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Product Update: Turn Emails Into Insights With Visible AI Inbox
Structured data. The holy grail of business intelligence. Structured data unlocks a realm of possibilities, from setting benchmarks to enhancing decision-making processes. Yet, in the venture capital landscape, accessing reliable, structured data remains a formidable challenge. This is precisely why we created the Visible AI Inbox. With unique features like automated metric detection and file parsing, the Visible AI Inbox stands out as a pioneering solution for portfolio monitoring. Discover how it can transform your data strategy by meeting with our team. Turning email into insights We believe that investors should spend time sourcing new deals and helping founders, not manually copying and pasting data from email 🙂. The AI Inbox helps aggregate insights that exist siloed in data, files, and updates across a venture firm. Updates from founders often stay stuck in one team member's inbox because it's too time-consuming to extract and enter the data and files into a more centralized repository. Visible AI Inbox makes this possible within seconds. Requests + AI Inbox = A Complete Picture The addition of the AI Inbox continues to advance our market-leading portfolio monitoring solution. The pairing of Requests + the AI Inbox will give investors a holistic view of portfolio company performance across a fund. Visible continues to be the most founder-friendly tool on the market. We’ll continue to build tools in existing workflows where both founders and investors live every day. How Does it Work? Visible AI Inbox works in three simple steps. Forward emails to a custom AI inbox email address Visible AI automatically maps data and files to portfolio companies Investors can review and approve content before it is saved From there, dashboards, tear sheets, and reports are all automatically updated on Visible. Learn more about how Visible AI Inbox can streamline workflows at your firm by meeting with our team. FAQ Will this be available on all plans? Visible AI Inbox is only available on certain plans. Get in touch with your dedicated Investor Success Manager if you want to explore adding this to your account. How is Visible addressing privacy and security with Visible AI Inbox? No data submitted through the OpenAI API is used to train OpenAI models or improve OpenAI’s service offering. Visible AI Inbox leverages OpenAI GPT 4 and proprietary prompts to extract data in a structured way and import it into Visible. If you’re uncomfortable with utilizing OpenAI to optimize your account, you can choose not to utilize this feature. Please feel free to reach out to our team with any further questions. These processes adhere to the guidelines outlined in Visible’s privacy policy and SOC 2 certification.
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[Webinar Registration] VC Portfolio Data Collection Best Practices
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Case Study: How Moxxie Ventures uses Visible to increase operational efficiency at their VC firm
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11+ Top Venture Capital Firms in Boston in 2024
At Visible, we often compare a venture capital fundraise to a traditional B2B sales and marketing funnel. At the top of your funnel, you are looking for qualified investors. In the middle of your funnel, you are nurturing potential investors with pitch decks, meetings, and email updates. At the bottom of your funnel, you are hopefully closing new investors. Related Resource: The 12 Best VC Funds You Should Know About Just as a sales and marketing funnel starts by finding qualified leads, the same is true for a venture fundraise. For some, this might start by finding investors (or leads) that are in a certain geography. For founders located in Boston, check out a list of our favorite VC funds in Boston below: 1. General Catalyst Partners As put by the team at General Catalyst Partners, “We work with companies through their entire lifecycle—from the earliest stages through growth and beyond. Our team has expertise in all phases of company building and can add real value at every inflection point. No matter where they are in their journey, we always aspire to be a founder’s first call—connecting them to the relationships that matter most.” Focus and industry: General Catalyst invests across every sector. They specifically mention consumer, enterprise, fintech & crypto, and health assurance on their website. Funding stage: General Catalyst invests across every stage — “from creation to IPO.” General Catalyst is on of the biggest names in the venture industry. They’ve raised 15 funds dating back to 2001. The team invests in companies across every sector, in every stage, across the globe. A few of their most popular investments include: Stripe Warby Parker Hubspot Airbnb Location: Cambridge, MA – New York – London – San Francisco Related Resource: Exploring the Top 10 Venture Capital Firms in New York City Learn more about General Catalyst by checking out their Visible Connect profile → 2. Battery Ventures As put by the team at Battery Ventures, “We back founders and talented teams at all stages of growth, from startups to established market leaders. We are currently investing from our 14th flagship fund, Battery Ventures XIV, and companion fund Select Fund II, together capitalized at a combined $3.8 billion.” Focus and industry: Battery Ventures invests in many sectors but specifically mentions application software, infrastructure software, consumer, and industrial tech on their website. Funding stage: The team at Battery Ventures invests in companies across all stages Battery Ventures has been investing since 1983. Over their 40 years of investing, they’ve funded 450+ companies. Battery Ventures will invest in companies across all stages across the globe. Check out a few of their most popular investments below: Affirm Amplitude Invision Location: Boston – San Francisco – Menlo Park – Tel Aviv – London – New York City Related Resource: 15 Venture Capital Firms in London Fueling Startup Growth Learn more about Battery Ventures by checking out their Visible Connect profile → 3. Polaris Partners As put by the team at Polaris Partners, “Since 1996, Polaris has been guided by the fundamental beliefs that people come first and true partnerships make all the difference. Rooted in mutual respect and a shared passion for innovation, our relationships with outstanding visionaries principally in technology and healthcare have helped to change the world for the better.” Focus and industry: The team at Polaris is focused on healthcare and life science/biotechnology companies Related Resource: The Top VCs Investing in BioTech (plus the metrics they want to see) Funding stage: The team at Polaris Partners does not publicly stage their stage focus. Polaris Partners has been funding healthcare businesses for 20+ years. Polaris has raised 10 funds focused on funding companies in healthcare and technology. A few of their most popular investments include: Syros SimplyInsured Amunix Location: Boston – New York – San Francisco Learn more about Polaris Partners by checking out their Visible Connect profile → 4. Summit Partners As put by their team, “Summit Partners was founded in 1984 with a commitment to find and partner with exceptional entrepreneurs to help them accelerate their growth and achieve dramatic results. Since then, Summit has become the investment partner of choice for many of the best growth companies in the world. We’ve grown to a team of more than 115 investment professionals, led by Managing Directors and Partners whose tenures average more than 16 years with Summit. We have the capital and team to support your growth initiatives.” Focus and industry: Summit Partners is focused on technology, healthcare & life science, and growth products Funding stage: The team at Summit Partners is focused on growth-stage companies and typically writes checks between $10M and $500M As put by their team, “We invest around the world and have portfolio companies in North and South America, Europe, Asia, Australia, and Africa. Based from offices in North America and Europe, our team travels the globe in search of growing companies and the resources to support them.” A few of their most popular investments include: WebEx Uber Reverb Location: Boston, MA 5. .406 Ventures As put by the team at .406 Ventures, “We invest in opportunities where we understand the need and your company’s technology solution; where we have deep, relevant networks; and where we believe we can add disproportionate value as a partner, investor, and board member. Our initial investments are typically between $2 and $5 million with substantial additional capital reserved for follow-on investment.” Focus and industry: The team at .406 Ventures focuses on cybersecurity, digital health, and data & cloud companies. Funding stage: .406 Ventures is focused on early-stage companies and typically writes checks between $2M and $5M. As put by their team, “When we were building our own entrepreneurial companies, we found that it was often our independent board members, not the VC board members, who contributed the most value. Invariably, it was the independent board members who had the deep experience and strong operational networks—and who had been in our shoes. At .406, we aim to bring these qualities, in addition to capital, to every one of our portfolio companies. It is our goal to be the most valuable member on your board.” Some of their most popular investments include: Compass Nomad Health Randori Location: Boston, MA 6. OpenView According to their team, “OpenView, the expansion stage venture firm, helps build software companies into market leaders. Through our Expansion Platform, we help companies hire the best talent, acquire and retain the right customers and partner with industry leaders so they can dominate their markets. Our focus on the expansion stage makes us uniquely suited to provide truly tailored operational support to our portfolio companies.” Focus and industry: OpenView Partners is focused on companies that are “changing the future of work.” Related Resource: 15+ VCs Investing in the Future of Work Funding stage: OpenView Partners is focused on expansion-stage companies. OpenView is largely associated with “product-led growth” and has backed some of the most prolific and successful SaaS companies. With their focus on the future of work companies + expansion stage companies, OpenView offers resources to help companies tackle all aspects of expansion stage growth. A few of their most popular investments include: Calendly Lessonly Datadog Location: Boston, MA Learn more about OpenView Partners by checking out their Visible Connect profile → 7. 1414 Ventures As put by their team, “1414 Ventures is focused solely on the digital identity space which supports functions such as payments, cybersecurity, and data privacy & trust. Given the exponential surge in virtual and digital transactions/interactions over the last year combined with increased security, fraud prevention, and privacy needs, there is a huge opportunity for next-generation digital identity startups.” Focus and industry: 1414 Ventures invests in companies that are “focused on creating innovative digital identity solutions.” Funding stage: Pre-seed and seed-stage companies 1414 Ventures has an intense focus on companies that are developing the future of digital identity. Some of 1414 Ventures’ most popular investments are: SingularKey Tautuk SwiftConnect Location: Boston, MA 8. Mendoza Ventures As put by their team, “Mendoza Ventures is an early and growth stage Fintech, AI, and Cybersecurity venture fund that provides an actively managed approach to VC. We invest in areas where we have deep domain expertise, companies with early revenue, a clear value proposition, and use a proven due diligence model. We focus on diversity as playing an important role in our investment decisions, as roughly 75% of our portfolio consists of start-ups led by immigrants, people of color, and women.” Focus and industry: Mendoza is focused on Fintech, AI, and Cybersecurity companies. Funding stage: Mendoza Ventures is focused on early and growth-stage companies On their website, Mendoza further explains their background and foundation, “Based in Boston, Mendoza Ventures is women-owned and the first LatinX-owned venture fund on the East Coast. The firm is run by husband and wife Adrian and Senofer Mendoza, entrepreneurs and prior operators who are veterans of the Boston start-up ecosystem.” Some of their most popular investments include: Canvas Senso Daylight Location: Boston – San Francisco Learn more about Mendoza Ventures by checking out their Visible Connect profile → 9. HLM Venture Partners As put by their team, “HLM provides venture capital to early- to mid-stage health care information technology, health care services, and medical device companies. HLM has helped over 75 privately-held health care companies turn innovative ideas into market-leading businesses. The Company’s investment professionals have over 125 years of collective expertise in the health care industry, an accumulation of knowledge and experience that is invaluable to the leadership of its portfolio companies.” Focus and industry: HLM Venture Partners are focused on healthcare services and companies. Funding stage: HLM offers early to mid-stage capital. HLM Venture Partners has invested in 75+ companies. Some of their most popular investments are: Able To Blue Rabbit Tebra Location: Waltham, MA 10. Venrock As put by the team at Venrock, “Originally established as the venture capital arm of the Rockefeller family in 1969, Venrock partners with entrepreneurs to build some of the world’s most disruptive, successful companies. With a primary focus on technology and healthcare.” Focus and industry: The team at Venrock is focused on investing in technology and healthcare companies Funding stage: Venrock invests across all stages Venrock is an original player in the venture capital space. Over their history, they have invested in 700 companies and have raised 10 funds. They’ve invested in some of the most prolific companies such as: Apple Nest Zoominfo Location: New York – Palo Alto 11. Third Rock Ventures As put by the team at Third Rock Ventures, “To achieve what hadn’t been done before, we created a process that hadn’t been done before. By starting with big ideas and fostering collaboration among brilliant people with expertise in science, medicine, business, and strategy, we set out to do more than fund startups – we aim to build sustainable, innovative companies that can transform the lives of patients.” Focus and industry: Third Rock Ventures focuses on biotechnology companies Funding stage: Third Rock Ventures does not publicly list a specific stage or check size As put by their team, “We build our companies on a solid foundation, instilling core values and a commitment to a great culture. Our companies are based on bold ideas that meet at the intersection of science, business, medicine, and strategy – where transformational science meets operational rigor – providing the best opportunity to make a dramatic difference in patient’s lives.” Some of their most popular investments include: Celsius Faze Medicines Moma Location: Boston – San Francisco Learn more about Third Rock Ventures by checking out their Visible Connect profile → Find investors in Boston with Visible As we previously mentioned, a venture fundraise oftentimes mirrors a traditional B2B sales and marketing funnel. Just as sales and marketing teams have dedicated tools to track their funnel, shouldn’t founders have dedicated tools to manage their most important asset – equity? With Visible, you can track and manage every part of your fundraising funnel. Find investors at the top of your funnel with Visible Connect, our free investor database Add them directly to your fundraising pipeline directly in Visible Share your pitch deck and data room with investors in your pipeline Send Updates to current and potential investors to keep them engaged with the progress of your business. Take your investor relations to the next level with Visible. Give Visible a free try for 14 days here.
