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[Webinar Recording] A Deep Dive of OpenView’s 2023 SaaS Benchmarks Survey
OpenView Ventures is back with their annual SaaS Benchmarks Survey & Report. Join us and Kyle Poyar of OpenView as we take a deeper look at the data and takeaways from the 2023 report. Webinar Overview Join us on November 9th as we take a deeper look at the 2023 OpenView Ventures SaaS Benchmark Survey with Kyle Poyar. Kyle is an Operating Partner where he helps portfolio companies fuel growth and become market leaders. He specializes in monetization, product-led growth (PLG), and SaaS metrics. A few topics you can expect us to hit on: SaaS Pricing Models Churn benchmarks AI adoption Financial performance Save Your Spot Even if you can’t make the scheduled time, register anyway — we’ll send the recording to anyone who registers. We hope to see you there!
AI Meets Your Investor Updates
Case Study: How Moxxie Ventures uses Visible to increase operational efficiency at their VC firm
How to Start and Operate a Successful SaaS Company
How AI Can Support Startups & Investors + VCs Investing in AI
“94% of business leaders surveyed say AI is critical to success.” Deloitte In the dynamic landscape of the global marketplace, AI stands as a transformative force for startups, catalyzing growth, fostering innovation, and sharpening competitive edges. This technology is not just a tool; it's a game-changer, reshaping the way startups approach their business models, customer interactions, and market strategies. AI is not just a technological advantage for startups; it's a strategic asset that propels them into new realms of possibilities, fostering a culture of continuous innovation and competitive prowess in the global market. The Impact of AI on Organizational Structure and Team Development In this rapidly growing era of technological innovation, AI is reshaping the landscape of startups, indicating a new paradigm in organizational structure and team dynamics. AI is not merely a tool for operational efficiency but a transformative force that will redefine what it means to start and run a company. From changing how startups will hire to introducing flatter organizational hierarchies and fostering interdisciplinary collaborations, there will be many ways in which AI will influence startups to adapt, evolve, and thrive in the competitive global arena. Startups are likely to experience significant changes in their work dynamics, organizational structure, and team compositions in the following ways: Embracing AI Expertise: The infusion of AI demands a workforce proficient in data science, machine learning, and AI ethics, steering recruitment towards specialized talent. This trend not only reshapes job roles but also fosters a culture of continuous learning and adaptation. Redefining Leadership and Management: AI-driven automation and decision-making tools are leading to leaner management layers. Decision-making becomes more data-driven and decentralized, empowering teams to operate with greater autonomy. Cultivating Interdisciplinary Collaboration: The complexity of AI applications necessitates collaboration across disciplines, blending AI expertise with industry-specific knowledge. This leads to diverse, cross-functional teams where innovation thrives at the intersection of technology and domain expertise. Adapting to Flexible Work Models: AI's facilitation of remote working tools and processes enables startups to adopt more flexible, global workforces, breaking geographical barriers and tapping into a wider talent pool. Prioritizing Ethical AI Integration: As AI becomes integral to business operations, the need for roles focusing on ethical AI usage and governance becomes crucial, ensuring responsible and fair use of technology. How Can AI Best Support Startup Operations? For startups, the key is to identify which areas are most crucial for their growth and how AI can be integrated to support those areas effectively. Proper implementation and ethical considerations are also essential to ensure that AI is used responsibly and efficiently. Here are some key areas where AI can significantly support startups: Market Research and Analysis: AI can analyze vast amounts of data to identify market trends, customer preferences, and competitive landscapes. This helps startups in making data-driven decisions and understanding their market better. Customer Service and Support: AI-powered chatbots and virtual assistants can provide 24/7 customer service, answering queries, and solving basic problems. This improves customer experience and frees up human resources for more complex tasks. Product Development and Innovation: Startups can use AI for rapid prototyping, predictive analytics, and to gain insights into how users interact with their products or services. This can accelerate the development cycle and lead to more innovative solutions. Marketing and Personalization: AI can tailor marketing campaigns to individual consumer behaviors and preferences, leading to more effective and targeted marketing strategies. Operational Efficiency: AI can automate routine tasks, manage inventory, optimize logistics, and streamline operations, leading to cost savings and increased efficiency. Data Security and Fraud Detection: AI algorithms can monitor for unusual patterns indicating fraud or security breaches, providing an added layer of security to the company's data. Talent Acquisition and HR: AI can streamline the recruitment process by screening candidates, analyzing resumes, and even conducting preliminary interviews, helping startups find the right talent more efficiently. Customization and User Experience: By analyzing user data, AI can help customize user experiences, making products or services more appealing and user-friendly. Networking and Collaboration: AI can suggest potential partnerships, identify networking opportunities, and even assist in collaborative projects by managing and analyzing large datasets. Below we’ll dive deeper into some of these areas and the existing solutions that can help assist your startup in streamlining these operations and delivering better outcomes. Market Research Using AI Tools Startups using these solutions can gain deeper market insights, identify customer preferences and behaviors, understand competitive landscapes, and make informed, data-driven decisions for their business strategies. Poll the People: Utilizes OpenAI and Chat-GPT to combine human intelligence with AI, enabling data-driven decision-making through surveys and responses from over 500,000 panelists. SimilarWeb: Offers comprehensive insights into digital consumer behavior with advanced algorithms and machine learning. It helps in understanding website traffic, user demographics, engagement metrics, and competitive analysis for identifying industry trends and market opportunities. Latana: Specializes in brand performance tracking using AI and machine learning. It provides insights into brand awareness, perception, customer sentiment, and competitive positioning, using data from various sources including online surveys and social media. Tableau: An AI-powered data visualization and analytics tool, ideal for exploring, analyzing, and visualizing complex market research data. Its AI-driven features help uncover patterns, trends, and correlations in market data, with intuitive dashboards for effective communication of research findings AI Customer Service and Support Tools The tools can help with improved efficiency in handling customer queries, enhanced quality of customer interactions, faster resolution of issues, and overall better customer satisfaction. By leveraging these AI tools, startups can also reduce the workload on their human staff, allowing them to focus on more complex tasks. Uniphore: Provides a Conversational AI technology platform for delivering transformational customer service across various touchpoints. Startups can use this to improve customer interactions and automate responses. Gong.io: Utilizes natural language processing and machine learning to train and assist sales and customer service representatives, helping them in providing more effective customer service. Moveworks: Specializes in using AI to automatically resolve help desk tickets, which can significantly reduce response times and improve resolution rates. Observe.AI: Offers a Voice AI platform for call centers, enhancing customer calls with real-time feedback on customer sentiment and guidance for the best actions during calls. Amelia: Develops a Trusted AI platform that captures and transforms AI innovations, useful in creating more responsive and intelligent customer service experiences. Aisera: Provides an AI-driven service solution that automates operations and support for various domains like IT, HR, sales, and customer service, thus increasing efficiency and reducing manual effort. Dixa: Offers conversational customer engagement software, enabling real-time communication between brands and customers, enhancing the overall customer interaction experience. Glia: Creates digital-first platforms for companies to connect with customers using messaging, video, co-browsing, and AI, aiming to improve the digital customer service experience. Cresta: Develops an AI platform designed to improve the quality of customer services, by providing real-time assistance and information to customer service agents. Moogsoft: Delivers AI for IT Incident Management, automating operational tasks and helping teams become more effective in addressing customer issues. Marketing and Personalization AI Tools Using these tools, startups can aim for improved marketing efficiency, enhanced audience engagement, and better brand positioning. Jasper.ai: This AI tool, utilizing GPT-3, aids in creating high-quality ad copy, emails, landing pages, and social media posts. It provides customizable templates for various content frameworks, ensuring brand-appropriate and engaging copy. Desired outcomes include improved content quality, efficiency in content creation, and better engagement with target audiences. Beacons AI: Offers an AI Outreach Tool for generating personalized and compelling pitch emails to brands. This simplifies the task of brand outreach, making it an efficient process for startups aiming to establish partnerships or collaborations. Rapidely: Uses GPT-4 technology for social media content creation. It includes features like a Monthly Calendar Generator and Carousel Maker, enhancing social media management and engagement. Startups can expect to achieve streamlined content creation and improved social media presence. Flick: An AI Social Media Assistant that aids in brainstorming, writing, and scheduling social media content. It helps in generating on-brand captions and ideas, managing hashtags, and scheduling posts, leading to more effective social media marketing. DeepBrain AI: Specializes in AI video creation, allowing the conversion of text to video with photo-realistic AI avatars. This tool can significantly reduce video production time and costs, ideal for creating engaging video content for marketing purposes. Brandwatch Consumer Intelligence: Provides AI-powered consumer intelligence and social media management solutions. It generates actionable insights for understanding consumer behaviors and trends, assisting startups in making data-driven marketing decisions. Brand24: An AI social media monitoring tool that tracks real-time feedback about a company. It helps in managing brand reputation and analyzing marketing campaign effectiveness, crucial for maintaining a positive brand image. GrowthBar: Utilizes GPT-3 AI for content generation, especially useful for SEO, blogging, and meta descriptions. This tool assists in creating optimized content, enhancing a startup's online visibility and search engine ranking. The Future AI Plays in How VCs Invest “We found that the best performance, nearly 3.5 times the industry average, would result from integrating the recommendations of the humans on our investment team and the machine-learning model. This shows what I strongly believe—that decision-making augmented by machine learning represents a major advancement for venture-capital investing.” – Veronica Wu VCs are already using AI in a variety of ways but say it’s still necessary to use human judgment when it comes to decision-making. In an interview with McKinsey Veronica Wu says, “we combined machine learning, which produces insights we would otherwise miss, with our human intuition and judgment. We have to learn to trust the data model more, but not rely on it completely. It’s really about a combination of people and tools.”