Fundraising

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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: The Understandable Guide to Startup Funding Stages Just as a sales and marketing funnel starts by finding the right leads, the same is true for a fundraise. Founders raising venture capital should start by identifying the right investors for their businesses. If you’re a founder located in France and are looking for venture capitalists in your area, check out our list below: 1. Alven Capital Partners As put by their team, “Alven is an independent venture investment firm with a successful track record of 5 successive funds backing more than 130 startups over 20 years. Our team consists in seasoned investors and functional experts with significant startup experience, to identify promising startups and accelerate their growth.” Learn more about Alven by checking out their Visible Connect profile → Location Alven has offices in Paris and London and invests in founders across Europe. Portfolio Highlights Some of Alven’s most popular investments include: Algolia ChartMogul Stripe Funding Stage Alven attempts to be the first check into a business after angel investors — typically seed or series A. Their typical investment is between €500K and €5M. 2. Partech As put by their team, “Partech is a global investment platform for tech and digital companies, led by ex-entrepreneurs and operators of the industry spread across offices in San Francisco, Paris, Berlin and Dakar. We invest from €200K to €75M in a broad range of technologies and businesses for enterprises and consumers, from software, digital brands and services to hardware and deep tech, across all major industries.” Learn more about Partech by checking out their Visible Connect profile → Location Partech has offices across the globe and has multiple funds to invest in companies across the globe. Portfolio Highlights Some of Partech’s most popular investments include: Bolt The Bouqs Co. Zeel Funding Stage Partech has multiple funds that are geared towards different stages — from seed to growth stage. 3. Sofinnova Partners As put by their team, “At Sofinnova Partners, we focus on breakthrough innovations that have the potential to solve the world’s most pressing problems. Experience, agility, and diverse points of view push us forward, driving our ability to evolve in a complex environment. “Partners for Life” is a cornerstone of our identity: nurturing strong relationships through trust and transparency. We invest in people and science to create opportunity. We commit to long-term partnerships with entrepreneurs who are as passionate as we are about pushing the frontiers of innovation to contribute to a better future. Founded in 1972, Sofinnova Partners has backed more than 500 companies over 50 years, creating market leaders around the globe. Today, Sofinnova Partners has over €2.5 billion under management.” Learn more about Sofinnova Partners by checking out their Visible Connect profile → Location Sofinnova is located in Paris. Portfolio Highlights Some of Sofnnova’s most popular investments include: Avantium Kiro NuCana Funding Stage Sofinnova has 6 different fund strategies that are targeted on different stages and markets. They are: Sofinnova Capital Sofinnova MD Start Sofinnova Crossover Sofinnova Industrial Biotech Sofinnova Telethon Sofinnova Digital Medicine Related Resource: The Top VCs Investing in BioTech (plus the metrics they want to see) 4. Seventure Partners As put by their team, “Seventure Partners adopts an extremely rigorous but collegial process when selecting innovative companies for investment. Determining whether we can establish a relationship based on trust and work effectively with a company’s management team are key elements that we take into consideration. Investments are aimed at strengthening the equity capital of innovative companies at all stages: from seed to growth capital. As we are often the lead investor, we actively partner with entrepreneurs, encouraging and supporting them in reaching their full potential in order to achieve a leadership position within their fields. Our presence as directors on the company’s board or in a supervisory role creates a holistic approach that supports entrepreneurs in their development and companies throughout the key phases of their growth.” Learn more about Seventure Partners by checking out their Visible Connect profile → Location Seventure is located in Paris. Portfolio Highlights Some of Seventure Partner’s most popular investments include: Hivency Skinjay Sumup Funding Stage Seventure invests in companies across all stages — from seed to growth stage. Related Resource: A Quick Overview on VC Fund Structure 5. Eurazeo As put by the team at Eurazeo, “From fledgling startups to SMEs, mid-caps and multinationals, we detect, finance, accelerate and support companies that are inventing and reinventing themselves, innovative entrepreneurs, and emerging talent. We turn constraints into opportunities, challenges into ways to create value, and bold ideas into success stories. Every day, we work alongside management teams and investors at the grass-roots level. In the right place, at the right time, and over the long term, we help them reveal the best of themselves and, ultimately, contribute to creating meaningful growth.” Learn more about Eurazeo by checking out their Visible Connect profile → Location Eurazeo has offices across the globe. Portfolio Highlights Some of Eurazeo’s most popular investments include: Swile Grab Wefox Funding Stage Eurazeo funds companies across all stages. 6. Omnes Capital As put by their team, “Our Venture Capital activity, the historic heart of Omnes, with €700M under management, supports innovative European start-ups in the fields of deeptech. We back extraordinary founders executing on a clear vision and building worldwide leading businesses in the fields of techbio, cybersecurity, new space, quantum computing, new materials, carbone capture and novel food.” Learn more about Omnes Capital by checking out their Visible Connect profile here → Location Omnes Capital is headquartered in Paris. Portfolio Highlights Some of Omnes’ most popular investments include: Opensee Artifakt Gourmey Funding Stage As put by their team, “First investment from €2M to €7M with potential follow-on up to €20M.” 7. Vantech As put by their team, “Ventech is a global early-stage VC firm based out of Paris, Munich, Berlin, Helsinki, Shanghai and Hong Kong with over €900m raised to fuel globally ambitious entrepreneurs and their visions of the future positive digital economy. Since inception in 1998, Ventech has made 200+ investments such as Believe, Vestiaire Collective, Botify, Freespee, Ogury, Veo, Picanova and Speexx; and 90+ exits including Webedia, Meuilleurs Taux.com, Curse, StickyADS.tv and Withings).” Location Vantech has offices across Europe and Asia including Paris, Berlin, Munich, Helsinki, Hong-Kong, Shangai. Related Resource: 8 Most Active Venture Capital Firms in Europe Portfolio Highlights Some of Vantech’s most popular investments include: Adore Me Mobius Labs Picanova Funding Stage Vantech invests in companies across all stages. Related Resource: Private Equity vs Venture Capital: Critical Differences 8. Aster As put by their team, “Aster Capital arranges equity and debt-secured accounts for Proof of Funds uses on a fixed-return basis to facilitate various funding requirements, providing organizations and individuals the capability to meet on-going project needs. The investment process is simple and secure, and can be completed in as little as two banking days. Aster can arrange funding for various types of accounts and instruments for a broad range of requirements.” Location Aster has offices in Paris, London, and Nairobi. They make investments in companies located in Europe, US, and Israel. Portfolio Highlights Some of Vantech’s most popular investments include: Betterway Habiteo Candi Funding Stage Vantech funds companies that are raising anything from a seed round to series B. Looking for Investors? Try Visible Today! 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.

In the dynamic realm of venture capital, where innovation meets investment, the success of startups often hinges on the expertise, networks, and strategic insight provided by the key players within VC firms. Venture partners, uniquely positioned within the VC ecosystem, offer a blend of expertise, networks, and capital that can significantly influence the trajectory of startups. Their role extends beyond mere financial investment, encompassing a broad spectrum of activities designed to nurture and propel startups toward success. This article delves into the nuances of venture partners' responsibilities, their distinct positions within VC firms, and the invaluable assets they bring to the startup world. Who is a Venture Partner? Venture partners are seasoned professionals who collaborate with venture capital firms on a flexible basis. Unlike general partners, who are integral to the VC firm's day-to-day operations and investment decisions, venture partners typically engage in a more focused capacity. Their primary function is to identify promising investment opportunities, leverage their expertise and networks to guide startups and represent the VC firm within the broader entrepreneurial ecosystem​​. The distinction between venture partners, general partners, and limited partners lies in their involvement level, compensation structure, and role in investment decision-making and firm governance. Venture partners often work on a part-time or project basis, may receive carried interest but not necessarily a salary, and usually do not have full voting rights on investment decisions​​. Related resource: 25 Limited Partners Backing Venture Capital Funds + What They Look For The Unique Role of Venture Partners in Startups Venture partners occupy a distinctive and influential position within the startup ecosystem, bridging the gap between VC firms and the innovative companies they invest in. Their contribution extends far beyond mere financial backing; venture partners bring a wealth of expertise, strategic insight, and invaluable networks to the table. Sourcing Potential Investments Venture partners are essential in VC for scouting startups and fostering founder relationships. They combine market research, sector expertise, and tech trends to spot investment opportunities. Through networking and direct outreach, they build early trust with entrepreneurs, offering advice and connections. This role is pivotal for VC firms to gain a competitive edge, ensure portfolio diversity, and maintain a consistent investment pipeline. In essence, venture partners' insights and networks enable VC firms to capture high-potential investments and sustain their market leadership. Offering Expertise and Guidance Venture partners offer crucial expertise and guidance to startups, leveraging their extensive experience and industry knowledge to mentor and advise companies within a VC firm's portfolio. They typically have a deep understanding of specific sectors, market dynamics, and the challenges that emerging companies face. This enables them to provide strategic advice on a wide range of issues, including product development, market entry strategies, scaling operations, and navigating competitive landscapes. Their guidance often extends to helping startups refine their business models, improve operational efficiencies, and develop go-to-market strategies that enhance their chances of success. Moreover, venture partners can assist in preparing startups for future funding rounds, advising on the best approaches to attract further investment. By acting as mentors, venture partners not only contribute to the immediate growth and stability of startups but also help build the foundation for long-term success. Their involvement can significantly impact a startup's trajectory, accelerating growth and reducing the risk of failure. Representing VC Firms Venture partners play a key role in representing VC firms within the broader startup ecosystem. By actively participating in events, conferences, and panels, they not only enhance the visibility of their VC firm but also engage directly with emerging startups, investors, and industry thought leaders. This involvement allows them to stay abreast of the latest trends, technologies, and opportunities, fostering relationships that could lead to future investments. Their presence at these gatherings underscores the VC firm's commitment to the startup community, facilitates the exchange of ideas, and positions the firm as a key player in the entrepreneurial landscape. Through these engagements, venture partners effectively bridge the gap between VC firms and the dynamic world of startups, ensuring their firm remains at the forefront of innovation and investment opportunities. Provides Access to Networks Venture partners significantly enhance a startup's growth potential by providing access to their extensive networks, introducing startups to potential clients, strategic partners, and key hires. This access can accelerate a startup's market penetration, expand its customer base, and secure partnerships that offer competitive advantages. Additionally, leveraging a venture partner's network for talent acquisition can help startups attract experienced and skilled professionals crucial for scaling their operations. This network access is invaluable for startups looking to navigate market challenges and capitalize on opportunities more efficiently, underlining the venture partner's role in facilitating connections that drive success and growth. Related resource: A Quick Overview on VC Fund Structure The 5 Types of Venture Partners Venture partners can be categorized into five distinct types, each bringing unique skills and focus areas to the VC firm and its portfolio companies: 1. Operating Partners Operating partners represent a vital resource within the VC ecosystem, offering a unique blend of operational expertise and strategic guidance to help portfolio companies navigate growth challenges and scale successfully. Their hands-on approach and deep involvement in the operational aspects of a business differentiate them from other types of venture partners and make them invaluable allies for startups looking to maximize their potential and achieve sustainable growth. Role and Responsibilities Operational Support Operating partners provide hands-on support to portfolio companies, helping them scale operations, improve efficiency, and navigate complex business challenges. They often work closely with the company's management team to implement best practices, optimize processes, and drive growth. Expertise in Specific Areas They typically have a wealth of experience and expertise in specific functional areas such as sales, marketing, finance, human resources, or technology. This expertise allows them to offer tailored advice and strategies to address the unique needs of each portfolio company. Value Creation The primary goal of an operating partner is to create value for the portfolio company by leveraging their operational expertise. This could involve leading turnaround efforts, driving go-to-market strategies, optimizing supply chains, or implementing technological innovations. Strategic Initiatives Operating partners may lead or contribute to strategic initiatives within the portfolio company, such as entering new markets, launching new products, or pursuing mergers and acquisitions. Mentorship and Coaching They often serve as mentors and coaches to the CEOs and leadership teams of portfolio companies, sharing insights from their own experiences to guide leaders in making informed decisions. Duration of Engagement The involvement of an operating partner with a portfolio company can vary, ranging from a short-term project to a long-term engagement, depending on the specific needs and goals of the company. How They Differ from Other Venture Partners The key differentiator of operating partners is their hands-on, operational focus. While other venture partners might concentrate on broader strategic, advisory, or networking roles, operating partners are deeply involved in the trenches with portfolio companies, working to solve operational problems and drive tangible improvements. Benefits to Startups and VC Firms Accelerated Growth and Scale By implementing best practices and strategic initiatives, operating partners can significantly accelerate the growth and scaling efforts of portfolio companies. Risk Mitigation Their expertise and oversight can help identify and mitigate potential risks before they become significant issues. Increased Value Through operational improvements and strategic guidance, operating partners can increase the value of a portfolio company, leading to better outcomes for both the company and its investors. 2. Board Partners Board partners serve as a bridge between the strategic oversight required by a board of directors and the operational support provided by the broader VC firm and its network. By leveraging their experience, networks, and strategic insight, board partners contribute significantly to the growth and success of portfolio companies. Their role underscores the importance of governance and strategic planning in the fast-paced startup environment, ensuring that companies not only grow but also adhere to sound business principles and practices. Role and Responsibilities Strategic Guidance Board partners provide strategic direction and advice to portfolio companies, helping them navigate complex decisions and align their operations with long-term objectives. Governance They play a crucial role in governance, often serving on the boards of portfolio companies. Their presence ensures that there is an experienced voice to guide decision-making processes, oversee the management team, and ensure that the company adheres to its strategic goals. Network and Connections Board partners leverage their extensive networks to assist startups in finding potential clients, partners, and even future employees. Their connections can be invaluable in opening doors that might otherwise remain closed to early-stage companies. Fundraising and Financial Oversight They can also play a significant role in helping startups secure further funding, providing advice on financial structuring, and preparing for rounds of financing. Their experience can be critical in negotiating terms with new investors and in financial planning. Crisis Management In times of crisis, board partners can offer seasoned perspectives to help navigate through challenging periods, whether the issues are financial, operational, or market-related. How They Differ from Other Venture Partners The main differentiation of board partners from other types of venture partners lies in their primary focus on governance and strategic oversight rather than operational support or deal sourcing. Board partners are specifically brought into the VC ecosystem for their ability to contribute at the board level, offering insights and guidance that can steer a company towards success. Benefits to Startups and VC Firms Improved Decision-Making With their extensive experience and strategic vision, board partners can significantly improve the quality of decision-making within a startup, steering it clear of potential pitfalls. Enhanced Credibility Their involvement can enhance a startup's credibility in the eyes of investors, customers, and partners, given their reputation and track record. Strategic Networking Board partners open up their network of contacts, providing startups with access to a broader ecosystem that can support growth and expansion. Risk Mitigation Their governance role ensures that the company adheres to best practices and regulatory requirements, thereby mitigating risks associated with compliance and operational missteps. 3. Fundraising Partners Fundraising partners facilitate the flow of capital that fuels innovation and growth within the VC firm's portfolio. By leveraging their expertise, networks, and understanding of the financial landscape, they ensure that both VC firms and their portfolio companies have the resources they need to succeed. Their role underscores the importance of strategic fundraising in the competitive and fast-paced world of venture capital, making them indispensable allies in the quest for growth and success. Role and Responsibilities Capital Raising for VC Funds Fundraising partners are instrumental in raising new funds for the VC firm. They engage with potential investors, articulating the value proposition of the fund, its investment thesis, and the track record of the firm to secure commitments. Supporting Portfolio Companies Beyond raising capital for the VC firm itself, fundraising partners often assist portfolio companies in their fundraising efforts, helping them to prepare for rounds of funding, from seed stage to later-stage financing rounds. Strategic Networking They utilize their extensive networks of investors, including institutional investors, family offices, and high-net-worth individuals, to introduce potential funding sources to both the VC firm and its portfolio companies. Market Intelligence and Trends Fundraising partners keep a pulse on market trends, investor sentiments, and the regulatory landscape to advise on the most opportune times to raise funds, the best strategies to employ, and the types of investors to target. Investor Relations and Communication They play a key role in managing relationships with existing investors, ensuring transparent communication, and keeping LPs informed about the performance of their investments and the progress of portfolio companies. How They Differ from Other Venture Partners The distinguishing feature of fundraising partners compared to other types of venture partners is their focus on the financial ecosystem surrounding venture capital and startups. While operating partners may delve into the operational aspects and board partners may focus on governance and strategy, fundraising partners are deeply entrenched in the financial networks and activities that fund the venture ecosystem. Benefits to Startups and VC Firms Access to Capital Fundraising partners open doors to capital by connecting startups and the VC firm itself with potential investors, crucial for both launching and scaling ventures. Strategic Fundraising Guidance They provide strategic advice on the fundraising process, helping to structure deals in ways that are attractive to investors while safeguarding the interests of the startup and its founders. Enhanced Credibility The involvement of a seasoned fundraising partner can enhance the credibility of a fundraising round, attracting more and potentially better-suited investors. Efficient Fundraising Process Their expertise and network can streamline the fundraising process, reducing the time and resources that startups need to invest in securing funding. 4. Sourcing Partners Sourcing partners serve as the bridge between promising startups and the capital they need to grow. Their ability to identify and evaluate potential investments, coupled with their deep understanding of market trends and networks within the startup community, makes them invaluable to VC firms looking to invest in the next wave of innovative companies. Through their efforts, VC firms can maintain a robust pipeline of investment opportunities, ensuring sustained growth and success in the competitive venture capital landscape. Role and Responsibilities Deal Flow Generation: Sourcing partners are responsible for generating a steady flow of investment opportunities by identifying promising startups and entrepreneurs. This involves attending industry events, networking, and staying abreast of emerging trends and sectors. Initial Evaluation and Screening: They conduct initial evaluations of potential investments, screening opportunities based on the VC firm's criteria such as market potential, team quality, product innovation, and fit within the firm's portfolio strategy. Relationship Building: Sourcing partners build and maintain relationships with startups and entrepreneurs, even before these entities are ready for investment. This helps in creating a pipeline of potential future investments and ensures the VC firm has early access to high-potential deals. Market Research and Analysis: They conduct market research and analysis to identify emerging trends, sectors, and technologies that present new investment opportunities. This insight helps the VC firm to stay ahead of the curve and invest in future growth areas. Collaboration with Investment Team: Sourcing partners work closely with the broader investment team to share insights, evaluate deals, and contribute to the decision-making process. Their on-the-ground intelligence is crucial for informed investment decisions. How They Differ from Other Venture Partners Sourcing partners differ from other types of venture partners in their primary focus on the top of the investment funnel—identifying and securing new deals. Unlike operating or board partners, who might engage more deeply with portfolio companies post-investment, sourcing partners are pivotal in the pre-investment stage, dedicating their efforts to discovering and vetting potential investment opportunities. Benefits to Startups and VC Firms Access to Opportunities For VC firms, sourcing partners provide access to a broad and deep pool of potential investments, including early access to high-potential startups that might not yet be on the radar of the broader investment community. Strategic Alignment They ensure that the investment opportunities align with the VC firm's strategic goals and investment thesis, optimizing the firm's portfolio for success. Competitive Advantage By building strong relationships with entrepreneurs and startups early on, sourcing partners can give VC firms a competitive edge in securing investments in highly sought-after ventures. Efficient Investment Process Their expertise and initial screening efforts streamline the investment process, enabling the VC firm to focus its resources on the most promising opportunities. 5. Business Development Partners Business development partners focus on leveraging strategic partnerships and growth initiatives to drive value creation within the portfolio of a VC firm. Their role is instrumental in helping startups achieve scale, access new markets, and develop sustainable business models. Through their efforts, business development partners not only enhance the growth potential of individual companies but also contribute to the overall success and return on investment for the VC firm and its stakeholders. Role and Responsibilities Strategic Partnerships Business development partners identify and facilitate strategic partnerships for portfolio companies. These partnerships can range from alliances with other companies, channel partnerships, or joint ventures that can help startups scale quickly and efficiently. Market Expansion They play a crucial role in helping portfolio companies enter new markets, whether geographic or demographic, by providing insights into market dynamics, regulatory environments, and competitive landscapes. Customer Acquisition and Sales Strategies Business development partners assist in refining and implementing effective sales and customer acquisition strategies. Their goal is to accelerate revenue growth and market penetration for the portfolio companies. Networking and Introductions Leveraging their extensive networks, they introduce portfolio companies to potential customers, partners, and industry influencers, opening up new opportunities for business growth and collaboration. Operational Scaling They provide guidance on scaling operations, from optimizing sales processes to enhancing product delivery, ensuring the company's infrastructure can support growth. How They Differ from Other Venture Partners Business development partners distinguish themselves from other types of venture partners by their focus on operational growth and market expansion activities. While sourcing partners concentrate on finding new investment opportunities and fundraising partners on capital inflow, business development partners are deeply involved in the strategic and operational scaling of existing portfolio companies. Their work is hands-on, directly impacting the revenue and growth trajectory of the companies they support. Benefits to Startups and VC Firms Accelerated Growth Business development partners contribute directly to the accelerated growth of portfolio companies through strategic initiatives and partnerships, enhancing the value of the VC firm's investments. Market Access Their efforts help startups gain access to new markets and customer segments, crucial for companies looking to scale beyond their initial niche or geographic location. Strategic Alliances By fostering strategic alliances, they enable startups to leverage the strengths and capabilities of other companies, potentially bypassing years of solo development and scaling efforts. Enhanced Revenue Streams Their focus on optimizing sales strategies and customer acquisition can lead to enhanced revenue streams and improved market positioning for portfolio companies. Expert Guidance The operational and strategic guidance provided by business development partners can be invaluable for startups navigating the complexities of scaling a business, helping to avoid common pitfalls and accelerate success. Qualities of a Successful Venture Partner A successful venture partner embodies a set of key qualities that enable them to contribute effectively to the growth of startups and add value to VC firms. These qualities include: Industry Expertise: Deep understanding of specific sectors, enabling them to provide valuable insights and guidance. Strategic Thinking: Ability to develop and advise on strategies that drive startup growth and innovation. Networking Skills: Extensive connections across the startup ecosystem, facilitating introductions and partnerships. Communication Skills: Clear and persuasive communication, crucial for representing VC firms and advising startups. Analytical Skills: Strong ability to assess market trends, financial data, and startup potential, guiding investment decisions. Mentorship: Commitment to supporting and guiding entrepreneurs through the challenges of scaling their businesses. Adaptability: Flexibility to navigate the fast-paced and ever-changing startup landscape. Integrity and Trustworthiness: Building trust with entrepreneurs and within the VC firm by acting with honesty and integrity. Start Your Funding Journey With Visible Venture partners represent a critical nexus between venture capital firms and startups, offering a combination of capital, expertise, and networks that can significantly accelerate a startup's path to success. Their multifaceted role underscores the collaborative spirit of the venture capital ecosystem, where diverse talents and resources converge to nurture innovation and growth. Start your funding journey with Visible, where you can tap into a wealth of resources, expertise, and connections to propel your startup forward. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: Private Equity vs Venture Capital: Critical Differences