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Exploring the Top 10 Venture Capital Firms in New York City in 2024
At Visible, we often compare a startup fundraising process to a traditional B2B sales and marketing funnel. At the top of your funnel, you are adding qualified investors. Nurturing them in the middle of the funnel with email, meetings, pitches, etc. And ideally closing them as a new investor at the bottom of a funnel. Related Resource: How to Find Venture Capital to Fund Your Startup: 5 Methods Just like a sales and marketing funnel, a fundraising funnel needs to start with the right investors for your business (e.g. qualified lead or qualified investor). One of the aspects founders will want to research is the geography of the investor and where they invest. Check out a few popular venture capital firms located in New York below: 1. Union Square Ventures According to their website, “Union Square Ventures is a venture capital firm focused on early-stage, growth-capital, late stage, and startup financing.” Learn more about Union Square Ventures by checking out their Visible Connect Profile here → Investment Range Union Square Ventures invests in a large range of companies. Looking at their website and you’ll find that they invest in anywhere between Series A and Series D stages. Industries Union Square is self-described as a “thesis-driven” investor. They are currently investing off of their Thesis 3.0: “Enabling trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols.” Check out more about their Thesis 3.0, recent investments, and key ideas below: 2. Insight Partners According to the Insight Partners website, “Insight accelerates revenue and profit in software companies. Our obsession with software has produced a habit of success. We recognize industry patterns, emerging tech markets and software trends. We’ve accumulated the knowledge to understand the strategies needed to win.” Learn more about Insight Partners by checking out their Visible Connect Profile here → Investment Range Insight Partners will invest across every stage but their bread and butter are “scale-up” companies. Insight will invest anywhere from pre-seed to series C and beyond stages — generally with a check size between $10M and $350M. Industries Insight is focused on software companies. However, they invest in a number of different sectors that you can find here (or below): 3. Scout Ventures According to the Scout Ventures website, “Scout Ventures is an early-stage venture capital firm that invests in frontier and dual-use technologies built by veterans, intelligence leaders, and premier research labs. By leveraging our network of professional investors, operators, and experienced entrepreneurs, Scout can effectively execute every aspect of our investment thesis. We’re also paving the way for military veterans and intelligence professionals to access hundreds of millions in government grants and non-dilutive capital. The firm has three locations: Austin, New York City, Washington, DC.” Learn more about Scout Ventures by checking out their Visible Connect Profile here → Investment Range Scout Ventures writes checks anywhere between $100,000 and $3M. According to their website, “We lead Seed rounds with $1-2M initial checks and reserve capital for follow-on investments up to Series B.” Industries According to the Scout website, “We focus on sectors aligned to our experience serving in defense and building multi-billion dollar companies: AI/ML, quantum computing, robotics, advanced materials science, security, space & aerospace, and advanced energy.” 4. Greycroft According to their website, “Greycroft is a venture capital firm that focuses on technology start-ups and investments in the Internet and mobile markets.” Learn more about Greycroft by checking out their Visible Connect Profile here → Investment Range According to the team at Greycroft, “Greycroft typically makes initial investments from $500,000 at the seed stage to up to $30 million from the growth stage. We are an active Series A investor and typically invest between $1 million and $10 million. The growth fund targets investing $10 to $30 million on an initial basis and may reserve up to double that amount over time. The growth fund focuses on later-stage companies with proven unit economics, annual revenue growth in excess of 50%, and a management team that is prepared to scale.” Industries On the Greycroft website, you’ll find that they invest in a number of different industries — ”We invest across a broad range of Internet sectors. We currently group our portfolio into four verticals: Consumer Internet, Fintech, Healthcare, and Enterprise Software.” 5. RRE Ventures RRE Ventures has been funding software startups since the 90s. According to their website, “RRE Ventures is a New York-based venture capital firm that offers early-stage funding to software, internet, and communications companies.” Learn more about RRE Ventures by checking out their Visible Connect Profile here → Investment Range The team at RRE invests in a variety of early-stage tech and software companies. According to their Visible Connect profile, they invest in Series A and B companies with an average check size between $4M and $15M. Industries According to their website, “RRE invests in early-stage, technology-enabled companies across all sectors and across the country. We back credible teams executing against incredible ideas to build category-defining businesses.” Check it out here or learn more below: 6. Lerer Hippeau According to their website, “Lerer Hippeau is an early-stage venture capital fund founded and operated in New York City. We invest in good people with great ideas who redefine categories — and create new ones entirely.” Learn more about Lerer Hippeau by checking out their Visible Connect Profile here → Investment Range The team at Lerer Hippeau has 3 funds that invest in pre-seed to Series C and beyond companies. Industries The team at Lerer Hippeau is industry-agnostic and will invest in any company — including enterprise and consumer landscapes. 7. Starta According to their website, “​​Starta is a venture ecosystem to find, foster, and fund early-stage talent in tech. Our mission is to provide opportunities to: International startups who want to scale globally and raise capital Aspiring industry leaders, seeking professional training Investors who believe in long-term growth potential and a strong connection with the community Starta values inclusivity and diversity. Having worked with over 200 startups from all over the world, we intensively focus on bringing equal opportunities and support to the ecosystem.” Learn more about Starta by checking out their Visible Connect Profile here → Investment Range Like many of the other firms on this list, Starta has multiple funds that invest in many stages. Starta operates both an accelerator and early-stage fund intended for seed and series A companies: Industries The Starta team has a focus on international startups that are looking to expand and scale their US presence. 8. FirstMark FirstMark is an early-stage venture capital firm headquartered in New York City. As put by their team, “We are proud to back the ambitious founders of the most iconic companies in the world.” Learn more about FirstMark by checking out their Visible Connect Profile here → Investment Range According to their Visible Connect profile, the team at FirstMark writes checks anywhere between $500k and $15M. Industries The team at FirstMark invests in companies of a variety of industries and sectors. They have major focus areas of Enterprise, Consumer, and Frontier companies. 9. Hypothesis According to the Hypothesis website, “We build and fund companies. We’re a startup studio and seed fund that launches, funds, and scales exceptional companies.” Learn more about Hypothesis by checking out their Visible Connect Profile here → Investment Range As a startup studio, Hypothesis focuses on finding successful founders and co-founders and helps them launch and scale businesses. In addition to capital, Hypothesis portfolio companies receive resources and help with sales and marketing, hiring, product development, follow-up funding, etc. Industries The team at Hypothesis will invest in companies across many industries and are focused on “mission-driven” companies and founders. 10. Interlace Ventures According to the team at Interlace Ventures, “Investing in early-stage commerce- and retail-technology companies gives us unparalleled access to the latest technological innovations and trends across commerce and retail. We leverage this access by partnering with global brands and retailers to support their innovation efforts. We do this through a variety of methods, all of with are tailored after each partner’s individual needs and priorities.” Learn more about Interlace Ventures by checking out their Visible Connect Profile here → Investment Range The team at Interlace invests in pre-seed to series A-stage companies. According to their Visible Connect Profile, they will write checks anywhere between $150k and $600k. Industries Interlace has a focus on commerce and retail companies. Get Connected With Investors Today At Visible, we oftentimes compare a fundraise to a B2B sales and marketing funnel. At the top of your funnel, you are finding new investors. In the middle, you are nurturing and pitching potential investors. At the bottom of the funnel, you are working through diligence and ideally closing new investors. Related Resource: The 12 Best VC Funds You Should Know About With the introduction of data rooms, you can now manage every aspect of your fundraising funnel with Visible. Find investors at the top of your funnel with our free investor database, Visible Connect Track your conversations and move them through your funnel with our Fundraising CRM Share your pitch deck and monthly updates with potential investors Organize and share your most vital fundraising documents with data rooms Manage your fundraise from start to finish with Visible. Give it a free try for 14 days here. Related Read: Private Equity vs Venture Capital: Critical Differences Related Resource: 11 Top Venture Capital Firms in Boston
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Understanding the Advantages and Disadvantages of Venture Capital for Startups
Venture capital can be a game-changer for startups, offering not just financial backing but a whole ecosystem of support. However, it's not without its trade-offs. This article delves into the multifaceted world of venture capital, from the substantial resources and invaluable networks it brings to the potential for diluted ownership and pressure for rapid growth. Whether you're considering venture capital for your startup or simply curious about its implications, this guide will provide you with a balanced perspective. Advantages of Venture Capital for Startups Venture capital offers a plethora of advantages to startups that go beyond mere financial investment. It's about injecting your business with the resources, knowledge, and networks needed to thrive in competitive markets. Let's explore how venture capital can catalyze your startup's growth and success. Related resource: How to Find Venture Capital to Fund Your Startup: 5 Methods Access to Significant Capital Venture capital provides startups with significant capital that can be pivotal for scaling operations, research and development, and entering new markets. Unlike traditional financing, which may be limited or come with stringent repayment terms, venture capital offers a substantial financial runway, allowing startups to focus on growth without the immediate worry of financial constraints. Expertise and Mentorship Beyond capital, venture capitalists often bring a wealth of expertise and mentorship to the table. They offer strategic guidance, industry insights, and operational advice that can help navigate the complexities of scaling a startup. This mentorship can be invaluable in avoiding common pitfalls and accelerating growth. Networking Opportunities Securing venture capital also opens the door to a vast network of industry contacts, potential partners, and clients. These connections can be instrumental in business development, partnerships, and even future fundraising efforts. The right introductions can significantly accelerate a startup's trajectory. Credibility and Prestige When a VC firm decides to invest, it does so after thorough due diligence, assessing the startup's potential for growth, market opportunity, and the strength of its team. This rigorous evaluation process means that once a startup secures venture capital, it's seen as having passed a critical test of viability and potential. This perception can be incredibly beneficial in several ways: Attracting Further Investment: With the initial VC backing, other investors are more likely to take an interest in the startup. VC funding can serve as a validation of the startup's potential, making it easier to raise additional rounds of funding. The initial VC investment often acts as a catalyst for attracting more capital, as it reduces the perceived risk for subsequent investors. Talent Acquisition: Top-tier talent looks for opportunities that offer both growth potential and stability. VC funding enhances a startup's appeal to such individuals by providing evidence of both. The funding signifies that the startup has enough resources to scale and supports its long-term vision, making it a more attractive place for ambitious professionals looking to make their mark. Market Positioning: A startup with venture capital backing can also command more attention in its market. Customers, suppliers, and partners often view VC-funded startups as more credible and stable, making them more likely to do business with them. This enhanced credibility can be crucial for startups looking to establish themselves in competitive markets. Brand Visibility: VC firms often have extensive networks and platforms for promoting their investments. When a startup secures VC funding, it can benefit from this exposure, increasing its visibility in the industry and among potential customers. No Repayment Requirement One of the most significant advantages of VC funding over traditional loans is the absence of a repayment obligation if the startup fails. The advantage of not having to repay the investment if the startup fails frees entrepreneurs from the weight of debt, allowing them to focus fully on their vision and growth. This model not only facilitates innovation and risk-taking but also builds a partnership framework between investors and founders, where both parties are equally invested in the success of the venture. This risk-sharing model has several advantages for startups: Encourages Risk-taking: Knowing that failure will not result in crippling debt allows entrepreneurs to pursue innovative, high-risk ideas that could lead to significant market disruptions. Focus on Growth: Without the burden of debt repayment, startups can channel their resources into growth and development rather than diverting funds to service debt. Attracts Talent: The potential for significant returns without the personal financial risk associated with debt can make startups more attractive to top talent. Investor Support: Since VCs have a vested interest in the startup's success, they are more likely to provide support, advice, and connections to help the business grow. No Debt or Interest In traditional financing models, such as bank loans or debt financing, the borrower is required to repay the principal amount along with interest, regardless of the business's success. This obligation can place a considerable strain on a startup's cash flow, especially in its early stages when revenues may be unpredictable or non-existent. Moreover, in the event of business failure, entrepreneurs may still be liable for the outstanding debt, which can lead to personal financial ruin in the case of personally guaranteed loans. Venture capital, on the other hand, is invested in exchange for equity in the startup. VCs are well aware of the high risk associated with these investments, including the possibility that the startup may fail. Their return is contingent upon the success of the business, typically realized through an exit event such as an initial public offering (IPO) or acquisition. If the startup fails, the venture capital invested does not need to be repaid. This setup aligns the interests of the investors with those of the founders, as both parties succeed or fail together. Scalability Venture capital is a critical accelerator for startups aiming to make a market impact, providing not just funds but a springboard for rapid growth and scalability. This financial backing enables startups to swiftly penetrate and expand in markets, pushing innovation and product development at an accelerated pace. It facilitates the hiring of top talent essential for scaling operations and executing ambitious growth strategies. Furthermore, venture capital empowers startups to engage in strategic partnerships and acquisitions, enhancing their market reach and product offerings. It supports substantial investments in marketing and brand building, crucial for establishing market presence and driving customer acquisition. Additionally, venture capital aids in geographic expansion, opening doors to new markets and global opportunities. Disadvantages of Venture Capital While venture capital can be a powerful tool for startups, it's not without its disadvantages. The pursuit of venture funding comes with considerations that can affect your