Daniel Halstead

On 22nd Feb, Dan Siroker and I disagreed about funding round dilution on Twitter. In this episode we hash it out 🥊 ❌ Fundraising rules that are BS 🗣️ What VC’s really mean & want 💸 Getting Peter Fenton to invest for less than 10% My key lessons from winning this fight 👇 1. The Importance of Focus I worked on thousands of things at my first company & thought everything was important. In hindsight, there were only 3 or 4 things that made a difference. Founders need to distinguish between which tasks are truly important & focus on them. 2. The Big Secret When An Investor Asks How Much Are You Raising? They are actually asking how much you think you’re worth. Instead of giving a number, say you’re selling a certain percentage & letting the market decide the valuation. This annoys investors because they don’t get what they want. 3. Elad Gil on When and How to Pivot  The things that work tend to work really fast. Sticking it out & being perseverant doesn’t always work. You have to see some glimmer of hope in the early days. 4. Contrarian View on Selling Stock as Employees Founders should let employees sell their stock at any point. I’ve let my employees sell up to 25% when we were oversubscribed in our series A. My theory is more liquidity = more retention. 5. When They Bring up Title It Is a Bad Sign It shows you where their values are. The best people I’ve hired never brought up titles during the interview. They care about the problem & the company. 6. Why Always Be Raising is Total BS You need to have an on & off switch on fundraising. I have all my investor meetings in a week every two quarters. This removes any distractions when I’m building the company. 7. The Best Question Peter Fenton Asks Founders "What will excite you about being at this business in five years?" Great founders need to be perseverant. They have to stay in love with the business in 5, 10, or 20 years. (links in comments) #founder #funding #business #investing #vc #venturecapital #entrepreneur #startup #seed #funding #fundraising

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🚀 For founders eyeing Series A funding... Here’s a snapshot of how 20 sectors stack up in valuations and round sizes. This is based on the analysis of 900 Series A deals over the past year (sadly US data only). Key Takeaways The median raise sits at $10M with a pre-money valuation of ~$41M. Top Performers 🌱 Renewables: Leading the charge with higher valuations and substantial cash infusions. 🤖 AI: Dominates across all sectors adding badly needed momentum to the market. 🔐 Cybersecurity: Strong valuations and raise sizes indicative of robust investor confidence. 💾 Hardware & 💸 Fintech: Both sectors are performing above the median, showing solid growth potential. Sectors Falling Behind 🏠 Personal/Household & 🍽️ Food/Beverage: These sectors trail significantly in valuations. 💊 Medical Devices: Struggle in valuation dynamics compared to Biotech and Healthtech. Special thanks to Peter Walker I wonder how these sectors would stack up with European data? Does anyone have any insights? 👍 Feel free to like & share Also 👀 Check us out - Gary Taylor & Skale 👨‍🔬 BUILD YOUR TEAM – WITH OUR TEAM 👩‍🔬 🗨 Book a https://lnkd.in/eJg-khyZ #funding #vc #growth #scalling

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Tradfi fiat lending against crypto is finally here Both for retail and institutions 2-5% interest. It’s a game changer No need to sell crypto. No need to pay capital gains As long as you don’t over leverage it’s practically free money Expect growing calls for taxes on unrealised crypto gains.. especially in Europe. But for now there is a unique window to compound wealth. It could be the slow trigger for the next bull run as new demand faces a wall of hodlers

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xAI secures $6 Billion funding. xAI is focused on building artificial intelligence to accelerate human scientific discovery. Their mission is to advance our collective understanding of the universe, with their first product being Grok, a conversational AI. xAI's recent $6 billion funding, led by Andreessen Horowitz and Sequoia Capital, significantly boosts its valuation to $18-24 billion. This substantial investment indicates strong investor confidence in xAI's potential for growth and innovation in artificial intelligence. It also highlights the trend of leading VCs preferring substantial stakes in promising start-ups, aiming for around 20% per funding round. #TechNews #xAI #BusinessFunding