. In the fast-evolving landscape of venture capital, the integration of AI and platforms like Visible is creating a synergy that significantly enhances investment strategies and operational efficiencies. This combination presents a powerful toolset for VCs, enabling smarter, data-driven decisions and streamlined processes. Here's how VCs can leverage AI, both generally and specifically in conjunction with Visible: Enhanced Due Diligence and Data Analysis: AI's ability to sift through and analyze extensive data sets enables VCs to conduct more thorough due diligence. This deep data analysis covers market trends, startup performance metrics, and competitor analysis, providing a comprehensive investment picture. Predictive Analytics for Identifying Opportunities: AI's predictive capabilities are pivotal in forecasting market trends and identifying burgeoning sectors. This foresight allows VCs to stay ahead, investing in startups with high growth potential before they become obvious choices. Optimized Portfolio Management: AI algorithms continually assess market conditions and offer insights for portfolio rebalancing. This dynamic management approach ensures that VC portfolios are aligned with changing market realities, optimizing returns. Streamlining Deal Flow Management: AI streamlines the deal flow process, efficiently sorting through potential investments. This not only saves time but also ensures that VCs focus on the most promising opportunities. Accurate Risk Assessment: AI provides sophisticated risk assessment models, evaluating potential investments against various market and economic indicators. This results in a more nuanced understanding of investment risks and potential returns. Additional Resources CBInsights: Generative AI Bible 13 Generative AI Startups to Look out for AI Meets Your Investor Updates Using AI Prompts to Write Your Next Investor Update Top VCs Investing in AI Startups Alpha Intelligence Capital Locations: San Francisco, Paris, Hong Kong, Singapore, Dubai About: Alpha Intelligence Capital (AIC) is an entrepreneurs-led, entrepreneurs-invested, family of global venture capital funds. AIC invests in deep Artiﬁcial Intelligence/Machine Learning (AI/ML) technology-based companies. To us, AI is the science of self-learning software algorithms that execute tasks otherwise typically performed by humans, or that substantially augment human intelligence. Thesis: AIC invests in deep Artiﬁcial Intelligence/Machine Learning (AI/ML) technology-based companies Investment Stages: Series A, Series B, Series C Recent Investments: Aidoc Proscia ZeroEyes Check out Alpha Intelligence Capital’s Connect Profile, to learn more! Air Street Capital About: Air Street Capital is a venture capital firm investing in AI-first technology and life science companies. We invest as early as possible and enjoy iterating through product, market and technology strategy from day 1. Thesis: AI-first technology and life science companies. Investment Stages: Pre-Seed, Seed Recent Investments: Athenian Valence Discovery V7 Labs Check out Air Street Capital’s Connect Profile, to learn more! Two Sigma Ventures Location: New York, United States About: Two Sigma Ventures invests in companies run by highly driven people with potentially world-changing ideas. Thesis: 1. Startups across all industries need to be data driven and getting really good at deriving value from data will continue to be critical 2. VCs can be way more supportive of founders. Our model is to utilize the 1700 mostly technical employees of Two Sigma Investments to assist companies with data science, engineering, recruiting, BD, etc. Investment Stages: Seed, Series A, Series B, Series C, Growth Recent Investments: Cajal Neuroscience Xilis Remote Check out Two Sigma Ventures Visible Connect Profile, to learn more! DCVC (Data Collective VC) Location: Palo Alto, California, United States About: Data Collective is a venture fund with a unique team of experienced venture capitalists, technology entrepreneurs and practicing engineers, investing together in seed and early stage Big Data and IT infrastructure companies. Investment Stages: Seed, Series A, Series B Recent Investments: Smartex Samsara Eco ZwitterCo Check out DCVC’s Visible Connect Profile, to learn more! 1984 Ventures Location: San Francisco , California, United States About: 1984 Ventures is an early-stage venture capital firm proptech, fintech, healthcare, marketplace, SaaS, e-commerce, and consumer. Thesis: Looking for companies from pre-revenue to 100k+ in MRR Investment Stages: Pre-Seed, Seed Recent Investments: Relevize Collaborative Robotics SyIndr Check out 1984 Ventures Visible Connect Profile, to learn more! Wing VC Location: Palo Alto, California, United States About: Wing is a purpose-built venture capital firm founded by two industry veterans with a different perspective on what it takes to create enduring companies. Thesis: Invest before it’s obvious, Partner for the long term, Focus on business Investment Stages: Pre-Seed, Seed, Series A Recent Investments: Deepgram Supernova HeadsUp Check out Wing VC’s Visibles Connect Profile, to learn more! Zetta Venture Partners Location: San Francisco , California, United States About: Zetta Venture Partners is the first focused fund committed to delivering exceptional returns from the high-growth analytics market. Thesis: AI & Infrastructure (B2B only) Investment Stages: Pre-Seed, Seed Recent Investments: EnsoData VideaHealth Pimloc Check out Zetta Venture Partners Visible Connect Profile, to learn more! M12 Location: Redmond, Washington, United States About: Is the new name for Microsoft Ventures; it invests in AI & machine learning, big data & analytics, business SAAS, cloud infrastructure, emerging technologies, productivity & communications, security. M12 ran a $2m competition for female founders (applications closed in September 2018) Investment Stages: Series A, Series B, Growth Recent Investments: Valence Security RapidSOS Insite AI Check out M12’s Visible Connect Profile, to learn more! True Ventures Location: Seed, Series A, Series B About: True Ventures is a Silicon Valley-based venture capital firm that invests in early-stage technology startups. Investment Stages: Seed, Series A, Series B Recent Investments: Almond Avidbots Chameleon.io Check out True Ventures Visible Connect Profile, to learn more! AME Cloud Ventures Location: California, United States About: AME Cloud Ventures invests in seed to later-stage tech companies that build infrastructure and value chains around data. Investment Stages: Seed, Series A, Series B Recent Investments: Meez Haven Kojo Check out AME Cloud Ventures Visible Connect Profile, to learn more! Greycroft Location: New York, United States About: Greycroft is a venture capital firm that focuses on technology start-ups and investments in the Internet and mobile markets. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: Ostro Frame AI FrankieOne Check out Greycroft’s Visible Connect Profile, to learn more! Hyperplane Venture Capital Location: Boston, Massachusetts, United States About: Hyperplane Venture Capital is an investment firm focused on exceptional founders building machine intelligence and data companies. The company was founded by Brendan Kohler and Vivjan Myrto in 2015; and is headquartered in Boston, Massachusetts. Investment Stages: Seed, Series A, Series B Recent Investments: Relevize Givebutter Nurse-1-1 Check out Hyperplane Venture Capital’s Visible Connect Profile, to learn more! Morado Ventures Location: Palo Alto, California, United States About: Morado Ventures is focused on high-growth, seed-stage technology companies, with particular emphasis on “Data-fueled” businesses. Thesis: At Morado we invest in Passionate Entrepreneurs with unique expertise working on hard technological problems with software and hardware. Investment Stages: Pre-Seed, Seed, Series A Recent Investments: Metrist Everest Labs Headroom Check out Morado Ventures Visible Connect Profile, to learn more! Gradient Ventures Location: Mountain View, California, United States About: We help founders build transformational companies. Specialties include; Artificial Intelligence, Deep Learning, Neural Nets, Machine Learning, Data Science, Virtual Reality, Augmented Reality, Venture Capital, Startups, and Community Investment Stages: Pre-Seed, Seed, Series A Recent Investments: Payload Butter The Coterie Check out Gradient Ventures Visible Connect Profile, to learn more! Wing Location: Menlo Park, California, United States About: Wing is a purpose-built venture capital firm founded by two industry veterans with a different perspective on what it takes to create enduring companies. Thesis: Invest before it’s obvious, Partner for the long term, Focus on business Investment Stages: Seed, Series A, Series B Recent Investments: Deepgram HeadsUp Supernova Check out Wing’s Visible Connect Profile, to learn more! BootstrapLabs Location: San Francisco, California, United States About: BootstrapLabs, a leading Silicon Valley based venture capital firm focused on Applied Artificial Intelligence, and the first VC firm to focus solely on AI since 2015 – with over 30 investments in AI-first companies and today investing from the 3rd AI-focused seed fund ($115M). Investment Stages: Seed Recent Investments: Southie Autonomy Rabot Pryon Check out BootstrapLabs Visible Connect Profile, to learn more! East Ventures Location: Tokyo, Japan About: Founded in 2009, East Ventures is an early-stage sector-agnostic venture capital firm. The firm has supported more than 170 companies in the Southeast Asian region that are present across Indonesia, Singapore, Japan, Malaysia, Thailand, and Vietnam. Investment Stages: Early Stage, Growth Recent Investments: Klar Smile The Parentinc Wagely Check out East Ventures Visible Connect Profile, to learn more! Hyperplane Location: Boston, Massachusetts, United States About: Hyperplane Venture Capital is an investment firm focused on exceptional founders building machine intelligence and data companies. The company was founded by Brendan Kohler and Vivjan Myrto in 2015; and is headquartered in Boston, Massachusetts. Investment Stages: Pre-Seed, Seed Recent Investments: Relevize Nurse-1-1 Butlr Technologies Check out Hyperplane’s Visible Connect Profile, to learn more! Streamlined Ventures Location: Palo Alto, California, United States About: We are a seed-stage investment firm rooted in the belief that the founders of companies are the true heroes of entrepreneurial value creation in our society. We are passionate about working with visionary founders to help them create exceptional companies and help them capture as much of that value for themselves as possible – they deserve it! If we stay true to our beliefs and we are good at what we do, then we will benefit too. Our style of engagement with all our stakeholders focuses on low ego behavior, mutual respect and clarity of thought. We seed invest in visionary founders who are building the next generation of transformational technology companies. Investment Stages: Seed, Series A Recent Investments: Hoken Fursure Ratio Check out Streamlined Ventures Visible Connect Profile, to learn more! Looking for Funding? We can help We believe great outcomes happen when founders forge relationships with investors and potential investors. We created our Connect Investor Database to help you in the first step of this journey. Instead of wasting time trying to figure out investor fit and profile for their given stage and industry, we created filters allowing you to find VCs and accelerators who are looking to invest in companies like yours. Check out all our investors here and filter as needed. To help craft that first email check out 5 Strategies for Cold Emailing Potential Investors and How to Cold Email Investors: A Video by Michael Seibel of YC. Related Resource: All-Encompassing Startup Fundraising Guide After finding the right Investor you can create a personalized investor database with Visible. Combine qualified investors from Visible Connect with your own investor lists to share targeted Updates, decks, and dashboards. Start your free trial here. * The author generated this text in part with GPT-3, OpenAI’s large-scale language-generation model. Upon generating draft language, the author reviewed, edited, and revised the language to their own liking and takes ultimate responsibility for the content of this publication
Liquidation Preference: Types of Liquidation Events & How it Works
