Matt Willardson’s Post

How much equity should I give away??? 👀 Giving away too much equity too quickly, WILL DAMAGE your future potential!!! 🥵 If you get to Series A/B and you only have 20% of equity remaining, almost all VCs will think you don't have enough incentive to get the company to where it needs to be. The objective is for the founding team to drop below 50% equity after SeriesB/C 🚀 Each round you should dilute 10-20% (maximum you should go up to is 25%). .... We get Founders back-to-back VC deal-flow (Pre-Seed to SeriesB). https://www.easyintro.vc/

Why do so many VCs say "come back to us when you have a lead?" Is it because they lack "guts" or "conviction" or want to piggyback on someone's work and experience? Sometimes, yes, these are the reasons. But much, much more likely the reason is the mismatch of check size and runway (or round size). E.g., let's say a company has $50k monthly burn, and they want to raise $1M to have 20 months of runway (simplification) and enough time to get to the next milestone to raise at the higher valuation. And let's say a VC really likes the company and is willing to invest. But their check is $100k (based on the fund size, they can't do more). Should they sign and wire? If they do, the company will have 2 months of runway, and if no one else invests in these two months, the company will go bankrupt and it will be a really quick write-off for that VC. So that VC has to wait until you have at least half of the round ready before they sign and wire, to make sure the company has a chance to get to the next milestone. I also was in a situation of investing early with a small check that didn't give enough runway. Thankfully, thanks to our LPs, we were able to increase the check size over time, so now we can move in first into small rounds (when a company has low burn) - $500-700k rounds. However, if a company needs to raise $2M or $3M, our check is still too small to go first. It's useful for founders to understand how VCs operate.

What is reverse vesting and why does it matter so much for start-ups? 🧐 Reverse vesting is an essential tool in early-stage investing and I personally won't invest in a start-up without it. Read along and find out more about the ins and outs of reverse vesting 😊 I'll be doing a series of "mini-guides" for Founders and Business Angels alike throughout the year - feel free to let me know in the comments if there are any topics you would like me to cover. I'm also very eager to get any insights/comments you might have on reverse vesting 🤓 #payitforward #reversevesting

Smart insights from Ihar Mahaniok at Geek Ventures. Often, investors ask for a lead because of lack of conviction or a way to kick the can and buy some time. They aren't able to, or don't want to do the legwork to get to conviction on their own (it takes a lot of work!) but if they can feel confident in another firm's diligence and conviction (they have to have a really good and clear reputation) then they would be willing to co-invest. But also the runway thing Ihar details below is real. I have seen some investors overcome that by making a commitment but part of the terms of their wiring is for them to hit a certain milestone to funding in order to mitigate that risk.

Why are VCs wasting founders time? I'm hearing a lot of stories of VCs and other investors wasting a lot of time doing due diligence on founders they have no intention of investing in. Here's what happens: The founder reaches out to the VC who takes the meeting. They then spend several months reviewing documents, meeting the team, etc. After a while, they declare that they won't be investing because the founder is too early stage for them. There are a ton of good reasons why a fund may decide that the founder isn't a good fit for them. But it should be obvious from within 30 secs of looking at the deck whether they are at the right stage. So why take up so much of the founder's time and effort? I know one founder who spent 9 months talking to a VC. Last week they turned round and said actually the business is too early stage. The whole process was a huge waste of time and effort. A founder's time is their most precious resource and I hate seeing it get squandered like this. What's going on?

I think one day angel investing will be accessible from your standard brokerage account. The notion that angel investing is only meant for ultra wealthy people is long gone. It may be true in some cases, but the average angel investor today doesn’t fit that mold. They’re investing $1k-$5k checks into startups they love and care about. And this level of democratization will continue. I believe it’ll be as easy as scrolling through options and a few clicks from whichever account you use to manage your public stocks.

I love how VC fund executives for the last couple of years have been on full ‘gyaan-mode’ on what it takes to build a business (most of them with no building experience). And more importantly, have started talking about profits and right valuations. As most Founders, I also struggle making sense of it. Weren’t these the same folks, who invested tons of capital into companies with no revenues or no Product Market Fit (PMF). Even when the companies needed no capital (or were not raising) at tough to justify valuations (sometimes at 2-3x of last valuation barely weeks or months after the previous round)! Only advice to Founders - keep building. Periods of easy money and tough money will come and go. You are NOT just building for the funds that invested. You are building, more importantly, for your customers and your teams (and for yourselves). Lack of easy capital is the best time to build anyway. Advice to self as we wear the VC hat now. Do better, and don’t get carried away (or be overly shy) in backing the right Founders and businesses!

We've been building a powerful "Founders love Founders" machine over here at Massive since the beginning. The capital we invest comes from a great group of builders and operators across a number of domains. David Mandell and I are founders ourselves, (yes we walk the talk and put our own money into every investment), so this has always been in our DNA and and also part of how we deliver outsized value to our portfolio. I know I have my bias here but I'm not optimistic that big name firms raising from founders out of desperation due to Inst. LP pull back are going to get this right, or continue to lean into this when the big LPs come back and want to get into these funds. Founders working with founders to build great companies over time requires more innovation and adaptation than just tapping into the capital in a tough market. That said, nice to see people talking about this and we know this is where the future of venture is going. Someday soon these mega funds will suffer their own version of innovators' dilemma and be out maneuvered...

Such a simple practice. Yet few founders do it. Back at Eleven <20% of founders we talked to kept us in the loop in the months to come. If you are: - not raising at all at the moment - or warming up for a round - or actively raising Send frequent updates to investors. Even the ones who said NO. Keep it simple: - Write one email - Make it short and friendly - Include your monthly highlights - Leave several personalized fields - Send it to all investors you keep updated Rinse.  Repeat. I know unicorn founders who update dozens of VCs. They do this every month. Become top 10% in relationship building. It will make you stand out. P.S. Founders, do you do this? Does it work? Share with me in the comments. ⬇️

Why is Summer a Bad Time to Fundraise? Our friends at Panache Ventures gave some insights that we have summarized here for your convenience. Conventional wisdom suggests that July and August are tough for fundraising due to vacations. While true to some extent, VCs are still active. The key lies in understanding the nuances of VC operations during this time: - Meetings take longer to schedule and complete. - Diligence processes are extended due to team vacations. - Building momentum for competitive dynamics becomes more challenging. Why does this matter? Because you’re trying to build momentum. Despite these hurdles, many funds continue to close deals in summer. Preparation is key: refine your pitch, build relationships, and focus on growth metrics. Read More Here: https://lnkd.in/gH3yh5qm #StartupLife #VentureCapital #SummerFundraising #Entrepreneurship