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Which UK #Fintechs are now profitable? £1bn OF PROFIT GENERATED BY UK FINTECHS The startup scene has been brutal the past couple of years. Redundancies are at an all time high, recruitment at an all time low, and startups are going bust or raising down rounds at an unprecedented level. BUT, some startups have shown incredible resilience and have achieved profitability, and deserve to be celebrated. Here are the 8 profitable UK Fintechs: Revolut: Founded in 2015, Revolut quickly became one of the UK’s top startups, are have recently confirmed a $45bn valuation. Their 2023 results were INSANE: 🚀 $2bn of revenue 🚀 $545m profit Monzo Bank: #Monzo released their latest annual results a few months ago and they are INSANE: 🚀 £15.4m of profit (vs £116m loss in 2023) 🚀 £880m of revenue (+147% YoY) 🚀 9.3 million users (+26% YoY) Allica Bank: #Allica is the UK’s only digitally-native challenger bank committed to providing a full-service banking relationship to established SMEs and entrepreneurs, offering them lending, savings and payments. It launched in 2019 and became one of the fastest UK fintechs to achieve profitability: 🚀 Revenue increased 141% to £191 million 🚀 Pre-tax profit of £16.1 million Starling Bank: Founded in 2014 the fintech first achieved profitability in 2022. Their latest results show them operating an an incredible 37% profit margin: 🚀£453m of revenue 🚀£169m of net income Zopa Bank Zopa began as the world's first peer-to-peer lending company in 2005. It has since expanded to broader fintech products and gained a full banking licence in 2020. It became a unicorn in 2021 when it raised £220m at a valuation of $1.03bn. Since then it has gone from loss-making to very profitable: 🚀 £222m of revenue (+44% YoY) 🚀 £16m of profit (vs £24m loss in 2022) ClearBank #ClearBank is a technology-enabled clearing bank that enables its clients to offer real-time payment and innovative banking services to their customers.
They released their FY2023 results which showed them operating on a 20% profit margin: 🚀 £111m total income (+91% YoY) 🚀 £18m of profit (+109% YoY) 🚀 £6.1bn in deposits (+103% YoY) Clear Junction Founded in 2016 by Dima Kats Kits, Clear Junction is a global leader in cross-border payments for regulated financial institutions. It's the only bootstrapped company on this list, and is very profitable: 🚀 £19m of Revenue 🚀 £8m of Net Profit OakNorth Oaknorth became a unicorn 2 years after being founded and their latest accounts demonstrate why they deserved it: 🚀 £466m revenue (+73% YoY) 🚀 £187m of profit before tax (+24% YoY) 🚀 30% net profit margin. Other fintechs, such as Freetrade, Moneybox, #Chip, Atom bank and Tandem Bank, have also all achieved profitability recently, but either on shorter time frames or after tax! #isapexchange #isapwallet www.isap.exchange iSAP Exchange FZCO iSAP Group Investments ltd Tino Herold

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Founders: stop comparing yourself to other founders. If someone has higher ARR than you - they may have taken more VC funding than you (and be handcuffed as a result). If someone has to turn down business because they’re so busy - they may not be as savvy as you about hiring for their team. If someone charges higher fees than you - well, you could increase your fees ;-) But you also could have a totally different business model, pricing strategy, and margins. You don’t know their whole business. They don’t know yours. If you’re not happy with your results, figure out what you need to change. But I guarantee you won’t find it doom scrolling your competitor’s posts.

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Raising on Post-Money SAFEs? Don't make these common mistakes... 1. DON'T Exclude angels from MFN (Most Favored Nation) Even if you didn't use a MFN clause in your SAFE, it's bad practice to exclude a previous investor from the generally best terms of your current round. Those discounts or val cap adjustments might mean a lot financially, but you know what matters more? Having strong investors that will invest in you time and time again. 2. DON'T use a value cap Sure, a value cap might make sense—but then it's essentially a valuation right then and there. As a founder, you're incentivized to raise the next round above the value cap, but you've essentially lost control and flexibility. Your investors might even want you below the value cap to get a higher %. Sure, it's a little less paperwork to do a SAFE than a priced round, but a valuation cap is essentially figuring out a priced round, which is next to impossible to do pre-seed. So that leaves a discount rate. It's easier all around—and doesn't box you into games of over diluting yourself. Discounts reward investors for taking a risk AND keep you in maximum control. "Normal" discounts are a bell-curve between 10 and 30%, with 20% being most common. 3. DON'T treat a Discount as the "Discount Rate" in the SAFE. Speaking of discounts—it's surprising how many people get this wrong—even the experts in SAFEs! If you're filling out a SAFE with a Discount of 20%, don't put 20% in your DISCOUNT RATE. Your DISCOUNT RATE is 80% (100-20%). It's a common mistake so your investors will probably be OK with resigning paperwork—but you've legally just given an 80% discount on your next financing round. Your legal team will catch this when it comes time, but oooo boy that's an awkward conversation. What else are you running into when raising on SAFEs?