startup's trajectory and founding principles. Let's examine the potential downsides to be mindful of. Dilution of Ownership Accepting venture capital typically involves exchanging equity in the startup for financial investment, leading to a dilution of the founders' ownership stake. This means that founders own a smaller percentage of their company after the investment than they did before. While this influx of capital is crucial for growth, it also results in founders sharing control and potential future profits with the venture capitalists. This trade-off is an essential consideration for startups, as it impacts the founders' influence over company decisions and their share of the financial rewards in the event of the company's success. Less Control Venture capital investors frequently seek a say in business decisions as a condition of their investment, potentially leading to diminished control for the original owners. This involvement can range from strategic direction to operational changes, reflecting the investors' stake in the startup's success. While their expertise can be beneficial, it may also result in founders having to compromise on their vision or make decisions aligned with the investors' goals, rather than their own. This dynamic underscores a critical trade-off in venture funding: accessing significant capital and expertise at the cost of sharing decision-making power. Pressure for High Growth VC funding often comes with the expectation of rapid, substantial returns, placing intense pressure on startups to grow quickly. This urgency for growth can sometimes push startups towards aggressive expansion strategies that may not align with sustainable or prudent business practices. The drive for quick scalability and market dominance can lead to short-term decisions that prioritize speed over stability, such as overextending financial resources, neglecting quality control, or unsustainable customer acquisition practices. While rapid growth can propel a startup to success, this pressure can also risk its long-term viability and ethical standing, challenging founders to balance investor expectations with sustainable development. Length and Complex Process Securing venture capital is a time-consuming and complex process, marked by an extensive due diligence phase that demands significant attention and resources from startup founders. The journey to obtain venture funding involves multiple steps, including preparing detailed business plans, financial projections, and engaging in negotiations with potential investors. Venture capitalists conduct thorough due diligence to assess the viability, market potential, and team capability of the startup. This scrutiny can include deep dives into the startup's financials, business model, competitive landscape, legal compliance, and more. The process ensures that investors are making informed decisions but also requires startups to be transparent and well-prepared. This exhaustive vetting process, while necessary for securing investment, can divert founders' focus from day-to-day operations and delay immediate business development efforts. The complexity and length of securing venture capital not only test a startup's readiness and resilience but also its capacity to balance long-term fundraising goals with short-term business needs. Focus on Exit Strategy Venture capitalists typically enter investments with a clear exit strategy in mind, aiming for a significant return on their investment through a sale, merger, or public offering of the startup. This focus on exit events is fundamental to the venture capital model, as it dictates the timeline and manner in which investors expect to realize their profits. However, these exit strategies may not always align with the long-term vision of the startup founders. Founders often embark on their entrepreneurial journey with a passion for their product or service and a vision for long-term growth and industry impact. In contrast, venture capitalists' emphasis on an exit within a certain timeframe can pressure startups towards rapid scaling and market positioning that prioritizes short-term valuation increases over sustainable growth and development. This misalignment can lead to strategic conflicts, where founders are pushed to make decisions that optimize for an exit event rather than the long-term health and vision of the company. Navigating these differing objectives requires careful negotiation and alignment of interests between founders and their venture capital partners to ensure that the company can achieve both its immediate goals and long-term ambitions. Alternatives to VC Funding For startups wary of the potential downsides of venture capital, there are several alternative funding options available. These alternatives can offer different advantages, from less dilution of ownership to more aligned growth strategies. Let's explore a few of these options. Related resource: Types of Venture Capital Funds: Understanding VC Stages, Financing Methods, Risks, and More Angel Investments Angel investments represent a vital source of capital for startups, typically coming from affluent individuals who provide funding in the early stages of a company's growth. Unlike venture capitalists, who usually invest through funds with money pooled from various sources, angel investors use their own wealth to support startups they believe in. These investors often offer capital in exchange for equity in the company, acquiring a stake in the startup's future success, or sometimes through convertible debt, which can later be converted into equity. Angel investors not only provide financial backing but can also bring valuable expertise, industry connections, and mentorship to the startup. Their investment can be crucial during the initial phases when the startup may not yet qualify for venture capital or bank loans due to the high risk associated with early-stage ventures. By opting for angel investment, founders can secure the necessary funds to kickstart their operations, refine their product, or expand their market reach, all while potentially gaining a supportive advisor in their angel investor. This form of investment offers a blend of financial support and personal engagement, making it an attractive option for startups seeking both capital and guidance. Revenue-based Financing Revenue-based financing is a funding model where investors provide capital to startups in exchange for a percentage of the company's future revenues until a predetermined amount is repaid. This form of financing offers a flexible repayment schedule that directly correlates with the business's performance, making it distinct from traditional equity or debt financing. In this model, repayments increase when revenue is high and decrease during slower business periods. This flexibility is particularly advantageous for startups with fluctuating revenue patterns, as it aligns repayment obligations with their financial capacity. Unlike equity financing, revenue-based financing does not require founders to give up ownership stakes, nor does it impose fixed repayment terms like traditional loans. Instead, the total repayment amount is usually a multiple of the invested capital, agreed upon at the outset. Revenue-based financing is attractive for businesses that generate consistent revenues but may not yet be profitable or for those looking to avoid dilution of ownership. It allows startups to access the capital they need for growth, such as expanding operations, entering new markets, or increasing marketing efforts, without the pressures of equity dilution or rigid debt schedules. This model promotes a partnership approach, with investors directly vested in the company's revenue growth and success. SBA Loans Small Business Administration (SBA) loans are a government-backed financing option designed to support the growth and sustainability of small businesses. These loans are facilitated by the SBA, a U.S. government agency, in partnership with banks and lending institutions. The SBA guarantees a portion of the loan, significantly reducing the risk to lenders and enabling more favorable terms and lower interest rates for borrowers compared to traditional bank loans. SBA loans are known for their relatively lower interest rates and longer repayment terms, making them an attractive option for startups and small businesses seeking funding without the burdensome costs associated with conventional loans. The variety of SBA loan programs caters to different business needs, from purchasing equipment and real estate to providing working capital and funding for expansion projects. One of the key benefits of SBA loans is their accessibility to businesses that might not qualify for standard bank loans due to requirements for higher credit scores or collateral. The SBA's backing means that businesses with solid plans and potential for success have a greater chance of obtaining the financing they need, even if they're in the early stages of growth or lack extensive credit history. However, the process of applying for an SBA loan can be more complex and time-consuming than other financing options, requiring detailed business plans, financial statements, and projections. Despite these challenges, the favorable terms, lower interest rates, and government support make SBA loans a compelling choice for small businesses and startups looking for a stable and affordable source of funding. Connect With the Right Investors for Your Startup With Visible Venture capital offers startups a blend of significant capital, expertise, and networking opportunities, propelling rapid growth and market impact. However, it also brings challenges such as diluted ownership and intense pressure for quick returns. Alternatives like angel investments, revenue-based financing, and SBA loans present different benefits and trade-offs, catering to various startup needs. For founders navigating these options, Visible provides a comprehensive platform to find and connect with the right investors, track a fundraise, share a pitch deck, and manage stakeholder communications effectively. Give Visible a free try for 14 days here. Related resource: A Guide to How Venture Capital Works for Startups and New Investors

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Multiple on Invested Capital (MOIC): What It Is and How to Calculate It
Venture capital firms need to have a system in place to track the performance of their different investments. Limited partners want to understand how a specific fund is performing — especially when a general partner is raising a new fund. Multiple on Invested Capital (MOIC) stands out as a critical measure for investors aiming to track their portfolio performance . This article delves into the essence of MOIC, offering a clear guide on how to calculate it and its significance in the venture capital ecosystem. Related resource: Venture Capital Metrics You Need to Know What is Multiple on Invested Capital (MOIC)? In venture capital, MOIC is a crucial metric that measures the return on investment by comparing the current or exit value of an investment to the initial capital invested. It offers a straightforward ratio indicating how many times the original investment has been returned, making it essential for evaluating the financial performance of an investment. MOIC's simplicity allows venture capitalists to assess value creation, compare performance across various investments, and make informed decisions on future investments or exits. As a universal metric, it facilitates direct comparison across diverse portfolios, highlighting the efficiency of startups in generating growth and guiding investors in maximizing their returns. MOIC Formula The formula for MOIC is: MOIC = Current Value of Investment / Total Invested Capital Each component plays a crucial role: Current Value of Investment: The present market value or exit value of the investment. Total Invested Capital: The initial amount invested. Unrealized vs. Realized MOIC Unrealized and realized MOIC are two states of the Multiple on Invested Capital that reflect different stages of an investment's lifecycle in venture capital: Unrealized MOIC refers to the calculation of the multiple based on the current market value of an investment that has not yet been liquidated or exited. It represents a paper value, indicating the potential return on investment if the investment were to be sold at its current valuation. Unrealized MOIC is a snapshot of the investment's performance at a given point in time, offering investors a glimpse into the possible outcome of their venture, assuming the market conditions remain favorable until the actual sale or exit. Realized MOIC, on the other hand, is determined when an investment is actually sold or exited. It calculates the multiple based on the final sale price or exit value, representing the actual return on investment received by the investor. Realized MOIC is concrete, reflecting the tangible outcome of an investment after it has been fully liquidated. The key difference between these two measures lies in their timing and certainty: unrealized MOIC is speculative, based on current valuations that can fluctuate, while realized MOIC is definitive, based on actual returns received from an investment. Both metrics are valuable for investors to assess and monitor the performance and potential of their investments over time. MOIC vs. IRR MOIC and IRR are both used to evaluate investment performance, but they do so in fundamentally different ways: MOIC measures the total return on an investment as a multiple of the original investment. It's calculated by dividing the current or exit value of an investment by the initial amount invested. MOIC provides a straightforward, time-independent snapshot of investment performance, showing how many times the invested capital has been returned. IRR, on the other hand, calculates the annualized effective compounded return rate of an investment, considering the time value of money. IRR is the rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero. It provides a time-weighted annual return, making it especially useful for comparing investments with different durations. The primary difference between MOIC and IRR is how they incorporate time: MOIC is a simple multiple, useful for quickly assessing the magnitude of return without considering the investment period. IRR provides a deeper analysis by considering the timing of cash flows, offering a rate of return that accounts for the duration of the investment, making it possible to compare investments on a more nuanced level. While MOIC offers a clear, immediate measure of how much value an investment has generated, IRR gives insight into the efficiency and timing of returns, accommodating more complex scenarios where the timing of cash inflows and outflows is a crucial factor. Why MOIC is Important in Venture Capital MOIC plays a crucial role in evaluating investment performance by providing a clear, direct measure of the financial returns relative to the initial capital invested. It does this by expressing the return as a multiple, showing investors how many times their original investment has been returned in value. This simplicity and directness make MOIC an invaluable tool for quickly assessing the effectiveness of investments in generating financial growth. MOIC helps investors understand the value generated from their investments by offering a straightforward metric that reflects the total increase in value of an investment, without the complexity of accounting for time or the pattern of cash flows. It enables investors to gauge the overall success and efficiency of their investments in turning the initial capital into a larger sum. By comparing the initial investment to the current or exit value, investors get a clear picture of the investment's performance and its contribution to their financial objectives. Related resource: VC Fund Performance Metrics 101 (and why they matter to LPs) Compares Returns Across Investments and Funds By expressing performance as a multiple, MOIC standardizes the evaluation of investment returns across different startups and VC funds, making comparisons straightforward despite variations in initial investment sizes. This standardization is possible because MOIC calculates returns relative to the invested capital, providing a ratio or multiple that directly reflects how many times the investment value has increased. For instance, an MOIC of 3x indicates that the investment value has tripled, regardless of whether the initial investment was $100,000 or $10 million. This approach abstracts away the absolute dollar amounts and focuses on the proportional return, enabling investors to compare the performance of various investments on an equal footing. MOIC thus serves as a universal metric that simplifies the assessment of financial efficiency and success across the diverse landscape of startup investments and VC fund portfolios, facilitating more informed decision-making processes for investors. Provides a Benchmark for Success MOIC serves as a robust benchmark for success by offering a uniform metric that quantifies investment performance as a multiple of the initial capital. This simplicity allows stakeholders to assess and compare the absolute return on investments across various ventures, irrespective of their scale or the amount of capital deployed. In the competitive landscape of venture capital, where the goal is to maximize returns on investment, MOIC distills the essence of financial success into a single, comprehensible