Building a startup is challenging. On top of building a product, hiring a team, and scaling revenue — founders are responsible for securing capital for their business. For many startups, this comes in the form of venture capital. Learn more about the different funding stages and venture capital rounds below. What Are Startup Funding Stages? There are multiple stages of startup funding: Seed, Series A, Series B, Series C, and so forth. Startups should be conscientious about the funding rounds that they will go through, which are generally based on the current maturity and development of the company. Here’s an overview of the major startup stages. As of 2023. Source Crunchbase Seed funding is a startup’s earliest funding stage. Often, seed funding comes from angel investors, friends and family members, and the original company founders. An early-stage startup may also look for funding through bank loans, but angel investments are usually preferred. Seed funding is used to start the company itself, and consequently, it’s a fairly high risk: the company has not yet proven itself within the market. There are many angel investors that specifically focus on seed funding opportunities because it allows them to purchase a part of the company’s equity when the company is at its lowest valuation. Related Reading: Valuing Startups: 10 Popular Methods The next stage of the startup funding process is Series A funding. This is when the company (usually still pre-revenue) opens itself up to further investments. Series A funding is generally much more significant than the funding procured through angel investors, with funds of more than $10 million usually being procured. Series A funding is often acquired to help a startup launch. The business will publicize itself as being open to Series A investors and will need to provide an appropriate valuation. Finally, there’s Series B, C, D, and beyond funding. Later stage funding is sought by companies that have already become successful and are trying to expand that success. Each stage of the startup funding process operates very similarly, despite the different stages the business might be in. During the startup funding process, the company has to be able to establish it’s valuation and will need to have clear plans for how it is planning to use the money it procures. Each round of funding will also, by necessity, dilute the company’s equity. Related resource: The Ultimate Guide to Startup Funding StagesPre-Seed Funding Over the last few years, a new funding stage has emerged, pre-seed funding. A pre-seed round is a round of venture capital that is generally the first round of institutional capital that a startup raises. A pre-seed round generally allows a founding team to find product-market fit, hire early employees, and test go-to-market models. As a general rule of thumb, funding should last somewhere between 12 and 18 months. It should be enough capital to allow you to comfortably hit your goals and the forecast you laid out during your pitching and fundraising process. Related Reading: What is Pre-Seed? Average Pre-Seed Funding Amount The size of pre-seed rounds varies quite a bit from company to company. There is no cut and dry amount. Research shows that round sizes can range anywhere from $100,000 to $5M at the pre-seed round. At the end of the day, you will want to weigh your business needs when setting valuations and determining how much to raise. How to Acquire Pre-Seed Funding? Raising a pre-seed round mirrors a traditional B2B sales process. You will be talking and adding investors to the top of your funnel, pitching and negotiating in the middle of the funnel, and hopefully closing them at the bottom of the funnel. Learn more about building a fundraising process in our guide, “All-Encompassing Startup Fundraising Guide.” We sat down with Jonathan Gandolf, CEO of The Juice, every week during his pre-seed raise to breakdown what he was learning along the way. We boiled down the conversations into 8 episodes. Give it a listen below: Who Invests in Pre-Seed Rounds? One of the plus side of a pre-seed round is that it opens up more types of investors as the check sizes are generally smaller: Angel Investors — A common place to start for a pre-seed round. Angel investors are individuals that can write checks that are anywhere from a few thousand dollars to $500,000+ Accelerators/Incubators — Many accelerator programs will take place in tandem with a pre-seed or will potentially write follow-on checks after completing their program to help fund your pre-seed round. Related resource: Accelerator vs. Incubator: Key Differences and Choosing the Best Fit for Your Startup Dedicated VC Funds — Over the last few years, many dedicated pre-seed funds have popped up and become a staple in the space. More traditional and larger firms are also making their way into pre-seed rounds. Related Resource: How Rolling Funds Will Impact Fundraising Active Pre-Seed Stage Investors As we mentioned, there are many dedicated pre-seed funds that are popping up in the space. Check out a few of our favorites below: Hustle Fund Forum Ventures Bessemer Venture Partners Boldstart Ventures Connetic Ventures Expa Kima Ventures LongJump M25 Mucker Capital Starting Line TheVentureCity Find more pre-seed investors in our investor database, Visible Connect, here. Related Resource: What is Pre-Revenue Funding? Related Resource: 12 Venture Capital Investors to Know Seed Funding As we mentioned earlier, “Seed funding is a startup’s earliest funding stage. Often, seed funding comes from angel investors, friends and family members, and the original company founders.” More investors have become keen on being early investor into a startup so they have access to invest again at later stages. Raising seed-stage funding is a major accomplishment for a startup. Seed stage funding is the initial surge of capital into the business. At this point, a startup is largely an idea and will have little to no revenue. This stage is generally when a product and go-to-market strategy are being built and developed. Over the past couple of years, seed-stage funding has exploded in round size. What used to be regarded as a few small checks from family and friends has turned into a multimillion-dollar round. Check it out: Source Crunchbase How to Acquire Seed Funding There are generally a few ways founders can approach a seed round. First things first, founders need to find a list of investors that are relevant for their business. Not every investor will say “yes” so it is important to have a list of 50+ investors to target. From here, founders will need to reach out to potential investors, sit meetings, and share their pitch deck and vision to garner interest. Next, founders will work through due diligence with the hopes of adding new investors to their cap table. Related Reading: Seed Funding for Startups: A 101 Guide Related Reading: A Quick Overview on VC Fund Structure Related Resource: An Essential Guide on Capital Raising Software Series A Funding After raising a Seed Round it’s time for a company to advance to a later round of venture capital financing, which means Series A funding. Series A is a significant stage in a company's lifecycle and is a monumental moment in a startup's funding journey. A Series A startup typically has found some success, has found product market fit, and is ready to scale. At the time of Series A funding, the company has to be valued and priced. Thought must go into previous investments, as prior investors will have also purchased the business at a specific valuation. If an angel investor purchased into the company at a valuation of $100,000 just months ago, then new investors may balk at purchasing at a $10,000,000 valuation today. Once the funding round has been completed, the company will usually have working capital for 6 to 18 months. From there, the company may either be able to move to market or may instead progress to another series of funding. Series A, B, and C funding rounds are all based on stages that the company goes through during its development. It is important to remember that when raising your Series A you are setting goals and objectives for what that capital will do to your business. You need to raise enough capital to help you achieve these goals so you can go on to raise a Series B or future round of capital. Average Series A Funding Amount Source Crunchbase As of 2024, the average Series A funding amount is $18.7 million. A Series A valuation calculator can be used to get close to the number that you should value your company at, though you will also need to thoroughly justify your valuation. How to Acquire Series A Funding? A company’s valuation will be impacted by a number of factors, including the company’s management, size, track record, risk, and potential for growth. Analysts can be called in for a professional valuation of the business. During a Series A funding round, a business usually will not yet have a proven track record, and may have a higher level of risk. During a Series A round, investors will usually be able to purchase from 10% to 30% of the business. Series A investments are generally used to grow the business, often in preparation for entering into the market. The company itself will be able to decide how much it wants to sell during its Series A round, and may want to retain as much of the company control as possible. Let’s start out with a hard truth: sometimes revenue doesn’t matter much in a successful Series A raise. If you’re a seasoned SaaS entrepreneur with a strong team, raising your next round will be much easier than for a first-time founder. Many VCs will place the greatest emphasis on past success for the best indicator of future results—whether or not a company’s unit economics are solid or if they’ve reached the proper revenue benchmarks. Jason Lemkin claims he’d comfortably invest in a pre-launch SaaS company with $0 in ARR if the team is strong and experienced and the market and opportunity are huge. “This makes sense as in many cases, SaaS is an execution play,” Lemkin wrote on Quora. “Put the best team into a strong, upcoming (or disruptable, large market), and that’s a good bet to make.” Related Resource: 23 Top VC Investors Actively Funding SaaS Startups Related Resource: Who Funds SaaS Startups? Related Resource: 20 Best SaaS Tools for Startups Related Resource: 13 Generative AI Startups to Look out for But if you haven’t birthed any unicorns or shepherded any startups to 10x exits already, your benchmarks may be a little more concrete. In the same response, Lemkin wrote that he looks for unproven, bootstrapped startups to hit about $2 million in ARR. In an interview with SaaStr, Tomasz Tunguz estimated a lower mark. Tunguz said most of the founders he speaks with are looking to hit somewhere between $75,000 to $125,000 (or $900,000 to $1.5 million in ARR) in MRR before making their Series A pitch. Despite the wide range, it seems pretty tough for any new founder to conduct a strong Series A round without revenue nearing $1 million ARR in today’s fundraising environment. Without that, you’re going to have to lean more heavily on pitching your market opportunity or product superiority. Related Resource: 7 Startup Growth Strategies Recommended Reading: How to Write the Perfect Investment Memo Recommended Reading: How to Pitch a Series A Round (With Template) Series B Funding Once a business has been launched and established, it may need to acquire Series B funding. A business will only acquire Series B funding after it has started its operations and proven its business model. Series B funding is generally less risky than Series A funding, and consequently, there are usually more interested investors. As with Series A funding, the company begins with a valuation. From there, it publicizes the fact that it’s looking for Series B funding. The company will be selling its equity at the valuation that is settled upon, and investors are free to make offers regarding this valuation. A startup that gets to Series B funding is already more successful than many startups, which will not go beyond their initial seed capital. Once Series B funding has been procured, the business will need to use this money to further stabilize, improve its operations, and grow. At this point, the startup should be in a good position. If the startup needs further money after it develops, to grow and expand, it may need to embark upon a Series C funding round. Average Series B Funding Amount Source Crunchbase On average, Series B startups will usually get $30M or more. The bulk of the heavy lifting will already have been done by seed capital and Series A funding. Series B funding will simply be used to grow the business further and improve upon it. How to Acquire Series B Funding? Sometimes Series B funding will come from the same investors who initially offered Series A funding. Other times, Series B funding may come from additional investors, or from firms that specialize in investing. Either way, investors are usually going to be paying more for less equity than investors did in prior funding rounds, because the company’s valuation will have scaled. A Series B funding valuation will need to consider the company’s current performance and its future potential for growth. Analysts can be used to price a company looking for Series B funding. However, it should also be noted that the company itself has more negotiating power as a Series B company, as it has proven itself to be successful. Related Reading: How to Pitch a Perfect Series B Round Series C Funding Series C funding is meant for companies that have already proven themselves as a business model but need more capital for expansion. Like Series B funding, Series C investors will often be entrepreneurs and individuals who have already invested in the company in the past. A startup may connect with their angel investors and Series A and Series B investors first when trying to procure Series C funding. If a business has made it to Series C funding they are already quite successful. Whereas earlier stage rounds are used to help a startup find traction and grow, by the time a startup raises their Series C they are already established and growing. By raising a Series C a business will be able to make strategic investments. This could mean investing in market expansion, new products, or even acquiring other companies. Average Series C Funding Amount Source Crunchbase A Series C funding amount is generally between $30 and $100M settling on an average round of $50M. At this point, a startup’s valuation is likely over $100M and they are on a national radar looking to expand internationally. How to Acquire Series C funding? When approaching a Series C, the strategy will likely change from earlier rounds. As we mentioned, the average is around $50M. This means that your investors cutting checks between $1 and $5M from earlier rounds are no longer likely to lead a round. Previous investors may be keen to invest in your Series C but startups will need to fill out the remainder of the round from other investors. When approaching a Series C valuation, your company likely speaks for itself and will have more inbound requests from investors. These investors will likely be later-stage VC funds, private equity firms, and banks. Later Startup Funding Stages Depending on the business strategy, a Series C round may be the end of the road in terms of venture capital financing. At this point, the company is likely headed in a strong direction and owns a large % of an addressable market. However, some companies go on to raise their Series D, Series E, Series F, and even Series G. Series D Funding A Series D funding round may occur if the company was not able to raise enough money through its Series C. This often has implications for the business. Series D funding occurs when the business was not able to meet its targets with its Series C, and consequently it can mean that the business is now at a lower valuation. Being priced at a lower valuation is usually very negative for a business. If Series D funding is necessary, due to challenges that the company is facing, then it may be the only way for the startup to survive. However, it generally devalues the company, and may shake future investor faith. Series E Funding Series E funding may be necessary if Series D funding isn’t able to meet the company’s needs for capital. This is, again, a very bad sign, and very few companies are going to survive to Series E funding. Series E funding will only occur if the business still hasn’t been able to make up its own capital but the business is still struggling to remain active and private. Series F Funding Beyond Series E funding comes Series F funding. Very few companies will make it to Series F funding. This is many years into a company's lifecycle. Series F funding is largely used for capital-intensive businesses that need to fuel their next stage of growth, an IPO, an acquisition, or expansion. Series G Funding Next comes Series G funding. Even fewer companies will make it to a Series G. Like Series E or F funding, a Series G round is typically used for companies that are on to their next stage of growth, gearing up for an IPO or acquisition, or expansion into a new market. Related resource: Emerging Giants: An Overview of 20 Promising AI Startups Initial Public Offering (IPO): Accessing Public Markets for Funding An IPO has traditionally been the pinnacle of a startup’s success story. As put by the team at Investopedia, “An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance for the first time. An IPO allows a company to raise equity capital from public investors.” For startup founders and early employees, an IPO is an opportunity to cash out. Track Your Startup’s Fundraise With Visible No matter the series, size, or timing of your round, Visible is here to help. With Visible, you can manage every stage of your fundraising pipeline: Find investors at the top of your funnel with our free investor database, Visible Connect Track your conversations and move them through your funnel with our Fundraising CRM Share your pitch deck and monthly updates with potential investors Organize and share your most vital fundraising documents with data rooms Manage your fundraise from start to finish with Visible. Give it a free try for 14 days here. Related resources: Strategic Pivots in Startups: Deciding When, Understanding Why, and Executing How Multiple on Invested Capital (MOIC): What It Is and How to Calculate It Navigating the Valley of Death: Essential Survival Strategies for Startups Top 18 Revolutionary EdTech Startups Redefining Education Top Creator Economy Startups and the VCs That Fund Them Business Venture vs Startup: Key Similarities and Differences The Top 9 Social Media Startups Exploring Canada’s Emerging Tech Hubs: Where Innovation is Thriving