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Don’t raise VC funding 🔴 . 10 reasons why: 🔻 1. It takes about 6 months to complete the fundraising. It’s a full time job. If you’re one man team, it means you’ll need to put everything else on hold. 🔻2. You’ll lose confidence because most will reject you. Even best founders had over 90% rejection rate. 🔻3. You’ll replace your key stakeholder (the user/customer) with the investors. You’ll see yourself pivoting your project into a “fundable” one, which often means you’ll forget about your actual users. 🔻4. VCs want to bet on 100 startups so that 3 win. They don’t care about your life and future. They rather push you towards 0.03% odds of becoming a unicorn than 10% of becoming a million dollar biz. Do you wanna bet your best years on 0.03% chance? Better play roulette then 🔻5. VCs acts like your bosses. They tell you what to say and not to say. They tell you which nationalities to hire or not to hire. They set meetings based on their calendar only, and they want you to travel to their office. 🔻6. It’s really difficult to pivot if you’re VC backed. VCs invested in your idea and they won’t let you pivot overnight. 🔻7. You’ll have to spend months or years convincing them. In most cases, the time will destroy you. . You’ll have to do lots of boring sh*t - investor updates - portfolio parties - conferences - meetings for updates 🔻8. You can’t start a side project whenever you want. VCs expect you to be 100% focused on one startup. 🔻9. You can’t take a break at a random moment just because you want it. 🔻10. You can’t sell your startup for any price you want. You can only sell for the price acceptable for the board.

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STOP looking for funding shortcuts and do the damn work. Raising Capital is HARD Expanding your network is HARD Raising Interest from investors is HARD. Delivering a compelling investor pitch is HARD. Building trust with from total strangers is pretty HARD. Securing funding without a network is HARD. Negotiating investment terms  s HARD Deploying growth capital is HARD Anyone who tries to convince you otherwise is wrong. With DeeDee our all-in-one solution it gets EASIER FUND. ACQUIRE. EXIT Your Business • set-up online profiles in minutes • tease investors with deal summaries • build trust with recommendations • secure all documents in 1 place • comfortably track your deal • all your contacts in 1 crm • raise interest from 15.000 investors • auto investment updates • benchmark your metrics • etc.    𝗜 𝘄𝗮𝗻𝘁 𝘁𝗼 𝗶𝗻𝘃𝗶𝘁𝗲 𝟮𝟬 𝗲𝗻𝘁𝗿𝗲𝗽𝗿𝗲𝗻𝗲𝘂𝗿𝘀 𝘁𝗼 𝗴𝗶𝘃𝗲 𝗱𝗲𝗲𝗱𝗲𝗲 𝗮 𝘀𝗽𝗶𝗻 𝗳𝗼𝗿 𝗮 𝗹𝗶𝗳𝗲𝘁𝗶𝗺𝗲 𝗱𝗲𝗮𝗹 𝗼𝗳 𝗷𝘂𝘀𝘁 $𝟰𝟵𝟳,- 𝗶𝗻𝗰𝗹. 𝗺𝘆 𝘄𝗲𝗲𝗸𝗹𝘆 𝘀𝘂𝗽𝗽𝗼𝗿𝘁. If you plan a raise is 6 months, comment deedee and we will drop a dm See you on the inside. Your friend Sven Milder ⚡️

