🦄 The DART Weekly #4 ~ VC fundraising

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November 14, 2020

Entrepreneurship Chronicles

Imagine you have to choose between raising $1B+ in revenue or challenge Michael Jordan on a 1vs1 game, what would you pick?
Robert Pera picked both.
During high school, he had two passions, technology, and basketball. Forced by a heart disease he quit playing and went on studying at UC San Diego. After graduation he got his "dream job" at Apple: testing the company's WIFI. There he found out that by increasing the WIFI power, its range would increase a lot.
The idea being dismissed by his supervisor, Robert invested all his time and money to found Ubiquity. After building the prototype of his new network card in his apartment, online sales started. Copycats came right after.
The Apple mentality kicked and Robert started selling a whole system to deliver wireless internet access that was running proprietary software. Public in 2011, revenue of $1.3B+ in 2020 (Business Wire), Pera kept 75% of the firm which makes him a billionaire.
So what about basketball? In 2012 he bought the NBA franchise Memphis Grizzlies, made the playoff 5 years in a row, and increase the value by 245%. In 2013 he challenged Michael Jordan on a 1v1 game for charity (Yahoo). MJ turned down the offer saying it was ridiculous, in the meantime Pera is warming up (YouTube).

Products and services come and go, how to make it last? Simply put by Pera: “[...]You need to build something ­defensible”.
Done that, another challenge arises: how to enjoy the process? Be mindful of your passions. You don't get off them easily, yet you may put them aside for later. When possible go after your passions, take risks, and have fun doing it. And of course, don't forget to hold your equity along the road.

Ventures 101

🧑‍🏫 VC Fundraising

ALLOCATE 2020 is going to take place next week (LinkedIn). It is a magic moment when GPs of VC funds and LPs gather in the same (virtual) room to mingle, discuss trends and pitch their funds. Oh yes, VCs raise capital too!

Know your LPs

There is no such thing as a standard LP. Public funds, private individuals, funds of funds, pensions funds and family offices can all be Limited Partners. They also have a strategy and various selection criteria. Some might require a minimum ticket size ruling out small funds, others are less likely to reinvest in a sector. Vetting LPs is everything, especially if you want them to stick to your funds (sifted).

Captatio Benevolentiae

Founder-Investor relationship can last very long, GP-LP relationship will last even longer. Better not to screw it up at the first conversation! Patience and soft skills are required here. As a matter of fact it takes several months for an LP to sign a check. Undoubtedly painful, the best way to cope with it is to get to know as many LPs as possible and to follow-up with them frequently (sifted).

N degrees of preparation

As GPs raising capital is ...
... Almost impossible if you are completely new to investing and have no story whatsoever.
... Easy done if you are Seedcamp, you are a well established fund and have a rocking track record. It's enough to collect your data in a slides deck, hit the road and close a brand new £78M Fund V (LinkedIn <- check the deck, totally worth it!).
... Difficult if you have a brand new fund, but there are bunch of tactics that might help out: leveraging on your angel investments, offering lower managements fee, approaching wealthy family and friends (TechCrunch) ...
Interesting fact stats show and real life proves that new funds are better performing than established ones (Cambridge Associates). Beginner's luck or more persistent hustle? 

Of Unicorns and Cowboys

🦄 The Rounds

The deals worth knowing in Europe and beyond - ordered from coolest to coolio

🛴 Visionary: $250M and counting. Tier raised capital from Softbank et al... Its operations company and swappable batteries helped the Berlin-based startup to turn profitable during the pandemic.

⚛️ Brainiac: Before the first delivery of its quantum computers, Finnish IQM raised €39M. The startup joined the race for the most capable PhD.

🎒 Worldwide: Remote working is a fact, Remote.com is a facilitator. The startup raised $35M to help orgs with global workforce payroll, benefit and more. It has legal entities in most countries.

📱 Unbanked: Backed by Target Global, Nigerian Kuda raised $10M to be THE mobile-first challenger of all Africans inside and outside the continent by exploiting the skyrocketing adoption of smartphone.

🏦 Buzz: Italian neobank Aidexa secured €45M in its seed round. Lead by former Unicredit GM, it uses AI to offers loand to SMEs and help them to streamline their business operations.

🌈 The Pots

The exits you should follow in Europe and beyond - IPO, direct listing, SPAC, bankruptcy ... all awesome stuff

🍱 Dashing: Strong on its 2020 $1.92B revenues, DoorDash prepares its IPO. Thanks to the pandemic it has generated $315M in cash, although it is not yet profitable.

🎙 Berserk: Megaphone was acquired by Spotify for $235M. The streaming giant is betting big on podcast, now owning a SaaS heavily used by podcasters and advertisers.

👓 Shrouded: Snapchat acquired Israelian Voca.ai for an indisclosed sum. Its AI-based voice agents might be integrated to Spectacles or used to offer business functionalities on the social network.

🤠 The Funds

The tales of unicorns' hunters you should know about - particularly relevant if you are a founder looking for backing

🆙 Evolution: Turning navigated founders into great investors. That's the goal of Spearhead $100M 4th fund. The successful approach leveraged on the founders' hustle and network.

🇮🇹 Validated: CPR launched Boost Innovation. The fund allocates €50M to help startups with ongoing corporate partnership to scale.

📈 Network: Focused on digital marketplaces and platforms, Speedinvest x Fund 2 has raised €33M till date, the goal is €50M.

🧑‍🎤 ... and The Quirky Ones

The crazy stuff we gossip about while sipping our chai latte - it's like others, but better

🤯 Boom: From 0 to $2.1B+ valuation in 1 year, from 23 to 215 employees in 7 months, $20M ARR. This is online events startup Hopin and its choice to be remote-first.

🌍 Tide: Not only SaaS and productivity tools. VCs is increasing the investment in Impact Tech. SF is in the lead, but London, Paris, Berlin and Stockholm follow right after.

💉 Trendy: Started in 2008, public in 2019, now it is behind the COVID-19 vaccine. Founded by children of Turkish immigrants, German BioNTech offers an amazing startup story.

🇨🇳 Backlash: "Chinese banks operate with a pawnshop mentality" said Jack Ma on Oct 24th. The regulators stopped Ant's IPO and the scrutiny for its consumer-lending business intensified.
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