Matan Hazanov’s Post

Venture funding can be an incredible accelerator and good VC investors can add tremendous value, but also you need to understand how their business works and how you fit in if you really want to have a productive relationship. Learn why VCs are not always safe and how to still make sure you have a great relationship with them.

Attention Founders--VCs are not safe! Even if they want to be. Attention VCs--You are not safe! Even if you want to be. It just doesn't work that way. Most founders can't be truly honest with their VCs because they want more money from them and their friends. But all founders need a safe group where they can be fully, deeply honest about their challenges, frustrations, hopes, problems, dreams, and everything else. We need to relearn the role of VCs and where founders can get the rest of the support they really need. #startup #founder #scaleup

Founders often struggle with the question, "How much is my startup worth?" when it comes to raising capital. Let's call things the way they really are... nobody knows how much a Pre-Revenue (or even early revenue) company is actually worth. 🤓 Pro-formas = spreadsheet millionaire and nothing more besides something to help understand the path forward. DCFs don't work as there are no cash flows to model off of (good luck setting the right discount rate anyways) and any exit multiples are simply just a comparative estimate at what the company might become. Unless there's real traction, I personally believe a DCF or comp analysis is going to come up short. ❎ So... if you don't have traction yet and you need capital to get there (assuming debt isn't an option) what are you supposed to do? SAFEs provide a flexible solution to "Punt" the valuation discussion down the road until it's more appropriate. They provide the ability to protect investors via a SAFE CAP while incentivizing owners of a company to achieve the largest possible valuation when the time comes to do another equity raise. 💡 In short, a SAFE brings in cash today and any future equity event will trigger shares to be issued at a pre-determined valuation limit (Pre-money on the next round!). This means investors feel comfortable investing up to a certain valuation limit and companies gain access to capital without having to strongarm each other to get the best possible terms. Here's a snapshot of a quick SAFE (Simple Agreement for Future Equity) model. If you'd like the Excel file, please comment with your email address, and I'll be happy to share it with you. 👉 Check out my free newsletter for more insights: https://lnkd.in/dKZQKHg2 . #founder #investors #entrepreneurship #fundraising #funding #fundingopportunity #founderstories #founders #entrepreneurs #funds #venturecapital #vcfunding #angelinvesting #ycombinator #startups #startupjourney #SAFE

VCs are 9-5ers, unlike yourself. Why do this matter for your fundraise? Because they don’t have the same psychology as you. The fund isn’t their baby like your start-up it. They aren’t leading it - they don't make the decisions. Internally, they have KPIs that will define their: - Bonuses - Promotions - Salary increases So investors make decisions based on if they can reach their KPIs. Back in the day those KPIs were most likely around how many investments they did. And how much money they invested. Now its not. Now it's about making sure the portfolio don't fail. Otherwise they won't be able to raise another fund. So they are less “deal hungry." Less focused on making that new deal. More focused on helping their portfolio. Will they still invest? Of course... But only when they come across someone really special. When you are thinking about fundraising you have to play into this investor psychology. Understand it. Sit in their shoes. Believe me, it will unlock how you think about conducting your fundraise. -- P.S. Investor memos are great ways to see how investors think. Check out Bessemer memos or other fund's articles about why they invested. -- #entrepreneurship #startups #venturecapital

"1. Market Lots of decks I see talk about $250M-$600M exits as if this is a great accomplishment. Most VCs won't touch a company that can't hit AT LEAST $1B. They need to 3x their fund over 10 years. 90% of startups fail. So they need every investment to be a $1B+ moonshot." Wow, I was optimistic that 2022 had put an end to this approach. If you put aside the insanity otherwise known as 2021, there are fewer than 100 $1B exits each year (even in 2021, there were about 200 in the US) - even though several thousand venture backed companies are launched each year. https://lnkd.in/ecbcxW_3 More importantly, exit value is a pretty meaningless number, what matters is return on investment and IRR. Easiest way to invest in a Unicorn exit, invest $2B in my company 😀 If the $250M exit only requires $25-$35M in investment, that is a "great accomplishment". Does that create issues for venture funds with large pools of capital to deploy - yes. But that is not the founder's problem. #venturecapital

Warm intro's are preferred by 69% of investors (Source: trust me bro) But really. Investors do prefer when someone they know pitches startups to them, rather than the startup founders themselves. "But then how do I get in touch with investors?" - you might ask. ➡️ Through A1 Advisory A1 Advisory has a warm network of VCs worldwide, which we can introduce you to (if we see you as a good fit for them) If you don't appear to us as funding-ready - don't fret! We can help you become funding-ready, through advisory delivered to you by our expert advisors. "How to get started?" - you might be thinking. ➡️ Fill out this simple form: https://lnkd.in/dW2C3gXg A team member will reach out to you within the next couple of days! #investment #funding #vc #investor #startup .. 👉🏻👈🏻 I would really really appreciate it if you.. 1. Liked this post 2. Shared it with your network 3. Followed me If you do all 3, you're going to become a millionaire in 2024 💎 (i hope)

