Peter Rhines

Can't wait to reconnect with the brilliant Amanda Herson and join the discussion with Maciek Gnutek and Iain Martin at Slush about our fund models and what they mean for Founders ❄ 🚀

17

If you're a SaaS, CPG, or e-commerce business collecting revenue in every state you need to worry about sales taxes now 😫 . Every state has slightly different rules too! I just made an investment in the space to solve this problem, read below 👇 I'm excited to announce a new investment that's targeting that problem. Zamp is announcing it's series A, they work with over 400 companies already (a mix of CPG, SaaS and E-commerce). If you're looking for a solution to the complicated situation of collecting sales taxes for your business, look no further.

8

2 Comments

The opioid crisis was a sad hallmark of my years working for the Baker Administration. In a time of extreme partisanship at the federal level, this was one area where public policy, civil discourse, and private enterprise seemed aligned and sufficiently motivated to find a solution. What we learned, however, is that dollars and access only go so far in combatting a disease that knows no so specific demographic. Instead, it's apparent that a battery of tools is needed to combat and prevent addiction--ranging from strong safety nets, to novel non-addictive pain therapies, and better technology. Introducing Marigold Health. Shrenik Jain, Ravi Shah, Tracey Cohen, MD, FASAM and team have built a proprietary NLP-based platform that--most significantly--improves the lives of those suffering from SUD/SMI. One customer we spoke with noted, "We needed a unique treatment intervention that had supportive research, fit into a CMS established model with a recognized service code, and that would provide positive clinical outcomes in an efficacious and fiscally responsible manner”. Another plainly said: "Marigold is our best hope to reach into the lives and help those who many have already given up on." Honored to join Bill Evans, Sean Day, and the entire syndicate in doing our part to scale a tool we believe will become essential in the fight against addiction. Marigold Health Innospark Ventures Rock Health KdT Ventures Matt Fates Lily Zarrella Venkat Srinivasan

50

1 Comment

After the first deep dive discussion w/ founders I often hear a comment "I wish I had heard about this alternative [to all-in must-become-a-unicorn] way to build a startup earlier as I have wasted years in pursuing the wrong thing". Our mission is that no founder would ever need to say that again as it is such a waste. Us preaching the gospel 1:1 just doesn't scale, hence we use mass media to multiply our efforts - that's how Gorillacast came to be. The 1st episode is out, featuring yours truly. "How can you know what food you like unless you taste everything" said a chef. How can founders make informed choices about the best strategy for them to follow unless they know of all alternatives? This might not be of interest to you but pls spread the word so that the founders who should hear it can find it. I have a dream!

42

3 Comments

⛳ Emerging fund managers pulse check. PitchBook tracks over 10,000 funds that are raising money, with 45% being emerging fund managers (defined as firms with less than 3 funds). Despite a dip in available capital—down to 16% from the pre-pandemic 23%—these managers are finding creative ways to stay competitive, like partnering with larger firms. 💼 Joanna Drake (founder turned investor) shared how "wildly different" it is raising a fund versus for a startup. One key datapoint she shared on the fund side was how little feedback you get along the way (and the years you can wait for it). The “long-winded and challenging process to raise capital” inspired Drake and Ben Black to create RAISE Global, a community for emerging fund managers and the “forward-thinking LPs” who back them. (A decade later, several hundred emerging managers with AUM under $200m are on the platform) They've found the newest emerging managers are more diverse and geographically dispersed than Silicon valley, and more were able to crack the ceiling and raise larger $100m funds (although this is still a small % of the market, requiring partnership with larger funds at the late stage). ▶ And not a hugely surprising datapoint: A lot of action is in the sub $49 million range, where roughly 50% of emerging managers are raising. Theresa Sorrentino Hajer, Head of U.S. venture capital research at Cambridge Associates warns that past success isn't actually a strong indicator on it's own to assess emerging managers. We've had a valuation reset. And newer managers with investments during the 2019-2021 "party days", need to build relevant track record and play to their strengths. A lot of emerging managers are specializing (70% who applied for Raise had a thematic focus), and betting on getting in as early as possible in the startup's lifecycle (Raise: 31% at accelerator/ pre-seed stages, and 47% at seed stage). “Emerging managers have to compete on a different dimension,” Nick Moran from New Stack Ventures. You're no longer just dealing with capital. Emerging VC's need to be as innovative and nimble as the startups they invest in, having a unique thesis and insights. They also play a role at the top of the deal-flow funnel: helping larger firms find promising companies, so finding a thesis, sector or philosophy aligned partner at a larger firm is helpful. Onwards! #EmergingManager #Startups #VC

