Kevin Dowd’s Post

Unlocking the Future with SAFEs: Fueling Startup Dreams! 🚀 How can early-stage startups secure the funds to bring their vision to life? Enter SAFE, the catalyst of collaboration between startups and visionary investors. 🤝 Imagine it as a "promise of prosperity." An investor injects capital into the startup's voyage, and in return, a unique door opens – the door to future ownership. 🎉 Here's where the magic happens: Instead of putting a price tag on the startup's brilliance immediately, both parties agree to await a pivotal moment. This moment might arrive when the startup secures the backing of major players or achieves a significant valuation milestone. Why is this so crucial? At the startup's inception, nailing down its exact value is like capturing lightning in a bottle. The SAFE sweeps away this complexity, allowing for a dynamic, future-oriented partnership. A SAFE isn't just an investment; it's a pact that whispers, "I stand with your vision now, and I'm ready to embrace the journey to success alongside you." As startups quest to reshape industries, SAFEs become their compass, guiding them through the early stages of growth. They provide flexibility, empowerment, and a seamless way to secure vital resources. #startup #invest #SAFE https://lnkd.in/d7Sd4gXB

Check out this piece on how the clash between private valuations and public market realities has put startups and VCs in a tricky spot. The author uses Schrödinger’s paradox to explain the scenario - where a startup's value is both high and low until market reality kicks in. If you're into #StartupValuation or #VCFunding, it's a worthwhile read:

My takeaways from the "Investing Redefined: Beyond Unicorns and Zebras" panel that set the record straight on what the VCs are after in startups. And it's not just unicorns. The discussion was full of punchy insights, delivered by Jone Vaituleviciute of FIRSTPICK, Michael Bjørnlund of Rockstart, Petar Tsachev of LAUNCHub Ventures and Arvydas Bloze of Practica Capital: "Instead of unicorns, we look for cockroaches," stating the importance of survival. There is great value in startups that thrive regardless of political, geographical and economic conditions. As founders, you will be evaluated on how you got together, why are you doing this together and if your past experiences clash in just the right way to make magic happen. You will be evaluated on your maturity to lead, not just build. "When you're in a boat, you don't think who's rowing. You all are." VCs are not there to save the world, your growth is also possible without them. That being said, raise only and exactly the amount you actually need, not more, not less. Profitability before raising capital is not a priority for VCs, outcome planning and projecting is. That's why it's crucial for startups to be intentional and always aware of what the raised capital is for. Making startups is a competitive and completely different adventure than it was before. Data shows that 10 years ago startups competed with five companies, now they compete on average with 64. Can someone enlighten me on what a zebra startup is? 😂

Reasons for why startups fail vary, but there are a few common threads that emerge. We highlight 260 of the most expensive startup flameouts in history. https://cbi.team/3pWjDPz

Ever wonder why even the most promising startups ultimately crash and burn? 🤔💥 Check out the latest report from CB Insights where they analyzed 278 of the biggest, costliest startup failures of all time. 🔍 Why Did They Fail? Financial Struggles  Product-Market Fit Challenges  Tough Competition  Running Out of Money The report also includes extreme cases where failure was linked to fraud, lawsuits, and even criminal charges involving a startup founder. 🕵️♂️💼 #startups #startupfunding #startupsuccess

The article examines lessons for D2C brands from the struggles of 5 major companies - Casper, Peloton, Dollar Shave Club, Brandless, and Away. Casper shows the importance of profitability before overspending on marketing. With mattresses only purchased occasionally, it couldn't sustain heavy customer acquisition costs. Peloton misjudged pandemic demand as permanent, overinvesting in production and inventory. When demand dropped post-vaccines, it faced excess supply and losses. Dollar Shave Club lost its budget-friendly appeal after acquisition, launching premium products and multiple tiers. It struggled to boost revenue and retain identity. Brandless' model of $3 products was unsustainable. Its fixed price sacrificed margins while quality suffered. It quickly burned through cash and shut down. Away faced allegations of a toxic culture that contradicted its branding. combined with COVID's hit to travel, this led to executive turnover and sales drops. Key takeaways are to ensure profitability for occasional purchases, accurately forecast demand fluctuations, stay true to your brand identity and value proposition when expanding, focus on sustainable unit economics, and walk the talk on company culture. With discipline, D2C brands can better weather challenges.

Reasons for why startups fail vary, but there are a few common threads that emerge. We highlight 278 of the most expensive startup flameouts in history. https://cbi.team/3MblSX0

There is a myth of the "high school dropout" success in startups. Yet data suggests that venture backed businesses are much more likely to succeed if the founder has built something of scale before. Tommy Stadlen raises this with Freya Pratty at Sifted, saying: “We think there's a bit of ageism in tech and venture, where the college dropout is lionised but the 45-year-old experienced entrepreneur is not.” At Giant, we have already backed second time founders like: - Edward Shenderovich, founded Knotel, building Synonym - Hayden Wood, founded Bulb Energy, building Beams - Philip Krim & Jeff Chapin, founded Casper, building Haven Energy - Amit Gudka, founded Bulb Energy, building Field - Alison Greenberg, founded Dioptra, building Ruth Health (YC S21) - David Goldhill, Expedia board member and serial founder, building Sesame - Michael Acton Smith, founder of Mind Candy, building Calm + more still in stealth. Read more on Tommy Stadlen's perspective here: 🔗 https://lnkd.in/ea8R_TAT

Did you know that only 10% of pre-seed advisors receive 1% or more equity? A common question I get from early-stage founders relates to how much equity advisors should receive, given equity is often the primary way they can incentivise/remunerate them. Carta's recently released report highlights that the median advisor equity for a pre-seed stage company is 0.25% and a seed company 0.10%. No doubt these figures have many early stage founders scratching their head as to why some advisors are requesting 3-5% of equity. Like any good equity plan, there should be further incentives based on defined performance metrics, plus customary vesting periods and good/bad leaver provisions. Source: Peter Walker, Carta, 'State of Startup Compensation H2 2023: Early Startup Equity' #venturecapital #startup #earlystagestartups

The past two years have certainly been a wild ride for startup founders. Funding has been scarce, valuations have dipped, and there has been relentless economic turbulence. André Thiollier and I coauthored a new Foley Ignite blog about what's incoming for startup M&A. Here are some key takeaways: ▪️Carta data shows that Q3 2023 witnessed the highest number of startup shutdowns so far, primarily due to a lack of funding. ▪️CB Insights also reports that global startup funding sunk by 34% from 2021 to 2022 and still hasn't fully recovered in 2023. ▪️Startup failures can be attributed to a myriad of issues, including flawed business models, regulatory hurdles, and fierce competition. So, in this ecosystem, what's the survival strategy for the startups left standing? ▪️ Operating efficiently is crucial. Make sure to scrutinize every cost, assess team roles, and be prepared to adapt to challenges. ▪️ Consider multi-year customer deals for upfront cash and some potential debt to tide over rough waters. ▪️ Explore the possibility of mergers with or acquisitions of other companies. Conditions are ripe for the M&A boom we've all been waiting on, and startups that have proved their resilience are prime targets. The takeaway? Founders who are able to weather this storm and demonstrate their durability are positioning themselves for future success, and simultaneously attracting the attention of acquirers. Check out our full blog post here - https://lnkd.in/g25xwWZn #startup  #entrepreneur #venturecapital #mergersandacquisitions #techstartup #techlaw #siliconvalley Foley & Lardner LLP Gaurav Bhasin Deepak Chugh Brandee Diamond Natasha Allen Nicole Hatcher