Infuse Capital

Sifted recently rated the 100 fastest growing startups in UK & Ireland - based on a combination of revenue growth and increasing employee numbers. League tables drive interest and Sifted has been a great cheerleader for Europe's ecosystem, but we think it’s time to discuss more accurate proxies for success. As individual metrics without context, revenue and employee growth can indicate many things - most often that a company is burning lots of cash to buy unprofitable customers and hire more staff to service them. 📈# 1 Growing Staff and Runway Growing the team feels exciting! If you’re hiring because your team is swamped with valuable customers then it makes sense to add heads. If you’re hiring because projections based on limited data suggest more customers are soon coming you probably want to keep that brass in your pocket. We’ve all seen companies burn through too much cash too fast and quickly return to the funding market to refill their coffers. ✍🏻 What to look out for? → Are operations scaling in response to profitable growth opportunities? 📈# 2 Customer Acquisition Costs Many companies we speak with don’t have a sustainable growth model and as a result spend increasing amounts (with decreasing efficiency) on performance channels. What is a sustainable growth model? → Does the company have a clear and institutionally-accepted view of who the customers are and what their needs are? → Does the product and positioning aim directly at addressing what is known about those customers and their needs? → Does the product speak to customers in a language they relate to and can understand clearly? → Does it communicate via channels where customers are in a place to internalise our message? Companies who can answer yes to all four of the above questions are the most successful at acquiring and serving their customers successfully and profitably. ✍🏻What to look out for? → Examine how CAC and LTV trend over time. If the numbers are not moving the right way then dig in to understand what you’re doing wrong. → Remember, without a change in behaviour, past performance is the greatest predictor of future performance. 📈# 3 Growth vs Capital Raised This all adds up to capital efficiency. Growth in revenue and staff should be evaluated against the capital raised. Are you raising to support an existing growth trajectory or to initiate growth? Raising external funding is a means to an end, not an end in and of itself. ✍🏻What to look out for? → Does the business model scale efficiently? → Can company performance adapt when market conditions change? At Infuse Capital, our growth perspective is holistic, extending beyond mere top-line growth and out-of-context metrics to delve deeply into the core of the growth engine. If you’re on the treadmill of unsustainable growth and want to get off, get in touch and we can talk about a different path. Let’s build…to last! #startups #founders #earlystage

This data from PitchBook supports what we hear anecdotally from founders we're speaking with. Internal rounds continue to be completed on terms that further dilute founders whether directly (per the report) or unpriced CLN's with hefty discounts and liq prefs. Very often our growth model can support businesses to sustainable growth which allows for more financing options. If you lead a consumer business and want to explore a #differentpath - let's talk. Infuse Capital #founders #funding #VC https://lnkd.in/edJS7k72

This week, Sifted published a post on founder mental health headlined “49% of founders are considering quitting”. It paints a very tough picture. The real heartbreak: 39% had symptoms of depression and 53% burnout. Almost all cited a high level of stress. None of these reactions are any surprise when you begin to understand the root cause of founder anxiety.  In speaking with 100s of founders over the past year we’ve heard the same sentiment expressed again and again: a feeling of being out of control.  The environment has changed, capital has dried up, they don’t have a plan to win.  Unicorn dreams have turned into sleepless nights of anxious rumination leading to days of exhaustion and a downward emotional spiral. For those interested, the connection between our sense of control and emotional wellbeing is well studied - https://lnkd.in/ewHZU-yW “Lower self-agency was associated with worse depression (Inventory of depression) and anxiety (BAI),” according to Mehta, Marishka M et al, 2023. So what can be done to help builders of companies to successfully build emotional resilience? There are plenty of bromides out there saying ‘eat better, sleep more, go on holiday’.  Sure, why not? But after that vacation, if you want a different outcome you need to take a different path: 1️⃣ Figure out what you want from the business: how big do you want to grow?  How fast?  → How much stress and risk do you want to take along the way?  →  Most likely your answers here will be very different from those your investors would give (it’s not their lost sleep after all) 2️⃣ Create a plan to fix the fundamentals and to grow sustainably: in the rush for growth, you’ll have built up a lot of operational inefficiencies.  → Addressing these will reduce errors (and stress!), drive margin, and create a platform for sustainable growth → In many cases, there’s outside expertise that can help if you know where to look 3️⃣ Find a partner who believes in where you’re going, can bring in fresh capital, and help you reset your business - which often means a reset with your existing investors →  If you want to take a different path, we’d love to chat and see if we can help Infuse Capital … #infusecapital #venturecapital #startups #liquidity #secondaries #investment #fundraising #founders #earlystage

No better day to begin then today Toby Coppel

I heard the exact same words from several different founders this week, as though I was Bennett Marco I was in the Manchurian Candidate. Their words were not about the hero Raymond Shaw. Certainly I've lost you all by now so let's get back to the founders... "Our CM3 is growing at..." "CM3 is now x%" "We have a clear path to positive CM3" In discussing company's path to profitability each of these four made the same comment. Somehow there is a focus on CM3, that is a company's contribution after direct marketing costs, as the target rather than a *milestone* on the way to the target. This shibboleth no doubt has come from one of their existing investors telling them 'if your CM3 is positive then an acquiring company can fire all the staff and cut all opex and the acquisition will then be accretive.' This is complete and utter bullshit. Acquiring companies know better than to believe an acquisition can be shut down on day one and all the contribution will then beautifully flow into their earnings. Acquiring companies want to buy successful businesses with teams that have doggedly pursued profitability through all kinds of adversity. This is your opportunity. Your company's CM3 can be a measure or milestone on the way towards profitability but make no mistake this is not the target. Don't listen to that BS and stay completely focused on generating positive cashflow for your business. This is the highest probability for you to controll your own destiny and not have to listen to this drivel.

2023 Global Venture Review - Plummeting deal volume (US down 40%, UK %50, Israel 60%) - The industry's largest investors significantly slowed - Valuations are down, especially at the growth stage - VC funds struggled to raise new money (and sold parts of their holdings at steep discounts) - M&A and exits were at the lowest level of the past decade in 2023 However, several reports agree: - Generative AI is potentially seen as a game changer, expected to unlock an additional $10.3 trillion in economic value (Accenture) - Funding for GenAI startups shot up nearly 5x in 2023 compared to 2022 - The Fed is expected to cut interest rates this year, potentially thawing capital into startups, and opening up the IPO window (which will give funds/LPs liquidity) - It may sound like a cliche, but there has never been a better time to launch a startup. New tech means founders can do more with less, mass layoffs mean talent has become available, lessons learned from the crash means management teams are focus on responsible growth and unit economics Category defining companies will get started in 2024.

2023 was an interesting year - with companies finding it harder to raise, but bubbles in certain sectors such as AI and climate tech. In a new piece for Sifted, Anne Sraders compiles a list of predictions for 2024 from VCs.   Gemma Bloemen comments: "VCs still have capital and appetite to deploy but standards will remain high, similar to in 2023. Startups will need to think carefully about the best financing options and strategy." "From a talent perspective, the market remains strong, both for companies hiring new talent and for people deciding to build their own businesses." With insights from Cherry Ventures, Earlybird Venture Capital, HV Capital, La Famiglia , Point Nine and more, have a read and drop us a comment as to what you think 2024 has in store! https://lnkd.in/dC7HBGeg