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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 Quick Overview on VC Fund Structure A strong sales and marketing funnel starts by identifying the right leads for your business. The same idea is true for founders looking to find investors for their business — find the right investors for your business. If you’re a founder located in Israel and would like to find the right investors for your business, check out our list of active investors in the area below: 1. Altair Capital https://connect.visible.vc/investors/altair-capitalAs put by their team, “We invest in the world’s most promising companies with disruptive ideas and great return potential. We invest in early and growth stage startups in sectors such as Productivity tools, Fintech, Insuretech, AI, Digital Health. Great and motivated teams, strong product vision, scalable business model and big potential market are a must!” Location Altair Capital invests in companies in Israel, the US, and Europe. Company Stage Altair looks for companies that have achieved initial traction. Preferred industries As put by their team, “We are interested in productivity tools/future of work, SaaS, Fintech, Insuretech, AI, Digital Health.” Portfolio Highlights Some of Altair’s most popular investments include: Miro Deel OpenWeb 2. Pitango Venture Capital As put by their team, “Pitango is home to visionary entrepreneurs and groundbreaking companies from stealth mode to growth. We partner with exceptional founding teams via three parallel funds Pitango First, Pitango Growth and Pitango HealthTech.” Location Pitango is located in Tel Aviv and invests in companies across the globe. Company Stage Pitango VC invests in companies from the earliest stages to growth stages. Preferred industries Pitango invests in multiple sectors and has funds dedicated to HealthTech and Growth stage companies. Related Resource: How Venture Capital is Funding the Future of Healthcare + 7 VC Firms Making Investments Portfolio Highlights Some of Pitango’s most popular investments include: Via Logz.io Tulip 3. Vertex Ventures As put by their team, “We’ve worked with some of the most iconic startups to come out of Israel. Our experience and diverse backgrounds support our founders in their journey to grow their companies and become industry leaders. Vertex Ventures Israel funds are consistently ranked as top performers. We invest cross-verticals, from Seed to B.” Location Vertex Ventures is located in Tel Aviv and invests in companies across Israel. Company Stage Vertex invests in companies from Seed to Series B and beyond. Related Resource: The Understandable Guide to Startup Funding Stages Preferred industries Vertex Ventures is industry agnostic. Portfolio Highlights Some of Vertex Ventures’ most popular investments include: Base Yotpo EasySend 4. Jerusalem Venture Partners As put by their team, “Founded in 1993 under the famed Yozma program by Dr. Erel Margalit, Jerusalem Venture Partners VP has created and invested in over 160 companies in Israel, the US and Europe. JVP’s investment strategy is spearheaded by a deep expertise in identifying opportunities from inception and growing them into global industry leaders. Through our theme-driven focus and strong network of strategic partners, we seek to stay ahead of the latest market trends and address the most relevant market needs.” Location Jerusalem Venture Partners has office locations across Israel. Company Stage JVP is stage agnostic and invests in companies from seed to growth stages. Preferred industries JVP invests across many industries and has a focus on Cyber Security, Big Data, Enterprise Software, and FoodTech. Related Resources: 10 Foodtech Venture Capital Firms Investing in Food Innovation and 15 Cybersecurity VCs You Should Know Portfolio Highlights Some of JVP’s most popular investments include: Dealhub Quali Nanit 5. Grove Ventures As put by their team, “Grove Ventures is a leading early-stage venture capital investment firm with over half-a-billion dollars under management. We partner early with exceptional Israeli entrepreneurs who believe that the Deep Future is now and are ready to build it.” Location Grove Ventures is located in Israel and invest in companies across the globe. Company Stage Grove Ventures is focused on early-stage companies. Preferred industries Grove Ventures is hyperfocused on Deep Future companies. Portfolio Highlights Some of Grove Ventures’ most popular investments include: Rapid Lamigo Navina 6. Viola Ventures As put by their team, “Viola is a multi-strategy investment house with focused, separate investment arms. We partner with companies from inception to growth. Each partnership operates independently with a dedicated investment team, investors, pool of funds, and portfolio companies, but shares access to added-value services, best practices and insights.” Location Viola is located in Tel Aviv and invests in companies across the globe. Company Stage Viola has 5 different funds that invest in companies across many stages. Preferred industries Viola uses their 5 funds to invest in companies across different industries and markets. Related Resource: FinTech Venture Capital Investors to Know Portfolio Highlights Some of Viola Ventures’ most popular investments include: Ridge Grove Addressable 7. Entrée Capital As put by their team, “Entrée Capital was founded in 2010 to provide multi-stage funding to innovative seed, early and growth-stage companies all over the world. Entrée Capital manages over $1.2 billion across nine funds and has invested in over 180 startups.” Location Entree has office locations in New York, London, and Tel Aviv. They invest in companies across the globe. Company Stage Entree invests in companies from Pre-seed to Series C. Preferred industries Entree focuses on a wide variety of different industries. Including everything from Crypto to SaaS to Games & Social. Related Resource: 14 Gaming and Esports Investors You Should Know Portfolio Highlights Some of Entree Capitals’ most popular investments include: Stripe Monday Deliveroo 8. Magma Venture Partners As put by their team, “Magma Venture Partners is a leading Israeli venture capital firm, dedicated to investing in Israel’s Information, Communications and Technology space (‘ICT’), including the software, semiconductor and new media spheres. We seek bright ideas at their earliest stages, and serve as a springboard for our entrepreneurs as they develop and evolve into industry leaders. Our goal is to enable a flow of innovation from the earliest stage all the way through until a company realizes its potential reach.” Location Magma Venture Partners is headquartered in Tel Aviv and focuses on companies across Israel. Company Stage Magma Venture Partners is focused on early-stage companies. Preferred industries As put by their team, “Information, Communications and Technology space (‘ICT’), including the software, semiconductor and new media spheres.” Portfolio Highlights Some of Magma Venture Partners’ most popular investments include: Guesty Waze Trink 9. Cardumen Capital As put by their team, “Our general partners are investors, founders and operators. We have over a decade of experience founding and operating companies and helping entrepreneurs build, scale, and sell tech companies in Israel, Europe and in the United States. Our team is a diverse group of people from different backgrounds and upbringings. We strongly believe that different perspectives lead to better decision-making.” Location Cardumen Capital is located in Israel and invests in companies across Israel, Europe, and the United States. Company Stage Cardumen Capital is focused on companies between Pre-seed and Series A. Preferred industries Cardumen Capital is industry agnostic. Related Resource: 17 Travel & Tourism VC Investors that can Fund Your Startup Portfolio Highlights Check out some of Cardumen Capital’s most popular investments below: Munch Peech Spotlight.ai Join Visible and connect with the right investors for your business 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.

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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 Quick Overview on VC Fund Structure A strong sales and marketing funnel starts by identifying the right leads for your business. The same idea is true for founders looking to find investors for their business — find the right investors for your business. If you’re a founder located in Latin America and would like to find the right investors for your business, check out our list of 7 active investors in the area below. Related resource: Top 10 Growing Tech Hubs Transforming Latin America in 2025 1. Bossanova Investimentos As put by their team, “Bossanova is the most active VC in Latin America; We invest in startups at the pre-seed stage; B2B or B2B2C companies with scalable and digital business models that are operating and making money.” Location Bossanova Investimentos is located in São Paulo and invests in companies that are headquartered in Brazil. Portfolio Highlights Some of Bossanova’s most popular investments include: FanBase Famefy Scooto Stage Focus Bossanova Investimentos is focused on pre-seed and seed stage companies. They typically invests between BRL 100k and BRL 500k. They also seek out companies that have at least BRL 20k in monthly income. Related Resource: The Understandable Guide to Startup Funding Stages 2. Canary As put by their team, “We believe that the first round is the best one to start a long-term relationship with a founder, especially in a young startup ecosystem like Latin America. We believe in the right money for the right stage of a company. And we are fully focused on being the best first investor. We believe our ecosystem is at a tipping point. The quality of founding teams is already world-class and improving at an accelerating pace, the entrepreneurial mindset is permeating universities and younger generations and our nation’s top talent is founding companies rather than looking for traditional jobs. All over the world technology is changing the way people do business and live their lives. LatAm is no different.” Learn more about Canary by checking out their Visible Connect profile → Location Canary is located in São Paulo and invests in companies across Latam. Portfolio Highlights Some of Canary’s most popular investments include: Alice Clara Trybe Stage Focus As put by their team, “We partner with founders at the first venture capital round, from pre-Power Point to Series A. We’ve invested in rounds as small as USD 250K and as large as USD 15M+. We prefer and typically lead the first round, investing the largest amount of capital and defining the legal terms.” Related Resource: 7 Prominent Venture Capital Firms in Brazil 3. Monashees As put by their team, “monashees is the pioneer venture capital firm in Latin America. It partners with outstanding founders who are revolutionizing large markets. The firm serves entrepreneurs starting with their very first movements, supporting their growth through its expansion funds. With a human-values-first approach, monashees helps founders challenge the status quo and improve people’s lives through technology.” Learn more about Monashees by checking out their Visible Connect profile → Location Monashees is located in São Paulo and invests in companies across Latin America and the globe. Portfolio Highlights Some of Monashee’s most popular investments include: Clara Loggi Nomad Stage Focus Monashees does not publicly state what stage and how much they invest in portfolio companies. 4. Redpoint Eventures As put by the team at Redpoint Eventures, “Our mission is to support Brazilian digital market entrepreneurs on their journey to create fast-growing companies. Together with its partners, prominent U.S.-based firms Redpoint Ventures and e.ventures, Redpoint eventures brings funding, Silicon Valley access and global best practices to promising startups. In addition to serving the companies in its portfolio, the fund’s team contributes to the development of the growing entrepreneurial ecosystem in Brazil.” Learn more about Redpoint Eventures by checking out their Visible Connect profile → Location Redpoint Eventures is located in São Paulo and invests in companies across Brazil. Portfolio Highlights Some of Redpoint Eventures most popular investments include: Pipefy Gympass Cortex Stage Focus Redpoint Eventures does not publicly state what stage companies they typically invest in and what check size they write. 5. Magma Partners As put by the team at Magma Partners, “We’ve backed 125+ startups with $80M+ to help founders solve Latin America’s biggest problems by building scalable, technology businesses in big markets. While we’re best known for fintech, insurtech and marketplaces, we are a generalist fund backing Latin America’s top entrepreneurs. We’d love to be your first investor, but if we missed you at pre-seed, we can invest all the way to Series A.” Learn more about Magma Partners by checking out their Visible Connect profile → Location As put by their team, “We invest most of our capital in Spanish-speaking Latin America and devote a smaller percentage of our capital to early stage Brazil-based companies. We invest in companies that are either based in Latin America, do business in Latin America, or will be expanding to Latin America imminently. We also invest in Latin American immigrants or US Latins who may do business in Latin America in the future, or would like to have some of their team in Latin America.” Portfolio Highlights Some of Magma Partner’s most popular investments include: HelloGuru Bexi Groupraise Stage Focus As put by their team, “We invest $50k to $5M to back founders raising venture capital at pre-seed, seed and series A in Latin America.” 6. Spectra Investments As put by the team at Spectra Investments, “We manage Latin American focused funds, offering sophisticated investors access to multiple strategies, through balanced funds, mitigating costs and risks. Our portfolios are hybrid, investing in theses such as Growth, Buyout, Venture Capital, Distress, Legal Claims, Mining, Search Funds and Special Situations, amongst others in the region.” Location Spectra Investments is headquartered in São Paulo and invests in companies across all of Latin America. Portfolio Highlights Some of Spectra Investment’s most popular investments include: Bratus Capital Oria Monashees Stage Focus Spectra Investments in focused on investing in growth stage companies and different venture capital funds. Related Resource: Private Equity vs Venture Capital: Critical Differences 7. DOMO Invest As put by their team, “DOMO Invest is a leading venture capital firm in Brazil that invests in best-in-class entrepreneurs. We back early-stage consumer-focused technology startups, helping them grow faster and establish themselves in competitive markets. We started from the collective desire of our founding partners to contribute to the success of the next generation of Brazilian entrepreneurs. DOMO’s multi-disciplinary team is supported by its Advisory Board whose members have solid and proven track records in creating, investing, advising, and financing tech startups of all sizes.” Learn more about DOMO Invest by checking out their Visible Connect profile → Location DOMO Invest is located in São Paulo and invetss in companies across Brazil. Portfolio Highlights Some of DOMO Invest’s most popular investments include: Loggi Gympass Hotmart Stage Focus As put by the team at DOMO, “​​We back early-stage consumer-focused technology startups, helping them grow faster and establish themselves in competitive markets.” Looking for Investors? Try Visible Today! 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.

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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: The Understandable Guide to Startup Funding Stages Just as a sales and marketing funnel starts by finding the right leads, the same is true for a fundraise. Founders raising venture capital should start by identifying the right investors for their businesses. If you’re a founder located in Brazil and are looking for venture capitalists in your area, check out our list below: Related Resource: 7 Best Venture Capital Firms in Latin America 1. Bossanova Investimentos As put by their team, “Bossanova is the most active VC in Latin America ; We invest in startups at the pre-seed stage; B2B or B2B2C companies with scalable and digital business models that are operating and making money.” Location Bossanova is headquartered in São Paulo and invests in companies across Latin America. Company Stage Bossanova is focused on pre-seed and seed stage companies. They invest between R$100k and R$1.5M. They look for companies with at least monthly income of R$20k Preferred industries Bossanova is focused on B2B or B2B2C companies. Related Resource: 60+ Active Seed Stage SaaS Investors & Fundraising Tips Portfolio Highlights Some of Bossanova’s most popular investments include: FanBase GrowthHackers Nimbly 2. Redpoint Ventures As put by their team, “Redpoint eventures is a venture capital firm based in São Paulo. Our mission is to support Brazilian digital market entrepreneurs on their journey to create fast-growing companies. Together with its partners, prominent U.S.-based firms Redpoint Ventures and e.ventures, Redpoint eventures brings funding, Silicon Valley access and global best practices to promising startups. In addition to serving the companies in its portfolio, the fund’s team contributes to the development of the growing entrepreneurial ecosystem in Brazil.” Location Redpoint eventures is headquartered in São Paulo and invests in companies across Brazil. Company Stage Redpoint eventures does not publicly state what stage companies they invest in. Preferred industries Redpoint eventures does not publicly state what their focused industries are. Portfolio Highlights Some of Redpoint eventures most popular investments include: Gympass Pipefy Bossabox 3. Canary As put by the team at Canary, “We are an operator fund: our partners are technology and investment entrepreneurs that have first-hand experience – and battle scars – from building and scaling products, teams, and organizations. Our approach is simple and supportive of founders.” Location Canary has office locations across Latin America and invests in companies across Latin America. Related Resource: 7 Best Venture Capital Firms in Latin America Company Stage As put by their team, “We’ve invested in rounds as small as USD 250K and as large as USD 15M+. We prefer and typically lead the first round, investing the largest amount of capital and defining the legal terms.” Preferred industries Canary is industry and business model agnostic. Portfolio Highlights Some of Canary’s most popular investments include: Alice Buser Trybe 4. Monashees As put by their team, “monashees is the pioneer venture capital firm in Latin America. It partners with outstanding founders who are revolutionizing large markets. The firm serves entrepreneurs starting with their very first movements, supporting their growth through its expansion funds. With a human-values-first approach, monashees helps founders challenge the status quo and improve people’s lives through technology.” Location Monashees is headquartered in Brazil and invests in companies across Latin America. Company Stage Monashees does not publicly state what stage they focus on and what check size they write. Preferred industries Monashees is focused on investing in companies operating in large markets. Portfolio Highlights Some of Monashees most popular investments include: Clara Jokr Loggi 5. Quona Capital As put by their team, “Quona Capital is a global venture firm focused on inclusive fintech. We invest in startups expanding access to financial services for consumers and growing businesses across India and Southeast Asia, Latin America, Africa and the Middle East. We focus on markets that are massively underserved by the legacy finance infrastructure, where we see the biggest opportunity for transformation into more equitable financial systems.” Location Quona invests in companies across the globe and have offices across the globe. Company Stage Quona is stage agnostic. Preferred industries Quona is focused on fintech companies across the globe. Related Resource: FinTech Venture Capital Investors to Know Portfolio Highlights Some of Quona’s most popular investments include: Yoco Pillow Monkey 6. Valor Capital As put by their team, “Valor was founded in 2011 as the pioneer cross-border venture capital firm bridging the US, Brazilian and international tech communities. We invest in early stage tech companies in Brazil and international companies looking to expand into Brazil and the region. We are stage and sector agnostic. We are full lifecycle investors. We invest in business models that are only possible through the use of technology and, most importantly, we partner with companies that we believe are best positioned to leverage our relationship-capital and cross-border playbook.” Location Valor Capital has office locations in New York City and Brazil. Company Stage Valor Capital does not publicly share the stage of the companies they focus on. Preferred industries Valor Capital is industry agnostic but has a focus on crypto companies. Related Resource: 10 VC Firms Investing in Web3 Companies Portfolio Highlights Some of Valor Capital’s most popular investments include: Bitso BlockFi Coinbase 7. Astellas Venture Management As put by the team at Astella, “We support missionary founders building the future by leveraging the possibilities around consumer internet, software-as-a-service, and marketplaces We see ourselves as mentors. Our team brings a diverse, complementary and cohesive background around key growth disciplines We understand founders have two main paths to exponential growth: sheer brute force or intelligence. We believe that the right mix of knowledge and capital provides the best route for fast and efficient growth.” Location Astella Investimentos is headquartered in Brazil and invests in companies in Brazil. Company Stage Astella Investimentos is focused on early-stage companies. Preferred industries Astella Investimentos is focused on consumer internet, SaaS, and marketplace companies. Portfolio Highlights Some of Astella’s most popular investments include: Birdie BossaBox Zygo Elevate your investor outreach with Visible 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.

