Michael Si

49 founders and senior startup leaders respond to a survey from Sifted on the relationship between founders and VCs. Are expectations off from the start as VCs try too hard to pander to their founders with over promises of "value-add" and extensive platform teams? Do founders need to be reminded of their primary role - execution?

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Great deepdive from Simon Taylor on Stripe’s stablecoin acquisition. $1.1bn is more than a hedge: it’s a strategic bet on a new global payment rail. I’d add → It’s also a major market signal. There are questions being asked on stablecoins in fintech boardrooms everywhere right now. How will the market respond? My predictions: - We’ll see other big PSPs move: building their own solution or partnering with a stablecoin orchestration layer (like BVNK’s Layer1) - We’ll see another infrastructure player dominate, since it'll be difficult for Bridge to sell its solution to Stripe’s competitors - We’ll see a new payments paradigm, where real-time local rails integrate with blockchains & stablecoins At BVNK, we’re building critical infrastructure to enable businesses to seamlessly transact in stablecoins and fiat. Our approach has always been to build from the ground up in-house, enabling ultimate flexibility and scalability for our customers. As the largest stablecoin infrastructure player by revenue and volume, processing $8bn+ annually, and we’re excited to work with PSPs on their stablecoin journey. https://lnkd.in/dtGxjgsb

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This is an excellent article (loong one, pls note) on a step by step guide to hitting PMF or product-market fit. Love how PostHog cofounder 🦔 james hawkins visualises PMF akin to a game, with 5 levels and how to jump levels. More relevant for B2B / SaaS founders than B2C given James' experience w Posthog. One quibble would be keeping the ICP definition process on Level 5, whereas it should be something that you freeze on with picking the problem (his Level 1) ideally. While James describes this as getting to PMF, in my #pmfplaybook this is actually PPF or product to problem fit. In my definition, PPF + MMF (GTM Motion to Market Fit) = PMF. Repeatable scaling post this stage (5 reference customers) via a scalable GTM playbook is what is truly PMF. But this is my opinion against his opinion + track record of building to $20m ARR. This is a truly masterful resource for iterating to PMF. Every B2B / SaaS founder starting out or an aspiring B2B / SaaS founder should eyeball / read this. https://lnkd.in/ghGhBn-v

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Unveiling the 2024 UK Fintech Top 50 Report (Top 50 UK private fintech companies). Takeaway 1: less growth but much more profit -      Total Revenues of top 50 UK Fintech companies in 2023: £6.2bn; -      Revenues growth rate 2023 vs 2022: +45%; -      The annual revenues growth rate declined from 68% in 2022 to 45% in 2023; -      Combined positive EBITDA of £169m (vs a total loss of over £300m in 2022); -      Chip, Oxbury Bank, Truelayer and Moneybox registered the highest revenues growth rate in 2023 (+800%, +243%, +189%, +183%). -      The 10 most profitable companies have also a higher growth rate than the rest (+74% growth rate vs 48% of the benchmark). Takeaway 2: The breakeven message was heard by the sector -      17 companies are now profitable (34% of the panel); -      20 companies are > the Rule of 40 (Growth Rate + EBITDA Margin should be over 40%) vs. 10 in 2022; -      The median EBITDA margin was -39% (-96% in 2022); -      For the second year in a row Oak North has the best EBITDA Margin (64%), followed by Starling (47%) and Trading 212 UK (33%); -      Median GP Margin of 76%, The companies with positive EBITDA have a GP Margin 35% higher than the unprofitable companies (81% vs 60%). Takeaway 3: Fintech is just 10 years old but represents already 5% of the total UK finance industry -      The revenues of the top 50 fintech companies represented in 2023 around 5% of the total revenues of the top 5 UK Banks vs 3% in 2022; -      On average the companies in the fintech index are 10 years old (the top 5 UK banks are on average 249 years old).   Takeaway 4: Valuation are still too high, new down rounds are coming -      On average the fintech panel is valued @ 11.1x Revenues (latest disclosed valuation considered); -      The fintech sector in the US (70 listed players) is valued at 4.5x Revenues; -      In the UK, the main fintech listed players are Wise (8x revenues, 19x Earnings), AJ Bell (8x Revenues, 20x Earnings) and Pension Bee (12x Revenues, still loss making).