In the intricate world of venture capital and private equity, liquidation preference is a pivotal concept that dictates financial outcomes during critical junctures like company sales or bankruptcies. Our article delves into the nuances of this key mechanism, exploring how it prioritizes investors' returns over common stockholders and its impact in various low-return scenarios. We'll guide you through the five primary types of liquidation preferences, each with distinct implications for investment returns and company dynamics. Particularly crucial for startups, understanding liquidation preferences is essential for navigating future funding and maintaining financial health. Join us as we unravel the complexities of liquidation preference, a crucial element in balancing the risk-reward equation in business finance. Liquidation Preference Defined Liquidation preference is a key term in venture capital and private equity, defining the order and magnitude of payments to investors in events like company sale or bankruptcy. This provision in preferred stock agreements prioritizes the return of capital to investors before any distribution to common stockholders. It's an essential mechanism in venture capital contracts to safeguard invested capital, especially in scenarios yielding low returns. For example, in a real-life scenario, if a company with a liquidation preference clause is sold, preferred investors are entitled to receive their investment amount before any payouts to common stockholders. This ensures that in a liquidity event such as a company sale, the downside risk to preferred investors is minimized, as they are guaranteed a return on their investment before others. However, if preferred stock converts to common stock in a qualified initial public offering (IPO), the liquidation preference often ceases to apply, aligning the interests of all shareholders. The Importance of Liquidation Preference The importance of liquidation preference in venture capital and private equity cannot be overstated. Primarily, it provides financial security to investors by ensuring they recover their investment before any payouts to common shareholders in the event of a liquidation, such as a company sale or bankruptcy. This makes investing in high-risk ventures more attractive, as it reduces the potential losses in scenarios where the company does not perform as expected. Additionally, liquidation preference can influence company strategies and decision-making. It can impact negotiations during funding rounds, as terms can significantly affect how proceeds are divided in a sale or liquidation event. Moreover, for entrepreneurs and common shareholders, understanding liquidation preference is crucial in assessing how much control and financial benefit they retain in their company after external funding. In essence, liquidation preference is a key element that balances the risk and reward equation for both investors and company founders, making it an indispensable part of venture capital and private equity deals. Related resource: 5 Ways to Make Investor Communication Better The 5 Primary Types of Liquidation Preference As we delve deeper into liquidation preferences, it's important to understand that there isn't a one-size-fits-all approach. This financial tool comes in various forms, each with its unique characteristics and implications for investors and company founders. We will explore five primary types: Single or Multiple, Non-Participating and Participating, Participation Caps, Seniority Structures, and Dividend Preferences. Each type represents a different way of structuring payouts in liquidation events, offering distinct advantages and considerations. In the following sections, we'll break down these categories, providing clarity on how each operates and their potential impact on investment returns and company dynamics. 1.) Single or Multiple Single and Multiple liquidation preferences are two common structures used in venture capital and private equity to determine the payout order and amount to investors in a company's liquidation event. A Single liquidation preference, typically set at 1x the original investment amount, means that an investor with this preference gets paid back their full investment amount before any shareholders lower in the priority stack receive their payouts. This is the most common type of liquidation preference and is seen as a standard protective measure for investors. A Multiple liquidation preference, on the other hand, is less common and involves a multiple greater than 1x, such as 2x or 3x. In this scenario, an investor with, for instance, a 2x liquidation preference would be paid back double their original investment amount before any other shareholders receive anything. While it offers greater protection for the investor, high multiple liquidation preferences can become contentious in subsequent funding rounds and may negatively impact the ability of founders and employees to see a return, as these groups are pushed lower in the preference stack. For an example of a Single liquidation preference, consider a scenario where an investor invests $1 million for a 25% stake in a company that is later sold for $2 million. With a 1.0x Non-Participating Liquidation Preference, the investor would receive $1 million from their 1.0x preference, ensuring the recovery of their full investment. In this case, the remaining $1 million would be distributed to the common shareholders. An example of a Multiple liquidation preference is more complex and less common. For instance, if an investor has a 2x liquidation preference and invests the same amount in a company with the same sale price, they would be entitled to receive double their investment (i.e., $2 million) before any payouts to common shareholders. However, in this example, since the sale price is only $2 million, there would be nothing left for common shareholders after fulfilling the investor's 2x liquidation preference. This highlights how a multiple liquidation preference can significantly impact the distribution of proceeds, potentially leaving common shareholders with little to no return. 2.) Non-Participating and Participating Non-Participating Liquidation Preference allows investors to choose between receiving their initial investment back (usually at a 1x multiple) or converting their preferred shares to common shares and receiving a proportionate share of the sale proceeds. In other words, they can either get their initial investment back or participate in the profits like common shareholders, but not both. Participating Liquidation Preference, on the other hand, enables investors to receive their initial investment back (again, usually at a 1x multiple) and then also participate in the remaining distribution of proceeds as if their shares were common stock. This means they first recover their investment and then also get a share of any remaining proceeds. For example, if a company with a Non-Participating 1x Liquidation Preference is sold, and an investor's initial investment was $1 million, they would have the choice to either take back their $1 million (if the sale proceeds allow) or convert their shares to common and take their share of the total sale proceeds. In contrast, with a Participating 1x Liquidation Preference in the same scenario, the investor would first take their $1 million and then also receive a portion of the remaining proceeds as if they were a common shareholder. 3) Participation Caps Participation Caps in liquidation preference set a limit to how much preferred investors can receive in liquidation events, essentially capping their payout. This cap is usually expressed as a multiple of the original investment. For instance, in a capped participation preference scenario, an investor may have a cap set at 2x or 3x the original investment. This means they will participate in the liquidation proceeds on a pro-rata basis until their total proceeds reach this set multiple. After reaching this cap, they no longer receive additional proceeds, and the remaining funds are distributed to other shareholders. For example, suppose a venture capital firm invests $5 million in a company with a capped participating preference set at a 3x cap. If the company is later sold or liquidated, the VC's payout preference would be capped at $15 million (3 times the $5 million investment). In this scenario, the investor will first receive their $5 million preference and then share in the remaining proceeds until their total proceeds equal $20 million. After reaching this cap, the remaining funds are distributed to other shareholders, such as co-founders. This cap serves as a safeguard to prevent preferred shareholders from over-dominating the payout distribution, thus ensuring a fairer distribution among all shareholders, including founders and common shareholders. 4) Seniority Structures Seniority Structures in liquidation preference determine the order in which investors are paid in the event of a company's liquidation based on the seniority of their investment. This structure can vary, but generally, it prioritizes the most recent investors over earlier ones. A common form of seniority structure is Standard Seniority, where the liquidation preferences are honored in reverse order, starting with the most recent investment round. For instance, Series B investors would receive their liquidation preferences before Series A investors. Another form is Pari Passu Seniority, where all investors are treated equally regardless of their investment round, meaning they all receive a part of the liquidation proceeds proportionate to their initial investment. Lastly, there's Tiered Seniority, a hybrid model where investors are grouped within their funding rounds, and within each tier, payouts follow the pari passu model. An example of how seniority structures work can be illustrated as follows. Assume a company has received investments from seed investors who committed $2 million and Series A investors who committed $1 million, each with a 1x liquidation preference. If the company's assets after a sale amount to only $1 million, according to Standard Seniority, the Series A investors would receive the entire $1 million, leaving the seed investors with nothing. This example demonstrates the "last in, first out" principle, where investors who funded the business in its later stages, perhaps during more challenging times, are paid out first. 5) Dividend Preferences Dividend Preferences refers to the rights of preferred stockholders to receive specific dividends before common stockholders. These dividends are usually set at a fixed amount or rate and are prioritized over dividends to common shareholders, especially in liquidity events. This clause ensures that preferred stockholders not only get priority in the distribution of dividends but also in the accumulation of those dividends if the underlying asset faces a liquidity event. For example, participating preferred stockholders with Dividend Preferences might be entitled to a set dividend rate, in addition to having a liquidation preference. In a scenario with a 2x liquidation preference, these stockholders would receive twice the amount of capital they initially invested in the company in the event of a liquidity event, provided there are sufficient funds to meet this requirement. Additionally, they have the right to convert their participating preferred shares into common stock if they choose to do so. This type of preference is significant in providing an extra layer of financial security to preferred stockholders, ensuring they receive their due dividends in addition to any capital returns in the event of a company's sale, merger, or other liquidity events. How Liquidation Preference Works As we've explored various types of liquidation preferences, it's clear that they play a critical role in shaping the outcomes for investors and company founders in liquidity events. Essentially, liquidation preference determines the order and amount in which different shareholders are paid in the event of a company sale, merger, or bankruptcy. This system prioritizes the returns for preferred shareholders, often venture capitalists, over common shareholders, such as employees and founders. The preference can be structured in multiple ways, each having distinct implications on the distribution of proceeds from a liquidation event. Understanding how these preferences work is key to grasping the dynamics of venture capital and private equity investments, as they significantly influence the financial returns for all parties involved in a company's journey. The Best Liquidation Preference For Startups Determining the best liquidation preference for startups depends on various factors including the company's stage, the nature of the investment, and the interests of both investors and founders. Generally, a simpler liquidation preference, like a 1x non-participating preference, is often considered favorable for startups. This type ensures investors get their investment back in a liquidation event, but doesn't excessively dilute the payouts to founders and other common shareholders. A 1x non-participating preference is balanced, offering protection to investors without overly penalizing common shareholders. This type of preference is vital for early-stage startups where future funding rounds might require more attractive terms to new investors, and excessive liquidation preferences can make follow-on funding difficult or unattractive. However, the "best" preference can vary. For more established startups with a clearer path to profitability or exit, different structures might be more appropriate. It's crucial for startups to consider how liquidation preferences might impact future funding and the company's overall financial health. Consulting with financial and legal experts is advisable to determine the most suitable liquidation preference for a startup's specific circumstances. Related resource: What Are Convertible Notes and Why Are They Used? Visible: The Ultimate Resource for Founders We've explored liquidation preference, a key aspect of venture capital and private equity that shapes the financial outcomes in events like company sales or bankruptcies. This mechanism ensures that investors' capital is prioritized over common stockholders, especially in low-return scenarios. We've examined the five primary types of liquidation preferences – Single or Multiple, Non-Participating and Participating, Participation Caps, Seniority Structures, and Dividend Preferences, each with its implications on investment returns and company dynamics. The choice of liquidation preference is crucial for startups, influencing future funding and overall financial health. Overall, liquidation preference is an essential tool in balancing risk and reward for investors and founders in the complex world of business finance. Let Visible help you succeed- raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days.