Impact investments can be made across many different sectors and asset classes but target startups whose mission is to produce environmental or social benefits. These industries can include electric cars, renewable energy, sustainable agriculture, or affordable and accessible housing, healthcare, and education. Impact investing aims to target areas that are often missed by sustainability-themed approaches in an effort to tackle global problems as well as go after the underserved in the global economy. For each investment target, an SDG might invest in a range of companies that support that. For example, if the target is climate change their investments might go after green buildings and renewable energy. There is a growing focus of funds understanding the importance of embedding ESG practices into their investment thesis. Robeco defines ESG funds as “portfolios of equities and/or bonds for which environmental, social and governance factors have been integrated into the investment process. This means the equities and bonds contained in the fund have passed stringent tests over how sustainable the company or government is regarding its ESG criteria.” Mercer breaks down the following when it comes to key elements in investing and implementation. “Key elements of impact investing: Intentionality: contributing to positive social or environmental outcomes Measurability: the intended social or environmental impact needs to be measured and reported on clearly and reliably Additionality: pursue social or environmental benefits that would not have otherwise occurred without the investment. How to implement impact investing Investors typically approach an impact investment allocation with three key issues in mind: 1) intention and themes to target; 2) portfolio allocation and implementation options; 3) how outcomes will be measured and reported to different stakeholders. There are many ways that themes or topics can be identified and prioritized by investors. We have identified those that we believe are key from an impact investment perspective, in both environmental and social categories.” Events SOCAP is the largest and most diverse impact investing community in the world The GIIN Investor Forum is designed to advance and scale the impact investing market by bringing all the crucial elements of the world’s impact ecosystem together in one place. Social enterprise and impact investing events in 202Social enterprise and impact investing events in 202 Investors and Accelerators in the Space Impact investments are made by both institutional and individual investors such as private foundations, NGOs, individual investors, fund managers, family offices, as well as religious and financial institutions/ banks. Here are our top pics from our Connect Investor Database. Buoyant Ventures Location: Chicago, Illinois, United States Thesis: Digital Solutions for Climate, we look to make investments that adapt to and mitigate from climate change at the speed and scale required. Investment Stages: Seed, Series A Recent Investments: Raptor Maps SupplyShift FloodFlash Better Ventures Location: Oakland, California, United States About: Better Ventures backs mission-driven founders leveraging breakthrough innovations in science and technology to build a more sustainable and equitable economy in which both people and planet thrive. Thesis: We back founders on a mission to build a better world. Investment Stages: Pre-Seed, Seed, Series A, Series B Recent Investments: SMBX 54gene agathos Obvious Ventures Location: San Francisco, California, United States About: Obvious Ventures brings experience, capital, and focus to startups combining profit and purpose for a better world. Thesis: Let’s reimagine trillion-dollar industries together. Investment Stages: Seed, Series A, Series B Recent Investments: Anagenex MycoMedica Life Sciences Tandym Bethnal Green Ventures Location: London, England, United Kingdom About: Europe’s leading early-stage tech for good VC. Thesis: We invest in ambitious and diverse founders using technology to create positive impact at scale. Investment Stages: Pre-Seed, Seed Recent Investments: aparito Chatterbox Commonplace Blackhorn Ventures Location: Denver, Colorado, United States About: Blackhorn Ventures is an early stage venture firm that invests in capital-efficient companies redefining resource use, enabling the decarbonization of the toughest to transition sectors in our economy (Transportation, the Built Environment, Supply Chain, and Energy). Thesis:Blackhorn Ventures invests in world-class founders building digital infrastructure to redefine industrial resource efficiency. Investment Stages: Seed, Series A Recent Investments: CoFi Ecoworks.tech Iso.io Blue Bear Capital Location: San Rafael, California, United States About: Blue Bear Capital is a VC investor supporting companies that apply data-driven technologies to the energy supply chain. Investment Stages: Seed, Series A, Series B Recent Investments: Raptor Maps Copper Labs First Resonance Braemar Energy Ventures Location: New York, New York, United States About: Braemar Energy Ventures was formed in 2002 to create a venture capital firm with that expertise. Focused exclusively on technology and communications opportunities in the energy sector, Braemar Energy Ventures has both the industry and operating knowledge to select promising young companies, bring them into the larger energy world and guide them to reach their full potential. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: Utilidata LO3 Energy Aledia Cultivian Sandbox Location: Chicago, Illinois, United States About: Cultivian Sandbox is a venture capital firm focused on building next-generation disruptive agriculture and food technology companies Investment Stages: Pre-Seed, Seed, Series A, Series B, Series C, Growth Recent Investments: Full Harvest Leaf Cooks Venture Core Innovation Capital Location: San Francisco, California, United States About: Core Innovation Capital is a venture capital firm investing in companies committed to empowering small businesses and everyday Americans. Investment Stages: Seed, Series A, Series B, Growth Recent Investments: Arrived Column Tax Ness CRE Venture Capital Location: New York, United States About: CRE Venture Capital finances and partners with entrepreneurs in technology-enabled startups in Sub-Saharan Africa. Investment Stages: Seed, Pre-Seed, Series A Recent Investments: Stitch Sabi Carry1st Resources IRIS+ is a great resource for developing impact measurement frameworks The GIIN’s Investors’ Council is a leadership group for active large scale impact investors. Start Your Next Round with Visible 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 VC’s and accelerators who are looking to invest in companies like you. Check out all our investors here and filter as needed. After learning more about them with the profile information and resources given you can reach out to them with a tailored email. To help craft that first email check out 5 Strategies for Cold Emailing Potential Investors. 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.

In the dynamic world of business partnerships, understanding the nuanced differences between general partners (GPs) and limited partners (LPs) is crucial for founders. This article will dive into the roles, liabilities, control, and profit-sharing mechanisms that distinguish GPs from LPs, offering a comprehensive guide for those navigating the complexities of business partnerships. What is a General Partnership? A general partnership is an unincorporated business entity formed by two or more owners sharing business responsibilities. This structure is marked by its simplicity in setup and tax filing, but it comes with the caveat of unlimited personal liability for each partner. This means that each partner's personal assets are at risk for the business's debts and obligations​​​​. The Role of a General Partner Shifting the focus to the crucial role of a general partner, we enter the realm of leadership and active engagement in the partnership. General partners are at the forefront, steering the business through decision-making, financial oversight, and risk management. Their responsibilities are central to the partnership's operation, balancing the drive for growth with the interests of all partners. Management and Decision Making GPs play a pivotal role in the management and success of partnerships or investment funds, with their involvement being integral to both day-to-day operations and long-term strategic direction. Here's how GPs are actively involved: Management and Operations: GPs are deeply involved in the daily management of the partnership. This includes overseeing operations, managing staff, and ensuring that the partnership's activities align with its goals and objectives. Their hands-on approach ensures that operations run smoothly and efficiently​​. Decision Making: GPs have the authority to make key decisions that affect the partnership. This encompasses a wide range of areas from financial management, investment choices, to strategic planning. They assess various opportunities and risks to make informed decisions that will benefit the partnership over the long term​​​​. Investments and Strategy: GPs are responsible for the partnership's investment strategy. This involves identifying, evaluating, and executing investment opportunities as well as managing and divesting assets when necessary. Their goal is to maximize returns for the partnership while managing risk. This requires a deep understanding of the market, the ability to forecast trends, and the insight to act on these predictions in a timely manner​​​​. Alignment of Interests: By investing their own capital and making significant management decisions, GPs align their interests with those of the LPs. This ensures that their strategies and decisions are made with the best interests of the partnership in mind, fostering trust and commitment among all parties involved​​. Risk Management: GPs are also tasked with managing the partnership's exposure to risk. This includes financial risk, operational risk, and investment risk. They implement strategies to mitigate these risks, ensuring the partnership's stability and sustainability. This involves regular assessment of internal and external factors that could impact the partnership and adjusting strategies accordingly​​​​. Capital Contribution GPs typically invest a smaller portion of the total capital in a partnership or fund compared to LPs, yet the value of their investment is profoundly significant. This financial commitment aligns the GPs' interests with those of the LPs, ensuring a mutual focus on the partnership's success. By having "skin in the game," GPs demonstrate confidence in the partnership's strategies and decisions, reinforcing trust among LPs. This alignment not only motivates prudent risk management but also bolsters the partnership's stability and potential for growth, underscoring the critical role of GP investment beyond its face value​​​​. Liability and Risk Management GPs face unlimited liability, directly linking their personal assets to the partnership's financial obligations. This significant responsibility demands vigilant risk management and strict adherence to legal and regulatory standards to safeguard both the partnership and their personal finances. GPs must proactively mitigate risks and ensure compliance across all aspects of the partnership, a task that often requires expert consultation due to the complex nature of legal requirements​​​​. Fundraising and Investor Relations GPs play a critical role in securing the financial foundation of a fund through capital raising activities. Their responsibilities extend beyond merely attracting investments; GPs are deeply involved in fostering and maintaining relationships with both current and potential investors. This includes regular communication to keep investors informed about the fund's performance and strategic direction. The process of raising capital involves presenting the fund's value proposition to prospective investors, outlining potential returns, and articulating the strategic advantages of investing in the fund. GPs leverage their networks and industry knowledge to identify and engage with potential investors, employing persuasive presentations and detailed financial models to showcase the fund's potential. Maintaining investor relations is another key aspect of a GP's role. This involves providing timely updates and comprehensive reports on the fund's performance, including achievements, challenges, and strategic adjustments. Regular communication, such as newsletters, investor meetings, and performance calls, ensures transparency and keeps investors aligned with the fund's progress and long-term goals. Portfolio Management In the context of investment funds, GPs are pivotal in steering the fund's investment strategy, involving a multi-stage process of identifying, vetting, and managing investment opportunities. Initially, GPs undertake thorough market research and analysis to identify promising investment prospects, evaluating each for alignment with the fund's investment criteria and potential for returns. The vetting process includes comprehensive due diligence, where GPs assess the financial health, business model, market position, and growth potential of potential investments. This meticulous examination is critical to minimizing risks and ensuring that only the most viable opportunities are pursued. Once an opportunity is deemed suitable, GPs lead the deal execution, negotiating terms and finalizing investments. This phase requires a blend of financial acumen, negotiation skills, and strategic foresight to secure favorable terms for the fund. After the investment is made, GPs take on the ongoing management of portfolio companies. This involves active engagement with the management teams of these companies, providing strategic guidance, operational support, and sometimes, direct involvement in governance through board representation. The goal is to enhance value and ensure the company's growth trajectory aligns with the fund's investment objectives, ultimately leading to successful exits that generate returns for the fund's investors. What is a Limited Partnership? A Limited Partnership (LP) is a specific type of partnership that is distinguished by having one or more GPs who manage the business and are personally liable for partnership debts, alongside one or more LPs who contribute capital and share in the profits but have limited liability and are not involved in day-to-day management. This structure allows LPs to invest in the partnership without the risk of being held personally liable for the partnership's debts beyond their investment in the partnership. The general partner's role involves managing the partnership's operations, making key business decisions, and assuming full personal liability for the partnership's obligations. In contrast, limited partners act as passive investors, contributing capital and receiving a share of the profits but typically not engaging in the management or operational decisions of the partnership. This arrangement offers the benefit of pass-through taxation, similar to a general partnership, where the partnership itself is not taxed, but profits and losses are passed through to the partners to be reported on their individual tax returns. Limited Partnerships are commonly used for businesses that require investment without wanting to involve investors in daily management or for family estate planning to protect assets and manage tax liabilities. The formation of an LP requires compliance with specific state laws, including filing the necessary documents with the relevant state authority, usually the Secretary of State. The details of the partnership, such as the division of profits, roles of the partners, and operational procedures, are typically outlined in a partnership agreement. Related resources: 25 Limited Partners Backing Venture Capital Funds + What They Look For What Is a Limited Partnership and How Does It Work? The Role of a Limited Partner Unlike their general counterparts, limited partners contribute financially without immersing themselves in the day-to-day operational decisions of the partnership. This unique position allows them to invest and share in the profits while their liability is capped at their investment amount. As we delve into the role of a limited partner, we uncover the nuances of their involvement, the passive yet crucial contribution to the partnership's capital, and the protective bounds of their liability, setting the stage for understanding the symbiotic relationship between general and limited partners within the framework of a Limited Partnership. Capital Provision LPs are often passive investors, meaning they invest their money but do not take part in the day-to-day management or decision-making processes of the business. This category of investors typically includes institutional entities like pension funds, endowments, and insurance companies, as well as high-net-worth individuals who seek investment opportunities that do not require their active involvement in operations. The capital provided by LPs is vital for the fund's ability to pursue its investment strategy, whether it involves acquiring assets, funding new ventures, or expanding business operations. By contributing financially, LPs enable the partnership to leverage additional resources while limiting their personal risk to the amount they have invested. This arrangement allows LPs to benefit from the potential upside of the partnership's success, such as receiving a proportionate share of the profits, without the burden of unlimited liability or the complexities of daily management responsibilities​​​​​​. Limited Involvement in Management LPs play a distinct role within a partnership, primarily serving as financial contributors rather than being involved in the daily management or operational decisions. Their involvement is strategically financial, allowing the partnership to leverage their investment to fund projects, acquisitions, or growth initiatives without requiring their input on operational matters. The structure of a Limited Partnership is designed to benefit from the capital that LPs inject, while the GPs retain full control over the business decisions and management. This setup provides a clear division of responsibilities: GPs handle the operational aspects and decision-making processes, ensuring the business's strategic direction aligns with its goals, while LPs contribute financially, relying on the GPs' expertise to maximize the return on their investment. Limited Liability LPs liability is restricted solely to the amount of capital they have invested in the fund or partnership. This means that LPs are not personally responsible for any debts or obligations that exceed their investment. In essence, should the partnership incur debts or face financial challenges, the personal assets of LPs are shielded from creditors, ensuring that their maximum potential loss does not surpass the capital they have contributed. This protective measure is a defining feature of the LP structure, making it an attractive investment vehicle for individuals and institutions seeking exposure to the potential rewards of partnership investments without the risk of unlimited personal liability. It enables investors to participate in potentially lucrative ventures with the assurance that their risk is capped, providing a clear boundary between their investment and personal financial health. This limited liability encourages investment by reducing the financial risk to LPs, thereby facilitating the pooling of capital for the partnership’s activities​​​​​​. Monitoring Investment Performance Limited Partners (LPs) maintain oversight of their investments in a partnership through a structured approach to information sharing, facilitated primarily by General Partners (GPs). GPs are responsible for providing regular reports and updates that detail the partnership's financial performance, operational progress, and strategic developments. These communications are critical for LPs, as they offer insights into how their investment is being managed and its corresponding performance. The reports and updates typically include financial statements, performance metrics, market analysis, and updates on significant events or decisions. This transparency allows LPs to assess the health and trajectory of their investment, ensuring that their financial contributions are yielding expected results or identifying areas of concern that may need addressing. Beyond passive monitoring, LPs often play a role in key decision-making processes within the partnership. While they do not involve themselves in daily operations, LPs may have the right to vote on or approve major decisions that could impact the partnership's direction or financial status. This could include changes to the partnership agreement, substantial financial transactions, or decisions about the sale or acquisition of assets. Their involvement in these critical decisions ensures that their interests are considered in the partnership's strategic choices, aligning the partnership's operations with the expectations and goals of its investors. Receiving Returns on Investment LPs in a fund or partnership receive returns on their investment primarily based on the entity's financial performance. These returns are typically proportional to the size of their capital contribution, reflecting the principle that the greater the investment, the larger the share of the profits should be. The mechanism for distributing returns is designed to align with the partnership's success—when the partnership prospers, LPs benefit from higher returns, and conversely, their returns may diminish if the partnership faces financial difficulties. The distribution of profits to LPs often occurs after the partnership has achieved certain financial thresholds, ensuring that the operational needs and any preferential returns agreed upon for the GPs are met first. This structure incentivizes LPs to invest substantial capital, as their potential for financial gain is directly tied to the partnership's success, while also aligning their interests with the GPs, who are tasked with managing the partnership towards profitability. Differences Between General Partners and Limited Partners Having delved into the distinct roles and responsibilities of GPs and LPs within partnerships, it becomes evident that their contributions, while both crucial, diverge significantly in nature and scope. GPs are deeply entrenched in the day-to-day operations and bear unlimited liability, aligning their actions closely with the partnership's success. In contrast, LPs contribute capital and share in the profits while enjoying the protection of limited liability, remaining largely removed from operational decisions. These differences affect their involvement, financial risks, and the rewards they reap from the partnership. Management and Control GPs are crucial to the daily management and decision-making in a partnership, directly handling operations and strategic planning due to their unlimited liability. In contrast, Limited Partners LPs primarily offer financial investment, staying out of management to limit their risk exposure to their capital contribution. Liability GPs face unlimited personal liability, meaning that if the partnership incurs debts or legal claims that exceed its assets, GPs' personal assets can be used to fulfill these obligations. This unlimited liability reflects the GPs' active involvement in the management and operations of the partnership, holding them directly accountable for its financial health​​​​. In contrast, LPs enjoy a layer of protection from personal liability beyond their investment in the partnership. Their liability is limited to the amount of capital they have contributed, shielding their personal assets from claims against the partnership. This limited liability is a result of their passive role; LPs do not participate in the day-to-day management or decision-making processes of the partnership. Consequently, they are not held personally responsible for its debts or liabilities beyond their initial investment. Profit Sharing The distribution of profits and losses in a partnership typically aligns with each partner's investment and their role, as detailed in the partnership agreement. GPs, due to their active management and unlimited liability, might receive a share for their operational role plus a portion based on their investment. LPs, with limited liability, earn returns proportional to their investment, reflecting their financial contribution without direct operational involvement. The agreement also outlines how losses are shared, often paralleling profit distribution. This ensures a fair allocation based on each partner's stake and contribution to the partnership's success​​​​​​. Information Rights General Partners, who are actively involved in the day-to-day management of the partnership, have unrestricted access to all financial and operational data. This comprehensive access is necessary for GPs to make informed decisions, manage the partnership effectively, and fulfill their management duties. Their role requires a deep understanding of the partnership's financial health, operational challenges, and strategic opportunities, necessitating real-time access to all pertinent information. In contrast, Limited Partners typically have more restricted access to information. Their role as passive investors means they are not involved in daily management decisions, which is mirrored in their rights to information. LPs usually receive periodic reports that summarize the partnership's financial performance, significant operational updates, and strategic decisions. These reports are designed to provide LPs with a clear overview of their investment's performance without overwhelming them with the day-to-day details necessary for operational management. However, the extent of information rights for LPs can vary based on the partnership agreement. Some agreements may grant LPs rights to request additional information or detailed reports under specific circumstances, offering a mechanism for LPs to obtain further insights if they have concerns about the partnership's management or performance. Exit Strategies For General Partners, leaving can be more complex due to their integral role in management and operations. Exiting typically requires finding a replacement who can take over their responsibilities, which may necessitate approval from other partners, depending on the partnership agreement. Financial implications for GPs can include settling accounts related to their management activities and any personal liabilities tied to the partnership's debts. Limited Partners, given their passive investment role, usually have a more straightforward exit process. Their departure primarily involves the sale or transfer of their partnership interest, which can be subject to terms outlined in the partnership agreement, such as right of first refusal for other partners. Financially, LPs need to consider the market value of their investment and any potential capital gains tax implications. Both GPs and LPs must consider the partnership agreement's terms, which may specify conditions for exit, including notice periods, valuation methods for the partnership interest, and any restrictions on transfer. Additionally, the timing of the exit can significantly impact the financial outcome, with market conditions and the partnership’s performance playing crucial roles. Other Types of Partnerships While we've explored the traditional roles of general and limited partners in business partnerships, the realm of collaborative business ventures extends beyond these conventional structures. Each partnership type offers unique benefits, catering to specific business needs, risk appetites, and strategic goals. Other prevalent forms of partnerships that exist are: Joint Venture Partnerships: These are formed between two or more parties for a specific project or a limited period. Joint ventures allow entities to pool resources for a common goal, sharing profits, losses, and control, while still maintaining their separate legal identities. This structure is ideal for projects that require diverse skills, resources, or market access that a single entity cannot provide on its own. Limited Liability Partnerships (LLPs): Merging the features of partnerships and corporations, LLPs offer partners the operational flexibility of a partnership while providing a shield against personal liability for the actions of other partners. This is particularly attractive for professionals, such as lawyers, accountants, and architects, allowing them to benefit from the partnership's profits without risking their personal assets for the liabilities or professional misconduct of their partners. Partner With Visible for Expert Guidance and Access to High-Growth Ventures In this article, we've navigated the complexities of business partnerships, highlighting the distinct roles, liabilities, and contributions of GPs and LPs. Understanding these differences is crucial to forge successful partnerships, whether through traditional setups or alternative structures like Joint Ventures and LLPs. Each partnership model offers unique benefits and challenges, tailored to various business needs and goals. As you embark on or continue your entrepreneurial journey, aligning with the right partners and structure is key to growth and success. If you’ve read this post and determined that venture capital is a good fit for your company, let us help. Raise capital, update investors and engage your team from a single platform. Try Visible free for 14 days. Related resource: A Quick Overview on VC Fund Structure