24

1 Comment

Fin Capital’s Fintech CEO Pulse Report is out! We surveyed over 50 CEOs and C-suite leaders of private companies from our portfolio and the broader fintech industry during June and July 2024 to get a quick pulse on what’s top of mind for fintech’s leaders. Here are some key takeaways: Optimism in the Air: More than 60% of CEOs reported being bullish or highly bullish on the fintech industry for the second half of 2024. Regulatory Changes on the Horizon: CEOs identified Cryptocurrency, Open Banking, and Buy Now Pay Later as the top three sectors likely to see increased regulation by the end of 2024. CEOs Want Business Development Support: Beyond capital and fundraising, business development support emerged as the top area where CEOs seek investor assistance.For more insights, including comments from my colleagues Ren Riley, Logan Allin, Matthew D. Mann, CFA, and Stephanie Perez, check out the full report here: https://lnkd.in/euHK8-9B

32

1 Comment

Rolling into another day of the Primary Summit. Hit me up if we should connect onsite. Kudos to the Primary Ventures team so far, as yesterday’s Pre-Seed Summit was on point. Mar Hershenson, Benjamin Sun, Chris Douvos, Zach Weinberg, and Graham Pingree all dropping helpful nuggets for fund managers. Some paraphrased highlights: - Chris Douvos (AHOY Capital) - Most fund decks are terrible. Start with your people (not your strategy) and know you have about 6 slides of his attention. - Zach Weinberg (Curie.Bio ) - beleives SF’s AI talent is a significant advantage over NY, wouldn’t build AI in NY. Also questions if VC exits can keep up with VC expansion (generally hilarious and smart Twitter follow) - Mar Hershenson (Pear VC) - VC is so much more competitive now. It’s not enough to be an ex-founder with a great network and domain expertise. Have a better “why you are different” or do something else! - Benjamin Sun (Primary Venture Partners)- still sees arbitrage in going long NY venture (vs. SF). Do the work to keep various influential networking nodes aware of what you’re doing and how you think.

50

5 Comments

Founders: Lets talk about “Happy Ears”. I’m sure you’ve heard the phrase “it’s not a yes until the money hits the bank.” During the fundraising process, it’s important to hear what’s being said vs what you may want to hear. One trick that I learned during Techstars was to ask clarifying questions. Yes, it can be uncomfortable but it’s necessary that you ask. For example: Investor: “I’m interested in investing $100k into your company.” Happy ears heard: “I’m going to invest $100k into your company.” But there’s a clarifying question you should ask: “if I send you the safe paperwork, this means you will sign and wire the $100k within the week?” The response you are trying to get to is clarity behind them wanting to invest. Do they want to see a lead? Are they waiting on another deal to close to give you the $100k? Are there milestones they want to see you hit first? This clarity helps you manage expectations on both sides and keeps you from being disappointed about something you heard with happy ears.👂🏻