9 Tips for Effective Investor Networking
Raising funding for a business is challenging. At Visible, we like to look at the fundraising process similarly to a traditional B2B sales and marketing process — like a funnel. At the top of the funnel, you are finding potential investors via cold outreach and warm introductions. In the middle of the funnel, you are nurturing potential investors with meetings, pitch decks, updates, and other communications. At the bottom of the funnel, you are working through due diligence and hopefully closing new investors. Related Resource: A Step-By-Step Guide for Building Your Investor Pipeline Building relationships with leads is crucial to success for both a sales and fundraising funnel. Investors are typically investing hundreds of thousands or millions of dollars so building a relationship with investors will help them build conviction. Having a game plan for networking with potential investors can set you up for fundraising success. Check out our tips for networking with potential investors below: The Importance of Networking for Investors According to Brett Brohl of Bread and Butter Ventures, the average early-stage fundraise should take around five months. This means that investors are trying to deploy hundreds of thousands or millions of dollars within just a few months of meeting founders. In order to better your odds of fundraising success, this means that you need to start networking and building relationships with investors in advance of a fundraise. This will help investors build conviction and move quickly when it does come time to raising capital Key Benefits of Effective Networking Founders have to take on countless roles and responsibilities when starting their business. For many founders, fundraising can turn into a full-time job — on top of their other daily responsibilities. By investing in networking throughout the year, you will be able to build momentum when it is time to “actively fundraise.” You will have already formed relationships with investors and will allow them to build conviction quickly so you can get back to your day-to-day. Check out a few key benefits of networking with potential investors below: Momentum when it comes time to fundraise. By networking with potential investors you’ll be able to speed up your fundraise as you’ve already built relationships. Introductions to other investors. Most investors will pass on a potential investment. However, they can make introductions to other investors that might be a fit for your business. Building out your network. The startup world is a tight-knit circle. Forming relationships with investors will allow you to grow your network and find introductions to peers, potential customers, hires, etc. Related Resource: 6 Helpful Networking Tips for Connecting With Investors Breaking Down the 9 Effective Networking Tips Networking might be easier said than done for many founders. Finding an introduction or way to network with potential investors can be challenging. Check out our tips for how you can effectively network with potential investors below: 1. Attend relevant investment seminars Investors are typically involved with different events in the venture capital space. Many are geared towards helping founders network with investors. If you are located in/near a larger city, chances are you will be able to find local events that are full of local investors and VCs. 2. Cultivate a strong online presence Venture investors typically have a strong online presence. One of the best ways to network with potential investors is by having an online presence yourself. You can start by following ideal investors and slowly start to engage with them. 3. Prioritize genuine relationships over quantity There are thousands upon thousands of investors. However, not every investor will be a good fit for your business. We recommend identifying your needs and building a list of “ideal investors” for your business. By focusing on building relationships with these investors, you’ll be able to make sure you are spending time on investors that will be beneficial to your business. 4. Stay updated with industry trends Investors seek to stay in the know when it comes to different industries and verticals. By staying up to date with your industry or focus area, you will improve your odds of being able to offer investors something of value and start building your relationships. 5. Master the elevator pitch If attending different networking events or seminars it is important that you have a plan for how to engage with investors. An aspect of this is likely having your elevator pitch dialed. A shaky or uncertain elevator pitch will be seen as a red flag to many potential investors. 6. Join investor groups and associations As we previously mentioned, the startup and VC world is a tight-knit community. There are countless investor groups and associations — some based in a specific region or city and others based on a vertical or market. Investor groups are a great opportunity to network with investors and peers who are a good fit for your business. Most will host different events and workshops that will allow you to further deepen relationships. 7. Leverage technology for networking In recent years there has been a rise in different technologies to help founders and investors connect. These tools typically include investor profiles that surface their firm’s vital information (some support profiles for startups as well). Related Resource: How Startups Can Use an Investor Matching Tool to Secure Funding Visible Connect, our free investor database, enables startup founders to filter and find the right investors for their business. We use the data and information that is crucial to finding the right investor — like check sizes, investment focus, investment geography, etc. From here, you can add investors directly to your Visible Pipeline to keep tabs on your fundraising conversations and actions. Give it a free try and find the right investors for your business using Visible Connect. 8. Consistent follow-ups Fundraising can be a long and arduous process. Investors are incentivized to move slowly and wait as more data and information about your company and market becomes available. It is critical to stay persistent and continuously follow up with potential investors. At Visible, we recommend adding potential investors to your monthly investor updates to keep them in the loop with your progress. Check out a template to nurture potential investors here. Related Resource: How To Write the Perfect Investor Update (Tips and Templates) 9. Mentorship and being mentored One of the best ways to network with potential investors is to seek out advice and mentorship from them. Going in with a true intent to learn from their experiences is a great way to hone your skillset and build a strong relationship — with them and their network. Related Resource: Startup Mentoring: The Benefits of a Mentor and How to Find One Find Out How Visible Can Help You Connect With the Right Investors As we mentioned at the beginning of this post, a venture fundraise often mirrors a traditional B2B sales and marketing funnel. Just as a sales and marketing team has dedicated tools, shouldn’t a founder that is managing their investors and fundraising efforts? 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.
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[Webinar Recording] A Deep Dive of OpenView’s 2023 SaaS Benchmarks Survey
OpenView Ventures is back with their annual SaaS Benchmarks Survey & Report. Join us and Kyle Poyar of OpenView as we take a deeper look at the data and takeaways from the 2023 report. Webinar Overview Join us on November 9th as we take a deeper look at the 2023 OpenView Ventures SaaS Benchmark Survey with Kyle Poyar. Kyle is an Operating Partner where he helps portfolio companies fuel growth and become market leaders. He specializes in monetization, product-led growth (PLG), and SaaS metrics. A few topics you can expect us to hit on: SaaS Pricing Models Churn benchmarks AI adoption Financial performance Save Your Spot Even if you can’t make the scheduled time, register anyway — we’ll send the recording to anyone who registers. We hope to see you there!
Market Penetration Strategy 101: How to Calculate & Best Strategies
Market penetration can elevate a business to new levels by tapping into existing products in current markets. This article will delve into what market penetration is, how it’s calculated, and the optimal strategies to achieve it. Whether you’re a startup or an established enterprise, understanding market penetration can help enhance market share and drive success. What is Market Penetration? Market penetration is a business growth strategy where companies aim to increase their market share of existing products or services in existing markets. Market penetration is crucial for businesses looking to solidify their presence in an industry and build a robust customer base. This is done by selling more products or services to current customers or by finding new customers within existing markets. It can be achieved through various tactics like pricing strategies, advertising, sales promotions, and product improvements or innovations. The primary goal of this strategy is to increase market share, revenue, and customer loyalty within a market where the products or services are already available. The degree of market penetration can be an indicator of the brand’s popularity, business growth, and the level of risk involved. It’s crucial for evaluating the success of products and services in the market and is also a critical factor in developing effective marketing strategies and plans. Images source How is Market Penetration Calculated? Market Penetration is calculated to understand the existing sales or market share of a company in comparison to the total market potential. It provides insights into how much of the potential market a company has been able to capture. Formula for Market Penetration Rate Actual Market Size is the current market share or sales volume of the company. Total Addressable Market (TAM) represents the total sales revenue opportunity available for all companies in a particular market. Example: Let’s say a company sells 500 units annually in a market where 10,000 units are sold in total by all competitors. The Market Penetration Rate would be: This calculation implies that the company has captured 5% of the total market. Additional resources: Total Addressable Market Template– In order to help calculate your market share and your potential to build a large business, it helps to calculate and understand the total addressable market and sensitivity analysis. Check out our free total addressable market template below When & How to Calculate Market Share (With Formulas) Suggest Market Penetration Rate for Startups Once you’ve calculated the market penetration rate, it’s essential to analyze it in context. A high rate may indicate a strong market presence but may also suggest market saturation, limiting growth. A lower rate can point to significant growth opportunities, but it could also reflect poor market fit or strong competition. Companies often use market penetration metrics alongside other market analysis tools and industry benchmarks to develop effective market strategies and identify growth opportunities. For startups, achieving a market penetration rate of 2-3% is often considered commendable, and it can serve as a strong foundation for further expansion and growth. 8 Best Market Penetration Strategies To achieve greater market penetration, various strategies can be implemented. The selection depends on the business model, industry, and target audience. Below are eight effective market penetration strategies: 1) Dynamic Pricing Dynamic Pricing can be a powerful tool for companies looking to penetrate existing markets more deeply. It is a strategy where companies adjust the prices of their products or services in real-time, or near real-time, in response to market demands, competitor prices, and other external factors. This strategy can be pivotal in achieving higher market share in existing markets as it allows businesses to quickly adapt to market conditions and customer behaviors. By adjusting prices to meet market conditions and consumer expectations, businesses can optimize their sales and profits, attract more customers, and enhance their market share. However, it’s crucial to manage this strategy carefully to maintain customer trust and satisfaction. How It Works: Dynamic Pricing leverages advanced technologies and algorithms to analyze multiple factors that influence demand, including seasonality, competitor prices, inventory levels, and consumer behavior. Based on this analysis, prices are adjusted to optimize sales, revenue, or margins. Pros Maximizes Revenue: Enables businesses to adjust prices to meet demand, maximizing revenue during high demand and possibly stimulating sales during low demand. Competitive Advantage: Allows for real-time response to competitors’ pricing strategies, helping companies stay competitive in the market. Optimizes Inventory: Helps in managing inventory more effectively by increasing prices when stock is low or decreasing prices to move surplus inventory. Customer Segmentation: Offers the possibility to segment customers and offer different prices based on customer willingness to pay, optimizing revenue and customer satisfaction. Market Responsiveness: Provides the flexibility to quickly respond to market conditions like changes in demand or supply, ensuring optimal pricing at all times. Cons Customer Dissatisfaction: Customers may perceive dynamic pricing as unfair, especially if they find out they paid more for the same product or service than others, potentially leading to loss of trust and customer churn. Complex Implementation: Requires sophisticated software, algorithms, and expertise to analyze data and adjust prices accurately and effectively, which can be resource-intensive. Brand Image Risk: Frequent price changes, especially upward revisions, can lead to a negative brand image and accusations of price gouging. Price Wars: Can lead to destructive price wars with competitors, resulting in decreased profit margins for all market players. Legal and Ethical Considerations: In some industries and jurisdictions, there may be legal restrictions and ethical considerations around dynamic pricing, and violating these can lead to fines and reputational damage. 