Vivek Krishnamurthy

If you're building a fintech startup, you likely know of this investor, but just in case... This week's findfunding.vc spotlight is on Neil Kapur from TTV Capital. He: 🛫 Is based in SF & Atlanta 💲 Has spent time at Google in consumer-facing payments & at two fintech startups  🏔️ Loves alpine mountaineering and has climbed Kilimanjaro, Denali, Rainier, and more!! Amongst founders, Neil and the team at TTV Capital , including Gardiner Garrard, Mark Johnson, Sean Banks, Lizzie Guynn, and Laney Lewis are known for saying “lift, not lean.” They believe that their job as investors is not to create work for founders, but instead ask the right questions and help navigate to the best outcomes. Knowing Neil well personally, he's not only my go-to person for anything related to fintech but I can also highly recommend having him on your cap table - he's the kind of human you want to have in your corner during both good times and bad. Make sure to: ✉️ Pitch him at nkapur@ttvcapital.com ➡️ Follow TTV Capital on LinkedIn For more, check out our funder spotlight card below along with TTV Capital's profile on findfunding.vc (link in comments).

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Southeast VC Update: Q2 2024 PitchBook Venture Monitor Highlights The Southeast continues to hold its position in the VC regional landscape #5 in dollars raised for Q2 2024 🥉 #3 in deal count (just behind the West Coast and the Mid-Atlantic) H1 2024 Southeast Breakdown:  📊 10% more deals than Northeast  📈 30% more deals than Mountain region, 20% more than South  💰 5% more dollars raised than Mountain region  💸 23.5% more dollars raised than South YoY Funding Trends:  📈 Southeast: Up 29% 📈 Mid-Atlantic: Up 136%  📉 Midwest: Down 67%  📉 New England: Down 11%  📈 West Coast: Up 59% Key Trend: While closing in on Mid-Atlantic numbers, we are seeing more deals but smaller rounds. This could indicate strong activity occurring in the seed & early-stage funding, despite the macro challenges. (Pitchbook classifies the Southeast as AL, FL, GA, KY, MS, NC, SC, TN, Puerto Rico, & Virgin Islands) #BuildInSE

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When I first read Jevgenijs Kazanins's very excellent fintech take on why Cash App Pay could be the next major driver of Block’s growth, I was floored by his initially compelling case that if Cash App can incentivize more payments payments volume to go through Cash App Pay, they can drive massive gross profit uplift, because Cash App Pay’s take rate is substantially higher than Cash Card’s take rate on purchase volume (2-3x). But if it were true, why hasn’t Cash App taken advantage? Whereas Jevgenijs is more optimistic about the ~$2.5bn in GPV that Cash App Pay has generated in its first ~2.5 years of existence, I find it downright embarrassing. That’s less than 1% of Square’s GPV after two years in the wild? And that’s despite it being essentially pre-installed on every terminal with no change in hardware required. I started to have a sinking feeling that maybe something was missing in the calculus. And as I dove deeper, it became clear that the “magic” take rate uptick we thought we’d found was more of a magic trick, relying on some deception. The seeming increase in take rate comes about like this. Normally, when a Cash App user makes a purchase, Cash App acts as the Issuer which means there are several intermediaries between what the merchant is charged and what Block earns on the transaction, meaning its ultimate take rate is relatively low. But in the case of Cash App Pay, there’s potentially a few magic tricks at work. The first is that in this case, Block is facilitating the Square merchant’s acquiring POS AND it’s issuing the Cash App user’s debit card, thereby cutting the intermediaries down in the typical payments flow and seemingly increasing Cash App take rates by 35-50% (instead of just interchange, you’re now getting interchange and markup). But then gets even better with the second trick, because if you’re both the acquirer and the issuer, *you don’t even need the payment network at all*. You can simply move money by book transfer between your merchant’s bank account and your user’s bank account in a perfectly closed loop payment network. Suddenly, Cash App Pay has a magical 2.9% take rate with no money movement costs at all. The problem with these magic tricks, like the ones in life, is that they are actually using some deception to hide what’s truly happening. Let’s play it out. In the status quo, without Cash App Pay, Square would earn ~1.85% in acquirer markup and Cash App would earn 0.90% in interchange for a total of 2.75% in take rate. In the Cash App Pay case, Square and Cash App would split the 2.90% Merchant Discount rate they artfully charged without having any money movement. So instead of the 2-3x markup, the uptick is more like +15bps (+5%). So maybe there isn’t a massive take rate arbitrage, but Block should still be focusing on its closed loop payment network because it represents huge opportunity for other reasons. Read the full post at https://lnkd.in/d93nkn29.