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I don't go in for 'building in public' in general, but every now and then I think it's worth sharing what I'm seeing in the market. The below graph shows the average time to close a deal over time at EmergeOne and you can see that this has been creeping up since last year (adjusted for seasonality) and is currently close to 3 months to close a deal. So what's happening? Well, I was recently at an CFO event where we got a bit of a data driven view into the state of private markets. Some key points that came out: 🏷️ Median post money at Series A has dropped from 80m USD in 21/22 to 65m USD in 2024. This is still up from 40m from circa 2020. ％ Top quartile is significantly over at 107m. 📈 Series B median post money is $137m, top quartile $287m USD, but bottom quartile significantly struggling. 🚀 Deal velocity has slowed but started recovering. 💰 Lots of deals are happening but not priced - bridges abound. So how does this therefore relate to what we're seeing in terms of time to close? Firstly, we are a consultancy providing fractional CFO support to venture backed tech startups typically post Seed and pre Series A so this data reflects what we are generally seeing in the market as well. But the two main issues that are seemingly impacting our numbers are around deal velocity and bridge financing. There are simply fewer deals being done and they are taking longer to close, so the volume of potential clients we can target has dropped significantly. This does, however, mean that the quality of deals we're working on is significantly higher this year. Secondly, as companies struggle to raise priced rounds, they are raising lower amounts of capital on convertibles. This impacts us as CFOs are only truly valuable when there is a significant balance sheet to manage, less capital = less need for CFOs and hence the decision as to when to bring us in gets pushed out. But equally, that insecurity over funds means that founders are much more hesitant to make significant hiring decisions, prioritising hires that can directly influence revenue / traction in the near term. But they also know that they need the support so are often waiting for the 'magic moment' where they hit an inflection point that gives them confidence to pull the trigger. Outside of the deal data, we are also seeing venture indexing towards more R&D heavy businesses (life science, hardware etc.) and these sort of companies are often not commercialising for several years. They have security over spend and regard finance as a future problem. We are seeing a lot of companies approaching Series B without anyone in finance, deferring that decision till they close. But we are also seeing leads come through from a multitude of sources proving there is appetite for strong commercially minded CFOs to support and grow these scaling businesses. So as the market stabilises, I would expect to see these numbers come back. Business wouldn't be any fun if it was all easy, would it?!

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The US house passing FIT 21 is a landmark moment for crypto. The true believers in the space have always known that crypto is unstoppable, but the average joe on the street still thinks there's a chance it "might get banned" - the most important thing about legislation like this isn't the details, its the optics of it. This takes a step towards changing public perception of crypto, it shifts the narrative... #bitcoin #regulation #crypto

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Full disclosure I don’t own vacant, or even investment property, so consider this as an unbiased view, THIS is ridiculous. Imagine you bought something, anything, and an arbitrary group of people unilaterally decided that if you didn’t use it every day, they could just take more of your money. Imagine you are living overseas and your Australian home is getting taxed up to the teeth just because you aren’t occupying it for more than 6 months, or, if you do rent it out and deal with all those headaches, the government will tax you on rental income at the highest marginal rate. So in this story there’s an older man sitting on a portfolio of assets probably bought with post-tax dollars, that are costing him rates and need improvements to rent them out, he’s 80, he probably doesn’t have the cash sitting around to improve them, and the government thinks he should be forced to sell them so someone else could develop them. Then he has to take that money and put it somewhere, a bank, investments, where it can now pay tax on that. Australia is great at tax, we tax our citizens no matter how old, not matter where they are and use anything as an excuse to tax them more. This isn’t a solution to the property crisis, people have valid reasons for not living in their homes. It’s time our leaders started using the carrot instead of the stick.

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2024 is more than half way through already. Here’s some interesting data from PitchBook: 👉🏻 AI investments drive 47% increase in US VC funding in Q2 👉🏻 Exits remain challenging with $23.6 billion in exit value in Q2 👉🏻 Investors: AI businesses require outsized funding; M&A could pick up Reuters recently said that U.S. venture capital funding surged to $55.6 billion in the second quarter, marking the highest quarterly total in two years, according to PitchBook data published on Wednesday. The latest (Q2) figure shows a 47% jump from the $37.8 billion U.S. startups raised in the first quarter, largely driven by significant investments in artificial intelligence companies, including $6 billion raised by Elon Musk's xAI and $1.1 billion raised by CoreWeave. Image credit: Michael Spencer from AI Supremacy

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Today’s shoutout goes to Griffin.  A bank you can build on. And their founders, David Jarvis & Allen Rohner. Griffin, the UK's rising BaaS (Banking-as-a-Service) star. Just leveled up in a big way! Here's what makes them stand out: 1/ Going from startup to fully licensed bank. They just secured a full banking license. Proving their operational excellence and regulatory compliance. 2/ Focus on sustainability. From "light green" investments to a dedicated sustainability manager. Griffin walks the walk on ESG. 3/ New opportunities ahead. Griffin secured an additional $24M in funding. This brings their total capital to $39M for continued growth. Griffin is no longer just a sandbox player. They're building castles! My full shout-out note is in the latest EUVC newsletter. Link in comments. 🔽 How about you? Let's show our appreciation more often! Leave your shout-out to a product you love in the comments section! #venturecapital #angelinvesting #startupfunding #europe

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😈Crypto Start-up Founders, I’m going to save you $172,000 in this tweet. 