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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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In early-stage startups, product sense is crucial. With limited resources and data, it can be the key to success. I've seen founders with strong product sense navigate uncertainty effectively, using intuition and early market feedback. #product #startup

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This year is all about survival. I've seen enough data to call it. Multiple reports are showing Flat -> No growth. Wayflyer/Iris Finance report had Q1 overall growth at +4% YoY. Common Thread Collective Index has same store sales flat YoY. What does this mean? This year is about survival. The industry as a whole isn’t growing. We can blame this on whatever we want. But the outcome remains the same. Instead of obsessing about your topline growth. (Which is a steep mountain to climb.) Focusing on growing your bottom line. In a low topline growth year, spend time becoming more profitable. 100% YoY growth doesn’t do you any good if you’re out of biz in 2 years. The goal needs to be surviving to 2025. #shopify

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If you need to make redundancies as a Startup, why not consider offering voluntary redundancies first? Here's why I now think this is a much much better strategy, having been through it a number of times... 1) Talented people will probably leave anyway I get it..: "we wan't to select and keep the best people". I've seen it time and time again. Here is the reality: - The best people will have the most options to move - Those options come thicker and faster after layoffs - Highly ambitious people will often jolt at a perceived loss in momentum of growth The talent drain that can follow layoffs is a painful, protracted period where the question becomes "who's going to leave next...". This can build momentum and start to snowball, as people fear being left holding the bag. 2) Trust is unavoidably broken No matter how much you try to communicate the potential for layoffs, it will still come as a sudden and jarring shock to the team. Even the most empathetic process is still unavoidably a sudden, top-down mandate where there is no consultation. 3) People will start to hide their true feelings Where there is a perceived risk of future layoffs (no matter the promises made), people are less likely to lift their head above the parapet to express dissatisfaction etc. You may have created a state of fear and thus reduced communication between team and leadership. ------------- A voluntary period means: 1) No sudden shock 2) A sense of empowerment as people are given some choice 3) That you are left with people who WANT to be there 4) That you get an honest, open understanding of sentiment in the team In the period right after layoffs, you need a lot of truly invested people at every level to get the team going again. This isn't going to come from the more career-oriented (vs mission-oriented) people who are just passing through, no matter how talented. This way, trust is BUILT through the process, not broken. You end up with a more cohesive group who are more likely to believe in the mission. You will have more open and honest conversations that may uncover broad dissatisfaction. If there are people you really want to keep, invest in talking to them through the process, re-sell them on the mission. It becomes an opportunity to tell people how much you value them, rather than a form of top down control where you've decided they get to stay. If they can't be sold, they will leave anyway. Top talent has equal potential to be a superpowered detractor. If there are people you don't want to keep, this isn't the right way to handle it. Fair, accountable performance management is the right answer over time afterwards (...preferably before). Layoffs aren't a free fix to bad management, they incur a cost to the teams' long term faith and trust in your leadership.

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VC Platform explained, in apples. By the nature of what I do, I think about social systems a lot: how do we build a platform of founders supporting other founders? It’s so easy to get caught up in complexity here, that I make myself think about it, quite literally, in apples. Give it a try: * If I have two apples, and give you one, how many do I have left? One less than I had, so down to one apple. * But in real life the correct answer is that I now have an apple and a relationship with the culture of sharing with others when you can. I‘ll be able to lean back on that relationship when in a twist of fate it’s now me standing with no apples. I am now part of a system. * Can I rely on someone else to start this system? Yes, I can. But apples in life are a bit more complicated: — Maybe the person in front of me doesn’t share the apple with me, because she has already committed it to someone else. — Maybe she borrowed the apple from someone else in the past, and now wants to return it. — Maybe she hasn’t eaten in a while, and now needs not one, but both apples to sate herself. — All these people might be generally willing to share an apple with me—but maybe not this exact one, the timing may be not right at the moment, they are part of a bigger group where they have agreed to only share apples inside the group etc. Yes, the analogy with deal-sharing is intended, too. :) * When we factor in real-life circumstances, it’s hard to tell if the person, in fact, has a spare apple or not. Besides, when I wait for someone else to share an apple first, I make myself dependent on an external factor over which I have no control. I shouldn‘t, therefore, be surprized to find myself in a situation when I would want someone to share an apple with me, but the system is not there yet. * So, in reality, the only sure way to become part of a system like that is to wait for a moment when I have a spare apple and share it. * For this to work, the person I am sharing the apple with should actually need the apple. Let’s imagine I try to share an apple with someone who has just had two, doesn’t like apples, or has an apple tree. In the best case, it just won’t work. In worse cases, if let’s suppose I insist on giving the apple, the person might grow irritated. So, I need to share my spare apple with someone who actually needs an apple at this point in time. * This example is fabulous, as it helps answer other questions as well. For example, should I then give both apples, so that the relationship is 2x stronger? My answer will follow in the next post. PS. The artwork frivolously used by me to illustrate my thoughts is by a generative artist @dmitricherniak on inst who considers automation his artistic medium. He makes it seem easy, but after spending an hour in DALL•E and getting a bunch of really ugly apples in webs, I am a raging fan.