72

6 Comments

Well-written and sourced article describing what's going in seed-stage venture market. At 9point8 Collective we tend to orbit the seed-stage (both ideating and developing companies to reach seed and helping post-seed companies refactor and scale in anticipation of A) and for many companies it's a critical inflection point which determines their long term success or failure. The main takeaways I was able to gather: 1️⃣ Many startups that raised seed rounds in 2021-2022 are struggling to secure Series A funding due to tighter market conditions and increased investor expectations. 2️⃣ Seed investors are becoming more cautious, leading to longer diligence processes and a preference for startups with strong traction or experienced founders. As a result, valuations have stayed relatively high even as deal flow reduces. 3️⃣ Startups are adopting various strategies to navigate this challenging environment, including cutting costs, raising bridge rounds or convertible notes, and M&A/acqui-hires. 4️⃣ Despite the challenges, there are opportunities for both startups and investors in this new landscape, particularly for those who can adapt to the changing market conditions. Investors are accumulating dry powder -- and with rates on the decline -- will be looking to deploy into companies with stronger fundamentals than their 2021-2022 counterparts.

4

Great time on the Embracing Erosion podcast w/Devon O'Rourke! We talked about: 🚀 How to scale a company from concept to 9-figure exit 🔄 How to break away from the traditional consulting model and apply product approaches ⏩ Why it’s important to iterate quickly and often with messaging 💸📈What signals are important to pay attention to when investing in startups and much more!

1

1 Comment

Wendy Xiao, Molly Alter, Aaron Liu, and I recently hosted a dinner with CMIO / CIOs from top NY health systems and execs from startups who are building solutions across the care delivery and back-office billing stack. A few takeaways: - Delivering value-based care at scale changes the incentives for health systems in such a way that they require unique point solutions that can help them triage and manage at-risk patients. - While scribing platforms are certainly powerful in the administrative burden they can take off of doctors, their full value may not be unleashed until they can convert notes into the appropriate fields / codes for billing. - More attention needs to be paid to social determinants of health. For example, certain types of new addiction treatment, like gambling, may soon be covered by insurance if data continues to show that there are serious negative health implications for people affected. Treatments like Ozempic are also showing promise in the field of addiction. In the coming years there will an increasing acknowledgment of how interconnected social factors and medical health are across all patient populations. If you’re a healthcare exec looking to learn more about what the next generation of healthcare IT startups are building, or a healthcare startup looking to get involved, please reach out. cc Northzone

46

4 Comments

I've seen as many founder breakups as failures to reach product market fit. We’ve talked a lot on First Funders about product-market fit. Still, in my conversation with Julie Lein and Clara Brenner of the Urban Innovation Fund, they reminded me of the importance of a cohesive team. Is there a fit between the co-founders? I've started calling this cofounder-to-cofounder fit. As early-stage investors, we often only meet the CEO Founder during our process and not the rest of the team. It's a delicate balance not to take too much of a team's time, but it's also critical to understand working dynamics. Think about the last time you evaluated visit cofounders of a company together. How did they interact? Did they agree on the big things? Did they seem to actually … like each other?! These are all key observations investors need to make so they can choose founders with rock-solid relationships – not just ones who have opposite skills. I've hosted founder dinners to allow me to get to know teams. Julie and Clara take the time to go to the startups' offices, which is a great option! What else are investors doing to understand team dynamics better while respecting the team's time? #founders #cofounders #investors #vc