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⛳ Emerging fund managers pulse check. PitchBook tracks over 10,000 funds that are raising money, with 45% being emerging fund managers (defined as firms with less than 3 funds). Despite a dip in available capital—down to 16% from the pre-pandemic 23%—these managers are finding creative ways to stay competitive, like partnering with larger firms. 💼 Joanna Drake (founder turned investor) shared how "wildly different" it is raising a fund versus for a startup. One key datapoint she shared on the fund side was how little feedback you get along the way (and the years you can wait for it). The “long-winded and challenging process to raise capital” inspired Drake and Ben Black to create RAISE Global, a community for emerging fund managers and the “forward-thinking LPs” who back them. (A decade later, several hundred emerging managers with AUM under $200m are on the platform) They've found the newest emerging managers are more diverse and geographically dispersed than Silicon valley, and more were able to crack the ceiling and raise larger $100m funds (although this is still a small % of the market, requiring partnership with larger funds at the late stage). ▶ And not a hugely surprising datapoint: A lot of action is in the sub $49 million range, where roughly 50% of emerging managers are raising. Theresa Sorrentino Hajer, Head of U.S. venture capital research at Cambridge Associates warns that past success isn't actually a strong indicator on it's own to assess emerging managers. We've had a valuation reset. And newer managers with investments during the 2019-2021 "party days", need to build relevant track record and play to their strengths. A lot of emerging managers are specializing (70% who applied for Raise had a thematic focus), and betting on getting in as early as possible in the startup's lifecycle (Raise: 31% at accelerator/ pre-seed stages, and 47% at seed stage). “Emerging managers have to compete on a different dimension,” Nick Moran from New Stack Ventures. You're no longer just dealing with capital. Emerging VC's need to be as innovative and nimble as the startups they invest in, having a unique thesis and insights. They also play a role at the top of the deal-flow funnel: helping larger firms find promising companies, so finding a thesis, sector or philosophy aligned partner at a larger firm is helpful. Onwards! #EmergingManager #Startups #VC

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Last week at Stripe Sessions, we at OMERS Ventures, in partnership with Recall Capital and Gusto Embedded, hosted a few founders, builders and investors to chat about current and future trends in embedded fintech and vertical software. A few of my big takeaways from the evening: 🤖 A lot of us on the media and content side see AI as an existential threat, but many of those on the SMB and entrepreneur side actually view it as a solution to the 'cold-start' problem of 'wtf do I actually put on my website?' when they sign up for a Shopify, Squarespace, Wix, whatever and have to actually populate a customer-facing surface for the first time 🥞 Point solutions are increasingly losing out to full-stack offerings, even in vertical markets where requirements up and down the stack are unique. Everyone building a point solution is looking at how and when to expand. I think the differentiator will be in what the starting line was and how that cascades through the company's DNA as it adds additional features and capabilities. 👩‍💻 Technical integration of embedded solutions remains a complex and frictionful process, even for so-called 'two lines of code' 'simple' plug-ins (they end up not being this when they encounter complicated, aging legacy codebases). Is this a place for AI to excel – can agents handle heavy lift codebase stitch-ins without the time and effort it takes devs on either or both sides now? All in all a fantastic evening with great discussions and a terrific panel hosted by Somrat Niyogi! Thanks to Fred (Fady) Helou, Elizabeth Olveda, Charity Hudnall, Jackson Reynolds, Jeremy Butteriss, Lucy Wang, Isabelle Cole, Sarah Tierney Niyogi, Matt Bocci, Yi Liu, Yanett Burgueño and many more for provoking the above thoughts and many more!

