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Challenges for raising Seed Money for early stage Startup: Raising seed money for an early-stage startup in 2024 comes with several challenges, some of which are influenced by broader market trends, evolving investor behavior, and economic conditions. Here are key challenges founders may face: 1. Tighter Economic Conditions and Market Uncertainty 2. Increased Investor Scrutiny 3. Overcrowded Market 4. Shift in Investor Focus 5. Limited Access to Network 6. Lack of Strong Metrics 7. Competing with Non-Dilutive Funding Sources 8. Valuation Pressure 9. Investor Expectations for Quick Scaling 10. Impact of Emerging Technologies. 11. Geopolitical Uncertainty 12. Dilution and Equity Control 13. Shifting Regulatory Landscape Key Takeaways for Founders: 1. Focus on traction and metrics: Even at the seed stage, demonstrating customer demand or early product success is crucial. 2. Differentiate clearly: Articulate why your startup stands out in a crowded market. 3. Network strategically: Build relationships with potential investors early and leverage introductions. 4. Prepare for investor diligence: Be ready to answer tough questions about financial projections, scalability, and market fit. Adaptability and a strong narrative will help founders navigate these challenges in the competitive 2024 funding landscape.

We need new models to leverage venture capital in our communities. In 2023, $170B in capital was deployed across 13,600 deals in every state in the U.S. While these are great numbers, it represents a 30% drop from 2022. The National Venture Capital Association (NVCA) 2024 Playbook suggests that the likelihood of returning to status quo in 2024 is unlikely. We know that some of this, according to @PitchBook’s newest report, is the result of geopolitical unrest, an upcoming presidential election and high interest rates. We also know that none of those things are short term (well, maybe the election is short term, but is it really)? All of this is to say that it is time for economic developers to think proactively about venture capital- especially in flyover and smaller regions where it is already difficult to obtain equity investment. We need to deploy programs that promote equitable access to VC capital for women and people of color and more. Those of us on the ground who do this good work across the table from innovators, need some models to choose from, metrics to look at and proven networks to support capital access and support services over time. Multiple, emerging programs from the private sector deserve our attention. Check out the current programs run by gener8tor in Reno, Nevada , Builders + Backers in Tulsa, Oklahoma and Plug and Play Tech Center in Cleveland, Ohio. These companies are delivering economic impact in hundreds of cities across the country and overseas- and they are doing it in tandem with EDOs. These partnerships may hold the key to serving the startup community in many of our cities and smaller communities, especially as the VC investment space becomes more volatile. If you want to learn more and ask some questions (without sitting through a demo, yay!) join us this week on Wednesday, June 26 at 12:00 Noon (EST) for IEDC’s new webinar, Leveraging Venture Capital as Part of an Economic Development Strategy. I’m moderating this session with Donna Harris the founder of Builders and Backers, Troy Vosseller, the co-founder at Gener8tor, and Osama Al-Saleh, Head of Partnerships at Plug and Play. If you are looking for VC strategies for your community, this will be a terrific discussion. Join me! https://lnkd.in/gzBdqt42 #IEDC #entreprenuership #venturecapital #accelerators #OUEDI #economicdevelopment

This will be a great conversation. I caution the “fly over and smaller communities” to ensure the foundational work of building their region’s startup culture has been done first. Too often, economic developers rally investors only to find the local deal flow isn’t there. The result? People who were enticed to engage invest in syndicated deals outside of their region though they prefer to invest locally. Once EDs realize the need and begin to do the culture building work, the investors’ venture allotments are all dried up.

Reason for shutting down: Unable to achieve ‘venture-scale’ growth. Spreadsheet dot com has cited this on its official website. Well, this is not uncommon when you raise venture capital. 👉 Startups often project really high revenue growth for showing higher valuations to their investors. This has a downside. Over promise, under delivery. You may show higher valuations initially, but what can go wrong. Despite doing well, you start failing short of targets you set. It will negatively impact the ‘valuation’ and your ‘credibility’. In the long run, investors won’t invest on lower valuations. You will fail to raise more funds. 👉 Result: Shutting down due to lack of venture scale growth. Raise at right valuation, authentically and at the right time.

Quorus CEO John Hill, CFA®, sat down with Fintech Sandbox to discuss the future of custom investing, where we see opportunities, and how Quorus partners with asset managers and advisors to build smarter portfolios for clients. To see more of John and what we are building at Quorus, register for Demo Day!