Carried interest is a fundamental concept in venture capital (VC) that plays a pivotal role in shaping the financial rewards for venture capitalists. This financial term, often shrouded in complexity, directly influences the profits venture capitalists receive from successful investments. As founders navigating the intricate world of VC funding, understanding carried interest is crucial not only for grasping how VCs are compensated but also for appreciating the motivations behind their investment decisions. This article demystifies carried interest, detailing what it is, its importance, how it functions within a venture capital framework, and its implications for both fund managers and investors. By unpacking the intricacies of carried interest, founders can better position themselves to partner with venture capitalists, aligning interests towards mutual success. Related resource: How to Find Venture Capital to Fund Your Startup: 5 Methods What is Carried Interest? Carried interest, in the realm of venture capital, refers to the share of profits that general partners (GPs) of a venture capital fund receive as compensation, beyond the return of their initial investments. This form of income is contingent upon the fund achieving a return on its investments above a specified threshold, incentivizing GPs to maximize fund performance. Typically, carried interest amounts to about 20% of the fund's profits, with the remaining 80% distributed among the limited partners (LPs), who are the primary investors in the fund. Why Carried Interest is Important Carried interest is a critical component of the venture capital ecosystem for several reasons. It aligns the interests of GPs with those of the LPs, ensuring that fund managers are motivated to seek out and support businesses with high growth potential. Additionally, it serves as a reward mechanism for GPs, compensating them for the risk and effort involved in managing the fund and guiding the companies in their portfolio to success. How Does Carried Interest Work? Venture capital thrives on the principle of aligned interests, with carried interest at its core serving as the linchpin for this alignment. In this section, we’ll cover how carried interest functions, from incentivizing fund managers to maximizing investment returns- cementing the foundation for understanding its critical role in venture capital's operational and strategic framework. Fund Structure and Contributions Venture capital funds operate as partnerships between Limited Partners (LPs) and General Partners (GPs). LPs, including institutions like pension funds and high-net-worth individuals, provide most of the capital but are not involved in day-to-day management, limiting their liability to their investment amount​​​​. GPs manage the fund, making investment decisions and actively advising portfolio companies, with their income primarily derived from management fees (typically 2%) and carried interest (about 20% of the fund's profits), aligning their financial incentives with the success of the fund​​​​. The structure, usually a limited partnership in the U.S., offers tax benefits through pass-through taxation, allowing profits to be taxed once at the partner level, and establishes a clear separation of operational roles and financial responsibilities between LPs and GPs​​. This model ensures a strategic alignment of interests, with GPs using their expertise to grow the investments and generate returns, acknowledging the inherent high-risk, high-reward nature of venture capital investing​​. Related resource: A Quick Overview on VC Fund Structure Management Fees Management fees in venture capital funds are structured to cover the operational and administrative costs of managing the fund. These fees are typically calculated as a percentage of the fund's committed capital, ranging from 1% to 2.5%, and are charged annually to the fund's limited partners (LPs). The exact percentage can vary based on several factors including the size of the fund, the investment strategy, the fund's performance, and market norms. For instance, a fund with $100 million in committed capital charging a 2% management fee would incur a $2 million annual fee​​. The primary purpose of management fees is to cover day-to-day operational costs such as salaries, office rent, legal and accounting services, due diligence costs, and other expenses associated with running the VC firm. This ensures that venture capital firms can continue to provide investment opportunities and support to their portfolio companies without compromising on the quality of management and oversight​​. Management fees are an important consideration for both venture capital firms and their investors as they directly impact the net returns of the fund. While these fees are essential for the operation of venture capital firms, it's important for LPs to understand how they are structured and the factors that influence their calculation to ensure transparency and alignment of interests​​​​. Profit Wharing: The 'carry' Carried interest, or "carry," is a profit-sharing mechanism in venture capital funds, allowing fund managers (GPs) to receive a portion of the fund's profits, aligning their interests with the investors' (LPs). Typically, GPs earn carry after returning the initial capital to LPs, with a common share being around 20%, although this can vary from 15% to 30% based on market conditions and the fund's performance​​​​. Carry is distributed after certain conditions are met, such as the return of initial investments and possibly achieving a hurdle rate. The distribution models include European-style, focusing on overall fund performance, and American-style, based on individual investment performance. The taxation of carried interest at capital gains rates, lower than ordinary income rates, has been debated as a potential "loophole"​​. Hurdle Rate The hurdle rate is essentially a benchmark return that the fund must achieve before the fund managers (GPs) can start receiving their share of carried interest, which is a percentage of the fund's profits. This rate serves as a minimum acceptable return for investors (LPs) and ensures that GPs are rewarded only after generating sufficient returns on investments​​. There are two primary types of hurdle rates: hard and soft. A hard hurdle implies that the manager earns carried interest only on the returns exceeding the hurdle rate. In contrast, a soft hurdle allows the manager to earn carried interest on all returns once the hurdle rate is met, including those below the hurdle​​. The purpose of establishing a hurdle rate is to align the interests of fund managers with those of the investors, ensuring that fund managers are incentivized to achieve higher returns. The actual percentage of the hurdle rate can vary but is often related to a risk-free rate of return or a predetermined fixed rate. This mechanism ensures that fund managers focus on exceeding specific performance targets before benefiting from the fund's success​​​​. In the context of venture capital, the typical hurdle rate is around 7-8%, benchmarked against returns from less risky asset classes like public stocks. This reflects the expectation that investors locking their money in a VC fund for an extended period should achieve annual returns exceeding those of more liquid and less risky investments​​. Understanding the hurdle rate and its implications is crucial for founders considering venture capital funding, as it impacts how and when fund managers are compensated, ultimately affecting the fund's investment strategy and focus. Distribution Waterfall The distribution waterfall process in VC funds is a structured method to allocate capital gains among the participants of the fund, primarily the LPs and the GP. This process ensures that profits are distributed in a sequence that aligns the interests of both LPs and GPs, establishing fairness and transparency in the profit-sharing mechanism. Understanding the distribution waterfall is crucial for founders as it impacts how VCs are incentivized and how profits from successful investments are shared. This knowledge can be particularly beneficial when negotiating terms or evaluating potential VC partners. The waterfall structure typically follows a hierarchical sequence with multiple tiers: Return of Capital: This initial tier ensures that LPs first receive back their initial capital contributions to the fund. Preferred Return: After the return of capital, LPs are entitled to a preferred return on their investment, which is a predetermined rate signifying the minimum acceptable return before any carried interest is paid to the GP. Catch-up: This tier allows the GP to receive a significant portion of the profits until they "catch up" to a specific percentage of the total profits, ensuring they are adequately compensated for their management and performance. Carried Interest: In the final tier, the remaining profits are split between the LPs and the GP, typically following an 80/20 split, where 80% of the profits go to the LPs and 20% as carried interest to the GP. This tier rewards the GP for surpassing the preferred return threshold and generating additional profits. The distribution waterfall can adopt either a European (whole fund) or American (deal-by-deal) structure. The European model favors LPs by requiring the return of their initial investment and preferred returns before the GP can receive carried interest, enhancing long-term investment returns motivation. In contrast, the American model allows GPs to receive carried interest on a per-deal basis, potentially enabling them to realize gains more frequently but also includes mechanisms like clawback clauses to protect LP interests if overall fund performance does not meet expectations. Long-term Incentive Carried interest aligns fund managers' (GPs') interests with investors' (LPs') by linking GP compensation to the fund's long-term success. It rewards GPs with a portion of the profits only after meeting predefined benchmarks, such as returning initial capital to LPs and achieving a hurdle rate. This ensures GPs are committed to selecting investments and supporting them to maximize returns over the fund's life, often spanning several years. For founders, this means VC firms are incentivized to contribute to their company's growth and success genuinely, reflecting a partnership approach aimed at mutual long-term gains. Understanding Clawbacks and Vesting Clawbacks and vesting are key elements tied to carried interest in venture capital, designed to align the interests of fund managers (GPs) with the fund's long-term success and the investors' (LPs') expectations. Clawbacks act as a financial safeguard for investors. Imagine a scenario where a sports team pays a bonus to its coach based on mid-season performance, only for the team to finish the season at the bottom of the league. Similarly, clawbacks allow LPs to reclaim part of the carried interest paid to GPs if the fund doesn't meet overall performance benchmarks. This ensures GPs are rewarded for the fund's actual success, not just early wins. Vesting in the context of carried interest is akin to a gardener planting a tree and waiting for it to bear fruit. Just as the gardener can't harvest immediately, GPs earn their carried interest over time or upon meeting certain milestones. This gradual earning process keeps GPs motivated to nurture the fund's investments throughout its lifecycle, ensuring their goals align with generating lasting value for LPs. Together, clawbacks and vesting weave a tapestry of accountability and commitment in the venture capital ecosystem. They ensure that the journey to financial reward for GPs mirrors the fund's trajectory towards success, fostering a harmonious alignment of objectives between GPs and LPs in cultivating prosperous ventures. Carried Interest Calculation Calculating carried interest involves determining the share of profits that general partners (GPs) in a venture capital or private equity fund receive from the investments' returns. Here's a simplified process to understand how carried interest is calculated, keeping in mind that actual calculations can get more complex based on the fund agreement: Determine the Profit: Start with the total returns generated from the fund's investments after selling them, then subtract the original capital invested by the limited partners (LPs). This figure represents the profit. Profit = Total Returns - Initial Capital Apply the Hurdle Rate (if applicable): Before calculating carried interest, ensure that the returns have met any specified hurdle rate or preferred return rate. This rate is the minimum return that must be provided to LPs before GPs can receive their carried interest. Calculate Carried Interest: Once the profit is determined and any preferred return obligations are met, apply the carried interest rate to the profit. This rate is usually agreed upon in the fund's formation documents and is typically around 20%. Carried Interest = Profit x Carried Interest Rate For example, if a fund generates $100 million in returns with $80 million of initial capital, the profit is $20 million. If the carried interest rate is 20%, the GPs would receive $4 million as carried interest. Example Calculation: $20 million (Profit) x 20% (Carried Interest Rate) = $4 million (Carried Interest) Remember, this is a basic overview. The actual calculation may include additional factors like catch-up clauses, tiered distribution structures, and specific terms related to the return of capital. Fund agreements often detail these calculations, reflecting the negotiated terms between GPs and LPs. Tax Implications for Carried Interest Carried interest is taxed under the capital gains tax regime, which typically offers lower rates compared to ordinary income taxes. This tax treatment applies because carried interest is considered a return on investment for the GP of a VC or private equity fund, which receives this compensation after achieving a profit on the fund's investments. To qualify for long-term capital gains tax rates, the assets generating the carried interest must be held for a minimum of three years. This structure is sometimes debated for its fairness, with some viewing it as an advantageous "loophole" for high-income investment managers, allowing them to pay taxes at a lower rate compared to ordinary income rates​​​​. Unlock Venture Capital Opportunities with Visible Navigating the venture capital landscape can be a complex journey, but understanding the nuances of carried interest demystifies a crucial aspect of VC funding. This knowledge not only enlightens founders on how venture capitalists are rewarded but also sheds light on the motivations driving their investment choices. Through this exploration, we've delved into the essence of carried interest, from its foundational role in aligning GP and LP interests to its implications on fund structure, management fees, profit sharing, and more. Armed with these insights, founders are better equipped to forge partnerships with VCs, ensuring a unified path to success. As you venture further into the intricacies of raising capital and managing investor relations, remember that tools like Visible can significantly streamline your efforts. Visible empowers you to effectively raise capital, maintain transparent communication with investors, and track important metrics and KPIs. With Visible, navigating the venture capital process becomes more manageable, allowing you to focus on growth and innovation. For more insights into your fundraising efforts, Visible is the go-to platform. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: 25 Limited Partners Backing Venture Capital Funds + What They Look For