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Thrilled to announce the launch of our inaugural edition of Beyond Benchmarks at Emergence Capital. This comprehensive report dives deep into the metrics and trends shaping the early-stage enterprise cloud market. A huge thank you to our VC partners and contributors for making this possible! Here's a sneak peek of our findings: --> 60% of companies have already integrated GenAI into their service offerings, with another 20% planning to do so this year. --> While most companies use OpenAI as their primary LLM, many are experimenting with multiple models. We’re seeing a trend toward intelligently routing GenAI inference requests based on cost, performance, and security. --> Companies that have implemented GenAI are showing promising results, with a 7% higher NDR compared to those that haven’t. Beyond Benchmarks goes further with more GenAI trends, insights on the current fundraising environment, and key performance metrics. Our goal is to provide founders and their teams with valuable benchmarks to help them make better-informed decisions. At Emergence Capital, we're committed to helping founders build iconic companies. Dive into the full report here: https://lnkd.in/g6bnvAZM

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Seed VCs are turning to new ‘pro rata’ funds that help them compete with the big firms Alpha Partners, SignalRank and now SaaS Ventures help seed VCs pay for shares when big VCs try to price — or push — them out Lee Edwards, partner at Root VC, has a saying at his firm that “pro rata rights are earned, not given.” That may be a bit of a stretch since pro rata refers to a term that VCs put in their term sheets that gives them the right to buy more shares in a portfolio company during consequent funding rounds to maintain an ownership percentage and avoid dilution. Still, while these rights are not exactly “earned,” they can be expensive. One of the latest trends in VC investing these days are funds dedicated to helping seed VCs exercise their pro rata rights. https://lnkd.in/dRM3RvdA By Christine Hall

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Great time on the Embracing Erosion podcast w/Devon O'Rourke! We talked about: 🚀 How to scale a company from concept to 9-figure exit 🔄 How to break away from the traditional consulting model and apply product approaches ⏩ Why it’s important to iterate quickly and often with messaging 💸📈What signals are important to pay attention to when investing in startups and much more!

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- Thoma exits Venafi at $1.5b at ~10x ARR - They bought the biz at $1.15b ~4 years ago at 11.5x ARR - Only a 1.3x in ~4 years (and could be less depending on CyberArk's stock) - 50% of the deal is in CyberArk stock, trading at $10b, at 12x multiple at close to all-time highs, and up 60% in the last year - The deal will allow Venafi to expand CyberArk's TAM by nearly $10 billion - Despite this, the stock has been flat since the announcement - CyberArk is growing 37% YoY //Objectively a weak exit for Thoma despite Venafi's solid performance and scale //Or is this a strong exit considering the headwinds to go public, an inability to trade up to bigger PE, credit markets still in the sh*tter, and a need for PE to provide liquidity and positive returns to LPs? //Is this a top performer in their portfolio or run-of-the-mill? //Thoma can book the return, funnel $ back to LPs, LPs re-up in the next fund, and Thoma has more $$ to deploy at depressed prices //Very interesting to see pricing of other exits like this in the near term https://lnkd.in/gBqkvP48

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Dan Primack of Axios has some choice words for VCs in this post. If you are an investor, LP or a founder raising money from VCs - worth the read. I tend to agree with Dan here and have some thoughts... 1) Private Equity is an ecosystem that relies on flow not a one-way transfer of assets. VC is semi-broken right now because no one wants to sell off a portfolio below performance targets. Could mean game over for the GPs. Seems like public, private and venture are all trying to remain optimistic while waiting for a drop in interest rates and an uptick in IPOs or PE buyouts to start the liquidity flow again but Fed and inflation data keep frustrating this kicking off. 2) VC have one core job as far as LPs are concerned....Create a magic black box that is a cash multiplier. Not a black hole! When and how early investments become liquid need to change also. 3) We have an 80 year old VC fund model that requires wild, best-case scenario power-law returns to generate the performance numbers the asset class promises to investors. This handcuffs GPs to staying in deals for a very long time as the early exits or lower deal multiples can drag funds performance and then their job security, fee structure, etc as I alluded to above. This also drives companies to "go big or go home" and operate with inherently more risk than stability. 4) Dan talks about the need for liquidity and to get back to the money flow. This is easier said than done as a minority investor. Incrementally easier if you and your co-investors are able to steer the company at the board level but its still "not your company" and the "market is the market" re comps/multiples and demand. 5) So - what can we, as an industry, do about this? We have to evolve. We have to have some hard conversations around the table and not let staid endowment funds and Goldman Sachs dictate how our industry looks at the future...feel like this becomes a new post or a series so I'll leave it here for now. #venture #VC #startups #privatequity