How does a early-stage startup capture VC interest in a down market? Startup founders need to adapt their tactics for this market where the economic forecast is clouded by rising interest rates and market declines. Statistics have shown that fundraising is down as VCs have shifted their funds to current portfolio companies rather than seek new opportunities. Founders need to emphasize key metrics that showcase market opportunity, traction, and growth potential. 🔥 Burn Rate and Runaway: Burn rate refers to the pace at which your cash reserves are depleting. In a down market, burn rate is essential because running out of cash is the reason most companies fail. Burn rate and runaway illustrate the efficiency of your business, your fundraising timelines, and your company's capital needs. 💸 Total Addressable Market: TAM is an indicator of product-market fit and market opportunity. TAM is the calculation of the maximum size of the market demand for your product or service. It speaks to the scope and urgency of the problem you are solving. 💁Customer acquisition and customer acquisition cost: Healthy user acquisition numbers indicate that your startup is adding new customers consistently. CAC refers to the average cost of acquiring a customer and typically includes any costs associated with advertising, sales, marketing, and onboarding. 📈 Financial projections: Investors want to see a financial model that shows you have the flexibility to save capital when necessary and ramp up spending when the economic environment allows. Your financial projections should factor in fixed costs and variable costs. Read more about what investors are looking for in a down market over at Mercury https://lnkd.in/gwYUzeQB

Startup funding shows signs of recovery, with valuations rising and $55.6 billion in deal value in Q2 2024 — the highest in eight quarters. But VC headcounts are shrinking, with many leaving the industry. Is it because of AI? Our Christian Leybold doesn't think so, and spoke about it with PitchBook: “Ultimately, our business is about relationships. The best people in VC are the ones who can build trust very fast with entrepreneurs,” he said. “You will get a deal by building trust with an entrepreneur faster than other people do. And for that, you’ll always need people—that is where the value is.” Full article: https://lnkd.in/eJw4ZAn5 (Side note: With this mindset, Headline has never hired as much as in the past months!)

WealthTech seems to be taking the charge in the Fintech industry, with PitchBook’s forecast of the market to grow to over $2 trillion by 2027. Here’s the new light bearer in this trend:👇🏻 WealthTech startups have a long runway for growth, with a large potential market to mine. As passive investing grows in popularity, advisory firms need engaging digital experiences to convey their value (and justify their total expense ratios). With over $5bn in AUM (Asset Under Management), Farther, a technology-centric financial advisory firm, has successfully closed a $72m Series C funding round. This funding came from CapitalG, #Alphabet’s independent growth fund, combined with Viewpoint Ventures, pushing the company’s post-money valuation to $542m. What’s so different about Farther that helped it gain A. Funds, lots of funds 💰 B. Publicity and Applause 👏🏻 C. 5x year-over-year growth 📈 Let’s decode this success: The USP of this WealthTech company was making life, and work easier for the wealth advisors. Farther credits its proprietary, custom-built technology for driving operational efficiencies, boosting advisor productivity, and accelerating asset growth. This company focused more on making client - advisor communication more streamlined, taking away the administrative burdens, by leveraging tech to build a unique platform for Advisors. The company’s technology is designed to empower advisors to spend a whooping 90% of their time engaging with clients and prospecting, which is four times the industry average. Of course this pillar alone could carry the credit of funding and applause Farther received. Additionally, it offers a flexible working environment without mandatory minimums or non-compete agreements, allowing advisors to grow their businesses in line with personal goals. When most Fintech investment companies were looking for potential to transform the wealth management industry, CapitalG took the award by funding this wealthtech gem. In total, Farther has now raised more than $118m, with previous investors including Bessemer Venture Partners, Context Ventures, Cota Capital, Khosla Ventures, Lightspeed Venture Partners, MassMutual Ventures, and Moneta Ventures. What are your thoughts on the evolution of #wealthtech, shifting from M&A to such innovations? #WealthTech #Fintech #startups #InvestmentManagement #FinancialAdvisory #TechForAdvisors #VentureCapital #SeriesCFunding #StartupSuccess #ClientEngagement #Innovation #GrowthStrategy #AssetManagement #FinancialTechnology #FutureOfFinance

🚀 Exploring Alternative Funding Sources for Founders in 2024 🚀 In the fast-paced world of startups, securing funding is often a make-or-break moment. Let's explore alternative funding sources beyond the traditional avenues. Here are some options to consider: 1️⃣ Crowdfunding Platforms: Rally support from the crowd! Platforms like Kickstarter and Indiegogo provide access to capital while validating your idea in the market. 2️⃣ Angel Investors and Syndicates: Tap into the expertise and networks of angel investors and syndicates. Platforms like AngelList simplify the process of connecting with these investors. 3️⃣ Venture Debt: Fuel expansion without equity dilution. Venture debt offers financing flexibility for growth initiatives. 4️⃣ Revenue-Based Financing (RBF): Align incentives with investors through RBF. Repay investors with a percentage of revenue until reaching a predetermined cap. 5️⃣ Corporate Venture Capital (CVC): Partner with strategic investors for more than just funding. CVC arms offer resources, distribution channels, and market insights. 6️⃣ Government Grants and Subsidies: Explore non-dilutive funding options. Governmental grants and subsidies support innovation and economic development. And the list doesn't end here! There are many more alternative funding sources waiting to be explored. By casting a wide net and embracing innovation, founders can navigate the funding landscape with confidence and resilience. #StartupFunding #Entrepreneurship #Innovation #2024Trends #Founders #AlternativeFunding

I recently sat down with Fintech Sandbox to discuss the future of custom investing, where we see opportunity, and how Quorus partners with asset managers and advisors to build smarter portfolios for clients. To see more of what we are building, register for Demo Day!