figure. It enables investors to quickly identify high-performing investments and make informed decisions based on the capacity of startups to multiply the initial funds provided. By setting a clear, quantifiable standard, MOIC helps define what constitutes a successful venture within the industry, guiding both investors and entrepreneurs in their pursuit of exceptional growth and value creation. Tracks Progress Over Time MOIC can be calculated at various stages throughout the lifecycle of an investment, offering investors timely insights into its performance and future potential. By comparing the current or exit value of an investment to the original capital invested at different points, investors can track the progression of their investment's value over time. This dynamic application of MOIC allows stakeholders to monitor growth trends, evaluate the effectiveness of strategic decisions, and adjust their expectations for future returns based on real-time data. Such periodic assessments of MOIC provide a clear, ongoing picture of an investment's health and potential, empowering investors with the information needed to make informed decisions regarding additional investments, exits, or strategic shifts to maximize returns. How to Calculate MOIC Calculating MOIC involves a straightforward process, enabling investors to assess the performance of their investments at any point in time. Here’s a step-by-step guide to calculating MOIC, along with an example to clarify the process: Identify the Total Invested Capital: Determine the total amount of money invested in the venture. This includes all capital contributions made towards the investment. Determine the Current or Exit Value of the Investment: Assess the current market value of the investment if it has not been sold, or use the exit value if the investment has been liquidated. Calculate MOIC: Divide the current or exit value of the investment by the total invested capital. The formula is: MOIC = Current Value of Investment / Total Invested Capital​ Example: Let’s assume you invested $100,000 in a startup. After a few years, the current market value of your investment is $400,000. Total Invested Capital: $100,000 Current Value of Investment: $400,000 Using the MOIC formula: MOIC = $400,000 / $100,000 = 4 This means your investment has generated a return four times the original amount invested, indicating a significant increase in value and showcasing the investment's performance. By calculating MOIC at various points during the investment period, investors can monitor the progression and potential future returns of their investments. This continuous assessment helps in making informed decisions, whether it's about holding onto the investment, considering additional funding, or planning an exit strategy. What Is a Good MOIC? A good MOIC (Multiple on Invested Capital) typically indicates that an investment has generated a substantial return relative to the initial capital invested. In venture capital, a MOIC of 3x or higher is often considered good, as it demonstrates that the investment has tripled the original amount invested, reflecting strong value creation and investment performance. Example of a Good MOIC: If an investor puts $1 million into a startup and later exits the investment for $4 million, the MOIC would be 4x. This is considered a strong performance, as the investor has quadrupled their initial investment. Conversely, a bad MOIC falls below 1x, indicating that the investment has lost value and the investor receives back less capital than they originally invested. Example of a Bad MOIC: If an investor invests $1 million in a company, but the investment's value decreases, and they can only exit at $800,000, the MOIC would be 0.8x. This signifies a loss, as only 80% of the initial investment is recovered. Track Your Investment Data With Visible By leveraging Visible, investors can track critical portfolio company and investment data all from one place. Learn how to get started with Visible to track your crucial investment data here. Related resource: The Ultimate Guide to Startup Funding Stages
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[Webinar Registration] VC Portfolio Data Collection Best Practices
Collecting updates from portfolio companies on a regular basis is an important part of running smooth operations at a VC firm. Well-organized, accurate, up-to-date portfolio data helps investors provide better support, make data-informed investment decisions, and share more engaging insights with LPs. However, collecting data from portfolio companies can also be a time-consuming and frustrating process if you’re not implementing best practices. On Thursday, March 28th, Visible is hosting a product webinar covering tips for streamlining the portfolio data collection process for VCs. This webinar is designed for any VC looking to upskill their portfolio monitoring processes. Current Visible customers will benefit from a deep dive into recent product updates related to Visible AI Inbox and Visible Requests. Topics Discussed: The top 6 most common metrics to collect from companies Best practices for increasing response rates from portfolio companies Demo of the most recent product updates that help streamline the data collection process Time for questions
investors
Product Update: Turn Emails Into Insights With Visible AI Inbox
Structured data. The holy grail of business intelligence. Structured data unlocks a realm of possibilities, from setting benchmarks to enhancing decision-making processes. Yet, in the venture capital landscape, accessing reliable, structured data remains a formidable challenge. This is precisely why we created the Visible AI Inbox. With unique features like automated metric detection and file parsing, the Visible AI Inbox stands out as a pioneering solution for portfolio monitoring. Discover how it can transform your data strategy by meeting with our team. Turning email into insights We believe that investors should spend time sourcing new deals and helping founders, not manually copying and pasting data from email 🙂. The AI Inbox helps aggregate insights that exist siloed in data, files, and updates across a venture firm. Updates from founders often stay stuck in one team member's inbox because it's too time-consuming to extract and enter the data and files into a more centralized repository. Visible AI Inbox makes this possible within seconds. Requests + AI Inbox = A Complete Picture The addition of the AI Inbox continues to advance our market-leading portfolio monitoring solution. The pairing of Requests + the AI Inbox will give investors a holistic view of portfolio company performance across a fund. Visible continues to be the most founder-friendly tool on the market. We’ll continue to build tools in existing workflows where both founders and investors live every day. How Does it Work? Visible AI Inbox works in three simple steps. Forward emails to a custom AI inbox email address Visible AI automatically maps data and files to portfolio companies Investors can review and approve content before it is saved From there, dashboards, tear sheets, and reports are all automatically updated on Visible. Learn more about how Visible AI Inbox can streamline workflows at your firm by meeting with our team. FAQ Will this be available on all plans? Visible AI Inbox is only available on certain plans. Get in touch with your dedicated Investor Success Manager if you want to explore adding this to your account. How is Visible addressing privacy and security with Visible AI Inbox? No data submitted through the OpenAI API is used to train OpenAI models or improve OpenAI’s service offering. Visible AI Inbox leverages OpenAI GPT 4 and proprietary prompts to extract data in a structured way and import it into Visible. If you’re uncomfortable with utilizing OpenAI to optimize your account, you can choose not to utilize this feature. Please feel free to reach out to our team with any further questions. These processes adhere to the guidelines outlined in Visible’s privacy policy and SOC 2 certification.

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founders
What is a Schedule K-1: A Comprehensive Guide
Understanding the intricacies of Schedule K-1 is crucial for founders and business owners navigating the tax landscape. Schedule K-1, an IRS tax form, plays a pivotal role in the financial and tax reporting for entities such as partnerships, S corporations, and trusts. Its primary function is to report each partner's share of income, deductions, and credits, allowing these amounts to be taxed at the individual level rather than at the corporate rate. This mechanism is a cornerstone of the "pass-through" taxation model, which is fundamental to entities that distribute earnings directly to their members​​. Getting to Know Schedule K-1 The Schedule K-1 plays a crucial role in aligning the financial outcomes of entities like partnerships, S corporations, and trusts with the tax obligations of their individual members or beneficiaries. This alignment is pivotal, ensuring that income, deductions, and credits are reported transparently and accurately, directly impacting the tax filings of individuals involved in these business structures. What is a K-1 Form? The Schedule K-1 form is an essential tool used by the IRS to manage the complex "pass-through" taxation process, where the tax liability passes from the entity to the individual. This form reports the share of income, deductions, and credits from entities such as partnerships, S corporations, trusts, and estates to the IRS. Its primary purpose is to ensure that the income earned by these entities is taxed at the individual level, reflecting each member's or beneficiary's share of the entity's financial activities during the tax year. This approach avoids the double taxation typically associated with corporate earnings, ensuring a fair and equitable tax treatment for all parties involved. Who Needs to Fill It Out? The requirement to complete and file a Schedule K-1 extends to a diverse group of taxpayers. Partners in partnerships, shareholders in S corporations, and beneficiaries of trusts and estates must report their share of the entity's income, deductions, and credits through this form. This broad applicability underscores the form's importance in tax filing, ensuring that individuals accurately report their income from various sources and comply with federal tax laws. Related resource: A User-Friendly Guide to Startup Accounting Difference Between W-2s and K-1s Understanding the distinctions between Schedule K-1 and W-2 forms is crucial for accurately navigating tax responsibilities. While employers issue W-2 forms to report wages, salaries, and other compensation paid to employees, Schedule K-1s serve a different purpose. K-1 forms report the income, losses, and dividends distributed by partnerships, S corporations, and other entities to their partners or shareholders. This fundamental difference highlights the diverse nature of income sources and the importance of correctly reporting them to the IRS. The K-1 form ensures that income from pass-through entities is taxed appropriately at the individual level. At the same time, W-2s cater to direct employment income, each playing a unique role in the broader tax reporting ecosystem. Types of K-1 Forms by Business Structure Navigating the tax implications of business earnings requires understanding the different Schedule K-1 forms applicable to various entity structures. Each type of entity—partnerships, S corporations, trusts, estates, and foreign alliances—uses a specific version of Schedule K-1 to report the income, deductions, and credits attributable to its members, shareholders, or beneficiaries. This differentiation ensures that each entity complies with tax regulations while providing accurate information for individual tax filings. K-1 Forms for Partnerships The Schedule K-1 form (Form 1065) is vital for partnerships. It details each partner's share of the business's income, deductions, and credits, allowing this information to be reported on individual tax returns. Partnerships, including general partnerships (GP), limited partnerships (LP), and limited liability partnerships (LLP), utilize this form to distribute the financial outcomes of the business operations to the partners, reflecting their respective shares according to the partnership agreement or the proportion of their investment​​. K-1 Forms for S Corporations S corporations use Schedule K-1 (Form 1120-S) to report each shareholder's proportionate share of the corporation's income, deductions, and credits. This form facilitates the pass-through taxation feature of S corporations, where the income flows through to the shareholder's tax returns. It's essential for ensuring that shareholders accurately report their income from the corporation, maintaining compliance with tax laws while avoiding double taxation of corporate earnings​​. K-1 Forms for Trusts and Estates Trusts and estates report income, deductions, and credits to their beneficiaries using Schedule K-1 (Form 1041). This form is crucial for managing income distribution from these entities, allowing beneficiaries to include this information in their tax filings. Using Schedule K-1 by trusts and estates ensures that the income is taxed at the beneficiary level, providing a precise tax reporting and compliance​​mechanism. K-1 Forms for Foreign Partnerships The Schedule K-1 forms issued to U.S. partners regarding foreign partnerships include additional requirements and considerations. These K-1 forms must account for income earned in other countries, and U.S. partners must report this foreign income on their tax returns. The complexity of tax treaties and international tax laws necessitates careful attention to accurately report foreign income and claim applicable tax credits or deductions. This ensures U.S. partners comply with U.S. tax obligations and the tax regulations of the foreign country where the income was earned. Things to Consider While Filling Your K-1 Filling out your Schedule K-1 is more than transferring numbers from business documents to a tax form. This process involves nuanced considerations and complexities that can significantly affect your tax responsibilities and financial planning. It's crucial to approach this task thoroughly and understand the underlying principles and implications to ensure accuracy and compliance with tax laws. Partnership Agreements Partnership agreements are vital in reporting income, losses, and other items on Schedule K-1. These agreements outline the distribution of profits and losses among partners and can significantly impact the figures reported on each partner's K-1. Different contracts may allocate income and losses based on various factors, such as the percentage of ownership, invested capital, or other agreed-upon terms. This allocation directly influences each partner's tax obligations, highlighting the importance of accurately reflecting the partnership agreement terms on Schedule K-1. Basis Calculation The concept of basis calculation is central to understanding your financial stake in an entity and its implications on your taxes. Your basis in the partnership, S corporation, or trust represents your investment in the entity for tax purposes. It's crucial to determine the taxable portion of distributions you receive and calculate gain or loss on the sale of your interest in the entity. The basis starts with your initial investment and is adjusted annually by factors including your share of the entity's income, losses, and distributions. Understanding and accurately calculating your basis ensures you report the correct income or loss on your tax return, avoiding potential tax issues. Reporting Income Accurate income reporting on Schedule K-1 is essential for compliance with tax laws and minimizing your tax liability. Incorrect reporting can lead to audits, penalties, and interest on unpaid taxes. It's imperative to carefully review the K-1 form to ensure that income, deductions, and credits are correctly reported according to the entity's financial statements and tax returns. Any discrepancies should be resolved before filing to avoid potential issues with the IRS. Accurate reporting is crucial for preventing penalties and ensuring that you pay the correct amount of tax, neither overpaying nor underpaying. How to File Your Schedule K-1 Filing your Schedule K-1 is essential in complying with tax regulations for individuals involved in partnerships, S corporations, trusts, and estates. Understanding the process and ensuring the inclusion of all necessary information is critical to a smooth and accurate filing experience. What Information Should You Include? When completing your Schedule K-1, there are several critical pieces of information you need to ensure completeness and accuracy in your filing: Entity Information: This includes the name, address, and EIN (Employer Identification Number) of the partnership, S corporation, trust, or estate. This identifies the entity with the IRS and ties your tax situation to the correct business entity. Partner or Shareholder Information: Your name, address, SSN (Social Security Number), or ITIN (Individual Taxpayer Identification Number) must be accurately reported. This information links you to the entity and ensures that your share of income, deductions, and credits is correctly reported to the IRS. Tax Year: Indicate the tax year for which the Schedule K-1 is being filed. This specifies the period for which the reported figures apply. Share of Income, Deductions, and