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Earlier this year, we surveyed our fellow Los Angeles-based GPs to get a pulse check on the LA venture ecosystem. Here’s what we found: 💗 Deal flow is healthy, and most LA venture investors (68%) are seeing the same or more deal flow YoY. ✈ LA investors are spending time in a variety of markets, with NYC, Austin, and SF following closely on LA’s heels. 🔍 Innovation is concentrated in AI and machine learning, space, and commerce. 💸 Funding is happening, but it’s barbell-shaped, with deals concentrated at the early and late stages. Funding post-Series A has been challenging. 🚩 LA is differentiated, but not without its challenges. Key difficulties include not attracting enough AI talent (despite having the largest number of engineers graduating from our region over any other in the United States); talent relocated to more tax-friendly or less expensive locations; and the great SoCal / NoCal divide 🙏 Thank you to all our many respondents! I’m so glad to be part of a venture ecosystem that includes great minds like Anna Barber, Brent Murri, W. Christine Choi, Sarah Tomolonius, Rob Smith, Win Chevapravatdumrong, John Tabis, Jill Royster, Jesse Draper, Ashley Balla, Britt Danneman, Tram Lai, Carmen Palafox, Elaine Russell, Deborah Benton Amanda Schutzbank, Brian Lee, Petra Griffith, Minnie Ingersoll, Shamin Walsh, Gabe Greenbaum...wow, this list could go on forever...plus too many other exceptional humans to name. You know who you are! Explore our findings more deeply with our survey dashboard: https://bit.ly/3JsaLaB

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Announcing: $300M raised for The General Partnership's Fund II When we launched The General Partnership, we aimed to redefine venture capital partnership and closing this second fund is one more step toward that vision. Working with Daniel Portillo and our team of industry veterans, we've shown that true partnership goes beyond capital. Our approach is unique: We offer customized support for each company's needs - recruiting, product and engineering, GTM and Capital. We give founders the resources they need with capital and by deploying experienced recruiters, engineers, designers, and GTM leaders to work with leaders at each startup. We maintain alignment with founders through our Sweat Equity model. To our founders: Your trust validates our model. We're committed to driving your success through hands-on work, not just checks. To our LPs: Thank you for believing in our vision. Your support enables us to continue redefining VC and supporting the best as they build their companies. With Fund II, we're doubling down on supporting founders from formation to breakout stages and if you’re a builder, Let’s run it back! More here from Dan Primack and Axios https://lnkd.in/gcn9U9s5 And our note on TheGP II here: https://lnkd.in/gTJ8pyZu

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Big things on the horizon, we are motivated and blessed to be at the dawn of a new age for the internet. Read more about our journey below or listen to the podcast: https://lnkd.in/eJeNhvVa

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High Impact Biz, Ops & Investment Roles at Early Startups & VCs: • Opportunity to run a VC newsletter with over 55K subscribers • Analyst/Associate position with a former Softbank Vision Fund Partner • Director of Ops & Director of Biz Dev at a company that recently raised one of the largest seed rounds in history • Associate at a seed stage fund with investments in Deel, Jasper, Relativity Space & more • Head of Growth at a company founded by a best-selling author & a serial entrepreneur with a substantial exit • CEO of a company incubated by an entrepreneur with 1.5M+ followers • Strategic Finance Director at one of the fastest-growing consumer companies • Associate Investor at a fund hyper focused on people • Chief of Staff to an ex-Googler aiming to teach robots quickly & at low cost • Head of Marketing at a company reimagining K-12 education • Chief of Staff at a company focused on delivering hyper personal nutrition • Head of Demand Generation at a stealth cybersecurity startup • Top-tier free VC fellowships 💸 All companies are well-funded and backed by top-tier investors. You can find links to the roles above, plus many more, in the comments. +Some really useful resources for breaking into venture.