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Most Pioneer Fund companies send monthly updates (some quarterly), and we read every update across the portfolio of 500+ companies. I actually still personally read every update. Most startups send updates with these sections, and it works well: - High level metrics (revenue, maybe another key metric or two like GMV or MAU, growth since last month, cash in bank, burn rate, runway). Many of the most consistently-growing or fastest-growing companies also include a revenue graph. - Highlights - Lowlights - Investor asks - Maybe a couple investor shoutouts from last month - Some short commentary on what the current priorities are, what's coming next, etc. Some founders like to include a special section or two. A few of my favorites: - Photos or videos of technical progress for hardware companies - One of our founders sends a self rating on a scale of 0-10 for the month, along with detailed explanation. Pretty impressive. - A zoomed out view of how the mission/vision/strategy is specifically evolving - Some have very detailed additional sections that are specific to their business. E.g. manufacturing updates, distribution updates, regulatory updates, etc. Each investor update may only take a few minutes to read, but they are the summary of the hard work of an entire team for an entire month, often fighting uphill or sprinting downhill or exploring the idea maze. We're always grateful reading them.

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🚀 Dive into the Future with Nicky – Your Gateway to Crypto Payments Hello LinkedIn Network! We’ve just launched a new funding round for NICKY, and spots are filling up fast. This is your chance to secure a stake in the future of crypto payments! NICKY is at the forefront of crypto payment solutions, and with an incredible network of hundreds of registrars worldwide, we are confident of scaling it. Thanks to the deep industry experience of our team, previously making strides in the domain registrar and web hosting space, we’re uniquely positioned to unlock massive opportunities for millions of SMEs globally. Interested in joining this adventure and getting a piece of NICKY? This opportunity is more than just an investment; it’s a front-row seat to the crypto payment revolution. Led by domain industry veterans like Thomas, Matheus, Sebastian and myself—we’re dedicated to streamlining and enhancing global business transactions. 🌐 Consider this: over 420 million people worldwide own Bitcoin, but only 15,000 companies accept it as payment. That’s about to change. NICKY is set to make accepting crypto payments seamless for businesses, connecting digital currency holders with the broader market and opening up exciting new possibilities. Don’t miss your chance! Reach out to me here on LinkedIn or contact [email protected] for more details. Together, let’s turn crypto payments into the new normal!

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April saw a slight slowdown in early-stage startup funding across Europe compared to March. VCs invested €1.4bn in 312 pre-seed, seed, and Series A rounds, down from March's €1.5bn across 381 rounds, according to Sifted. The UK led the way, securing €314m in funding, though this was a drop from March's €470m. France followed with €272m, down from €301m, and Germany climbed to third with €211m, up from €148m in March. Top sectors included B2B SaaS (€345m), climate tech (€333m), and healthtech (€315m). In healthtech, drug discovery and biotech led the pack, raising €138m and €135m, while digital lending secured €79m. #Startups #VentureCapital #Funding #Europe #TechTrends