Credits: Detail your specific share of the entity's income, deductions, and credits. This section is the core of the Schedule K-1, outlining what needs to be reported on your tax return. It includes various types of income, such as rental income, interest, dividends, capital gains, and deductions and credits you're entitled to claim. Capital Account Analysis: If applicable, include changes in your capital account for the year. This involves reporting contributions, withdrawals, and any changes in the ownership percentage. Additional Information: Some K-1 forms may require further information, such as details on foreign transactions, alternative minimum tax items, or other specific adjustments. This is particularly relevant for entities involved in complex transactions or those with international aspects. Accuracy in reporting these details is paramount. The information provided on Schedule K-1 directly affects your individual income tax return and your overall tax liability. Errors or omissions can lead to audits or penalties from the IRS, making it crucial to double-check all entries and consult with a tax professional if you have any uncertainties. Schedule K-1 FAQs Navigating the complexities of Schedule K-1 can prompt many questions, primarily as taxpayers work to comply with IRS regulations and optimize their tax outcomes. Below, we address some of the most common queries related to Schedule K-1, aiming to shed light on its intricacies and help taxpayers understand their responsibilities. K-2 vs. K-3: What's the Difference? The distinction between Schedule K-2 and K-3 is primarily about the type of information they report, catering to the IRS's requirements for international tax dealings. Schedule K-2 is used by the entity (partnership, S corporation, trust, or estate) to report items of international tax relevance at the entity level. Meanwhile, Schedule K-3 is provided to the partners, shareholders, or beneficiaries, indicating their share of the global items reported on Schedule K-2. K-2 is for the entity's records, and K-3 is for the individual's tax return, ensuring compliance with international tax obligations. Related resource: What Is Form 3921, and How Does It Affect Your Employees? When Are K-1 Forms Due? The deadline for issuing Schedule K-1 forms varies depending on the entity type. For partnerships and S corporations, the K-1 forms should be issued by March 15th or the 15th day of the third month following the end of the fiscal year if the entity operates on a fiscal year basis. Trusts and estates have until April 15th, or the 15th day of the fourth month after the end of their fiscal year, to issue K-1 forms. These deadlines ensure recipients have sufficient time to include this information in their tax filings. Is K-1 Considered Income? Yes, the income reported on Schedule K-1 is considered taxable income for the recipient and must be included on their income tax return. This income can affect the taxpayer's overall tax liability, potentially altering their tax bracket and influencing the total taxes owed. It's essential to accurately report K-1 income to avoid underpayment penalties and calculate the correct tax liability. When Should I Get My K-1? Recipients should typically receive their Schedule K-1 by the abovementioned deadlines: March 15th for partnerships and S corporations and April 15th for trusts and estates. If you haven't received your K-1 by these dates, contacting the entity is advisable to inquire about the delay. Delays in receiving your K-1 can impact your ability to file your tax return on time, so proactive communication is key. If necessary, consider filing for an extension on your tax return to accommodate the late arrival of the K-1. Find the Right Investors for Your Startup Navigating the complexities of Schedule K-1 and understanding its implications is crucial for startup founders looking to maintain compliance and optimize their tax positions. Securing the right investors becomes equally important as you steer your startup towards growth. Leveraging platforms like Visible can streamline this journey, find investors, track a fundraiser, and share a pitch deck directly from Visible. Give Visible a free try for 14 days here. Related resource: EBITDA vs Revenue: Understanding the Difference
founders
What is Acquihiring? A Comprehensive Guide for Founders
In the dynamic world of startups and technological innovations, founders constantly seek strategies to ensure growth, competitive advantage, and talent acquisition. One such strategic approach that has gained prominence is acquihiring. In this guide we’ll demystify acquihiring, offering insights into its definition, differentiation from traditional hiring and acquisitions, operational mechanics, and its myriad benefits for both acquiring companies and founders considering this pathway. By exploring the nuances of acquihiring, founders can better navigate the complexities, ensuring informed decisions that propel their ventures toward sustained success. What is Acquihiring? Acquihiring, a blend of "acquisition" and "hiring," describes the process where a company is acquired primarily to onboard its employees, not necessarily for its products or services. This strategy often provides a graceful exit for startups facing financial hurdles, while also offering acquiring companies rapid access to a skilled workforce​​​​. Acquihiring vs. Traditional Hiring and Company Acquisitions Acquihiring, traditional hiring, and company acquisitions are distinct strategies used by companies to grow their teams, acquire talent, and expand their business operations. Each approach has unique characteristics and serves different purposes within the corporate strategy. Acquihiring vs. Traditional Hiring Acquihiring is a strategy where a company acquires another company primarily to hire its employees, rather than to gain control of its products or services. This approach is particularly appealing when a company wants to onboard a whole team that has already demonstrated the ability to work well together, thereby bypassing the lengthy and often uncertain process of assembling a new team through individual hires​​​​. Traditional Hiring involves the process of recruiting individuals to fill specific roles within a company. This method focuses on assessing individual candidates through interviews, skill tests, and other evaluation criteria to fill a vacancy. Traditional hiring can be time-consuming and requires resources for sourcing, interviewing, and onboarding each new employee individually. Acquihiring vs. Company Acquisitions Company Acquisitions typically involve one company taking over another to gain control of its assets, including products, services, technology, and sometimes the workforce. The primary goal of a company acquisition is often to expand the acquirer's product line, enter new markets, or eliminate competition, not specifically to hire the talent​​​​. Acquihiring, while technically a form of acquisition, has a different focus. The main goal is to integrate the talent from the acquired company into the acquiring company's workforce. In many cases, the products or services of the acquired company may be phased out or significantly altered as the team is redirected towards projects within the acquiring company. Acquihiring is less about the acquisition of business operations and more about the rapid assimilation of a skilled workforce​​​​​​. Acqui-hire Example A notable example of an acquihire is Yahoo's acquisition of Tumblr for $1.1 billion, mainly to recruit Tumblr's founder, David Karp. Although the venture didn't turn out as successful as hoped, it illustrates the potential scale and intent behind acquihiring strategies​​. How Does Acquihiring Work? Acquihiring stands out as a strategic approach, blending acquisition with talent recruitment to enhance a company's workforce through the integration of entire teams. This method focuses on harnessing collective talent, ensuring a swift and effective transition of skilled individuals who have proven their ability to work together. 1. Target Identification and Initial Contact This step in the acquihiring process is critical for laying the foundation for a successful acquisition. During this phase, a larger company proactively scouts for smaller companies or startups that have a team with the skills, expertise, and cultural fit it desires. This search is often driven by the larger company's strategic needs, such as filling specific talent gaps, entering new markets, or enhancing technological capabilities. Once a potential target is identified, the larger company initiates contact to gauge interest in an acquisition. This initial outreach is typically done discreetly to maintain confidentiality and to prevent any unnecessary disruption to the target company's operations. The aim here is to open a dialogue about the possibility of an acquihire, discussing preliminary terms and understanding the smaller company's openness to such a proposal. This step requires meticulous research and networking, often involving the use of intermediaries such as investment bankers, venture capitalists, or mutual contacts to make introductions. The larger company must carefully assess not just the technical capabilities of the potential target's team, but also their compatibility with the larger company's culture and the feasibility of integrating the team into its existing structures. 2. Due Diligence and Valuation This is a pivotal phase in the acquihiring process where the acquiring company undertakes an exhaustive assessment of the target company's overall health and worth. This comprehensive review encompasses an evaluation of the target's financials, assets, liabilities, legal standings, team capabilities, and any other pertinent factors that could affect the acquisition's value and viability. Financial Analysis: The acquiring company scrutinizes the target's financial statements, revenue models, cash flow, and future financial projections. This helps in understanding the financial health and sustainability of the target company. Asset Evaluation: Beyond financials, tangible and intangible assets including intellectual property, technology, customer databases, and brand value are assessed. This evaluation helps in understanding what the acquiring company is precisely gaining beyond the talent. Liability and Legal Review: Potential liabilities, including debts, legal disputes, and contractual obligations, are closely examined. The acquiring company also reviews compliance with laws and regulations to identify any potential legal risks. Team Assessment: A crucial part of due diligence in acquihiring, this involves evaluating the target company’s team's skills, experience, and cultural fit within the acquiring company. Understanding team dynamics and potential retention strategies is key. Valuation: Based on the comprehensive due diligence findings, the acquiring company develops a valuation of the target. This valuation reflects not just the tangible assets and financial health of the company but also intangible aspects like the team's potential contribution to the acquiring company’s future growth. Making an Offer: Armed with a valuation, the acquiring company formulates an offer to acquire the target company. This offer considers the due diligence findings and reflects a price that accounts for both the assets and liabilities uncovered during the evaluation. 3. Negotiation and Agreement In this step, both the acquiring and target companies engage in detailed discussions to finalize the terms of the acquisition. This stage involves a series of negotiations to align the interests and expectations of both parties regarding compensation, roles of key team members, and the plan for integrating the team into the acquiring company. The main components of this step include: Compensation Negotiation: One of the primary focus areas is the negotiation of compensation packages for the key team members of the target company. This includes not only salaries but also bonuses, stock options, and other benefits. The aim is to ensure that the offers are attractive enough to retain the top talent post-acquisition. Roles and Responsibilities: Discussions around the specific roles and responsibilities that the acquired team members will assume within the acquiring company are essential. It's important to clarify expectations and career paths to ensure a smooth transition and integration. Integration Plans: Both companies collaborate to develop a comprehensive plan for integrating the acquired team into the acquiring company. This includes detailing how and when the team will be integrated into existing projects, training programs to acquaint them with new processes and systems, and any cultural assimilation activities. Legal and Contractual Agreements: Once the terms are agreed upon, drafting a formal contract becomes imperative. This contract encompasses all the negotiated terms, including compensation, roles, integration plans, and any other agreements made during the negotiations. Legal teams from both sides review the contract to ensure it adheres to all regulatory and legal requirements. Signing the Contract: The final step of this phase is the signing of the contract by representatives from both companies, officially sealing the acquisition agreement. This formalizes the acquihire, allowing the process to move forward to the announcement and transition phase. 4. Announcement and Transition By meticulously planning and executing the announcement and transition phase, companies can minimize disruptions, maintain operational continuity, and harness the full potential of the acquired talent, setting the stage for successful collaboration and growth. Key aspects of this step include: Official Announcement: This involves crafting and distributing a well-thought-out announcement that highlights the benefits of the acquisition to all stakeholders. The message is usually optimistic, focusing on the synergies between the two companies, the value the acquired team brings, and how the acquisition will drive future growth and innovation. Communication Strategy: Effective communication is critical during this phase. The strategy often includes Q&A sessions, meetings, and press releases to address any concerns and provide clarity. Transparency and openness in communication help in mitigating uncertainties and fostering trust among the team members of both companies. Integration into Projects: Following the announcement, the acquired team is gradually introduced to their new roles within the acquiring company. This involves aligning them with projects that benefit from their expertise and where they can start contributing effectively. The goal is to ensure a seamless integration where the new team members feel valued and can immediately begin making an impact. Cultural Assimilation: Integrating the acquired team into the company culture is equally important. This can include orientation programs, team-building activities, and mentorship arrangements to help the new team members understand the company's values, working style, and expectations. It's crucial for the acquired team to feel welcomed and for the existing employees to be open to the new ideas and perspectives they bring. Monitoring and Feedback: Throughout the transition, it's vital to monitor progress and solicit feedback from both the acquired team and existing employees. This feedback loop can identify any integration issues early on and allow for adjustments to the transition plan, ensuring a smoother assimilation process. 