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I recently had an enlightening conversation with Alex Pattis, general partner of Riverside Ventures and author of the #1 VC syndicate newsletter, "Last Money In." Alex's journey from sales director to launching a syndicate that has completed over 300 deals is truly remarkable. He's deployed over $70 million in capital and built a network of thousands of LPs along the way. During our chat, Alex clarified the intricacies of syndicates, explaining how they differ from traditional venture funds and the unique value they bring to both founders and investors. Syndicates offer a flexible, deal-by-deal approach for LPs, allowing them to cherry-pick investments. Alex highlighted that having a tier-one VC co-investor can significantly boost LP interest in a syndicate deal. Transparency and managing expectations are crucial when working with founders, according to Alex. He also shared insights on how Special Purpose Vehicles (SPVs) can be a strategic tool for founders to consolidate smaller investors. These structures offer a way to simplify cap tables while still accessing a broader investor base. Alex offered his perspective on the current syndicate market, noting the increasing interest in growth-stage and pre-IPO deals due to shorter paths to liquidity. This trend reflects a shift in investor priorities and the evolving landscape of venture capital. Whether you're a founder looking to understand syndicates or an aspiring investor curious about this unique approach to venture capital, Alex's insights are invaluable. Check out Episode 48 of Fundraising Demystified to learn from Alex's experience and gain a deeper understanding of the syndicate ecosystem!

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Ross Haleliuk posted the fantastic article below. This is the world where I live day-to-day. At TechOperators, we invest mostly in early-stage cyber, but we do things a little differently, and we believe there are ways to invest successfully outside of pure Power Law math. The article argues that many security problems are too small for VC. I agree. I often try to convince bootstrapped founders not to raise venture because doing so can turn a successful, slow-growing bootstrapped company into a failed venture-backed company because, despite a large infusion of capital, it couldn't double every year. VC is not monolithic--not by stage, strategy, or style. Venture is often equated with "Tier 1 Venture". Ross argues that VC is not always great for early-stage cyber--and he is right. Bootstrapping AND VC work when incentives are aligned. Does it work for an early-stage VC with a <$200M fund to invest in several early companies at reasonable valuations, setting up the conditions for reasonable exits that pay off for both investors and founders? Yes. Does it work for $800M funds investing in seed stage at $100M+ valuations? Well, that depends! Power law says it does (for VC), but the unfortunate externality is that these rounds destroy companies and founder equity more often than not. There is a role for patient capital in this ecosystem to fuel successful companies that retain exit optionality as they scale--driving exit value for both founders and investors.

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Having a Cars and Capital event tomorrow in Southern California with Oren Klaff. If you want to join message me. https://lnkd.in/gDQ4D39u Oren Klaff Bridger Pennington #InvestorEvent #FamilyOffice #InvestmentOpportunity #CarlsbadEvent #PrivateEquity #WealthManagement #InvestmentConference #CapitalRaising #NetworkingEvent #IndustryLeaders #FinancialGrowth #InvestorsMeetup #WealthBuilding #BusinessGrowth #InvestmentForum

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🚨 Startup friends - If you bank with Evolve through one of their fintech partners (such as Mercury or Stripe Treasury), take some steps now to try to protect your identity. If you aren't sure if you bank with Evolve, you can confirm by looking at your wire details in your account. I recommend: 1. Setting up credit freezes with each of the major bureaus 2. Signing up for an identity protection and credit monitoring service, such as Lifelock (especially if you aren't able or willing to do #1) 3. Be hyper vigilant for phishing attacks 4. Change your passwords with the fintech partners (while allegedly credentials were not leaked, I say better safe than sorry) Lastly, consider diversifying your financial stack (happy to chat about this with folks, just DM me). From SVB last spring, to Synapse's collapse, to this - there's always something.

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