2) Adding Distribution Channels Adding distribution channels refers to the strategy of increasing the number of ways or locations through which customers can access and purchase a company’s products or services. By making products or services available through a variety of channels, companies can reach a broader audience, adapt to customer purchasing preferences, and ultimately increase sales and market share within existing markets. This strategy requires careful planning and management to ensure consistency in brand image and customer experience across all channels. Pros Increased Sales: Access to more customers through varied channels can lead to higher sales and subsequently, increased market share. Enhanced Market Coverage: More channels mean broader market coverage, enabling the business to reach different customer segments and geographic locations within the existing market. Customer Convenience: Providing multiple purchasing options caters to diverse customer preferences, potentially improving customer satisfaction and loyalty. Risk Diversification: Distributing through various channels reduces dependency on one, mitigating risks associated with the underperformance of a single channel. Brand Visibility: Presence across multiple channels enhances brand visibility and awareness, contributing to brand equity. Cons Complex Management: Managing multiple channels can be logistically complex and administratively challenging, requiring additional resources and efforts. Inconsistent Brand Image: Maintaining a consistent brand image and customer experience across varied channels can be challenging, potentially affecting brand perception. Channel Conflict: Different channels might compete against each other for the same customers, leading to potential conflicts and affecting relationships with channel partners. Reduced Profit Margins: Some channels might require price reductions or additional expenditures, such as commissions for third-party sellers, impacting profit margins. Customer Confusion: Offering products through too many channels, especially with varied pricing or promotional offers, can confuse customers and dilute the brand value. When adding distribution channels, companies need to strategically assess the potential impact on the brand, customer experience, and overall business operations. Proper integration, management, and consistent monitoring of all channels are crucial to addressing the challenges and reaping the benefits of this strategy. Balancing the added complexity with the potential advantages is key to successful implementation and sustainable growth in market penetration. 3) Geo-Targeting Specific Locations Geo-targeting specific locations involves tailoring your marketing and sales efforts to target customers in a specific geographical area or region. This technique is often utilized by businesses to focus resources on areas where they are likely to gain the most traction, allowing them to reach and serve customers more effectively and efficiently. Geo-targeting can be implemented using various tools and platforms like online advertising services, SEO, and social media, which allow businesses to specify the geographic locations they want to target. Additionally, analytics and data analysis can help in identifying the most lucrative regions to focus on. Pros Enhanced Personalization: Allows for more personalized and locally relevant marketing campaigns, improving engagement and conversion rates. Resource Optimization: Focuses resources and efforts on high-potential or high-performing regions, ensuring better utilization and improved ROI. Improved Customer Experience: Offering localized content, deals, and products caters to regional preferences and needs, leading to higher customer satisfaction and loyalty. Market Insight: Provides valuable insights into regional market trends, consumer behavior, and preferences, aiding in better decision-making and strategy formulation. Competitive Edge: Establishing a strong presence in specific locations can provide a competitive advantage, especially in areas with less competition. Cons Limited Reach: Focusing on specific locations might limit the overall reach of the business, potentially missing out on opportunities in other regions. Resource Intensity: Developing localized strategies and content can be resource-intensive and might require significant investment in research and adaptation. Market Variability: Different regions may exhibit varying demand patterns, requiring constant adjustments and refinements to the targeting strategy. Cultural Sensitivity: There’s a risk of misunderstanding local cultures and preferences, which might lead to ineffective or even offensive campaigns. Data Privacy Concerns: The use of location data can raise privacy concerns and regulatory issues, potentially leading to legal challenges and reputational damage. 4) Continuous Improvements of Products Continuous improvements of products refer to the ongoing effort to refine and enhance products based on customer feedback, market demands, technological advancements, or competitive dynamics. This strategy is crucial in market penetration as it helps in maintaining and enhancing the appeal of the products, addressing evolving customer needs, and staying competitive in the market. Pros Increased Customer Satisfaction: Addressing customer needs and resolving issues lead to higher satisfaction and loyalty. Enhanced Market Position: Ongoing improvements help in maintaining a competitive edge and solidifying market presence. Revenue Growth: Enhanced features and quality can justify higher pricing, leading to increased revenue. Brand Strengthening: Demonstrating commitment to excellence and innovation enhances brand reputation and equity. Cons High Costs: Constant refinement and development can be resource-intensive and costly. Overcomplication: Adding too many features or making too many changes can complicate the product, potentially alienating users. Customer Overwhelm: Frequent changes and updates can overwhelm and frustrate customers, especially if they are not well-communicated. Market Misalignment: Without proper market research, improvements may not align with actual customer needs, leading to wasted resources and missed opportunities. 5) Launch a New Product or Rebrand Launching a new product or rebranding refers to the introduction of a novel product or a significant transformation of existing brand elements, respectively, to appeal to the current market. This can be a pivotal market penetration strategy, aiming to renew consumer interest and address evolving market demands, preferences, and competition. Pros Increased Market Share: New or revitalized offerings can attract a wider audience and capture additional market segments. Enhanced Brand Image: A successful rebrand can modernize and elevate the brand’s image, improving perceptions and attractiveness. Revenue Growth: New products and improved brand image can drive sales and potentially allow for premium pricing. Adaptation to Market Changes: Enables the business to stay relevant and responsive to evolving market trends, demands, and consumer expectations. Cons High Risk and Uncertainty: The success of a new product or a rebrand is not guaranteed and may not resonate with consumers, leading to financial losses. Substantial Investment: Development, launch, and rebranding processes can be costly, involving substantial investment in research, marketing, and implementation. Potential Customer Alienation: Existing customers may react negatively to significant changes in products or brand identity, potentially leading to loss of loyalty. Implementation Challenges: Executing a rebrand or launching a new product involves logistical, operational, and strategic challenges, requiring meticulous planning and coordination. 6) Build Relationships With Business Partners Building relationships with business partners involves creating and nurturing mutually beneficial connections with other businesses, suppliers, distributors, or stakeholders in your industry. This strategy is crucial in market penetration as it can open up new avenues for growth, co-development, and expansion, allowing businesses to leverage collective resources, networks, and expertise to enhance market presence. Pros Expanded Reach: Access to partners’ networks and resources can significantly extend market reach and presence. Increased Innovation: Collaborative efforts can lead to innovative solutions and offerings, enhancing competitive advantage. Cost Efficiency: Sharing resources and responsibilities can lead to reduced operational costs and increased efficiency. Enhanced Learning: Exposure to partners’ expertise and insights can lead to valuable learning and growth opportunities. Cons Potential Conflicts: Divergent goals, values, or management styles can lead to conflicts and strains in partnerships. Dependence Risks: Reliance on partners can pose risks in case of disagreements, underperformance, or termination of partnerships. Loss of Control: Collaborations may require concessions and shared decision-making, potentially leading to loss of control over certain aspects of the business. Resource Diversion: Managing partnerships can be resource-intensive and might divert focus and resources from core activities. 7) Buy a Smaller Competitor in Your Industry Buying a smaller competitor, also known as acquisition, refers to purchasing another company to control its assets and operations. This market penetration strategy can be powerful, as it allows a company to quickly increase its market share, expand its product or service offerings, and eliminate competition. When considering acquiring a smaller competitor, thorough due diligence is paramount to assess the compatibility, valuation, and potential synergies accurately. A well-planned integration strategy, clear communication, and cultural alignment are crucial for realizing the full benefits of the acquisition and ensuring smooth transition and consolidation, thus enhancing market penetration and long-term success. Pros Rapid Market Expansion: Provides immediate access to new market segments, geographic areas, and customer groups. Enhanced Resources and Technologies: Acquisition brings in additional resources, technologies, and intellectual properties, enhancing overall capabilities. Cost and Revenue Synergies: Merging operations can lead to cost savings and additional revenue opportunities, increasing profitability. Strategic Positioning: Reducing competition and leveraging combined strengths can strengthen market positioning and dominance. Cons Integration Challenges: Merging different corporate cultures, systems, and operations can be complex and challenging. High Costs and Risks: Acquisition involves significant financial investment and carries risks of overvaluation and unanticipated complications. Potential Culture Clash: Differences in organizational cultures and management styles can lead to conflicts and employee dissatisfaction. Regulatory Hurdles: Acquisitions may be subject to stringent regulatory scrutiny and approval, potentially impacting the feasibility and timelines. 8) Provide a Rewards Program or Promotional Program Providing a Rewards or Promotional Program refers to offering incentives like discounts, points, or special offers to customers to encourage loyalty, repeat business, and attract new customers. These programs are instrumental in market penetration as they help in increasing product or service usage among existing customers and drawing in new clientele. When implementing rewards or promotional programs, it is important to balance the incentives with the overall business strategy and ensure that the programs are sustainable, beneficial, and aligned with brand values. A well-crafted and managed rewards program can be a powerful tool for market penetration, building long-lasting relationships with customers, and creating a competitive advantage in the market. Pros Increased Sales: By incentivizing purchases, such programs can drive up sales volumes and revenues. Customer Data Collection: These programs often involve collecting customer data, which can be analyzed to gain insights into consumer behavior and preferences. Enhanced Customer Satisfaction: Customers receiving rewards or benefits are likely to be more satisfied and have a positive perception of the brand. Effective Word-of-Mouth Marketing: Satisfied customers, especially those benefiting from rewards, are more likely to recommend the brand to others. Cons Cost Implications: Implementing and maintaining rewards programs can be costly, impacting profit margins. Customer Expectation Management: Customers may come to expect regular promotions, potentially impacting perceived value and full-price sales. Complexity in Management: Designing, managing, and optimizing rewards or promotional programs can be complex and resource-intensive. Risk of Decreased Perceived Value: Regular and extensive promotions can lead to a devaluation of the product or service in the eyes of consumers. Raise Funds and Penetrate Your Market With Visible Market penetration is a pivotal strategy for businesses aiming to enhance their market share in existing markets with existing or innovative products. Whether it’s through employing dynamic pricing, adding distribution channels, geo-targeting, continually improving products, launching new products or rebranding, forging business partnerships, acquiring smaller competitors, or providing compelling rewards or promotional programs, each strategy carries its unique set of advantages and challenges. The key is to meticulously analyze and integrate these strategies, aligning them with the overarching business objectives, customer needs, and market dynamics, to drive sustainable growth and success. Leveraging such multifaceted approaches can aid in navigating the competitive landscape, fostering customer loyalty, and achieving a robust market presence, propelling your business to new heights. And, to successfully penetrate the market, raising funds effectively is crucial—discover how Visible can assist in making your fundraising journey seamless and successful.
TVPI for VCs — definition and why it matters
What is TVPI In simple terms, ‘Total Value to Paid In’, also known as TVPI, communicates how much a VC fund is worth on paper compared to how much money Limited Partners (LPs) have put into the fund. To calculate TVPI you take the total distributions paid back to the LPs (realized gains) and add it to the residual value of the investments in the fund (unrealized gains) and then divide the value by how much Limited Partners have contributed to a fund. It’s important to remember that LPs do not contribute all their committed capital to a fund all at once but rather over time it is ‘called’ by the General Partner for specific reasons such as a new investment. Related Resource: Fund Performance Metrics 101 (and why they matter to LPs) Why does TVPI matter in VC TVPI is one of the earliest indicators current and prospective LP’s will use to measure the performance of a VC fund. It’s essentially communicating whether the fund’s performance is heading in the right direction. In other words, it demonstrates whether the value of investments have increased or decreased. Any TVPI value greater than 1x means that the fund’s value has grown over time. LPs use TVPI to compare the performance of funds against each other. The greater the TVPI, the greater the increase in the value of the fund. To better understand TVPI benchmarks check out Pitchbook’s Benchmark Report as of Q4 2022. Visible empowers investors to visualize, share, and communicate their most important fund metrics in flexible dashboards. TVPI within the current market context According to Hustle Fund, TVPI is the metric that investors are currently feeling squeamish about reporting to potential Limited Partners in today’s tough market conditions. The reason TVPI is low for many funds right now is because their portfolio companies are having a hard time fundraising. If portfolio companies are raising priced rounds at all, the increase in company valuations are marginal or even lower than before (when this occurs it’s called a Down Round). This means investors are not likely to be marking up any of their investments, causing TVPI to remain the same or even decrease with down rounds. Whether your TVPI has gone up or down in the last quarter, it’s important to maintain transparent communication with LPs in both good times and the bad. Check out Visible’s LP Update Template Library to inspire better communication with your LPs this quarter. Using Visible to track and visualize fund metrics With Visible investors can keep track of over 30+ fund metrics including: TVPI RVPI DPI IRR Multiple And more Fund metrics can be visualized in Visible's flexible dashboards alongside text, properties, variance charts, and portfolio metric data. Over 400+ VCs use Visible to streamline their portfolio monitoring and reporting.
