The founders' dilemma

Charlie and the Startup Factories 👀

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A report released yesterday by Dealroom & Accel unveiled that ≈ 1,500 startups have flourished from European and Israeli unicorn companies, solidifying them as prolific 'founders factories' 🦄 🏭

While the summer surge of the secondary market faced an unexpected setback, December poses a risk for layoffs due to year-end financial evaluations and the imperative to swiftly adjust course. But here's some good news too: multistage funds are showing interest in seed-stage startups, and the outlook for 2024 appears promising, find out why 🔑

Founders' Dilemma: Seed Stage Seduction by Multistage Funds

As we close 2023, the IPO market is off the table, and late-stage deals are rare. This climate has led multistage funds to concentrate on seed-stage startups, driving up valuations and deal sizes and apparently this trend will continue in 2024.

🤝 Some things to consider before saying 'YES':

Multistage funds may not provide the crucial hands-on guidance needed at the seed stage. Specialized seed funds and angels offer closer collaboration, mentorship, and tailored support for early-stage challenges. While immediate cash from multistage firms is tempting, founders should weigh the long-term impact on ownership and control. Diverse seed sources can ensure a healthier post-money valuation and keep your decision-making power intact.

Getting a big-name multistage firm on board early is like bringing a celebrity to your party. It's exciting until they decide to leave early. If they don't lead the Series A dance, other investors might question the party's popularity. Remember, perception is reality – choose your dance partners wisely 💃🏻🕺🏽

Startup Events and Deadlines

  1. Financial Modeling Course for Startup Founders | January 22, 2024 | Online

  2. Financial Modeling 101 - Free Webinar | January 18, 2024 | Online

Takeaways from this week’s podcasts

Fostering learning and growth within teams requieres way more than simply providing learning materials. Founders need to treat learning and development with the same rigor as other business processes. This includes setting clear outcomes, implementing processes for regular feedback and clearly communicating how learning pathways benefit employees.

Ryan Sutton x John Lee Dumas on Entrepreneurs on Fire.

Startups create chaos by nature, solving one problem often leads to new issues, so funders need to learn how to manage chaos rather than attempting to eliminate it.

💡Time can resolve certain problems without direct intervention. You should recognize which issues may fade naturally and avoid wasting energy on them.

💡Develop a filter to determine which issues warrant time and attention. Teams should always ask why a request is important and whether it aligns with the startup's priorities.

Ryan Rutan & Will Schroeder on Startup Therapy.

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You might say it’s a down to Earth solution

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These companies just raised money

  1. 💅 The aesthetics and wellness booking platform, RepeatMD, raises additional funds of $40 million to fuel expansion and enhance its services - looking good! 🙃

  2. 🤖 The AI-powered engineering simulation startup, PhysicsX, reveals itself and secures $32 million in funding to advance its technology.

  3. 👩🏻‍💻 Mine, a platform with a no-code approach to data privacy vetting, secures $30 million in its recent funding round.

  4. 💰 Fintech startup Mozaic raises $20 million in funding to develop its payment-splitting solution tailored for creators.

  5. 🛡️ Brazilian startup Uncover raises $7.5 million in a seed funding round to further develop its business, focusing on innovative solutions in the insurance sector.

Unicorn Offspring: Their Entrepreneurial Legacy

Former employees from Europe's early fintech unicorns are leveraging the economic downturn to embark on their entrepreneurial journeys. Revolut, in particular, stands out.

🕵🏻 What do investors find attractive about these alumni-founders? The company's distinctive organizational structure—a super app with diverse product areas that fosters a flattened, highly entrepreneurial environment. This stands in contrast to traditional enterprise software companies, making it a fertile ground for nurturing emerging entrepreneurs.

🏃🏻‍♂️ In a few bullets:

  1. Fintech Dominates Founder Creation: European fintech unicorns, including Revolut, Klarna, N26, and Wise, stand as major "founder factories", birthing over 120 startups.

  2. B2B Focus and Swift Startup Launches: The latest trend among fintech alumni startups leans toward B2B models, with 60% of founders launching their ventures within a year of leaving their unicorn roots. London emerges as a startup hub, followed by Berlin, Paris, and Stockholm.

  3. Revolut Leads Alumni Startup Surge, having produced 34 startup founders so far, according to a recent report by Accel and Dealroom.

Six bullets of updates

  1. SaaS funding in 2024 will focus on sustainable growth metrics like ARR per employee and R40, not just TAM 📈

  2. Summer's surge in the secondary market did not sustain, but a robust outlook for 2024 is anticipated, indicating a strong performance ahead 💰❄️

  3. Layoffs in December aren't tied to the holidays but are motivated by financial considerations as Q4 figures loom 📉

  4. Valuation in 2024. Interest rates impact valuations, prioritize durable revenue growth, and remember sentiment drives short-term, fundamentals drive long-term 🏦

  5. Entrepreneurs shun VC money for independence, opting for alternative funding like crowdfunding and revenue-based financing to build sustainable, mission-aligned businesses 💸

  6. Recent policy changes by the UK government, raising the salary threshold for skilled workers, face backlash from startups 🇬🇧 😠

As a CEO, your main job is to never run out of money. 

And, let’s be real, financial modeling can be a pain. That's why we've created a one-on-one workshop series to teach you the fundamentals of driver-based financial modeling.

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