5. Integration and Role Assignment By carefully managing the integration and role assignment process, the acquiring company can maximize the value of the acquihire, ensuring that the new team members are engaged, productive, and committed to their new roles, contributing to the overall success and growth of the company. This phase can be broken down into several key activities: Role Alignment: Assigning the right roles to the new team members is crucial. This involves understanding their strengths, experiences, and career aspirations and matching them with the needs and opportunities within the acquiring company. The objective is to place these individuals in positions where they can make the most impact and feel fulfilled in their work. Retention Strategies: To ensure the long-term success of the acquihire, the acquiring company must implement retention strategies that address the unique needs and expectations of the new team members. This could include competitive compensation packages, career development opportunities, incentives aligned with company goals, and creating an inclusive culture that values their contributions. Cultural Integration: Beyond just assigning roles, integrating the new team members into the company culture is essential. This might involve orientation sessions, cultural workshops, and team-building activities designed to foster connections between new and existing employees, helping them to understand and embrace the company's values, practices, and expectations. Training and Development: Providing training and development opportunities is key to ensuring that the new team members can effectively contribute to their new roles. This could include technical training, leadership development programs, or mentorship arrangements to help them adapt to their new environment and responsibilities. Feedback and Adjustment: Continuous feedback mechanisms should be established to monitor the integration process and address any challenges or concerns that arise. This could involve regular check-ins, surveys, and feedback sessions that allow new team members to express their experiences and for management to make necessary adjustments to the integration plan. Advantages of Acquihires for the Acquiring Company Acquihiring provides immediate access to a skilled workforce, enabling faster integration and promoting team cohesion. Moreover, it is cost-effective compared to traditional hiring processes​​​​. Rapid Access to Skilled Workforce Acquihires provide immediate access to a skilled and experienced workforce, streamlining the process that typically involves individual recruitment efforts. This strategy is especially beneficial in industries where talent is scarce and the recruitment process is lengthy and competitive. Here's how acquihires facilitate rapid access to a capable team: Seamless Team Integration: Acquihiring a team means bringing on board a group of professionals who have already proven their ability to work together effectively. This existing synergy among team members can significantly reduce the ramp-up time for projects, as the team is accustomed to collaboration and has established workflows. Industry Expertise: Teams acquired through acquihires often come with specialized knowledge and skills tailored to specific projects or technologies. This expertise can be immediately leveraged, allowing the acquiring company to accelerate development timelines and innovate more rapidly. Cultural Fit: The process of acquihiring includes evaluating the cultural fit of the team with the acquiring company. A good match ensures that the new team members can quickly adapt to and thrive in their new environment, contributing to their immediate effectiveness and long-term retention. Reduced Training Time: Since the team is already familiar with working together on similar projects or technologies, the time and resources required for training are significantly less compared to hiring individuals from different backgrounds. This allows for a quicker transition to productive work. Strategic Advantage: By acquiring a team with a track record of success, companies can immediately strengthen their position in competitive markets. This rapid infusion of talent can enhance innovation, product development, and market responsiveness. Faster Integration The advantage of faster and smoother integration of the acquired team into the acquiring company's culture and operations is a significant benefit of the acquihiring process. This accelerated integration is primarily due to the collective transition of a team that has pre-existing working relationships and dynamics. Here's how this benefit manifests: Pre-established Team Dynamics: Unlike individual hires who may take time to adjust to a new team environment, acquihired teams already have established working relationships. This familiarity can lead to quicker project kickoff times and more efficient collaboration, as the team members already understand each other's working styles and strengths​​​​. Alignment with Company Goals: Acquihired teams often undergo a vetting process to ensure their goals and values align with those of the acquiring company. This alignment helps in smoother cultural integration, as the team is likely to share similar motivations and work ethics, reducing friction and misunderstandings​​​​. Streamlined Onboarding Process: The collective onboarding of an acquihired team can be more efficient than individual onboarding processes. Tailored orientation sessions can address the specific needs and questions of the team as a whole, ensuring they understand the company's operations, expectations, and culture from the outset​​​​. Leadership Continuity: In many cases, the leadership structure within the acquihired team remains intact, providing a sense of continuity for the team members. This can help in maintaining morale and productivity as the team transitions into the new company, with familiar faces guiding them through the process​​. Retention Strategies: The acquihiring process often includes discussions and agreements on retention strategies that are specifically tailored to the needs and expectations of the acquired team. This proactive approach can address potential concerns early on, ensuring that the team members feel valued and see a clear path for growth within the new company, further smoothing the integration process​​​​. Team Cohesion The pre-existing cohesion and established dynamics of an acquired team significantly contribute to enhanced productivity and innovation within the acquiring company. This effect is rooted in several key factors that stem from the team's history of collaboration: Efficient Communication: Teams with a history of working together have developed effective communication channels and understandings. This efficiency reduces misunderstandings and accelerates decision-making processes, allowing for faster project development and problem-solving​​​​. Trust and Mutual Understanding: The trust built within a pre-existing team encourages open discussions and the sharing of ideas without fear of judgment. This environment fosters creativity and can lead to innovative solutions, as team members feel comfortable proposing and critiquing ideas​​​​. Aligned Work Ethic and Values: Teams that have developed a cohesive work culture have aligned values and work ethics, which can seamlessly integrate into projects at the new company. This alignment helps in maintaining a high level of motivation and dedication towards project goals, directly impacting productivity and the quality of work​​​​. Rapid Conflict Resolution: Familiarity among team members means conflicts are likely to be resolved more quickly due to an understanding of each other's personalities and work styles. Quick resolution of disputes keeps the focus on progress and innovation, rather than getting bogged down in interpersonal issues​​​​. Collective Creativity: A team that has worked together successfully in the past has likely developed a collective creativity, where the sum is greater than its parts. This dynamic can lead to the generation of unique ideas and creative approaches to challenges, driving innovation within the acquiring company​​​​. Cost-effectiveness The cost-effectiveness of acquihiring, when compared to traditional hiring processes, is rooted in several key areas where efficiency gains and cost savings are realized: Reduced Recruitment Costs: Traditional hiring involves costs associated with advertising positions, sourcing candidates, conducting interviews, and potentially hiring recruitment agencies. Acquihiring bypasses many of these steps by bringing in an entire team at once, significantly reducing the per-capita cost of recruitment​​​​. Lower Training and Onboarding Expenses: Acquihired teams require less time and resources for onboarding and training because they are accustomed to working together and can leverage their pre-existing knowledge and skills. This contrasts with individually hired employees who may need extensive training to reach full productivity​​​​. Minimized Turnover and Retention Costs: Acquihiring often includes negotiations of terms that are specifically designed to retain key employees, thus potentially reducing turnover costs. High turnover in traditional hiring can lead to repeated cycles of recruitment, training, and lost productivity, all of which have significant financial implications​​​​. Immediate Productivity Gains: Since acquihired teams can hit the ground running, they contribute to projects and objectives much sooner than individually hired employees who may take months to acclimate and become fully productive. This immediate contribution can accelerate time to market for products and services, providing a competitive advantage and potentially increasing revenue sooner​​​​. Avoidance of Competitive Salary Bidding: In the competitive market for top talent, companies often find themselves in costly bidding wars to attract individual candidates. Acquihiring can sidestep this process, as compensation packages are negotiated at the team level, potentially avoiding inflated salaries that can occur in competitive hiring scenarios​​​​. Related resources: Types of Venture Capital Funds: Understanding VC Stages, Financing Methods, Risks, and More A Quick Overview on VC Fund Structure Why Would a Founder Consider Being Acquihired? Exploring the concept of acquihiring reveals its attractiveness to founders seeking not just an exit but also growth opportunities within larger entities. This strategic choice blends financial benefits with the potential for continued innovation, presenting a path for both personal and project advancement. Next, we'll delve into the reasons driving founders towards acquihiring as a viable and beneficial option. Financial Incentives Acquihires offer financial rewards and security for founders, especially when traditional funding routes prove challenging. This acquisition strategy not only provides founders with immediate financial benefits, often in the form of upfront cash and stock options in the acquiring company but also ensures a safety net that is particularly valuable in uncertain economic climates or competitive industries. Founders facing difficulties in raising additional rounds of funding or looking to mitigate financial risks find acquihires an appealing option. The financial payout can significantly outweigh the potential returns from an uncertain future, providing both a secure exit and a rewarding transition into new roles with the stability of a larger organization behind them​​​​​​. Continued Legacy and Project Survival An acquihire offers founders a unique opportunity to ensure the continuity and further development of their projects within the stable and resource-rich environment of a larger, established company. This arrangement allows the founder's vision and project to survive and potentially thrive, even if the original startup faced hurdles in scaling or funding. By becoming part of a bigger entity, the project benefits from access to greater resources, including technology, expertise, and networks, which can accelerate development and expansion in ways that might not have been possible independently. Additionally, the alignment with a larger company's strategic goals can inject new life and direction into the project, ensuring its legacy continues while also contributing to the broader success of the acquiring company. This transition can be particularly gratifying for founders passionate about their work, as it allows their innovations to reach wider audiences and have a more significant impact, all while securing their financial future and professional growth​​​​​​. Access to Resources Becoming part of a larger organization through acquihiring opens doors for founders and their teams to a wealth of resources, advanced technology, and expansive networks that might have been inaccessible otherwise. This integration offers several key advantages: Enhanced Resources: Larger companies often have deeper pockets and more substantial budgets allocated for project development, marketing, and research. This influx of resources can provide the necessary fuel for accelerated growth and product enhancement, allowing founders to scale their projects more efficiently than on their own. Advanced Technology Access: Being under the umbrella of a well-established company means having access to cutting-edge technologies and tools. This access can significantly shorten development cycles, improve product offerings, and foster innovation, keeping the project at the forefront of technological advancements. Expansive Networks: Larger organizations usually have well-established networks, including industry contacts, potential customers, and partners. Being part of such an entity allows founders to tap into these networks for business development, strategic partnerships, and even mentorship opportunities, which can be invaluable for growth and expansion. Market Reach: The acquiring company's established brand and market presence can significantly boost the project's visibility and credibility. This enhanced market reach can open up new customer segments and territories, driving increased adoption and revenue streams. Connect with Your Next Business Partners with Visible Navigating through the complexities of startup evolution and expansion, this article has unveiled the strategic maneuver of acquihiring, showcasing its pivotal role in facilitating growth, competitive edge, and talent integration. Acquihiring stands distinguished, not only as a means to onboard a cohesive, skilled workforce swiftly but also as a conduit for ensuring the survival and prosperity of innovative projects under the aegis of larger, resource-abundant organizations. Stay up to date with our resources by subscribing to our weekly newsletter here. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: Portfolio Management: What it is and How to Scale it at Your VC Firm
investors
[Webinar Registration] VC Portfolio Data Collection Best Practices
Collecting updates from portfolio companies on a regular basis is an important part of running smooth operations at a VC firm. Well-organized, accurate, up-to-date portfolio data helps investors provide better support, make data-informed investment decisions, and share more engaging insights with LPs. However, collecting data from portfolio companies can also be a time-consuming and frustrating process if you’re not implementing best practices. On Thursday, March 28th, Visible is hosting a product webinar covering tips for streamlining the portfolio data collection process for VCs. This webinar is designed for any VC looking to upskill their portfolio monitoring processes. Current Visible customers will benefit from a deep dive into recent product updates related to Visible AI Inbox and Visible Requests. Topics Discussed: The top 6 most common metrics to collect from companies Best practices for increasing response rates from portfolio companies Demo of the most recent product updates that help streamline the data collection process Time for questions

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founders
Advisory Shares Explained: Empowering Entrepreneurs and Investors
Managing company equity is a crucial part of a founder’s job duty. In the early days of building a business, chances are there will be countless advisors, investors, peers, etc. that help a business. However, most early stage businesses do not have the cashflow to compensate every advisor along the way. Founders need to get crafty with how they compensate their earliest advisors and experts — enter: advisory shares. We always recommend consulting a lawyer before taking further action on advisory shares. Learn more about advisory shares and how you can leverage them for your business below: What Are Advisory Shares? As put by the team at Investopedia, “One common class of stock is advisory shares. Also known as advisor shares, this type of stock is given to business advisors in exchange for their insight and expertise. Often, the advisors who receive this type of stock options reward are company founders or high-level executives. Advisor shares typically vest monthly over a 1-2 year period on a schedule with no cliff and 100% single-trigger acceleration.” Advisor Shares vs. Regular Shares (or Equity) Advisor shares come in different shapes and sizes. There is not a technical definition of advisor shares but is rather any form of equity in a business. Learn more about the characteristics of advisory shares below: Characteristics of Advisory Shares As mentioned above, advisor shares typically vest monthly over a 1-2 year period with no cliff. Advisory shares are typically granted as stock options but not every company grants their shares in the same way. This generally comes in the form of Non-Qualified Stock Options (NSOs). Related Read: The Main Difference Between ISOs and NSOs How Do Advisory Shares Work? While advisory shares can take on different forms, they typically can be boiled down to a few similarities. Of course, these can change depending on your business. Exchanged for advice or expertise Typically offered as NSO stock options Follow a shorter vesting schedule Learn more about how advisory shares typically work below: Implement a Startup Advisor Agreement As put by the team at HubSpot, “A startup advisor agreement is a contract between a startup and its advisor. This agreement outlines the terms of the relationship, including the responsibilities of each party and the compensation the advisor will receive.” There are countless advisor agreement templates online to get you started. The Founder Institute offers a free template called the FAST Agreement. Determine the Vesting Schedule As advisor shares are for advisors that offered their expertise, they are typically granted on a shorter vesting schedule because their value is given over a shorter amount of time. This is typically a 1 or 2 year vesting schedule (as opposed to the 4 year vesting schedule traditionally used for startup employees). Benefits of Advisory Shares Advisory shares come with their own set of pros and cons. Properly maintaining and distributing equity is a critical role of a startup founder so understand the benefits, and drawbacks, of offering advisory shares is a must. Related Resource: 7 Essential Business Startup Resources Learn more about the benefits of offering startup advisory shares below: Access to Real Experts When setting out to build a business, chances are most founders lack expertise in certain areas when it comes to building