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Deal Flow: Understanding the Process in Venture Capital
The deal flow process is arguably the most important operational functions at a VC firm. From an outsider's perspective, the way a VC firm runs its deal flow process can be mysterious. It’s the secret recipe that helps VC firms find and invest in the best-performing startups resulting in the biggest returns for their LPs. In this article we’re breaking down the deal flow process: what it is and why it matters. Defining deal flow in venture capital Deal flow is defined as the process investors run to attract potential investments, narrow down those opportunities, and then make a final investment decision. How a venture capital firm runs this process, and the quality of investments in their deal pipeline, is what separates great investors from the rest of the pack. The process of building great deal flow is similar to a sales funnel. Investors want a lot of leads (potential investments) coming to them at the top of their funnel to increase their odds of finding winners. What’s most important though is the quality of those leads. Too much inbound interest from startups that are not aligned with the fund’s thesis is overwhelming and distracting for investors. This is why it’s important for startups to do their research before reaching out to an investor. Similarly, it’s why investors often consider companies that come to them from a referral more credible opportunities -- those companies have already been pre-vetted by someone in their network. Ultimately, investors care about both volume and quality when building their deal flow pipeline. Maximizing the number of high-quality leads ensures investors are spending their time reviewing opportunities that can actually result in an investment. Why startups should be familiar with the deal flow process It’s important for startups to be familiar with the deal flow process so they can engage with the right type of investors, in the right way. When startups fundraise with a solid understanding of the deal flow process they can save themselves time and increase their likelihood of securing funding. According to a survey from more than 900 VC’s, investors are most likely to source a deal from the following channels: 30% - former colleagues or work acquaintances 30% - VCs initiating contact with entrepreneurs 20% - other investors 10% - cold outreach from startups 8% - existing portfolio companies What this means for startups is they shouldn’t rely on cold outbound alone. They’re more likely to stand out to an investor if they can get a warm intro from a personal connection, another relevant investor, or even from a current portfolio company. Founders should invest more time deepening relationships in their networks as opposed to a spray-and-pray cold outbound approach. A great way for founders to strengthen their relationships with their networks is to send out monthly communications to keep their potential investors, friends, and colleagues engaged. Get started sending regular updates with Visible. If a company is going to send a cold outreach to an investor it’s important to understand just how much inbound interest investors receive on a weekly basis. It’s reported that small VC firms receive about 30 inbound messages from startups per week while larger firms can receive more than 200 (source). Here's what this means for startups: Don’t be discouraged if an investor doesn’t respond to your cold outreach; they’re busy making their way through all the other inbound interest from the week Your pitch deck needs to be clear, concise, and compelling Make sure you research the investor in advance and are confident your company fits their investment thesis; otherwise, you’re wasting multiple people's time Related resource: Pitch Deck 101: How Many Slides Should My Pitch Deck Have? It’s also important for startups to understand that investors only invest in about 1% of the companies that go through their pipeline. While this may sound daunting, this advice from VC investor Krittr highlights the optimistic mindset founders should take. “This is the first thing that is important to understand — VC firms want you to succeed. We want you to get the money, and grow. All we want is a strong enough reason to give you the money. Remember this, this mindset shift does wonders.” Stages of the deal flow process in venture capital The deal flow process is commonly broken down into seven phases with a decreasing number of companies making it to the next phase. During this process, investors are collecting more information and building conviction about whether a company is a fit for their firm or not. A more in-depth breakdown of each step can be found below. 1. Sourcing Sourcing is the process of VCs finding potential investment opportunities. To source deals investors will do things like attend networking events (demo days, pitch competitions, industry conferences), research market activity, and meet with other VCs or incubators/accelerators to discuss deal opportunities. 2. Screening During the screening process, investors will rely on basic assets such as pitch decks to determine which opportunities are worth digging into on a deeper level. Share your deck with confidence and track engagement rates with Visible. 3. First meeting When investors believe the company has the potential to be a good investment opportunity based on their initial pitch deck, they will be invited to join a first meeting with the firm. At this stage, investors are trying to better understand the dynamics of the leadership team, whether the company has a competitive advantage, and the market health of the specific sector. This may lead to additional follow-up meetings where more in-depth questions are asked by the investment team. Learn more about preparing for the first meeting. 4. Due diligence If the investment team has built conviction on a company based on the initial meetings they will kick off a more thorough due diligence process. During this phase, the VC is trying to gain an in-depth understanding and evidence of the company’s financial, technological, legal, and market opportunities and risks. Here is a breakdown of the topics investors evaluate at this stage Market - The size of the market, level of maturity, predicted growth and trends, competitive activity, and regulatory changes Business - How does the product work, what are the early customer metrics indicating (CAC, Churn Rate, Average Order Size, MRR, Annual Run Rate, Cash Runway, Gross Sales, CLV), how is the team structured, what does the company operations look like Technical - Does the company have any intellectual property or patents Financial due diligence - Analyzing financial statements, unit economics, and performance rations Legal due diligence - Is the company complying with local and federal regulations 5. Investment Committee The next phase of the deal flow process is when the investment committee reviews all the due diligence information, listens to the company present another time, asks additional questions, and then votes on whether to move forward with the investment opportunity. The investment committee is usually comprised of the General Partners who have worked on the deal, some independent investment committee members, and possibly experts in the field. It is during this meeting that the firm decides whether or not to invest in the company. The VC Krittr explains that VCs can have different motivations for choosing to invest in a particular company. VC motivations can include: Conviction that this company will return 10x their investment (the VC power law) Balancing risk in the portfolio construction Building the right co-investing relationships Building a relationship with a great founder even if success may not come from this particular company Publicity or staying true to the firm's thesis/mission As a startup, it is beneficial to identify what is motivating the VC so you can leverage your strengths and build a good relationship with the VC. 6. Term sheet and negotiation Once the VC has decided to invest in a company they will give the startup a term sheet and negotiation begins. VCs and startups negotiate terms until both parties agree on key items such as: Deal size and ownership percentage - how much equity founders are willing to give to investors Cash flow rights - the financial upside that gives founders incentives to perform Control rights - the board and voting rights that allow VCs to intervene if needed Liquidation rights - the distribution of the payoff if the company fails and has to be sold Employment terms, particularly vesting - which gives entrepreneurs incentives both to perform and to stay at the company Pro rata rights - allows investors to retain their initial ownership percentage by participating in future financing rounds The goal of a term sheet negotiation is for both founders and VCs to feel fairly rewarded when the company succeeds, and protected if the company is missing milestones. (Source) Related resource: 6 Components of a VC Startup Term Sheet Related resource: Navigating Your Series A Term Sheet 7. Capital Deployment The final stage in the deal flow process process is the actual transaction of capital from the venture capital firm to the startup's bank account. Key metrics venture capitalists track in the deal flow process To ensure a Venture Capital firm is running an efficient deal flow process they measure success based on a few key metrics. Volume - Investors measure how many new companies are added to their deal flow pipeline each week. It’s an indication of their brand recognition in the industry and awareness among founders. Relevance - VCs not only care about the number of investment opportunities that land in their inbox but also how relevant the deals are. If they are seeing a high number of irrelevant deals the VC may need to strengthen their branding and messaging to attract the right type of founders. Conversion rates - It’s important for investors to track how many companies are making it to each stage within their pipeline so they can identify any areas of inefficiency. For example, they may have too many deals making it to the first meeting stage and as a result, they may need to set up a more formal application process for companies to go through. Diversity - Investors measure the diversity of the deals they are evaluating to understand and remove bias from their deal flow processes. For example, if they’re mostly receiving referrals or inbound interest from a certain demographic, the firm likely needs to work on diversifying their network as a whole. Related resource: Improving Diversity at Your VC firm Find the right investors for your startup with Visible Understanding the venture capital deal flow process is fundamental if startups want to make a great impression while fundraising. Demonstrating an understanding of each of the seven phases of the deal flow process is a sure way to impress investors. Additionally, understanding what is required from startups at each step will help founders prepare for their next fundraise. Visible helps over 3,500+ startups with their fundraising process.
Startup Mentoring: The Benefits of a Mentor and How to Find One
Being a startup founder is difficult. For many founders, it is their first time having full responsibility to fund their business, hire a team, build a product, and scale all aspects of their business. As Seth Godin puts it, “There are things you’re going to do just once. Get your tonsils out. Pick a caterer for your wedding. Raise money from a venture capitalist. Apply to college…When you have to walk into one of these events, it pays to hire a local guide. Someone who knows as much as the other folks do, but who works for you instead.” Learn more about how founders can tackle their challenges and asymmetric experiences by finding a startup mentor below: What is a startup mentor? A startup mentor is someone who can offer a startup founder (or employee) mentorship, advice, and support by sharing their own experiences and knowledge. For early-stage founders, a mentor can be particularly useful when it comes to understanding the different roles and responsibilities that come with the role of founder. Startup mentor vs. advisor Startup advisors are typically a more formal agreement than a mentor and are used to fill strategic gaps for a business. As put by the team at Mentor Cruise, “Startup advisors are chosen and utilized on a varying range of topics. The most common startup advisors are professors, founders, and serial founders themselves, with deep expertise in a company’s niche.” What Does a Startup Mentor Do? As we put in our blog, Startup Leaders Should Have a Mentor, “A great mentor can have an exponential impact on both your personal development and the growth of your business. They can serve as a guide through tough times, a voice of warning about potential pitfalls, or a source of challenging feedback and honesty. The best mentors are a combination of collaborator, coach, and friend.” What exactly does that look like in practice? Check out a few examples of what a great startup mentor should do below: Provides expert guidance and insight A great startup mentor will be able to offer guidance and insight. This typically comes from their own experiences and past roles in the industry. Different mentors will likely have different levels of expertise but you can expect help with leadership, hiring, company building, fundraising, etc. Related Resource: 10 Resources to Develop Your Leadership Skills Helps set goals and objectives Mentors are great for helping set goals and objectives. They are someone who can help hold you accountable and make sure you stay focused on the goals and objectives at hand. Offers networking opportunities The startup world is a tight-knit community. A mentor can offer introductions to their network — potential investors, other founders, executives, mentors, etc. Related Resource: Seed Funding for Startups 101: A Complete Guide Enables skill development If your startup mentor has expertise in a certain area, chances are they will be able to help hone your skills. For example, if a mentor is a strong leader they will be able to offer the skills and tools you need to level up your leadership skills. Benefits of a Startup Mentor The idea of a startup mentor typically sounds good on paper. Building a relationship with a mentor requires time from you — an expensive investment for a startup founder. To determine if a startup mentor makes sense for you and is worth the investment, check out a few of the benefits below: Network expansion As we previously mentioned, the startup world is a tight-knit community. A great mentor can offer opportunities to network with other founders, investors, executives, and startup leaders. This can pay dividends when it comes to raising capital in the future, hiring top talent, and closing new customers. Risk mitigation A great startup mentor likely has experience building and scaling a business. As most startup founders know, scaling a business is not always up and to the right — there are inevitable down periods and difficulties that arise. A mentor can come in handy when it comes to navigating these troughs and making sure you stay on the right path. Enhanced-problem solving Related to the point above, a mentor can help when it comes to problem-solving. A great mentor will spend more time listening than talking so will have a deep understanding of your issues and help you tackle them with sound advice. Accountability and motivation Being a startup founder can be lonely at times. For most founders, you are taking on multiple roles that you have limited experience doing. A startup mentor can help hold you accountable and motivate you as you face challenges. It will give you a peer to bounce ideas off of and keep you heading in the right direction. How to Find a Mentor for Your Startup Finding the right mentor for you and your business is crucial. Different mentors might come from different backgrounds with different experiences. You’ll want to make sure you have a mentor that matches your values and can offer a lift to you and your overall business. Check out some basic steps for how you can find a mentor below: 1. Identify your needs First things first, you need to identify your needs. Depending on your gaps as a founder will determine what you might want in a founder. We also suggest thinking through people, and attributes, you admire in a person. This will dictate the type of person (or exact person) that you want as a mentor. 2. Seek a mentor who aligns with your needs Once you lay out your needs, it is important to work on identifying the specific person. We suggest creating a list of 3-5 ideal mentors. You can scroll through your own LinkedIn or Twitter connections and slowly build out a list of individuals you admire who would make a good fit as a mentor. 3. Leverage your network If you are not directly connected with your ideal mentor, it typically makes sense to leverage your network to find an introduction. Before asking for an introduction it is important to do your research on the individual and make the case why you would be a good fit as a mentee. As we put in our post on finding a startup mentor, “Ideally, you want to answer the following questions: What is their attitude toward mentorship? What are they currently working on? What makes you think they’ll be a good fit?” 4. Utilize online platforms If your immediate network does not offer any good mentor candidates, you can turn to other social networking tools and websites to find a mentor. You can check out tools like GrowthMentor to be matched with a mentor that fits your needs. 5. Reach out thoughtfully Once you’ve identified your top candidates it is important to reach out thoughtfully to see if they’d be interested. We recommend starting with your #1 choice and moving down your list depending on the outcome. The key is being straightforward and respectful of the other’s time. Check out an example that we previously put together below: Hello Tom— I hope you’re having a great day! It was great running into you at the conference last week. I’m writing because I am currently looking for a mentor who might help me develop into a better leader as I work on scaling Kloud Co. I really admire what you were able to do with BiggerKloud Co, and I’d love to learn some lessons from you if you’re willing. I know mentorship can seem like a big commitment, so maybe we could start by having lunch later this month to see if there might be a good fit? My treat! If you don’t have the time or bandwidth right now, please don’t feel obligated. And if there’s someone else you think I should be speaking with, please let me know that, as well. Thanks, Tom! Let me know what you think. Barb Connect with Investors with Visible Connecting with the right investors is crucial to funding success. In order to better help with your fundraise, we’ve got you covered. Related Resource: A Step-By-Step Guide for Building Your Investor Pipeline Find the right investors for your business with our investor database, Visible Connect. Add them directly to your fundraising pipelines in Visible, share your pitch deck, and send investor Updates along the way. Give Visible a free try for 14 days here.