It’s common for venture firms to start raising their next fund in the last year of capital deployment, typically years 3-4 of a fund’s life. This poses a sort of chicken-and-egg problem because many of the common fund performance metrics that Limited Partners use to drive allocation decisions only become reliable, and therefore more meaningful, around year six (Source: Cambridge Associates). Farooq Abbasi, founder and General Partner of Preface Ventures, created a Seed Stage Enterprise VC Funding Napkin to help GPS think through alternative fund metrics that help communicate performance outside the traditional indicators that LPs use to measure success for more mature funds. The Seed Stage Enterprise VC Funding Napkin helps answer the question "What is good enough to raise a subsequent fund in the current market conditions". Farooq from Preface Ventures joined us on Tuesday, February 27th for a discussion about the fund performance metrics GPs can use to benchmark and communicate fund performance when it's still 'early'. View the recording below. Webinar Topics The issue with ‘typical’ fund performance metrics for ‘early’ funds Overview of Preface Venture’s Seed Stage Enterprise VC Funding Napkin Deep dive into alternative early performance benchmarks How to keep track of alternative fund performance metrics How to leverage alternative fund performance indicators into your fundraising narrative Inside look into how Preface Ventures keeps LPs up to date Q&A Resources From the Webinar Christoph Janz's What does it take to raise capital, in SaaS, in 2023? Preface Ventures' A GP's View on VC Fund Performance When It's Early Diversity VC About Preface Ventures Preface Ventures is a New York City-based firm started in 2020 led by Farooq Abbasi. Preface invests $500-$2M at the pre-seed and seed stage into startups who are building the Frontier Enterprise structure. Preface has 20 active positions in Fund II and 7 active positions in Fund III. (Learn more)

Simple Agreement for Future Equity (SAFE) is a financing tool for startups, offering a simpler, more flexible alternative to traditional equity or debt financing. Crucial in the startup ecosystem, SAFE agreements streamline the fundraising process, particularly for early-stage companies. They allow investors to convert their investment into equity at a later financing round, typically at a discounted price. This tool is significant in the startup landscape for its simplicity, efficiency, and founder-friendly nature, making it highly popular among early-stage startups. This guide will explore SAFE's definition, its role in early-stage funding, components like valuation caps and discounts, benefits for startups and investors, and alternatives to SAFE financing. The world of startup financing has been revolutionized by the Simple Agreement for Future Equity (SAFE), an innovative tool designed to simplify and streamline the fundraising process for early-stage companies. SAFE agreements, created by Y Combinator in 2013, offer startups a more accessible and founder-friendly alternative to traditional equity or debt financing methods. Related resource: Investor Agreement Template for Startup Founders Understanding SAFE Agreements Definition and Origins A Simple Agreement for Future Equity (SAFE) is a financing instrument used by startups to raise capital without immediate equity exchange or debt. Developed by Y Combinator in 2013, SAFE agreements provide a more straightforward and flexible approach than traditional equity or debt financing and it was created as an alternative to the more complex convertible notes. SAFEs are a contractual agreement between a startup and an investor, where the investment is converted into equity at a future financing round, usually at a discounted rate or with a valuation cap. This innovation emerged from the need to streamline startup investments, minimizing the legal complexity and costs associated with traditional methods. A Simple Agreement for Future Equity (SAFE) is an innovative financing instrument utilized by startups to secure capital without an immediate exchange of equity or debt. Conceived by Y Combinator in 2013, SAFE agreements offer startups a more straightforward and adaptable approach in contrast to the intricacies of traditional equity or debt financing, providing an alternative to the complexities of convertible notes. Key Differences from Traditional Equity or Debt Financing SAFE agreements differ significantly from traditional equity and debt financing. Unlike equity financing, where investors immediately receive company shares, SAFE does not involve immediate stock issuance. This means there's no immediate equity dilution or valuation requirement. In contrast to debt financing, SAFE is not a loan; it doesn't accrue interest and lacks a maturity date, reducing the financial burden on the startup. These differences make SAFE particularly attractive to startups looking for a less complicated and more flexible financing option. Role in Early-Stage Startup Funding SAFE plays a critical role in early-stage startup funding. Its simplicity and flexibility make it an ideal tool for startups that are too young for a clear valuation but need funding to grow. By deferring valuation to a later stage, it allows startups to focus on growth rather than complex financial negotiations. Additionally, the investor-friendly nature of SAFE, such as potential for future equity at a discounted rate, makes it appealing to investors interested in high-risk, high-reward opportunities typical of early-stage ventures. Components of a SAFE Agreement Standard Terms Breakdown A SAFE agreement typically includes several key terms. The most crucial are the amount of the investment and the conditions under which it converts to equity. Other standard terms include the valuation cap, which sets a maximum company valuation for the conversion of SAFE to equity, and the discount rate, offering investors a reduced price compared to later investors. Additionally, a SAFE may specify whether it includes 'participation rights', giving investors the option to invest in future rounds to maintain their ownership percentage. Valuation Caps, Discount Rates, and Conversion Mechanisms Valuation Cap: This is the maximum valuation at which the investment can convert into equity. It protects investors from dilution in high-valuation future rounds, ensuring they receive more shares for their investment. Discount Rate: It provides investors a percentage discount on the price per share compared to the next financing round. This reward compensates for the early risk taken by the investors. Conversion Mechanisms: Conversion typically occurs during a priced equity financing round, a sale of the company, or an IPO. The terms dictate how the SAFE investment converts into equity - either at the valuation cap or the discounted price, whichever is more favorable to the investor. Related resource: Everything You Should Know About Diluting Shares Impact on Founders and Investors For founders, SAFEs offer a quick and straightforward way to secure funding without immediately diluting equity or establishing a company valuation. This flexibility allows founders to focus on growing the company with less financial and administrative burden. However, they must be mindful of the potential future equity given away, especially when multiple SAFEs are used. For investors, SAFEs provide a simpler alternative to convertible notes, with the potential for high returns if the company succeeds. The valuation cap and discount rate can significantly increase the value of their investment in a successful startup. However, there's a risk as SAFEs don’t guarantee returns and don’t provide immediate ownership or control over the company. Related resource: Why and How You Should Evaluate Startup Team Risk Benefits of using SAFE for startups After understanding the key components of SAFE agreements and how they operate, it's essential to explore the numerous benefits they offer to startups. SAFE agreements are not just a funding tool but a strategic choice for early-stage companies navigating the complex world of startup financing. 1. Faster and Easier Fundraising Reduced Complexity and Legal Costs One of the primary benefits of using SAFE agreements for startups is the reduction in complexity and associated legal costs. Unlike traditional equity agreements, which often involve lengthy negotiations and extensive legal documentation, SAFEs are designed to be straightforward and concise. This simplicity not only accelerates the fundraising process but also significantly lowers the legal fees for both startups and investors. SAFE agreements are meant to be simple, standard, and fair for all parties involved, thereby reducing the need for extensive and expensive legal counsel. Related resource: SAFE Fundraising: When to Consider & Benefits No Need for Valuation Perhaps the most significant advantage of SAFEs for early-stage startups is the deferral of valuation negotiations. Traditional funding methods typically require a startup to set a valuation, which can be challenging and contentious, especially for early-stage companies with limited operational history. SAFEs circumvent this hurdle by postponing the valuation determination until a later funding round, usually when more information is available to accurately assess the company's worth. This aspect allows startups to secure funding more quickly, focusing on growth rather than getting entangled in complex and potentially contentious valuation discussions. 2. Flexibility and Investor-Friendliness Flexibility for Future Rounds SAFEs stand out for their adaptability, which is crucial in the dynamic environment of startup financing. They offer the flexibility to tailor terms such as discount rates and valuation caps to suit different investor preferences and anticipate various future funding scenarios. This flexibility is particularly beneficial for startups that may undergo several rounds of funding, each with unique conditions and requirements. As noted in resources, this adaptability makes SAFEs a versatile tool, capable of evolving with the company's funding needs. Non-dilutive Funding A significant advantage of SAFEs is their non-dilutive nature at the time of investment. Unlike immediate equity exchanges in traditional financing, SAFEs convert to equity only in a subsequent funding round. This feature means that the current ownership of existing shareholders remains undiluted until that point. For founders, this is crucial as it allows them to retain more control over their company in the early stages, as highlighted by startup-focused platforms like SeedInvest. Investor-Friendly Terms SAFEs often incorporate terms that are attractive to investors, making them a compelling option for those looking to invest in startups. Pro-rata rights, for instance, allow investors to maintain their percentage of ownership in future financing rounds. Valuation caps, another common feature, offer investors protection against overvaluation in future rounds. These investor-friendly provisions, as explained by Y Combinator, ensure that SAFEs are not only beneficial for startups but also provide fair and appealing terms for investors. 3. Aligned Incentives Shared Success One of the key advantages of SAFE agreements is the alignment of incentives between investors and founders, which is foundational for a successful startup journey. As both parties stand to benefit from an increase in the company's valuation at the time of future equity rounds, there is a mutual interest in the company's growth and success. This alignment, as discussed in resources from Y Combinator, creates a partnership dynamic where both investors and founders are equally motivated to increase the company's value, ensuring that their interests are in sync. Motivation for Growth SAFEs serve as a powerful motivational tool for founders. Since the conversion terms of SAFEs are typically more favorable at higher valuations, founders are incentivized to drive their company toward substantial growth and a successful exit. This motivation aligns perfectly with the startup's objective of maximizing value, as highlighted by startup financing experts. With SAFEs, the potential future rewards for founders increase with the company's valuation, encouraging them to pursue ambitious growth strategies and operational excellence. 4. Streamlined Process No Interest or Maturity Dates SAFEs offer a streamlined and less burdensome process for startups, primarily due to their lack of interest rates and fixed maturity dates. Traditional debt instruments typically accrue interest over time and have a set date by which the loan must be repaid or converted. In contrast, as outlined in resources like SeedInvest, SAFEs eliminate these complexities. This lack of interest and maturity dates simplifies the investment process, freeing startups from the pressures and administrative challenges associated with regular debt servicing or renegotiation at maturity. No Debt Obligations Another significant advantage of SAFEs is that they are not debt instruments. This distinction means that in the event of a startup's failure, there is no obligation to repay the investors, as would be the case with traditional loans. This feature, highlighted by experts at Y Combinator and other startup-focused platforms, significantly reduces the financial risk for founders. By not carrying debt on their balance sheets, startups can operate with more financial freedom and less stress, focusing their resources on growth and development rather than on managing debt repayments. 5. Early-Stage Suitability Ideal for Early-Stage Startups SAFEs are notably beneficial for early-stage startups, primarily due to their adaptability and minimal prerequisites. Early-stage companies often lack extensive financial history, making it challenging to secure traditional equity financing. As Y Combinator points out, these agreements are tailor-made for such companies. They provide a viable funding option without the need for a lengthy track record or established market presence, thus bridging the gap between nascent operations and potential investors. Minimal Financials Required Another advantage of SAFEs is the minimal financial documentation required. Unlike traditional financing methods that may demand detailed financial projections and comprehensive business plans, SAFEs operate with far less stringent requirements. This aspect, as highlighted by startup financing experts, makes SAFEs particularly accessible for early-stage companies that may not have the resources or data to produce extensive financial documentation. It allows startups to focus on growth and development rather than on preparing intricate financial models. 6. Attractive for Investors Potential for High Returns For investors, SAFEs represent an opportunity for substantial returns, especially if the startup experiences a successful exit. This investment model offers the potential for significant returns on investment, contingent upon the startup's future success. The prospect of acquiring equity at a lower price point than future investors makes SAFEs an attractive proposition for those looking to invest in high-potential startups. Flexibility and Potential Discounts SAFEs also provide investors with flexibility and the prospect of discounts on future equity. Investors can negotiate terms such as valuation caps and discount rates. This flexibility ensures that investors can tailor the terms of their investment to suit their risk profiles and investment strategies. The potential discounts on future equity rounds further enhance the attractiveness of SAFEs, providing investors with a strategic advantage in future financing scenarios. Alternatives to SAFE While SAFEs are a popular choice for startup financing, it's important for founders to consider other available options. Each alternative, from traditional equity financing to convertible notes and crowdfunding, offers unique benefits and fits different startup needs. Related resource: The Startup’s Guide to Investor Agreements: Building Blocks of VC Funding Traditional Equity Financing Pros: Provides immediate capital injection, can offer higher valuations for established companies, and gives investors greater ownership and control. Cons: Complex and time-consuming process, requires detailed financial projections and legal documents, can be dilutive for founders and early investors. Convertible Notes Pros: Simpler and faster than traditional equity, offers lower valuation cap flexibility, and can convert to equity automatically upon certain events. Cons: May not be as attractive to some investors, can be dilutive for founders depending on conversion terms, and often includes interest accrual. Debt Financing Pros: Can be secured quickly and with minimal paperwork, doesn't dilute company ownership, and provides fixed interest payments. Cons: Requires repayment with interest, can burden the company with additional debt, and may not be ideal for high-growth startups. Revenue-Based Financing Pros: Provides funding based on future revenue, aligns investor returns with company performance, and doesn't involve immediate dilution. Cons: May not be suitable for companies with unpredictable revenue streams, can be expensive due to higher interest rates, and can give investors control over certain financial decisions. Crowdfunding Pros: Raises capital from a large pool of individual investors, generates marketing buzz, and builds community around the company. Cons: May be challenging to reach fundraising goals, can be time-consuming and require significant effort, and offers limited investor oversight and control. Grants and Public Funding Pros: Non-dilutive funding source, ideal for social impact or research-oriented ventures, and offers access to valuable resources and mentorship. Cons: Highly competitive and challenging to secure, often comes with specific eligibility requirements and restrictions, and may not provide ongoing financial support. Learn more about SAFE & Fundraising with Visible This guide has outlined the essential aspects of SAFE agreements, highlighting their role in simplifying fundraising and aligning investor-founder interests, especially for early-stage startups. However, navigating the intricacies of startup financing goes beyond understanding SAFEs. This is where Visible comes in. Visible offers a suite of tools designed to assist founders in managing investor relations, tracking key metrics, and streamlining communication with stakeholders. For more insights into your fundraising efforts, Visible is the go-to platform. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resources: A Complete Guide on Founders Agreements VC Fund Performance Metrics 101

"The most successful fund managers are going to be the ones who are really authentic to what is important to them and they make sure every attribute of their model reflects that authenticity." - Gale Wilkinson About the Webinar Markdowns and lack of LP distributions resulted in a challenging fundraising year for many VCs. The firms that did close new funds in 2023 had to put in extra work to stand out and foster confidence from new investors. Visible had the pleasure of hosting Gale Wilkinson from VITALIZE Venture Capital on Tuesday, January 30th to discuss what she learned while closing her second fund in Q4 of 2023. You can view the webinar recording below. Webinar topics This webinar was designed for people working in Venture Capital who want to learn more about the VC fundraising process. Webinar topics included: Overview of VITALIZE's fundraising process Pre-fundraising activities that made a difference How LP diligence differed between Fund I and Fund II How Gale leverages social media to build both her personal and professional brand Reviewing VITALIZE's fundraising pitch deck Advice for GP's raising in 2024 You can view the presentation deck here. Key Takeaways Expect raising your first and second fund to take 2-3 years Stay authentic to what's most important to you as a fund manager and what you're great at. Make sure every attribute of that model reflects your authenticity. Most GP decks are too long. Gale's advice --> Find out what about your story is most interesting and give enough information to make it extremely clear about who you are and what you do without going into confidential information.