a business or in their market. However, most early-stage companies are typically strapped for cash and are unable to afford the defacto experts in the space. With advisor shares, startup founders can attract real experts to get guidance and strategic support in the early days in return for shares in the business. Related Resource: Seed Funding for Startups 101: A Complete Guide Better Network Credibility If hiring the right advisor, chances are they will be able to help beyond strategic advice or their expertise. They will be able to expose your business to their network and will be able to make introductions to new business opportunities, partnerships, investors, and potential hires. Cost-Effective Compensation As we previously mentioned, most businesses that benefit most from advisors are unable to offer them a salary or cash compensation. With advisor shares, startup founders are able to offer shares as compensation and conserve thei cash to help with scaling their business and headcount. Drawbacks of Advisory Shares Of course, offering advisor shares is not for everyone. While there are benefits to offering advisor shares, there are certainly drawbacks as well. Weighing the pros and cons and determining what is right for your business is ultimately up to you. We always recommend consulting with a lawyer or counsel when determining how to compensate advisors. Diluted Ownership The biggest drawback for most founders will be the diluted ownership. By offering shares to advisors, you will be diluting the ownership of yourself and existing shareholders. As advisors are fully vested in 1-2 years, they will potentially not be invested in future success as other stakeholders and could be costly when taking into account the diluted ownership. Potential Conflicts of Interest Advisors might not have the same motivators and incentives as your employees and other shareholders. As their ownership is generally a smaller % and their shares vest early, they are potentially not as incentivized for the growth of your company as employees and larger % owners will be. Getting in front of these conversations and making sure you have a good read on any potential advisors before bringing them onboard is a good first step to mitigate potential conflicts. Extra Stakeholder to Manage Chances are most advisors are helping other companies as well. This means that their attention is divided and you will need to ensure you are getting enough value to warrant dilution. This also means that you are responsible for managing a relationship and communication with another stakeholder in your business — what can be burdensome on some founders. The 2 Variations of Advisory Shares Advisory shares are generally offered in 2 variations — restricted stock awards and stock options. Learn more about each option and what they mean below: Restricted Stock Awards As put by the team at Investopedia, “A restricted stock award is similar to an RSU in a number of ways, except for the fact that the award also comes with voting rights. This is because the employee owns the stock immediately once it is awarded. Generally, an RSU represents stock, but in some cases, an employee can elect to receive the cash value of the RSU in lieu of a stock award. This is not the case for restricted stock awards, which cannot be redeemed for cash.” Stock Options As we mentioned, NSOs (Non-Qualified Stock Options) are commonly used for advisor shares. As put by the team at Investopedia, “A non-qualified stock option (NSO) is a type of employee stock option wherein you pay ordinary income tax on the difference between the grant price and the price at which you exercise the option… Non-qualified stock options require payment of income tax of the grant price minus the price of the exercised option.” Who Gets to Issue Advisory Shares? Issuing advisory shares is typically reserved for the founder or CEO of a company. Having a decision-making process and gameplan when issuing advisory shares is important. This might mean offering no shares at all, having an allocated amount of advisor shares from the get go, or something inbetween. Making sure your board of directors and other key stakeholders are on board is crucial to make sure that interest and strategy stays aligned for all stakeholders. How Many Shares Should You Give a Startup Advisor? Managing the balance between sufficient incentives and managing equity dilution is crucial for any business. Determining the number of shares to offer an advisor is subjective to the founder and advisor. When determining the number, a couple of things to keep in mind include: Advisor’s experience Time commitment Expected contribution As put by the team at Silicon Valley Bank, “An advisor may receive between 0.25% and 1% of shares, depending on the stage of the startup and the nature of the advice provided. There are ways to structure such compensation that ensures founders get value for those shares and still retain the flexibility to replace advisors, all without losing equity.” Let Visible Help You Streamline the Investment Management Process Use Visible to manage every part of your fundraising funnel with investor updates, fundraising pipelines, pitch deck sharing, and data rooms. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: Navigating the World of QSBS: Tax Benefits and Eligibility Criteria Explained
founders
Developing a Successful SaaS Sales Strategy
Founders are tasked with hundreds of responsibilities when starting a business. On top of hiring, financing, and building their product, early-stage founders are generally responsible for developing initial strategies — this includes the earliest sales and market strategies. In this article, we will look to help you craft a successful SaaS sales strategy. We’ll highlight the elements you will want to think of when you start to build your sales motion. This will help your team to understand how to measure the number of potential customers in your pipeline and the growth potential you might see in your revenue numbers. How are SaaS sales different from other types of sales? Like any sales strategy, it is important to start with the basics when looking at a SaaS sales strategy. At the top of your funnel, you have marketing leads that likely find your brand via content, word of mouth, paid ads, your own product, etc. From here, leads are moved through the funnel. In the middle, SaaS companies can leverage email campaigns, events, product demos, etc. to move leads to the bottom of their funnel. However, as the SaaS buying experience takes place fully online — sales and marketing organizations can be creative with their approach. The online experience allows companies to track more robust data than ever before. Additionally, SaaS products have turned into their own growth levers as well — the ability to manipulate pricing and plans has led to the ability for companies to leverage their own product for growth. Related Resource: How SaaS Companies Can Best Leverage a Product-led Growth Strategy The online presence and emergence of product-led growth have led to new sales strategies unique to SaaS companies. Learn more below: 3 Popular SaaS sales models There are countless ways to structure your Saas sales strategy. For the sake of this post, we’ll focus on 3 of the most popular strategies. Learn more about the self-service model, transactional model, and enterprise sales model below: Related Resource: The SaaS Business Model: How and Why it Works Self-service model The self-service model allows prospects to become customers without communicating with your team. As put by the team at ProductLed, “A SaaS self-serve model is exactly what it sounds like. Rather than rely on a dedicated Sales team to prospect, educate, and close sales, you design a system that allows customers to serve themselves. The quality of the product itself does all the selling.” This strategy is typically best for a strong and simple product that typically has a lower contract size. Transactional sales model The transactional model allows you to create income-generating actions where prospects have to become a customer at that point in time. This requires transactional sales models to have high-volume sales that can be supported by a strong sales and customer support team. Enterprise sales model The enterprise model is a strategy to sell more robust software packages to corporations – you will need baked-in features in a prepackaged manner to sell to a fellow business. Enterprise sales is the model that shares the most similarities with a traditional B2B sales funnel. Inbound vs outbound sales In a Saas sales funnel, you are constantly looking to consistently fill your sales funnel with fresh prospects. Once you have prospects you will look to find which prospects are worthy of being qualified and have a high likelihood of converting so you can spend your time communicating with those high-quality prospects. There are two popular strategies for creating fresh prospects that would be defined as inbound and outbound sales strategies. Inbound sales is when you invest in marketing to create prospects reaching out to you – fresh prospects reaching out to your business to ask about your software product. As put by the team at HubSpot: “Inbound sales organizations use a sales process that is personalized, helpful, and directly focused on prospects’ pain points throughout their buyer’s journey. During inbound sales, buyers move through three key phases: awareness, consideration, and decision (which we’ll discuss further below). While buyers go through these three phases, sales teams go through four different actions that will help them support qualified leads into becoming opportunities and eventually customers: identify, connect, explore, and advise.” An inbound strategy typically works best for SaaS companies that need a greater volume of customers and can nurture them and move them through their funnel at scale (e.g. self-service model) Outbound sales on the other hand are having members of your organization reach out to potential prospects to see if they would be interested in using your service. Outbound sales require highly targeted and proactive pushing of your messaging to customers. Generally, outbound sales require dedicated team members to manually prospect and reach out to potential customers. This means that outbound sales organizations do not naturally scale as well as an inbound sales organizations and will likely require a higher contract value. An enterprise model would rely heavily on Outbound sales, while a self-service business model will rely heavily on Inbound sales. The SaaS Sales Process The best Saas sales strategy will be a hybrid of inbound and outbound sales, but all of them should include a sales funnel. This funnel should have stages that help to qualify your prospects. These stages should be: Step 1: Lead generation This activity is often times a marketing activity that gives you contact or business information to explore the fit further Step 2: Prospecting This is where you develop the bio of who is the contact you are reaching out to within the organization. It is always helpful to prospect for someone who can make a buying decision Step 3: Qualifying In this step, you need to understand whether the prospect has the resources to pay for your product and the problem that your product can solve. This step is often the time for you to ask questions of your prospects Step 4: Demos and presenting This is when you will share the features and capabilities of your product with the qualified prospect. You want to show them the different features and where they can get the most value. Step 5: Closing the deal After your demo or a presenting call, the prospect should be pushed to a point where they need to make a decision on whether to buy your product. Step 6: Nurturing Once someone becomes a customer, you need to make sure to nurture them and grow your product offering with their business. This is the most difficult stage. Make sure to share your new product releases, stay in tune with how they are using your product, and build relationships with your customers. Cultivating a robust sales team To create a sustaining sales team, it is important to hire talented and tenacious people to own your sales funnel. They will need to track conversion numbers, stay organized with their outreach to prospects, and grow your funnel over time. There are three key roles within a Saas sales funnel. Those positions within your organization are: Sales development representatives (also known as business development representatives) These members of your team own lead generation, prospecting, and qualifying potential customers on your sales team. They get paid 40-60k/year depending on geographical location and experience. They should be tasked with outreach and drumming up new business. Account executives Account executives should focus on giving product demos, closing deals, and nurturing existing customers. They should be a bit more buttoned up in their approach and have a commission incentive associated with the # of accounts they manage. Sales managers/VPs Sales managers and Vice presidents of sales should take ownership of the data within your sales pipelines. Numbers like # of new leads, # of new qualified leads, # of new customers, # of churned customers, amount of new revenue, and lead to customer conversion %. Growing these sales numbers each quarter. Measuring these numbers weekly, monthly, and quarterly. Making them visible to the rest of the company regularly. 8 Key Elements of a successful SaaS sales strategy One of the most important elements of building a successful business is having a like-minded team around you to support and work with you. Make sure to align with all your team members and hire people with good work ethics and similar values of your company. A good sales team should be competitive, goal-oriented, and metric-driven. The sales managers and VPs will be really crucial in shaping the team dynamics and culture of your business. Hire great people and the numbers will take care of themselves! We’ve identified 8 elements of a successful sales strategy that every Saas sales strategy should include 1. Solidify your value proposition It is so important to understand thoroughly and communicate your product’s core value proposition. If someone decides to buy your product, they should know how to use the product and how to get the most out of it. 2. Superb communication with prospects Communication is of the utmost importance. Make sure your prospects understand your product and how it will help their business. Inform them of new product updates 3. Strategic trial periods An effective strategy is to give potential customers a free trial of your product to understand your value proposition. You want to make sure not to make this trial period too short or too long. Make it strategic so the prospect will understand the value prop but also be encouraged to make a buying decision. 4. Track the right SaaS metrics Tracking your core metrics is vital to success. See a few of those below: Customer Acquisition Cost – the amount of money it takes to acquire a new customer Customer Lifetime Value – the amount of value a customer provides your company over the course of their relationship with you as a customer. Lead velocity rate – the growth percentage of qualified leads month over month. This will help you understand how quickly you are qualifying your leads Related Resources: Our Ultimate Guide to SaaS Metrics & How To Calculate and Interpret Your SaaS Magic Number 5. Develop a sales playbook Every successful sales management team should develop a playbook on how to deploy their resources and where each team member should spend their time. Playbooks are often thought of in sports terms, but they also work wonders in the business world. They will help you do things efficiently and effectively. 6. Set effective sales goals How many new customers does your business hope to bring in next month? This is an important question and one your whole sales team should understand and work towards! 7. Utilize the right tools to enhance the process Your team should have all the resources at their disposal to communicate effectively and track their metrics. As you build out your strategy and team, be sure to give them all possible resources at their disposal. There are tons of great tools out there for teams to make the most out of their time and have direct methods of communication with customers and one another. 8. Establish an effective customer support program A huge part of an effective sales strategy is welcoming potential customers and making sure your existing customers are not forgotten about. When customers reach out, it is important to talk and listen to their issues. Understand what they are needing so your product can continue to evolve. Make sure anyone getting introduced to your product will also have the information they need to use your product successfully. It might be helpful to include this member of your team in your sales meetings and keep them informed as to messaging and efforts for growth! Generate support for your startup with Visible Developing a successful SaaS sales strategy is not an easy task. It will take a hybrid approach of many of the elements listed in this article and will need attentive members of your team to nurture it and test new things. We created Visible to help founders have a better chance for success. Stay in the loop with the best resources to build and scale your startup with our newsletter, the Visible Weekly — subscribe here.