Pointing the finger at VCs doesn’t help. They also have a job to do. VCs also have to raise money. When you’re an early founder trying to get VC attention it can feel like “the man” keeping you down. I’ve been there. It isn’t reality. VCs are not maliciously keeping people out. They are faced with a problem: source deals and capital but decide how to determine signal from noise. It is important to realize that VCs also struggle to raise capital from LPs. They are trying to do the exact same thing as the companies in which they invest. They have to show returns. I’ve played senior roles in building 1 unicorn and another that is really close to unicorn status. The harsh reality is that there’s a lot to learn. While I’d like to sympathize with my younger self who felt excluded from the VC party, I can’t. The reality is that I’d also prefer to give my money - as a VC - to me-now vs me-15-yrs-ago. Number 1 piece of advice for founders having a hard time raising: jump on an already fast moving rocket ship. Or, search for luck by joining a future unicorn as a very early employee - like I was able to. #startup #startupjourney #entrepreneurship #venturecapital

New Year Resolutions from the sky! When you are up there in the sky - with (probably) a 10% chance of death - resolutions change. From up the sky - the world looks like tiny dots - resolutions change. After this magnificent experience, its not longer sticking to list and engage in jargon. > Its about making bold guesses and trying to fulfil them > Its about making your place in these dots - and helping as many people achieve theirs too! > Its about valuing life and making it count on the grander scale of events! I am a DM away to help you realise your goals. #growth #startup #funds #venture #capital #finance

Investors back founders not companies. People invest into people. Yet, (Biotech) founders don't know how to show they are investable. And in the pursuit of checklist ticking "what investors look for", they fail at the most important one: How to make investor's want to fund YOU as a founder. Interesting post by Gian Seehra who helps founders get funded.

If an advisor comes along and says they can work as a NED in return for shares, then never give all the agreed equity upfront. Let's say they want 2.5%, and you believe their experience, skills and contacts are worth that amount, they should not request it all at the start, and it's a red flag if they do. An amazing founder I supported recently negotiated a deal with a NED that they really wanted to work with who can bring some incredible value. They've agreed to a vesting schedule over a couple of years. So the NED gets 1% immediately, 1% in 12 months, and 0.5% in 24 months. The actual numbers and times are flexible, although it should definitely be in a timeframe of at least two years, but commonly up to four years. The upfront element may be much smaller if any at all - the 1% in the above example is possibly quite generous. Often, there would be a one-year cliff, meaning the NED must stay for at least one year before getting the first tranche of equity. The vesting can be done monthly or quarterly. The point is to keep the NED aligned with the longer term. You don't want them coming on board, giving a bit of advice for a few weeks and then getting bored and disappearing. Because if that happens, you have given up a slice of your business, and apart from anything, future investors will not look upon it very favourably - in fact, it could be a huge blocker. 🚀 𝐅𝐨𝐮𝐧𝐝𝐞𝐫𝐬: 𝐜𝐨𝐧𝐧𝐞𝐜𝐭+𝐃𝐌 𝐟𝐨𝐫 𝐡𝐞𝐥𝐩 𝐫𝐚𝐢𝐬𝐢𝐧𝐠 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 🚀 𝐀𝐧𝐠𝐞𝐥/𝐇𝐍𝐖𝐬: 𝐜𝐨𝐧𝐧𝐞𝐜𝐭+𝐃𝐌 𝐟𝐨𝐫 𝐡𝐚𝐧𝐝-𝐩𝐢𝐜𝐤𝐞𝐝 𝐝𝐞𝐚𝐥 𝐟𝐥𝐨𝐰 ---------------------------- 😊 𝐌𝐲 𝐧𝐚𝐦𝐞 𝐢𝐬 𝐒𝐭𝐞𝐯𝐞: 𝐟𝐨𝐮𝐧𝐝𝐞𝐫, 𝒍2𝒐 𝐝𝐞𝐚𝐥 𝐟𝐥𝐨𝐰 𝐩𝐥𝐚𝐭𝐟𝐨𝐫𝐦 📌 Daily posts to support angels and early-stage founders 📌 Seasoned entrepreneur, building tech startups since 1996 #nonexecutivedirector #advisors #investing #leanstartups #startupstrategies #founders