Contributed equity is a cornerstone in the world of startups, serving as a vital mechanism for securing funding and fostering growth. This concept, crucial for founders and investors alike, involves the acquisition of a company's stock in exchange for capital, be it cash or other assets. Its significance lies not only in providing essential funds for a growing business but also in establishing a foundation for stakeholder relationships and future financial strategies. As we delve into the nuances of contributed equity, we aim to equip startup founders with the knowledge necessary to navigate this critical aspect of business growth effectively. What is Contributed Equity? Contributed equity represents the funds that investors infuse into a startup in exchange for ownership shares. This form of equity is distinct from other types, such as earned equity, which is typically accumulated through company profits or sweat equity. Contributed equity materializes when investors, whether angel investors, venture capitalists, or even friends and family, provide cash or other assets to a startup. In return, they receive shares, reflecting their ownership and stake in the company's future. Related resource: What is a Cap Table & Why is it Important for Your Startup Formula for Contributed Equity The formula for calculating contributed capital, also known as contributed equity, can be understood through two different approaches, depending on the financial information available and the context in which it is being calculated. Common Stock and Additional Paid-in Capital Approach: This method involves combining the value of common stock with the additional paid-in capital (APIC). Common stock is the par value of the shares issued by the company, while APIC represents the excess amount investors pay over the par value. The formula is: Contributed Capital = Common Stock + Additional Paid-in Capital For example, if a company issues shares at a par value and investors pay more than this amount, the extra paid is recorded as APIC. The sum of these two gives the total contributed capital. Total Equity and Retained Earnings Approach: Another way to calculate contributed capital is by subtracting retained earnings from the total equity of a company. The formula is: Contributed Capital (CC) = Total Equity (TE) − Retained Earnings (RE) This method is particularly useful when looking at the company's overall equity structure and understanding how much of the equity is contributed by shareholders as opposed to being generated by the company's operations. Both methods provide valuable insights into the financial contributions made by shareholders to a company's equity. The choice of method largely depends on the specific financial data available and the aspect of contributed capital that needs to be analyzed. Contributed Equity Example An example of contributed equity can be illustrated through the following scenario: Suppose a company, let's call it ABC Corp, decides to issue new shares to raise capital. ABC Corp issues 10,000 shares with a par value of $1 per share. However, investors are willing to pay $10 per share, valuing the entire issue at $100,000. In this scenario, ABC Corp will record $10,000 in its common stock account (reflecting the par value of the shares) and $90,000 in its Additional Paid-in Capital account (representing the excess over the par value). The total contributed equity, in this case, would be $100,000, which is the sum of the amounts in the common stock and Additional Paid-in Capital accounts. This example demonstrates how contributed equity is raised through the issuance of shares and how it is recorded on the company's balance sheet​​. In another illustrative example, XYZ Inc. decides to raise capital through the issuance of common and preferred stock. XYZ Inc. issues one million shares of common stock at $20 per share, resulting in $20 million being added to the company's contributed capital. In addition, the company issues 500,000 shares of preferred stock at $25 per share, amounting to $12.5 million. The total contributed capital raised from these issuances is $32.5 million. This capital is used for various company purposes like launching new products or expanding business operations. Common stockholders gain voting rights and the potential for capital appreciation, while preferred stockholders enjoy fixed dividends and priority in receiving returns​​. These examples illustrate how contributed equity is generated through the issuance of shares and how it impacts a company's financial structure. Contributed Equity Vs. Earned Equity Contributed equity and earned equity are two distinct types of equity that represent different sources of capital in a company. Contributed Equity: This is also known as paid-in capital. It refers to the capital that investors contribute to a company in exchange for shares. This type of equity can include funds raised from initial public offerings (IPOs), secondary offerings, direct listings, and the issuance of preferred shares. It also encompasses assets or reductions in liability exchanged for shares. Contributed equity is calculated as the sum of the par value of shares purchased by investors and any additional amount paid over this par value, known as additional paid-in capital​​. Earned Equity: Also known as retained earnings, this represents the portion of a company's net income that is retained rather than distributed as dividends. Earned equity accumulates over time and increases if the company retains some or all of its net income. Conversely, it decreases if the company distributes more in dividends than its net income or incurs losses. For new or low-growth companies that typically don't distribute dividends, earned capital can increase if the company is profitable​​. In summary, contributed equity reflects the investment made by owners and investors in the company, while earned equity indicates the company's profitability and the amount of profit retained in the business. Both types of equity contribute to the overall shareholder’s equity of a company​​. Types of Contributed Equity Transitioning to the various forms of contributed equity, it's important to understand the spectrum ranging from common stock to more complex instruments like warrants. Common Stock Common stock is a key component of contributed equity in a corporation, representing ownership and providing various rights to shareholders. Key features include: Voting Rights: Shareholders of common stock can vote on significant corporate decisions, such as electing the board of directors and approving corporate policies. Dividends: While not guaranteed, common stockholders may receive dividends based on the company's profitability, as decided by the board of directors. Capital Appreciation: Investors in common stock can benefit from the potential increase in stock value as the company grows. Residual Claim: In case of liquidation, common stockholders have claims to the company's assets after debts and preferred stock claims are settled. Risks: Common stock investment involves risks such as market volatility and potential loss in case of company bankruptcy. On the balance sheet, common stock is part of stockholders' equity and may include a par value, reflecting a nominal value assigned to the stock. The balance sheet also distinguishes between issued and outstanding shares, with the difference indicating treasury stock - shares reacquired but not retired by the corporation. Preferred Stock Preferred stock is a unique type of equity that combines elements of both stocks and bonds, offering benefits such as fixed dividend rates and greater claims on assets in liquidation compared to common stock. Unlike common stockholders, preferred shareholders typically don't have voting rights. The dividends of preferred stock are usually higher and prioritized over common stock dividends, providing more predictability for investors. Preferred shares are less volatile than common stocks but don't offer the same potential for capital appreciation. There are various types of preferred stock, including convertible, callable, cumulative, and participatory, each offering different benefits. Preferred stock is an appealing option for investors seeking stable dividend income but it lacks the growth potential of common stocks and the voting rights associated with them​​. Additional paid-in capital (APIC) Additional Paid-In Capital (APIC) is a crucial element in a company's financial structure, particularly in the shareholders' equity section of the balance sheet. APIC represents the amount investors pay over and above the par value of a company’s shares when they purchase them. This difference between the issue price and the par value, multiplied by the number of shares issued, constitutes the APIC. The significance of APIC in a company's financial structure is multifaceted: No Interest or Repayment Obligations: Unlike raising capital through loans or bonds, APIC does not require the company to pay interest or repay the principal amount. It is a more flexible and cost-effective way for companies to raise capital, especially for those not in a position to incur additional debt. Non-Dilution of Control: By raising capital through APIC, companies can avoid diluting the control of existing shareholders. This method involves issuing new shares to investors, but it does not necessarily affect the ownership stake or control of existing shareholders. Improved Financial Ratios: APIC can enhance a company's financial ratios, making it more attractive to future investors or lenders. A higher APIC relative to total equity can indicate financial stability and security. Increased Liquidity: APIC can enhance the liquidity of a company's shares, making them more appealing to investors. This is particularly significant for companies planning to go public or attract institutional investors. Facilitates Growth and Expansion: APIC provides companies with essential funds to explore new markets, invest in research and development, or acquire other companies. This access to capital is crucial for supporting growth and innovation. However, there are potential downsides to relying heavily on APIC. It can lead to the dilution of earnings per share and reduce earnings available to existing shareholders. In the event of a decline in the company’s share price post-APIC offering, there can be pressure from investors to enhance financial performance. Restricted Stock Units (RSUs) Restricted Stock Units (RSUs) are a form of stock-based compensation used to align employee incentives with shareholder interests. RSUs grant employees the right to receive a predetermined number of shares of the employer's stock, contingent upon meeting specific vesting requirements. These requirements can be time-based, performance-based, or event-based. Unlike stock options, RSUs don't provide the option to buy stock shares but instead promise actual shares or equivalent compensation once vested. The key differences between RSUs and direct stock grants are: Vesting Schedule: RSUs have a vesting schedule that dictates when the employee will receive the shares. This can be based on time with the company, performance metrics, or specific events like an IPO. The shares are not immediately available to the employee upon granting; they must meet the vesting criteria first. Taxation: RSUs are generally taxed as ordinary income when they vest, meaning the full value of the vested units is subject to tax at that time. In contrast, employee stock options have different tax treatments, depending on whether they are Non-Qualified Stock Options (NQSOs) or Incentive Stock Options (ISOs). Employee Incentives: RSUs provide a clear incentive for employees as they know the value of their grant and when they'll receive the shares. This clarity can be motivational, encouraging employees to contribute to the company's success over time to increase the value of their shares. Flexibility and Complexity: RSUs are generally more straightforward than stock options, which involve exercise prices and expiration dates. RSUs offer less flexibility but are easier for employees to understand in terms of value. The impact of RSUs on employee incentives is significant. They offer a stake in the company's future, potentially leading to substantial financial gain if the company performs well. This aligns the interests of the employees with those of the company and its shareholders, potentially driving better performance and retention. Stock Options Stock options, as a type of contributed equity, are an important tool used by companies to attract, motivate, and retain employees. They function by granting employees the right, but not the obligation, to purchase a specific number of company shares at a predetermined price (known as the exercise or strike price) within a set time frame. How Stock Options Work Granting of Options: Employees are granted stock options at a specific strike price, often the stock's market value on the grant date. Vesting Period: There is usually a vesting period during which the employee must remain with the company to be eligible to exercise the options. Exercising Options: After the vesting period, employees can exercise their options to purchase stock at the strike price. Potential Financial Gain: If the company's stock price increases above the strike price, employees can buy the stock at a lower price, potentially realizing a gain if they sell the shares at a higher market value. Benefits to Employees Financial Upside without Upfront Cost: Employees can benefit from the company's growth without needing to invest their own money upfront. Flexibility: They have the flexibility to exercise their options at potentially favorable times within the exercise period. Alignment with Company Success: Stock options align employees’ interests with those of the company and its shareholders, incentivizing performance and retention. Dilutive Effect on Shareholder Value Increased Share Count: When employees exercise stock options, new shares are created, increasing the total number of shares outstanding. Earnings Per Share Impact: This dilution can lower earnings per share (EPS), as the same amount of earnings is spread over a larger number of shares. Potential Impact on Stock Price: While dilution can have a negative impact on EPS and possibly the stock price, the extent of this effect depends on the number of options exercised and the company’s overall performance. Considerations for Companies Companies need to carefully manage the granting of stock options to balance the benefits of incentivizing employees and the potential dilution of existing shareholders' equity. Companies must communicate transparently with shareholders about the potential impact of stock options on dilution and earnings metrics. Warrants Warrants are a type of financial instrument that grants the holder the right, but not the obligation, to buy or sell an underlying asset, such as stocks, at a predetermined price before a specific expiration date. They are unique in their structure and offer several distinct features: Types of Warrants: There are primarily two types of warrants - call warrants and put warrants. Call warrants give the right to buy the underlying asset, while put warrants provide the right to sell it. Leverage: Warrants offer leverage, meaning a relatively small initial investment can give exposure to a larger amount of the underlying asset. This can amplify potential returns but also increase risk. Strike Price and Expiration Date: The strike price is the predetermined price at which the warrant holder can buy (call) or sell (put) the underlying asset. Warrants have a specific expiration date, after which they become worthless. The value of a warrant is influenced by the proximity of the underlying asset's price to the strike price and the time remaining until expiration. Risks and Volatility: Warrants are considered high-risk investments due to their derivative nature and sensitivity to market fluctuations. The value of warrants can change significantly with market conditions. Investment Strategies: Warrants can be used in various investment strategies, including speculation on the price movement of the underlying asset, hedging against portfolio risks, and leveraging to increase exposure. Trading and Liquidity: Warrants are traded on specific stock exchanges or financial markets, providing liquidity to investors. The market for warrants can vary, with some being more liquid than others. No Voting Rights or Shareholder Privileges: Unlike direct stock ownership, holding warrants does not confer voting rights or other shareholder privileges in the issuing company. The Role of Contributed Equity in Startup Financing Contributed equity plays a foundational role in startup financing, often serving as the initial capital that helps get a business off the ground. This form of equity involves funds raised through the issuance of shares to investors, typically without immediate repayment obligations, thus providing essential funding for early-stage companies. Comparing contributed equity with other financing options like venture capital, loans, and angel investing reveals distinct advantages and considerations for startups: Venture Capital (VC): VCs typically invest in early-stage companies, often after some proof of concept or customer base development. The investment size can range from a few million to tens of millions. VC firms often provide not just capital but also mentorship and network access. However, they usually acquire a substantial stake in the company, which can lead to significant dilution of the founders' shares. Angel Investors and Seed Funding: These investors are often the first external financiers in a startup, sometimes coming in even before the business generates revenue. Investments from angel investors or through seed funding are generally lower compared to VC, ranging from tens of thousands to a few million dollars. They typically take on higher risk for potentially higher returns and may offer valuable guidance and industry connections. Loans: Startup business loans are a debt financing option where repayment with interest is required. Unlike equity financing, loans do not result in ownership dilution. Banks may offer various products like venture debt or overdraft facilities, depending on the startup’s maturity and revenue. Loans, however, might not be as readily accessible to startups without significant assets or steady revenue streams. The choice among these options depends on the startup's stage, funding requirements, and long-term goals. Contributed equity is particularly advantageous for early-stage funding as it does not burden the company with debt repayments, allowing more flexibility for growth and innovation. This form of financing aligns investors' and founders' interests, as both parties stand to benefit from the company's success. However, it can lead to a dilution of ownership for the founders. Related resources: Corporate Venture Capital: A Strategic Partnership & Differences to Traditional VC Seed Funding for Startups 101: A Complete Guide Empower Your Startup Growth with Visible Contributed equity is an indispensable tool for startup growth, offering a flexible and strategic financing option. Founders can harness this power to build robust, investor-aligned companies. For those seeking to streamline their investor relations and reporting, Visible offers an intuitive platform to enhance transparency and foster investor confidence. Ready to empower your startup's journey? Try Visible for free for 14 days and elevate your investor engagement to the next level!