Recognising Red Flags In The Wrong ‘Influencer’ For Your Project. 

I’ve spoke to over 100+ start-up founders who have completely wasted 6 figures in fake & worthless KOLs for their project. 👇Here’s a few tips on how you can avoid the same mistake: 

- Anyone with “DM For Promo” or something similar in their bio, AVOID AT ALL COSTS

- Anyone that DMs your page offering to ‘Promo’ your project, AVOID AT ALL COSTS

- Anyone who has posted more than 1 giveaway in the last 7 days, AVOID AT ALL COSTS

- Anyone who is following over 10k people, AVOID AT ALL COSTS

(There is a very select few outliers who don’t apply to them reference points above but 99% of KOLs it applies to)

👇Other things to look out for: 

- What niche is their audience in? 
Do you want to attract them people… 

- What’s their reputation? 

- What is the success rate of the projects they promote? 

- How many influential people are following them? 

- What’s their engagement? They may have been ‘legit’ a few years ago but now may be dead. 

I could go on all day. Just be careful founders.

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Founders, If you're in the fundraising game.... You know there's a phase I like to call 'the gap.' It's that tricky period between getting a verbal nod from an investor and actually seeing the funds hit your account. Verbal commitments are great, but they don't always guarantee a closed deal. Here's how I handle this to keep things moving smoothly: Be Prepared to Act Fast: As soon as you get a verbal commitment, make the next steps as easy as possible for your investor. Any delays on your part can open the door for them to reconsider. Set Clear Deadlines: Make sure your investors know exactly when the round is closing. Setting a firm deadline for contributions helps keep everyone on schedule. Keep the Lines Open: Follow up with your investors regularly. Make sure they have all the information they need and gently remind them of the deadlines. And a little tip for peace of mind. Don't count your chickens before they hatch. Hold off on the celebration until the funds are securely in your bank. That's when you know you've really crossed the finish line. ✌️ #venturecapital #vcfunding #entrepreneurship #familyoffice #raisingcapital #fundraising #growth #startups #startupcommunity #startupecosystem #startupfunding

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So Toast is an absolute fricking monster and the best in class vertical SaaS company of our time. 💵 $1.2BN in ARR with 48.4% from payments 💸 Toast Capital has reached $1BN in annualised loans originated 🧑‍🍳 875K restaurants in the US (Toast has 112K: 13% market share) 🚀 75% of locations are coming from inbound channels The first investor invested $500K at a $3M price 😮 The full story and all the lessons 👇 1. Why This $14BN Company Would Not Exist Without Speed - Too many people worry about getting the product right. - One of the most important things you can do is get something out & learn from the user. - We wouldn’t have existed today if we didn’t move fast & iterate. 2. The Man Who Bought 12% of a $14BN Company for $500K - We were trying to raise in 2012-2013. - We were confident but almost everyone said no. - Steve Papa @ Endeca wrote us a $500K check at $3M. 3. The $14BN Company That Did Not Have a Good Business Model to Start - We realized within the first 10 customers that the financial model wasn’t working. - We were making $200 - $300 a month but there were too many customer service calls. - It wasn’t scalable at all. 4. Biggest Mistake: Not Hiring Managers Faster - There is also leverage in hiring managers vs. salespeople or engineers. - You need to move fast once you see signs of PMF. - Building out a team around us would have helped us move faster. 5. The Importance of Market Timing 3 Things: 1. Android 2. Cloud 3. Embedded payments - Without those 3 Toast wouldn’t have existed. 6. You Have to Sequence Strategy - We see many ways to expand the Toast platform across other geos & segments. - We need to be thoughtful about how to sequence this. - This is a long game: You underestimate what you can do in a decade and overestimate what you can do in a year. 7. This Public Company Creates Smaller Companies Within It - We have a New Ventures program for entrepreneurs. - We let them build companies as part of Toast but operate independently. - We want them to have the benefits of being part of Toast without the challenges of being part of a larger org. (links in comments) #founder #funding #business #investing #vc #venturecapital #entrepreneur #startup #seed #funding

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