4bkcNy

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Instacart is a market leader when it comes to leveraging AI tools to boost productivity at work. I had an amazing conversation with JJ Zhuang, Instacart’s Chief Architect, who has shepherded over 50 AI-driven initiatives to market across the org. We explored what catapulted Instacart to the forefront of AI integration, supporting radically diverse use cases across various functional areas. One striking insight (echoed by Ethan Mollick and others elsewhere) is that you often don't need specialized tools for specialized work. Frontier models like GPT-4 can seamlessly adapt to a wide range of functions and use cases. They're not just for engineers; they're incredibly versatile tools used by marketing, comms, and legal teams. From generating code to proofreading and ideation, GPT-4 empowers every department to leverage AI for enhanced productivity and innovation. By integrating LLM’s like GPT-4 into their workflows, teams can streamline processes, automate repetitive tasks, and unlock bandwidth for new creative possibilities. How can you harness the power of AI in your own work to boost productivity? Share your thoughts below 👇 Want to hear more insights from JJ? Check out the full podcast episode by clicking the link in the comments.

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💪💡Wisdom is learning from past mistakes from others but also oneself. Retrospection with action is powerful. An insightful weekend read from the WSJ… Christopher Mims shares his list, from 10 years of covering consumer tech for the The Wall Street Journal: ( link here: https://lnkd.in/eKj2wX_t ) 1. Disruption is overrated. 2. Human factors are everything in tech adoption. 3. People lie to themselves… and to you. 4. Tech bubbles are productive, even if wasteful. 5. We’ve got more power to shape how tech impacts us. Some of my list, from 25 years of early stage consumer internet investing and operating: 1. Tech disruption is overestimated in the short run, underestimated in the long run. (Amara’s Law) 2. Social proof is powerful in tech adoption. 3. Hope kills. Execution is everything. 4. Run towards tech bubbles. 5. Tech optimism empowers positive change.

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Looking forward to discussing how changing demographics and culture norms are affecting investment opportunities in longevity, health and well-being at The Care Summit today Alongside Cake Ventures' Monique Woodard, Ziegler's Dan Hermann, Oak HC/FT's Billy Deitch and JPMorgan Chase & Co.'s Jennifer Edwards, we’ll dive into the trends shaping how we are investing in the space: - Last year marked one of the most significant social and economic moments in modern times: The number of older adults—those aged 50 and over- surpassed the number of children under the age of 15 for the first time. - In 2020 the 50 plus population contributed $45 trillion to global GDP, or 34% of the total. That equates to about 3x the revenue of the world’s 100 highest- earning companies in 2020. - The U.S. population grew by 24.5 million from 2010 to 2022, and Hispanics accounted for 53% of this increase – a greater share than any other racial or ethnic group. - Women around the world and across all ages drive 64% of consumer spending

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Connie Kwan 🎤 Story-led Leadership, Chief Product Officer at Nobody Studios, is joining Sejal Thakkar and I on tomorrow's Making of a Nobody podcast. Join us live at 10:00 am PST as we share how to take an idea to an early stage-product. Link is in the comments, see you there! #product #startup #tech #futureisnow #venturestudio

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This week on the Mobile Dev Memo podcast: I speak with Mike Taylor about his new book, Prompt Engineering for Generative AI: Future-Proof Inputs for Reliable AI Outputs, as well as the skill gap in performance marketing. Find the episode by searching for "Mobile Dev Memo" wherever you consume podcasts.

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GPTZero has skyrocketed to profitability within 18 months, raking in millions. With 500% ARR growth in six months and user growth from 1 million to 4 million in a year. While many AI-detection companies struggle with accuracy, GPTZero excels, leveraging vast data and advanced LLM models using the latest open-source tools. Initially celebrated for helping teachers spot AI-generated student work, GPTZero's clientele now includes government agencies, grant writers, hiring managers, and AI training data labelers. One founder noted, "We have a big data advantage with millions of examples of human versus AI-generated text," proving the quality of data fed into AI models is crucial. https://lnkd.in/gREnQ2ps #ai #sustainabledevelopmenttechnology #emergingtechnology

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The #1 question I get asked is: “How do I hire a CEO?” (How to hire, incentivize, and manage a CEO) I created a guide with all my learnings from hiring ~40+ CEOs and leaders across Tiny (and many epic fuck ups along the way). Topics I cover include: Is hiring a CEO the right choice for you? When to hire a CEO? How to find the right CEO? Should you invest in a recruiter? What to look for in your CEO? How to diligence candidates? How to ensure a culture fit? How to negotiate & structure compensation? How to transition from founder to owner? How to relinquish control? How to determine CEO success? When to replace the CEO? Book Recommendations * A cheatsheet is included with key points from all sections. Get my guide for free → https://bit.ly/4bSTeUY Enjoy!

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Let's finally get rid off the "VC alphabet song" and redo the system to become more founder friendly. "The benchmarks set by funding stages are often arbitrary and not necessarily aligned with the actual development needs of individual startups." #vc #venturecapital #founder #fundraising #startups #fundingstages #funding #fundingrounds #pitchbook

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Ever wondered where the perfect balance between tranquility and innovation lies? For me, it’s Seattle. Unlike the Bay, Seattle has a more serene environment that’s perfect for focusing on building products and businesses. The city’s vibe encourages deep work and creative thinking, free from the overwhelming hustle. But let’s be honest, Seattle’s founder and investor communities aren’t as vibrant as those in SF. Yet, this city holds a special place in my heart – a blend of my love for startups and the charm of Seattle. I believe in Seattle’s potential and I’m on a mission to help ignite its startup community. From connecting with fellow founders to engaging investors, let’s come together to build something extraordinary here. Seattle has all the ingredients to be a startup hub – talent, innovation, and a supportive ecosystem. What it needs is a spark. Let’s be that spark.

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Parker just posted Rippling's new fundraising memo. It's the manifesto for compound startups and one of our initial inspirations for building Atlas. Here's a nugget that I really liked that summarizes how we feel about the competitive advantage of all-in-one startups over vertical startups (in customer support especially): "When we build corporate cards, we're not innovating on the way we issue corporate cards (through Stripe issuing or Marqeta) or the way we scan and extract metadata from receipts (which is mostly a vendor relationship for us today). We're going to win on the capabilities we have that are common to all Rippling products—the integration with the rest of Rippling and with employee data, the platform capabilities, and the common UX described above." Here's the full doc: https://lnkd.in/gYH59HVZ

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