11 Venture Capital Podcasts You Need to Check Out
Building a startup is challenging. Founders are faced with hiring a talented team, building a strong product, financing their business, and more — oftentimes with limited experience in many areas. For many founders, it helps to learn from their peers, investors, and operators that have done it before. A great starting point for many founders is turning to a podcast with experts in different aspects of startup building and venture capital. Check out our list of different venture capital podcasts below: 1. Founders Forward The Founders Forward Podcast is our podcast at Visible. At Visible, our mission is to give founders a better chance of success. In order to help founders do so, we try to pull data, information, stories, tactics, etc. from other founders and investors. With the Founders Forward Podcast, we regularly interview different startup founders and venture capital investors. We try to find guests that are experts in different fields — from anything to building a pitch deck to understanding SEO for first-time founders. Episodes are typically between 30 and 60 minutes. Related Resource: Our 7 Favorite Quotes from the Founders Forward Podcast Why We Like It Our goal with the Founders Forward Podcast is to strap founders with resources and knowledge to help them tackle problems at their own businesses. We might be partial but a few reasons we like the Founders Forward Podcast: Our guests are experts in a dedicated space or field We interview founders or VCs who are just “one step ahead” of where you might be We cover everything from raising venture capital to running a PLG playbook to sleep science Related Resource: 5 Takeaways From Our CEO On The Stride 2 Freedom Podcast 2. The Twenty-Minute VC As put by the team at The Twenty Minute VC, “The Twenty Minute VC (20VC) interviews the world's greatest venture capitalists with prior guests including Sequoia's Doug Leone and Benchmark's Bill Gurley. Once per week, 20VC Host, Harry Stebbings is also joined by one of the great founders of our time with prior founder episodes from Spotify's Daniel Ek, Linkedin's Reid Hoffman, and Snowflake's Frank Slootman.” Why We Like It The Twenty Minute VC is one of the most tenured podcasts in the VC space. This has led to a large following. A few reasons we like it: Guests — Big-name guests that play an integral part in the VC space Digestible Format — Most episodes are between 30 and 60 minutes. While not 20 minutes like the names suggest, they are still approachable in length and format. Topical — As the podcast is published regularly, many episodes and guests cover current events and relevant topics in the space. 3. Venture Unlocked As put by their team, “The Venture Capital community is no longer the monolithic asset category that it once was. Over the last decade, new forms of capital providers have emerged to drive the innovation economy. Venture Unlocked is the newsletter and podcast playbook designed to educate and assist emerging managers and aspiring investors with the information and tools necessary to drive smart, diverse, and informed capital to entrepreneurs.” Why We Like It Venture Unlocked goes beyond a podcast with a newsletter that is regularly sent. A few reasons why we like the Venture Unlocked community: Data & Trends — The Venture Unlocked podcasts and newsletter is full of venture data and trends that can be applied by founders, VCs, and LPs All Aspects of VCs — The Venture Unlocked community not only focuses on VCs <> Founders but LPs as well Regular Cadence — New episodes and newsletters are consistently published so you know things are up-to-date and relevant. 4. Masters of Scale As put by their team, “Since its launch in 2017, Masters of Scale with Reid Hoffman has grown into a vital listen for business leaders, thanks to its groundbreaking format. In each episode, LinkedIn co-founder and Greylock partner Reid Hoffman demonstrates how companies grow from zero to a gazillion, testing his theories with legendary guests.” Why We Like It Check out a few of the reasons why we like the Masters of Scale podcast below: Successful Host — Reid Hoffman is the founder of LinkedIn and offers countless tips from his own experience. High Product Value — The Masters of Scale Podcast offers great production value Storytelling — Reid uses great storytelling strategies and stories from real-world examples to make a point. 5. The Neon Podcast (fka 100x Entrepreneur) As put by the host, “Hi, I am your host Siddhartha! I have been an entrepreneur from 2012-2017 building two products AddoDoc and Babygogo. After selling my company to SHEROES, I and my partner Nansi decided to start up again. But we felt unequipped in our skillset in 2018 to build a large company. We had known 0-1 journey from our startups but lacked the experience of building 1-10 journeys. Hence was born the Neon Show (Earlier 100x Entrepreneur) to learn from founders and investors, the mindset to scale yourself and your company. This quest still keeps us excited even after 5 years and doing 200+ episodes.” Why We Like It Check out a few reasons why people like The Neon Podcast below: Hosts — Siddhartha has experience as a founder and has gone through the journey of starting, scaling, and selling a startup. Guest — The Neon Podcast offers a wide range of different guests offering different perspectives and insights. 6. LA Venture As put by their team, “We talk to Southern California VCs to get to know them, their funds, and their advice for entrepreneurs. Hosted by Minnie Ingersoll from TenOneTen, an LA-based seed fund investing in b2b software.” Why We Like It Check out a few of the reasons why people listen to LA Venture below: Focus — The LA Venture podcast is hyper focused on the VCs and startups in Southern California. Different Stages — The LA Venture podcast hosts VCs that specialize in all startup stages, from accelerators to late stage investors. Hosts — Minnis works at a LA-based seed fund so they know they ins and outs of what to asks their guests. 7. Distilling Venture Capital As put by the team at Distilling Venture Capital, “Host Bill Griesinger brings an informed, unbiased and unique historical perspective to the venture capital and high-tech world. Drawing on over 20 years in venture finance, working with tech companies and venture capitalists, he offers an unfiltered and transparent view of the venture capital & high-tech universe.” Why We Like It Check out a few of the reasons why we like the Distilling Venture Capital Podcast below: Guests — Bill brings on a number of different guest, from angel investors to venture capitalists to startup CTOs and executives. Topics — The Distilling Venture Capital podcast covers everything from cap table management to hiring. 8. Equity As put by their team, “The intersection of technology, startups, and venture capital touches everything now. That’s why Equity unpacks the numbers and nuance behind the headlines for entrepreneurs and enthusiasts alike. Every Monday, Wednesday and Friday, TechCrunch reporters Alex Wilhelm and Mary Ann Azevedo keep you up-to-date on the world of business, technology, and venture capital.” Why We Like It Check out a few reasons why we like the Equity podcast below: Consistent — The Equity podcast has 3 new episodes every week, rain or shine. Data points — As Equity is a TechCrunch podcast they are able to use relevant industry data points. Current events — With their consistent schedule, Equity is able to share current events in the startup world on a regular basis. 9. The Road Untraveled The Road Untraveled is a podcast hosted by Brian Hollins, Founder and Managing Partner at Collide Capital. The podcast is shared sporadically and features prevalent guests in the VC and startup world. Why We Like It Check out a few reasons why we like The Road Untraveled below: Host — Brian is an active VC and offers a unique perspective and take as they are active in the space. Guests — The Road Untraveled offers a wide range of guests and offer insights. Digestible — Most episodes of The Road Untraveled are 30 minutes or less, leaving for an easy and quick listen. 10. The Full Ratchet As put by The Full Ratchet host, “My name is Nick Moran and I launched the first Venture Capital podcast, The Full Ratchet, in May of 2014. I started angel investing in 2013 and found the startup fundraising/investing process to be confusing and opaque. The industry was a black-box with little transparency. Yet, I observed that venture drives significant value across both public and private markets. And the most inspiring, thought-provoking people that I had interacted with were startup entrepreneurs. After a year of coffee chats with VCs and Angels, it became clear that I could learn the most from conversations with the experts. And why not record the conversations to help others in a similar situation?” Why We Like It The Full Ratchet has been around since 2014 and has formed a loyal following. Check out a few of the reasons we like The Full Ratchet below: Engaging Community — Nick allows community members to ask questions and helps them answer questions. Great Guests — Nick hosts a wide variety of guests that offer great insights into the VC world. Relevance — The podcast is regularly published and features topical and relevant subjects. 11. How I Built This As put by the team at How I Built This, “Guy Raz interviews the world’s best-known entrepreneurs to learn how they built their iconic brands. In each episode, founders reveal deep, intimate moments of doubt and failure, and share insights on their eventual success. How I Built This is a master-class on innovation, creativity, leadership and how to navigate challenges of all kinds. New episodes on Mondays and Thursdays for free.” Why We Like It How I Built This is one of the biggest podcasts in the business world. The podcast is well-liked by startup founders and others for a few key reasons: Guests — Guy Raz interviews the biggest names in the business and startup world. Lessons — The guests are great at sharing a few key takeaways and lessons they learned from building their business. Engaging Host — Guy Raz has become one of the most popular podcast hosts due to his engaging and laid back approach to interviewing. Learn More Through Podcasts and Connect with Visible Today Learning from peers, investors, and operators is a great way to strap yourself with basic knowledge to tackle your different duties as a founder. At Visible, we use our own data, founder and investor interviews, and best practices from leaders to help founders improve their odds of success. Stay up to date with our resources by subscribing to our weekly newsletter here.
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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.