investors
Five Ways to Help your Portfolio Companies Find Talent
In Visible’s 2022 Portfolio Support Survey (full report here), VC Operators reported that the number one support request they receive from portfolio companies is help with sourcing and hiring talent. This makes complete sense considering funds are investing in companies they hope will scale quickly, and in order to do so, companies need to recruit top talent quickly. This post outlines 5 ways VC Funds can better support their portfolio companies with hiring and talent. 1. Develop recruiting expertise internally at your VC fund. For funds just thinking about making their first platform hire, consider hiring someone with a recruiting or talent background and making that your defined approach to your VC platform. Alternatively, if your fund has the resources, consider bringing on a Head of Talent either full-time or on a contract basis to lead your portfolio talent initiatives. 2. Bring in external expertise to educate founders. Invite relevant talent service providers to deliver content to your portfolio companies on the topic of sourcing and recruiting talent. Your companies will benefit by learning best practices from an expert and also by being introduced to a vetted service provider if a company decides to outsource recruiting for a role. Tip: Record the content and host it in a place where other portfolio companies can access the content in the future. (We like using Notion at Visible). 3. Create a curated list of vetted recruiting service providers. If you’re not sure where to start, you can begin by asking other founders and VCs where they’ve found talent. Which service providers, job boards, and networks did they use? Document and host this information in a place that can be easily accessed in the future. Here’s a VC & Startup specific recruiting firm to check out –> SCGC Executive Search 4. Host job-matching networking events. Hosting events for portfolio companies is a great way to build community and expand networks. Consider hosting an event or session specifically focused on bringing together your portfolio companies and talented candidates for intentional networking. 5. Add recruiting tech to your VC Tech Stack. If you’ve decided talent is going to be your VC Platform’s area of focus, it may be time to invest in recruiting technology to support your efforts. Here are three recruiting tech platforms to check out — Bolster – Bolster is an on-demand executive talent marketplace that helps accelerate companies’ growth by connecting them with experienced, highly vetted executives for interim, fractional, advisory, project-based, full-time or board roles. Bolster also provides startup and scaleup CEOs with software, programming, and content to help them assess, benchmark, and diversify their leadership teams and boards. Sign up for a free partner account here to unlock a $2,000 credit for your portfolio companies. Getro – This is an automated job board that updates as your portfolio companies add or remove job openings from their career pages. It takes the manual work out of connecting people and companies in your network. Pallet – This is a community-led job matching platform. You can host all your portfolio job opens in a single place to host on your website and promote on social media. For an example of a VC Fund’s pallet board check out K50 Ventures Portfolio’s pallet board. Visible for Investors is a founders-first portfolio monitoring and reporting platform. Learn More

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[Webinar Recording] VC Fund Performance Metrics to Share When it’s ‘Early’ with Preface Ventures
It’s common for venture firms to start raising their next fund in the last year of capital deployment, typically years 3-4 of a fund’s life. This poses a sort of chicken-and-egg problem because many of the common fund performance metrics that Limited Partners use to drive allocation decisions only become reliable, and therefore more meaningful, around year six (Source: Cambridge Associates). Farooq Abbasi, founder and General Partner of Preface Ventures, created a Seed Stage Enterprise VC Funding Napkin to help GPS think through alternative fund metrics that help communicate performance outside the traditional indicators that LPs use to measure success for more mature funds. The Seed Stage Enterprise VC Funding Napkin helps answer the question "What is good enough to raise a subsequent fund in the current market conditions". Farooq from Preface Ventures joined us on Tuesday, February 27th for a discussion about the fund performance metrics GPs can use to benchmark and communicate fund performance when it's still 'early'. View the recording below. Webinar Topics The issue with ‘typical’ fund performance metrics for ‘early’ funds Overview of Preface Venture’s Seed Stage Enterprise VC Funding Napkin Deep dive into alternative early performance benchmarks How to keep track of alternative fund performance metrics How to leverage alternative fund performance indicators into your fundraising narrative Inside look into how Preface Ventures keeps LPs up to date Q&A Resources From the Webinar Christoph Janz's What does it take to raise capital, in SaaS, in 2023? Preface Ventures' A GP's View on VC Fund Performance When It's Early Diversity VC About Preface Ventures Preface Ventures is a New York City-based firm started in 2020 led by Farooq Abbasi. Preface invests $500-$2M at the pre-seed and seed stage into startups who are building the Frontier Enterprise structure. Preface has 20 active positions in Fund II and 7 active positions in Fund III. (Learn more)
investors
[Webinar Recording] Lessons learned from raising Fund II with Gale Wilkinson from VITALIZE
"The most successful fund managers are going to be the ones who are really authentic to what is important to them and they make sure every attribute of their model reflects that authenticity." - Gale Wilkinson About the Webinar Markdowns and lack of LP distributions resulted in a challenging fundraising year for many VCs. The firms that did close new funds in 2023 had to put in extra work to stand out and foster confidence from new investors. Visible had the pleasure of hosting Gale Wilkinson from VITALIZE Venture Capital on Tuesday, January 30th to discuss what she learned while closing her second fund in Q4 of 2023. You can view the webinar recording below. Webinar topics This webinar was designed for people working in Venture Capital who want to learn more about the VC fundraising process. Webinar topics included: Overview of VITALIZE's fundraising process Pre-fundraising activities that made a difference How LP diligence differed between Fund I and Fund II How Gale leverages social media to build both her personal and professional brand Reviewing VITALIZE's fundraising pitch deck Advice for GP's raising in 2024 You can view the presentation deck here. Key Takeaways Expect raising your first and second fund to take 2-3 years Stay authentic to what's most important to you as a fund manager and what you're great at. Make sure every attribute of that model reflects your authenticity. Most GP decks are too long. Gale's advice --> Find out what about your story is most interesting and give enough information to make it extremely clear about who you are and what you do without going into confidential information.
investors
Case Study: Why Fuel Ventures chose Visible as their source of truth for portfolio monitoring and reporting
About Fuel Ventures Fuel Ventures is a UK-based venture capital firm founded by Mark Pearson in 2014. Today, Fuel Ventures manages over £350 million in assets and has a portfolio of over 160 investments. Fuel is considered one of the most active early and growth-stage investors in the UK. Fuel Ventures invests at the pre-seed and seed stage of globally scalable marketplaces, platforms, and SaaS companies. Fuel takes an active board role at all their companies and commits to supporting companies throughout their journeys. Learn more about Fuel Ventures. Fuel Ventures joined Visible in October of 2022. This case study includes feedback and insight from Oli Hammond and Mike Stevenson. Data disaggregation before Visible Before using Visible, Fuel Ventures' portfolio information was disaggregated in multiple Google solutions. Investment data was tracked in a master Google sheet file, qualitative information about companies was manually updated and saved to Google documents, and all of this information was stored in various Google Drive folders. As the Fuel Ventures portfolio grew, the master spreadsheet became harder to maintain. The team also found it cumbersome to have portfolio information stored in several different locations. “We felt we needed a solution where all portfolio information was stored in one place as Fuel’s single source of truth.” - Oli Hammond, Partner at Fuel Ventures Why Fuel Ventures chose Visible The Fuel Ventures team began researching the market for potential solutions that would meet their portfolio monitoring and reporting requirements. The Fuel Ventures' decision-making criteria included: A provider with a straightforward onboarding The ability to upload all of their historical data A solution that was at least 5x better (faster, more efficient, more accurate) than their current process Built-in flexibility to accommodate the details of their investments A solution with a justifiable return on investment The team at Fuel Ventures sat a tailored demo with Visible in the summer of 2022. Fuel chose Visible as the best solution to help their team better manage Fuel's portfolio and fund performance. Implementing Visible at Fuel Ventures Visible provided a hands-on onboarding experience to Fuel Ventures who needed to upload investment details for approximately 130 investments. “The Visible team was there to support us throughout the entire onboarding experience.” - Oli Hammond, Partner at Fuel Ventures When asked about what the learning curve was like for the team at Fuel Ventures, Oli Hammond commented, “It was easy. The team took to the platform really quickly.” How Fuel is using Visible today Adopting Visible significantly impacted the way Fuel Ventures monitors their portfolio companies. Visible provides the 20+ person team at Fuel with one centralized place for investment information, notes, and qualitative updates about portfolio companies. For Fuel Ventures, Visible’s investment tracking solution is especially beneficial because their team now has granular visibility into investments round by round and fund by fund which is something they had difficulty tracking in a master spreadsheet in the past. Visible also provides Fuel with a centralized place to store notes and company updates. This means the team at Fuel can now click into a company's profile on Visible and see a clear overview of initial investments, subsequent funding rounds, and narrative updates all in one place instead of having to dig through separate platforms. “Visible is our one source of truth for the wider team to find relevant company information instead of having to dig through various Google Drive folders.” - Oli Hammond, Partner Finally, the team at Fuel shared that Visible significantly improved the way they create bi-annual reporting for their Limited Partners. Minna from Fuel Ventures commented, “It’s now much easier to format the Tear Sheets we compile for our investor reporting. We really like that the Tear Sheets are automatically updated with live numbers instead of having to make updates in Word.” View more examples of tear sheets in Visible. Advice for other funds considering Visible Oli Hammond, Partner at Fuel shared "Visible is a great choice for funds who are looking to move away from fragmented systems and methodology (Word, Google Drive, spreadsheets) to one source of truth.”

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