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What a week it was for Klarna 🤯 Here's 𝟲 𝗕𝗜𝗚 𝗡𝗲𝘄𝘀 𝗨𝗽𝗱𝗮𝘁𝗲𝘀 from Klarna, and one quick question 😉: 1️⃣ Klarna is launching a 𝗖𝗿𝗲𝗱𝗶𝘁 𝗖𝗮𝗿𝗱 in the United States 🇺🇸, they told TechCrunch in an exclusive interview: “It was one of our most asked for products,” Read more: https://lnkd.in/efjqD7NR 2️⃣ ChatGPT parent company OpenAI shared that the Klarna’s adoption of the technology is estimated to yield a $𝟰𝟬 𝗺𝗶𝗹𝗹𝗶𝗼𝗻 𝗶𝗺𝗽𝗿𝗼𝘃𝗲𝗺𝗲𝗻𝘁 in the company’s profits this year. Read more: https://lnkd.in/eDzqhSE7 3️⃣ Klarna is selling Hero , the virtual shopping platform it acquired in 2021, to video commerce outfit Bambuser in a deal worth around EUR1.3 million. Read more: https://lnkd.in/eahY3BWh 4️⃣ Klarna scores 𝗺𝗮𝗷𝗼𝗿 𝗽𝗮𝘆𝗺𝗲𝗻𝘁 𝗱𝗲𝗮𝗹 𝘄𝗶𝘁𝗵 𝗨𝗯𝗲𝗿 ahead of hotly anticipated IPO. You can now use Klarna to pay for your Uber and Uber Eats in the US, Germany and Sweden. Read more: https://lnkd.in/eW5jhken 5️⃣ Klarna also announced the expansion of its 𝗽𝗮𝗿𝘁𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝘄𝗶𝘁𝗵 𝗘𝘅𝗽𝗲𝗱𝗶𝗮 Group to the US 🇺🇸 market, enabling them to book flights and stays using its interest-free Pay Now or Pay in 4 options. Read more: https://lnkd.in/e3GNUhjB 6️⃣ Also last week, Karma unveiled a super-speedy-checkout flow for restaurants, using Karma x Klarna bringing the check our process down to 𝟭𝟭 𝘀𝗲𝗰𝗼𝗻𝗱𝘀 (the average checkout time at a restaurant is 5m 25s!). Read more: https://lnkd.in/eEkKskuP Finally, now over to you: Did you notice Klarna's recent 𝗯𝗿𝗮𝗻𝗱 𝗿𝗲𝗳𝗿𝗲𝘀𝗵 (check out the picture below👇)? Which one do you think looks best❓ Let me know in the comments which logo you like most! 𝗕(efore) or 𝗔(fter) 😉 Find this helpful? [ 𝗿𝗲𝗽𝗼𝘀𝘁 ] Anything to add about this subject? [ 𝗶𝗻𝘃𝗶𝘁𝗲𝗱 𝘁𝗼 𝗰𝗼𝗺𝗺𝗲𝗻𝘁 ] Nice story, Marcel. Next! [ 𝗹𝗶𝗸𝗲 ] Get the most important FinTech news and analysis in a 5 minute daily briefing you’ll actually look forward to reading. Sign up now: https://lnkd.in/eiQBxdTW

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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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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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At Forum we look at thousands of deals each year across our Accelerator and Pre-Seed funds but only end up investing in a little over 1% of those startups.  As an early stage VC, I am in the business of saying no to nearly every startup I meet, and while there is nuanced rationale for many of the startups I pass on, a vast majority of businesses that don’t meet the qualification to get funded typically fall into one of two buckets. ▪ First time founders have a tendency to go out to market too early to raise pre-seed capital ▪   I’m sure most founders have heard some iteration of this from VCs that ultimately pass on their business.  In some cases it's a blanket excuse covering up for other pass reasons- perhaps a VC doesn’t believe in a team or isn’t bullish on the market opportunity - but in many cases founders simply haven't proven enough to the market to warrant an investment. I meet many teams with an articulate vision for the product that they want to build, but they either haven't performed enough customer discovery to prove demand for their initial wedge product, or need to raise pre-seed capital to build out an MVP.  In those cases, pre-seed investors are unwilling to underwrite those risks.  To be default fundable, teams need to be able to keep costs low, perform extensive customer discovery, and ship some version of an early product - pilots and early paid customers are key. A huge piece of this is having founding engineering talent on the team. ▪Not every startup is a venture opportunity ▪ By definition, a venture backed business is solving a problem within a market opportunity so massive and so desperately needed, that its growth rate is off the charts.   It spreads like a weed, absorbing almost unlimited amounts of capital to fulfill demand within its customer base.   Each year there are maybe 20 companies launched that ultimately have venture scale outcomes. The bar to reach this rarified air is unfathomably high and the reality is the vast majority of founders simply aren’t building for opportunities that have the potential to be one of these generational companies. Many startup founders view VC as the only viable option for capitalizing their business, but not every great business is a venture business, and most successful founders never take VC dollars.  In order to reach an IPO/acquisition large enough to generate venture returns, a startup needs a credible path to $100s of millions in revenue. This is the standard by which early stage opportunities are evaluated. The flip side to this, and I share this feedback often with founders I meet that are building interesting business in non venture markets, if you are able to scale to $10- $20M in revenue that can be a massively successful outcome for a founder.  There are investors who focus on these type outcomes, namely lower middle market PE shops, and the typical path to those deals is a bootstrapped business or a friends/family capital raise.

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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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