In recent years, the world of Non-Fungible Tokens (NFTs) has exploded in popularity, with various use cases and projects emerging across the digital landscape. As a result, venture capitalists (VCs) and NFT investors have started actively staking their capital in NFT projects and use cases. This trend represents a significant shift in the investment landscape, with traditional investors recognizing the potential of NFTs to revolutionize various industries and create new revenue streams. From gaming and art to real estate and collectibles, NFTs offer a unique opportunity for investors to get involved in a rapidly growing market and support innovative projects with the potential for massive returns. Also check out, 10 VC Firms Investing in Web3 Companies. NFT 101: Understanding the Basics NFTs are tokens that we can use to represent ownership of unique items. They let us tokenize things like art, collectibles, even real estate. They can only have one official owner at a time and they’re secured by the Ethereum blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence. – ethereum.org NFTs are unique digital tokens that represent one-of-a-kind assets that cannot be replicated, making them valuable as digital collectibles. Though they are held in a crypto wallet and function as a type of cryptocurrency, they cannot be used to purchase goods or services. Rather, their value is derived from their uniqueness and the potential to increase in value over time. This has made NFTs an attractive investment opportunity for venture capitalists, who recognize their potential to revolutionize various industries and create new revenue streams. Examples of NFTs include digital art pieces, memes, gifs, music albums, videos, virtual real estate, and even tweets. Upon purchase, the ownership of an NFT is guaranteed through a digital signature, creating a secure and transparent investment opportunity for those looking to support innovative projects with the potential for significant returns. While NFTs may seem like digital paperwork at their core, they represent a promising future in the world of digital assets and have already captured the attention of traditional investors. Where Is the Value of an NFT Derived From? Venture capitalists are investing in NFTs for several reasons, including the potential for significant returns, the growing popularity of NFTs, and the promise of innovative use cases for the technology. Unlike traditional collectibles, the value of NFTs is derived from their one-of-a-kind nature, which is stored on the Ethereum blockchain. This allows for secure ownership verification and differentiates NFTs from standard cryptocurrency tokens like ETH. This ownership verification is crucial as it provides evidence of the rarity and scarcity of an item, giving it value in the eyes of collectors. This can range from digital art, to music, to even tweets or other unique content. With blockchain technology providing ownership verification, the value of NFTs is no longer solely dependent on the market but also on their rarity and provenance. Additionally, NFTs are enabling the possibility of shared ownership, which allows for communities of fans to own a piece of the creator’s work and incentivizes their success. As a result, venture capitalists see NFTs as a promising investment opportunity that could potentially change the way creators monetize and distribute their content, while also creating new revenue streams for investors. Also check out, Top VCs Investing in the $100 Billion Creator Economy. NFTs are gaining popularity as a way for creators to monetize their digital content and intellectual property. As more artists, musicians, and other creators adopt NFTs, the market is expected to grow, presenting new opportunities for investors. Furthermore, NFTs have the potential to revolutionize various industries by enabling secure ownership and authentication of digital assets. For example, NFTs can be used in gaming, virtual real estate, and even in the art world to prove provenance and authenticity. Another reason VCs are interested in NFTs is that they represent a new and exciting asset class, with the potential for high growth and significant returns. As such, venture capitalists are investing in NFT marketplaces, NFT-focused companies, and NFT collections. Venture capitalists are investing in NFTs in a variety of ways, including through direct investments in NFT projects and platforms, as well as by investing in companies that use NFTs as part of their business model. Many VCs are investing in NFT marketplaces that allow creators to sell their NFTs, such as OpenSea, Nifty Gateway, and SuperRare. They may also invest in NFT-focused companies that are creating new use cases for the technology, such as digital identity verification or supply chain management. Overall, venture capitalists are investing in NFTs as a way to tap into the growing popularity of the technology and to support innovative projects that have the potential for significant returns. As the market for NFTs continues to grow, it is likely that venture capitalists will continue to play a major role in shaping the future of the industry. Proven NFT Use Case Examples Pier Kicks predicts we are on our way to the “Metaverse” — a “self-sovereign financial system, an open creator economy, and a universal digital representation and ownership layer via NFTs (non-fungible tokens).” NFTs made their debut focusing mainly on art, music, and trading cards because it was the most widely adopted collectible investment items with an existing community of fans to tap into- giving them instant value. This was the start though and the beauty of NFTs is that this traditional concept can now be expanded upon in so many ways. Also check out, The Top VCs Investing in Community Driven Companies. Now fast-forward 2 years later and according to our favorite crypto newsletter, The Milk Road, it looks like the NFT use cases that are here to stay are: Rewards for Super Fans A status symbol – there is actual proof that fans made the discovery early. A membership card – a way for NFT holders to get access to exclusive perks. A way for fans to “invest in your success”- if a fan buys someone’s NFT early it can be an investment and a way to fund the project/ artist/ person. Digital Collectables Art- before NFTs art wasn’t able to be digitally collected, which is why this was probably the first and best use case so far. Branded collectibles- we’re now seeing the high fashion world take part in the craze as well and eventually in the metaverse people will be able to show off these digital assets on their avatars. Membership as an Asset “NFTs turn ‘memberships’ into tradeable assets. NFTs let you ‘invest’ in a social group, rather than just paying fees for access.” Making things like a SoHo House membership digitally transferrable. Video Game Assets “In the future, games will issue items as NFTs. Those are things you OWN. You can sell them. You can bring them into new games. You can rent them out to other players.” NFTs In the Future of Investing As the use cases for NFTs continue to expand, venture capital (VC) firms are taking notice and are increasingly interested in investing in startups and businesses that are utilizing NFTs in innovative and impactful ways. One area where VC firms are likely to invest in NFTs is in the real estate industry. As mentioned, tokenizing real-world assets is still in its early days, but once certain securities, insurance, and infrastructures are built out, the use cases could be endless. We can expect to see VC firms investing in startups that are developing blockchain-based platforms that allow for the tokenization of real estate assets, making it easier for individuals and institutions to buy and sell fractional ownership in property. VC firms are also likely to invest in startups that are utilizing NFTs in the realm of official documentation. The ability to create, transfer, and verify ownership of digital assets using NFTs has the potential to revolutionize the way that official documents are handled. For example, NFTs could be used to store and verify educational degrees, professional licenses, and other certifications. We can expect VC firms to invest in startups that are building the necessary infrastructure and platforms to enable the tokenization and verification of these types of official documents. In addition to real estate and official documentation, VC firms are likely to invest in startups that are utilizing NFTs in the sports and entertainment industries. NFTs provide a new way for fans to connect with their favorite teams, artists, and celebrities. For example, NFTs could be used to create limited-edition merchandise, exclusive content, or even fan experiences. We can expect VC firms to invest in startups that are building platforms and marketplaces that enable these types of fan experiences. Overall, as the use cases for NFTs continue to expand, we can expect to see increased interest and investment from VC firms. This investment will help to drive innovation in the space and create new opportunities for startups and businesses that are utilizing NFTs in creative and impactful ways. As a side note, for any companies looking to drop NFTs to your customers or fans, thirdweb is a platform worth exploring. Resources for Founders CoinDesk: CoinDesk is a leading media outlet covering the cryptocurrency and blockchain industry. They have a dedicated section on their website for NFT news and analysis, providing updates on the latest developments in the space. CryptoSlate: CryptoSlate is a popular cryptocurrency news and media outlet that covers NFTs and their various use cases. They have a section dedicated to NFT news and analysis, providing insights on the latest trends and developments in the industry. Crunchbase: Crunchbase is a leading platform for discovering and tracking innovative companies and investors. They have a dedicated section on their website for NFT-related companies, providing information on the top investors in the space and their investment history. NFT Accelerator: NFT Accelerator is a program that provides funding, mentorship, and resources to startups that are building NFT-based businesses. They focus on helping founders navigate the challenges of building businesses in the rapidly-evolving NFT ecosystem. OpenSea: A popular NFT marketplace that allows creators to sell and trade their NFTs. Founders can use OpenSea to sell their own NFTs and learn more about the market. SuperRare: Another NFT marketplace that focuses on digital art. SuperRare has a curated selection of high-quality NFTs and offers a unique auction system that founders may find helpful. Nifty Gateway: A user-friendly NFT marketplace that specializes in drops, where a limited number of NFTs are released at a specific time. Nifty Gateway is owned by Gemini, a cryptocurrency exchange, and has attracted high-profile creators and investors. The Block: A news and research site that covers the blockchain and cryptocurrency industry, including NFTs. Founders can use The Block to stay up to date on the latest trends and developments in the NFT space. NFT Vision Hack: A hackathon and accelerator program for NFT-focused startups. Founders can apply for the program to receive funding and support from industry experts. Metapurse: A crypto-based investment fund that focuses on NFTs and virtual real estate. Founders can learn more about NFT investing and get in touch with Metapurse for potential investment opportunities. NFT School: An educational platform that provides resources and tutorials on NFTs and blockchain technology. Founders can use NFT School to learn more about the technical and practical aspects of creating and selling NFTs. NonFungible.com: A data analytics platform that tracks the NFT market, including sales data, price trends, and project rankings. Founders can use NonFungible.com to get a better understanding of the market and the performance of their own NFT projects. Top VCs and NFT Investors Actively Investing in NFT Projects With the increasing popularity and potential of NFTs, many venture capital firms and angel investors are diving into this new field of digital ownership. These investors are actively seeking out promising NFT startups and providing the necessary funding to turn these ideas into reality. In this next section, we will highlight some of the top NFT investors who are leading the way in this emerging industry. From Silicon Valley giants to influential individual investors, these are the players shaping the future of NFTs. Animoca Brands About: Animoca Brands is a global leader in gamification and blockchain with a large portfolio of over 380 investments, and with the mission to advance digital property rights and contribute to building the open metaverse. The company and its various subsidiaries develop and publish blockchain games, traditional games, and other products, many of which are based on popular global brands including Disney, WWE, Power Rangers, MotoGP™, Formula E, and Snoop Dogg. Their mission is, “To deliver digital property rights to the world’s gamers and Internet users, thereby creating a new asset class, play-to-earn economies, and a more equitable digital framework contributing to the building of the open metaverse.” Investment Stages: Seed, Series A, Series B Recent Investments: MPCH Labs Thirdwave Revolving Games Shima Capital About: Shima Capital is an investment fund that focuses on supporting cutting-edge blockchain startups. “Our goal has always been to invest in strong founders across all crypto verticals, a goal we achieved throughout 2022. #1 in seed-focused gaming projects #5 in CeFi, DeFi, Infrastructure, & Web3 #3 in total projects invested (actual # is closer to ~120)” Investment Stages: PreSeed and Seed Recent Investments: Magna Thirdwave Sender NGC Ventures About: NGC Ventures is one of the largest institutional investors of blockchain and distributed ledger technologies, and has been a key contributor to a number of leading blockchain projects. We strategically leveraging and amplifying our portfolio to help create and enhance each one’s competitive advantages. Selectively partnering with leading investment professionals and technical developers in the world. Investment Stages: Seed, Series A Recent Investments: Chainsafe Kin Insurance Fan Controlled Football HG Ventures About: We partner with visionary entrepreneurs who are focused on bringing impactful R&D to market.At HG Ventures, we understand the dynamic landscape of your industry and bring our passion, expertise, and assets to support you as you execute your strategy for success. We invest in early stage to growth stage companies developing advanced materials and systems for transportation, infrastructure, environmental services and specialty chemicals. We provide resources spanning deep market insight, manufacturing and supply chain assistance, pilot testing of products, R&D expertise and equipment, introductions to our customers and service providers, and more. Traction metrics requirements: We will invest at the pre-revenue and pre-product stage, but we want to see the beginnings of a dedicated, full-time executive team. Investment Stages: Early to Growth Stage- Seed, Series A, Series B, Recent Investments: Circulor 6k Transcend Software Paradigm About: Paradigm primarily invests in crypto-assets and businesses from the earliest stages of idea formation through to maturity. Every once in a while, a new technology comes along that changes everything. The internet defined the past few decades of innovation. We believe crypto will define the next few decades. Paradigm is an investment firm focused on supporting the crypto/Web3 companies and protocols of tomorrow. Our approach is flexible, long term, multi-stage, and global. We often get involved at the earliest stages of formation and continue supporting our portfolio companies over time.We take a deeply hands-on approach to help projects reach their full potential, from the technical (mechanism design, smart contract security, engineering) to the operational (recruiting, regulatory strategy). Thesis: Paradigm is an investment firm focused on supporting the great crypto/Web3 companies and protocols of tomorrow. Our approach is flexible, long term, multi-stage, and global. We often get involved at the earliest stages of formation and support our portfolio with additional capital over time. Investment Stages: Seed, Series A, Series B, Series C, Growth Recent Investments: Uniswap Labs Nxyz Exponential AU21 Capital About: AU21 Capital is a Venture Capital firm dedicated to procuring value for teams expanding the frontiers of blockchain technology. Our team brings decades of executive and operational experience at industry titans including Huobi and Galaxy Digital. Our business development and investment acumen shines through our portfolio companies, including partnerships with Astar, Axie Infinity, Injective, Marlin, Cere, Covalent, Casper labs, Serum, Fantom, Harmony, Iotex, Coin98, Polkadot, Star Atlas among many others. We also serve as trusted partners to sector-leading launchpads, and work routinely alongside top exchanges to bring products to market. Investment Stages: Seed, Series A Recent Investments: IQ Labs The Unfettered Cryption Network Awesome People Ventures About: Awesome People Ventures is an early-stage fund focused on Web3. We invest in the future of work and life. We support our founders with capital, hands-on growth support, and access to an exclusive talent network. Awesome People Ventures is backed by Marc Andreessen, Chris Dixon, Multicoin, and founders of top crypto projects. Awesome People Ventures invests in a diverse set of founders, who operate with integrity and are building long-standing companies. Investment Stages:Pre-Seed, Seed Recent Investments: Treeswift Solid World DAO Jia Exnetwork Capital About: Exnetwork Capital was founded in 2018 as a means to democratize access to opportunities to support blockchain projects. Since then, it has evolved to be a multi-faceted organization that supports not just the well-known configurations of blockchain organizations but radical ones such as anonymous and distributed teams. Investment Stages: Seed Recent Investments: Reign of Terror KlayCity Volare Finance ConsenSys Ventures About: ConsenSys Ventures is a venture capital arm ConsenSys, a blockchain venture production studio. Investment Stages: Accelerator, Pre-Seed, Seed, Series A Recent Investments: Kiln WalletConnect Sardine Looking for Funding? Visible Can Help- Start Your Next Round with Visible 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 VC’s and accelerators who are looking to invest in companies like you. Check out all our investors here and filter as needed. After learning more about them with the profile information and resources given you can reach out to them with a tailored email. To help craft that first email check out 5 Strategies for Cold Emailing Potential Investors. 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.

15 VC Firms Investing in Web3 Companies In the evolving landscape of the internet, Web3 stands out as the next significant leap, offering a decentralized, blockchain-powered framework. Coined by Ethereum's co-founder, Gavin Wood, in 2014, Web3 embodies a trustless, permissionless internet that fundamentally alters digital interactions and transactions​​. This transformational technology has captured the attention of investors globally, as it heralds a new era of internet use where users regain control over their data and digital identities. For investors, Web3 companies represent a frontier in technological innovation, combining the promise of high-growth potential with the opportunity to shape the future of online experiences. Below we highlight 15 leading VC firms that are actively investing in this exciting new sector. Related Resource: 13 Generative AI Startups to Look out for 1. a16z/ Andreessen Horowitz Location: Menlo Park, California, United States About: Andreessen Horowitz was established in June 2009 by entrepreneurs and engineers Marc Andreessen and Ben Horowitz, based on their vision for a new, modern VC firm designed to support today’s entrepreneurs. Andreessen and Horowitz have a track record of investing in, building and scaling highly successful businesses. Thesis: Historically, new models of computing have tended to emerge every 10–15 years: mainframes in the 60s, PCs in the late 70s, the internet in the early 90s, and smartphones in the late 2000s. Each computing model enabled new classes of applications that built on the unique strengths of the platform. For example, smartphones were the first truly personal computers with built-in sensors like GPS and high-resolution cameras. Applications like Instagram, Snapchat, and Uber/Lyft took advantage of these unique capabilities and are now used by billions of people. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: Dapper OpenSea Ripple 2. Sequoia Capital Location: Menlo Park, California, United States About: Sequoia is a VC firm focused on energy, financial, enterprise, healthcare, internet, and mobile startups. Thesis: We partner early. We’re comfortable with the rough imperfection of a new venture. We help founders from day zero, when the DNA of their businesses first takes shape. Investment Stages: Seed, Series A, Series B, Growth Recent Investments: Polygon Binance Bitmain 3. Tiger Global Location: New York, New York, United States About: Tiger Global Management is an investment firm that deploys capital globally in both public and private markets. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: PDAX | Philippine Digital Asset Exchange Devron Novi Connect Related Resource: 12 New York City Angel Investors to Maximize Your Funding Potential 4. Coinbase Ventures Location: San Francisco, California, United States About: Coinbase Ventures is an investment arm of Coinbase that aims to invest in early-stage cryptocurrency and blockchain startups. Thesis: At Coinbase, we’re committed to creating an open financial system for the world. We can’t do it alone, and we’re eagerly rooting for the brightest minds in the crypto ecosystem to build empowering products for everyone. We provide financing to promising early stage companies that have the teams and ideas that can move the space forward in a positive, meaningful way. Investment Stages: Pre-Seed, Seed, Series A, Series B Recent Investments: Compound BlockFi Dharma 5. Paradigm Location: San Francisco, California, United States About: Paradigm primarily invests in crypto-assets and businesses from the earliest stages of idea formation through to maturity. Thesis: Paradigm is an investment firm focused on supporting the great crypto/Web3 companies and protocols of tomorrow. Our approach is flexible, long term, multi-stage, and global. We often get involved at the earliest stages of formation and support our portfolio with additional capital over time. We take a deeply hands-on approach to help projects reach their full potential, from the technical (mechanism design, smart contract security, engineering) to the operational (recruiting, regulatory strategy). Investment Stages: Pre-Seed, Seed, Series A, Series B, Series C, Growth Recent Investments: Chainalysis matrixport Fireblocks 6. Pantera Capital Location: Menlo Park, California About: Pantera Capital is the first institutional investment firm focused exclusively on bitcoin, other digital currencies, and companies in the blockchain tech ecosystem. Investment Stages: Seed, Series A, Pre-Seed, Early Stage, Series B, Series C, Growth Recent Investments: Ancient8 Stader Labs Offchain Labs 7. Ribbit Capital Location: Palo Alto, California, United States About: Ribbit Capital is a Silicon Valley-based venture capital firm that invests globally in unique individuals and brands who aim to disrupt the financial services industry. Founded in 2012 by Meyer “Micky” Malka, Ribbit believes the category is profoundly under-innovated and intends to support entrepreneurs who have already launched the businesses of the future. Ribbit has raised an inaugural $100M fund that will be aimed at driving innovation in lending, payments, insurance, accounting, tax preparation and personal financial management. Ribbit targets disruptive, early stage companies that leverage technology to reimagine and reinvent what financial services can be for people and businesses. The firm will mainly focus on investments in the U.S., Canada, Brazil, the United Kingdom, Germany, Italy, Spain, South Africa and Turkey. Investment Stages: Seed, Series A, Series B, Series C, Growth Recent Investments: Genesis Digital Assets Kavak Chipper Cash Related Resource: 8 Active Venture Capital Firms in Germany 8. Blockchain Capital Location: San Francisco, California, United States About: Blockchain Capital is a pioneer and the premier venture capital firm investing in Blockchain enabled technology companies. Investment Stages: Seed, Series A, Series B Recent Investments: Abra Securitize Anchorage 9. Digital Currency Group Location: New York City, New York, United States About: At Digital Currency Group, we build and support bitcoin and blockchain companies by leveraging our insights, network, and access to capital. Thesis: We invest in companies that are accelerating the creation and adoption of a better financial system using blockchain technology and cryptocurrency Investment Stages: Seed, Series A, Series B Recent Investments: Trust Machines Livepeer Elliptic 10. DWF Labs Location: Singapore About: DWF Labs is the global digital asset market maker and multi-stage web3 investment firm, one of the world's largest high-frequency cryptocurrency trading entities, which trades spot and derivatives markets on over 60 top exchanges. Investment Stages: Early Stage Venture, Initial Coin Offering, Late Stage Venture, Non Equity Assistance, Secondary Market, Seed. Recent investments: TRON Algorand Foundation Conflux 11. CMT Digital Location: Chicago, Illinois. About: CMT Digital is a venture capital firm engaging in the crypto asset and Blockchain technology industry. The firm focuses on asset trading, blockchain technology investments, and legal and policy. Investment Stages: Pre-Seed Recent investments: CFX Labs ZetaChain Trident Digital Group 12. NGC Ventures Location: Singapore About: NGC Ventures invests in early stage, web 3.0 infrastructure startups and projects. We identify projects with innovative ideas to today’s blockchain problems and work with them from ideation to strategy and market adoption. Thesis: We identify projects with disruptive innovation, aiming to solve problems with solutions that are characterized by simplicity, cost affordability, speed, uniqueness and a compelling product market fit. Investment Stages: Seed, Series A Recent investments: Polybase Smooth Labs Chainsafe 13. Bixin Ventures Location: Beijing, Chaoyang About: Bixin Ventures invests in early-stage infrastructure projects that cultivate and facilitate mass adoption of open finance through permissionless and decentralized networks. Thesis: Bixin Ventures’ mission is to invest in and build crucial infrastructure that enables the future of open finance through permissionless and decentralized networks. Our investment team works alongside founders to provide guidance and expertise for growth in Asia. These actions reflect our priority to transform open finance into a truly global ecosystem. Investment Stages: Pre-Seed, Seed Recent investments: Sei Earn Network zCloak Network 14. Spartan Group Location: Singapore and Hong Kong. About: Founded in 2017, Spartan Group is a leading player in the Web3 space. We are one of the most active venture investors and have backed some of the leading crypto companies and networks. We are also a leader in Web3 M&A deals and capital raises, leveraging our track record of working with world-class teams, deep expertise of the crypto industry, and unparalleled network to create collective value with exceptional founders. Investment Stages: Seed Recent investments: Wind Brine Fi DFlow 15. Alchemy Ventures Location: San Francisco, California About: Alchemy is a developer platform that empowers companies to build scalable and reliable decentralized applications without the hassle of managing blockchain infrastructure in-house. It is currently faster, more reliable, and more scalable than any other existing solution, and is incredibly easy to integrate! Thesis: At Alchemy, our mission is to provide developers with the fundamental building blocks they need to create the future of technology. Through Alchemy Ventures, we'll be accelerating this mission by dedicating financing and resources to the most promising teams growing the Web3 ecosystem. Investment Stages: Pre-Seed, Seed, Series A, Series B, Series C Recent investments: Acctual Bastion Unstoppable Domains Web3 Resources Web3 Report Q3 2021 – ConsenSys: The DeFi data, context, NFTs, tools, and trends that defined Web3 in Summer 2021. Coinbase Cloud is announcing a community for Web3 developers. Their forum for developers is live, searchable, and indexable. The Architecture of a Web 3.0 application ​​WEB2 vs WEB3 Twitter thread on Why Web3 Matters and What’s Next in Web3 Start Your Next Round with Visible These firms are not only financing the future of the internet but are also shaping the landscape of digital innovation. As the Web3 ecosystem continues to grow, staying on top of your business and connecting is key. Combine qualified investors from Visible Connect with your own investor lists to share targeted Updates, decks, and dashboards. Check out all our web3 investors here. 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. To help craft that first email check out 5 Strategies for Cold Emailing Potential. Related resource: 14 Gaming and Esports Investors You Should Know Related Resource: 14 Venture Capital Firms in Silicon Valley Driving Startup Growth Related Resource: 10 Venture Capital Firms in Canada Leading the Future of Innovation Related Resource: 7 Prominent Venture Capital Firms in Brazil