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. 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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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How Laurel Hess Sends A Monthly Investor Update in 1 Hour (or Less)
About Laurel & Hampr Laurel Hess is the CEO and Founder of hampr. hampr is a peer-to-peer, on-demand laundry app that provides magical wash-and-fold service at the push of a button! As the hampr website states, “The idea for hampr came after a chaotic weekend with kid sports games and 3 birthday parties. On top of that, there was still grocery shopping, cleaning the house, and oh, spending meaningful time with the family. Laurel was over it. So she thought “Hold on, why can’t laundry be as easy as ordering groceries with a tap of your phone?” And just like that, bam! hampr was born in 2020.” Quick facts: Founded Year: 2020 Headquarters: Lafayette, Louisiana Total Funding Amount: $9.7M Notable Investors: Techstars,VILLAGEx Learn more about hampr and give it a try yourself here The Power of Investor Updates for Laurel Investor updates can be a powerful tool for startup founders. Most VCS only hear from 10-50% of their portfolio companies on a regular basis. This is a major arbitrage opportunity for founders. Investor updates can help you stay top of mind with investors and secure help with fundraising, hiring, closing customers, strategy, etc — all in just an hour or less. As Laurel Hess wrote in her LinkedIn Post, “It boggles my mind how many founders don't do regular company updates to stakeholders (and potential investors!). So many people I know treat this as a chore - when it can be the highlight of your month (like it is mine!). Taking the time to review your business with your stakeholders is actually a really great opportunity for growth - if you view it that way, there is a ton of potential to unlock. I have gained the following from my regular updates: Intros to potential investors Additional capital for a round I'm working on Intros to new verticals for expansion Advice on strategy for a problem we are working on Intros to new mentors/advisors to unlock the next phase of growth Allllll this for just 1 hour of my time each month? That is the definition of no-brainer." Laurel’s Investor Update Template Sticking to a template and format can help build regular investor updates into your monthly rhythms. Laurel shared her monthly template that she uses in Visible via a LinkedIn Post, you can check it out below as well: “I have used Visible to manage my updates almost since the beginning. I love this company - they make it SO EFFORTLESS to send really factual, data-driven updates. SO, using Visible, this is how my monthly updates are typically structured: 1. Overview - this is a high-level, personal letter from me about the high notes and low notes of the update. Basically a TL/DR section. 2. Asks - I don't always have these but when I do, I have them right after my summary so it's high on the scroll. 3. Performance - I add charts on GMV growth month-over-month followed by membership KPIs in a chart (growth, churn and renewal). Then I add a summary with my insights/thoughts on each chart. Check out an example of a Visible chart below: 4. What we are excited about: A section on 1 or 2 things that the team is working on that we are really excited about - usually with a photo. 5. What we are Improving/Exploring: This is a realness section of challenges and concerns that we have and what we are doing to actively improve on them. AND THAT'S IT! It gives a super high-level overview of where we are, what our focus is, and how we are unlocking new opportunities. It's skimmable, it's concise and it's easy for everyone. AND because I use Visible.vc, it automatically ports in the numbers I need for my charts each month so all I have to do is replicate the previous month's email and then go to town. I can get a very thoughtful email out in 1 hour or less - and it gives me so much more in return.” Check out Laurel's template and add it to your Visible account below: Send Your Next Investor Update with Visible Join Laurel and the 3,300+ founders that use Visible to update their investors every month. Try Visible free for 14 days. Not sure where to get started? Check out our Update Template Library.
Case Study: How Moxxie Ventures uses Visible to increase operational efficiency at their VC firm
About Moxxie Moxxie was founded in 2019 by former Twitter executive Katie Stanton. Prior to starting Moxxie Katie worked at Google, in the Obama administration as a Special Advisor to the Office of Innovation, and co-founded the angel group #Angels. In 2021, Katie brought on Alex Roetter, whom she had worked with before at both Twitter and Google, as an equal partner in Moxxie’s second fund of $85M. Alex joined Moxxie with a wealth of operational and engineering experience from previously serving as the Senior VP of engineering at Twitter for 6 years as well as working as a software engineer at Google and various other early-stage startups. Today, Moxxie has invested in over 60+ seed-stage companies in the consumer, enterprise, fintech, health tech, and climate sectors. The team at Moxxie is differentiated by their operational experience and focus on underrepresented founders. According to an article published in Forbes, out of the 27 investments from Moxxie’s first fund, 36% were founded by women, 40% by people of color, 8% by Black founders and 43% by immigrant founders. Learn more about Moxxie. This Case Study was put together in collaboration with Alex Roetter, Managing Director and General Partner at Moxxie. What Moxxie was doing prior to using Visible In the early days at Moxxie, the team used a combination of check-in calls at varying frequencies, ad-hoc meetings, and texts to gather updates from their companies. Later on, they created a Google Group email alias where founders sent their updates so the communications were all stored in one inbox. The Moxxie team kept a summary of each company in a combined Google Document that was updated irregularly. The portfolio monitoring challenges Moxxie was facing The main issue with Moxxie’s ad-hoc method was that “...it was just all very manual. It was a mish-mash of documents and hard to maintain. We were inconsistent in how up-to-date we were on different companies,” shared Alex, Moxxie’s Managing Director. The manual effort required to stay on top of portfolio companies meant portfolio monitoring was “...falling to the wayside and we were not doing as good of a job [monitoring our companies] as we needed to be.” “...it was just all very manual. It was a mish-mash of documents and hard to maintain. We were inconsistent in how up-to-date we were on different companies." It’s common for investors to feel overwhelmed as they attempt to manually keep up to date on a growing number of portfolio companies despite recognizing the benefits of doing so. Alex emphasized that the main reason Moxxie wanted to improve their portfolio monitoring was to ensure they were spending their time most effectively at their firm. It was hard to identify which companies needed their support and where Moxxie's time would be most valuably spent “...without having a regular heartbeat from [their] portfolio companies.” The reasons Moxxie chose Visible Moxxie’s founder Katie Stanton was told to check out Visible’s KPI tracking capabilities at the end of 2022 while she was attending the Equity Summit, an invitation-only gathering that brings together thought-leading LPs and GPs that drive industry change. Alex from Moxxie reached out to Visible soon after the initial referral to schedule a demo. The demo confirmed that the Visible platform had exactly what Alex was looking for in a portfolio KPI tracking tool. Moxxie's portfolio monitoring criteria included: An automated way to send structured data requests to portfolio companies A solution that wasn’t taxing on their founders Allowed founders to share their data within seconds Ability to see all their portfolio data in one clear place Ability to easily build Tear Sheets for each company Moxxie's onboarding experience with Visible Moxxie’s onboarding took approximately 9 days to complete. When asked to share feedback on Visible’s onboarding process Alex shared “Everything was great. Whenever we had bulk data in a CSV that needed to be uploaded we shared it with Visible and it was uploaded within 24 hours.” Check out additional Visible reviews on G2. How Moxxie is leveraging Visible to streamline portfolio monitoring and reporting processes today Today Moxxie doesn’t have to remember to check in with their companies or make guesses about their companies’ recent progress updates. Instead, Visible has enabled Moxxie to send automatic, recurring, structured data requests to their companies that can be completed without their founders ever having to log in or create an account. The Moxxie team is immediately notified when companies complete data Requests. From there, they are able to easily identify which companies need more support. This streamlined, founder-friendly process ensures the Moxxie team can continue to spend time on high-value fund operations, such as deal flow, while also efficiently monitoring and supporting current portfolio companies. Taking a closer look at Moxxie’s use of the Visible platform, the team primarily uses four main features on Visible: Requests, Tear Sheets, Reports, and Updates. Requests: Streamlining Moxxie’s portfolio KPI data collection process Moxxie uses Visible’s Request feature to collect 5 metrics from companies on a regular basis. The firm collects data from early-stage companies on a monthly basis and on a quarterly basis for more mature companies in their portfolio. The five metrics Moxxie collects include: Revenue Runway Cash Spend Cash Balance Headcount Moxxie also includes a qualitative text block in their Request that provides companies with an opportunity to add additional context to their metrics, share any additional updates, or ask Moxxie for support on specific items. Alex shared that likes that the Visible platform sends him a notification each time a company submits a Request. He uses this as an opportunity to quickly identify any changes to the company’s performance. Alex shared “...anytime there’s something unexpected it’s a reminder to check in with the company.” Reports: Building a custom investment data report before an annual meeting Another key feature that Moxxie is utilizing is Visible’s report feature which allows Moxxie to pull together select metrics and investment data into a single table view. Moxxie has a fund summary for both Fund I and Fund II that includes: initial ownership %, total invested, total invested from a specific fund, and the initial valuation for each company. Moxxie initially created this report to prepare for an annual meeting with LPs. They wanted to see the numbers across all their portfolio companies, be able to download the figures, and then compute averages. Tear Sheets: Creating a clear overview of individual company performance Moxxie utilizes Visible’s dashboard templates to create custom Tear Sheets for each of their companies. Moxxie’s Tear Sheets incorporate elements of their original investment memo coupled with dynamic metrics and qualitative updates that change over time. Integrating company properties into Tear Sheets The static information in Moxxie's Tear Sheets is pulled directly from companies' profiles in Visible. The information that Moxxie includes in their Tear Sheets are: Company website url Latest valuation Co-investors Founders Company summary Why we invested Status Deal source Initial ownership Initial valuation Investment date Total invested Sector HQ location Year founded Integrated dynamic charts into Tear Sheets Moxxie also incorporates data visualizations into their Tear Sheets which are automatically updated as companies submit new information to Visible. The dynamic information Moxxie includes in Tear sheets is: Monthly KPI’s in a bar chart Runway vs Headcount in a bar chart Monthly spend vs cash balance in a bar chart Revenue forecast vs actual in a bar chart Update/progress since investment in a text widget Key metrics in a text widget Company-specific metrics in a text widget View Tear Sheet examples from Visible. Updates: Communicating portfolio performance with LPs on a quarterly basis Moxxie also leverages Visible’s Updates feature to send outbound communication to their LPs and the wider Moxxie community on a quarterly basis. The firm uses Visible’s Update feature instead of its previous Google Group as a way to consolidate its tech stack. Alex shares that he finds the open rates and viewing analytics helpful so he can understand how LPs are engaging with their regular communications. Conclusion Moxxie chose to move forward with Visible’s founder-friendly portfolio monitoring solution after hearing about Visible’s KPI tracking capabilities through a credible referral. By adopting Visible, Moxxie’s ad-hoc, manual portfolio monitoring processes have been transformed into a streamlined cadence for collecting structured updates from their companies. The firm previously stored outdated company summaries in Google Documents and now the Moxxie team leverages neatly organized Tear Sheets that auto-update when companies share new information. Over 400+ VC firms are using Visible to streamline their portfolio monitoring and reporting process.
[Webinar Recording] Best Practices for Onboarding Portfolio Companies to Your VC Firm with M13 and Forum Ventures
We can all agree that first impressions matter. Onboarding a new investment into your VC firm’s community is a key step in setting up the investor <> company relationship for success. Join us Tuesday, August 29th for a discussion with two leaders in VC Operations, Steph Jones from Forum Ventures and Amelia Zack from M13, on how to set up effective portfolio company onboarding processes at your VC firm. This webinar is designed for people working in VC operations who want to improve the way they engage with their portfolio companies post-investment. Discussion topics: Defining the company onboarding process for your firm and why it matters Welcoming companies into your community Connecting companies to resources Setting expectations about portfolio data collection Q&A
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