46

1 Comment

Over the last two weeks, I attended the Equal Ventures Emerging Manager Circle Summit in NYC, as well as the RAISE Global summit and the Emergence Capital Seed fund Summit in SF, with leading LP's, emerging managers and established seed funds. All 3 were great events! Secondaries was a topic that came up on multiple panels given the liquidity crunch we are currently in as an industry. Rewind to 2019/2020/2021, the advice I predominantly heard from established GP's and LP's alike was that VC managers should hold their "winners" forever because there just aren't that many companies that end up mattering in a power law business like venture. While that may be generally true in order to generate a true outlier fund, I think the VC business model is shifting and certainly the LP mindset has shifted based on the panels I heard. Many of the top LP's that just a few years ago were telling GP's to hold their winners forever, were up on panels talking about the importance of pre-seed and seed managers navigating secondary opportunities in later stage rounds, sometimes as early as Series B rounds. Obviously a lot of factors go into these decisions such as where you are in the life of the fund, how the rest of the portfolio is performing and the performance of the underlying company in question. But it's been interesting to see this shift happen. What is driving it? ❄ Large M&A and the tech IPO market are both frozen, which is creating a liquidity crunch throughout the VC ecosystem. This will hopefully open up a in the next 12-24 months but it's creating a need for liquidity across the VC ecosystem right now 📉 At the same time, multiples on public SaaS companies are way down from the highs of 2019-2021 and likely not going back to those levels any time soon, which means the revenue bar to be a mega winner is higher. ⚡ Lastly, the impact of AI Agents lowering the friction to build products and do customer validation I think will increase company formation, which will likely create a dispersion of value creation and the number of early stage funds continues to grow as well. This means that the probability of being in a mega winner at pre-seed/seed for any single fund will likely be lower than it's ever been. Fairview Capital recently put out a great piece on this topic at https://lnkd.in/ewd7Q5XN I would be curious to hear from other LP's and pre-seed/seed stage GP's on how they are navigating and thinking about selling secondaries in later stage rounds. Portfolio construction and entry prices will matter a lot if selling secondaries becomes an increasingly popular strategy for pre-seed and seed managers. More on that in my next post.

46

WE DID IT! After 2 years of pushing through the biggest downturn in VC in decades, Matthew Stotts 🌐 and I made it to the finish line with Fund I! We couldn't have done this without One Small Planet (Will Peterffy and Jack Wielebinski 🙏), Regen Network and Regen Foundation (Austin Wade Smith Gregory Landua and Will Szal), and a dozen other family offices and angels who believed that we can build a nature-positive economy utilizing our eye for software and our history as founders from day 1 A shout out goes to all of our founders (only four announced today, but watch this space - there are multitudes!) who trusted us enough to give us a spot on their cap table for this 10-15 year journey. This is the best job in the world, and it's because we get to work with people like you who have weird ideas in the best possible way. Using Bitcoin as anchor base load to decarbonize residential housing in America's most expensive energy market? Make every complex supply chain legible to machines so we can find and eliminate deforestation in commodity supply chains? Build deeply liquid environmental asset markets to price ecosystem services, on a blockchain, that no one needs to know is a blockchain? I'm so excited to get to work on this stuff for the next 10-15 years minimum, and to see what we can accelerate with our tiny fund in the next 5-6 years as we approach 2030 Onward! https://lnkd.in/gy3B-DFe

571

118 Comments

I posted last week about the shift in sentiment from LP's regarding secondaries. It used to be that GP's were told to hold their winners forever but more recently a lot of LP's are recommending pre-seed & seed stage VC's get good at navigating secondary transactions as early as Series B rounds. Obviously a lot of factors go into these decisions such as where you are in the life of the fund, how the rest of the portfolio is performing and the performance of the underlying company in question. But in this new reality, entry price and ownership relative to fund size really matter in order to still generate top decile funds by selling into later stage rounds; and that tends to be at odds with many seed fund strategies I see out there today. According to Carta, the average seed round valuation is $15M and I see some seed funds doing seed deals at $20M - $30M valuations. Many seed funds between $40M - $75M in size (avg of $50M) write seed checks at $15M valuations and probably invest $1.5M into each company to get 10%. The portfolio construction in this scenario is probably 20-25 companies given the check size. Assuming 50% dilution (probably low), you need a company to get to a $1B valuation to return your fund and you have less shots on goal to do that at a time where I think the probability of hitting a winner at seed for any single seed fund is going to go down per my post last week. It also means the opportunities to sell secondaries in later rounds in order to drive meaningful DPI is harder because it likely won't get to that sort of valuation until Series C or later; and you probably don't want to consider selling until the position is worth even more than your entire fund. Alternatively, if you write a $1M check into a deal at a $8M valuation out of a $50M fund, you are getting 12.5% ownership and probably investing in more like 30-35 companies given the initial check size. Higher ownership and more shots on goal. Assuming 50% dilution again, you get there with a $800M valuation. At even lower valuations, $1B outcomes would return multiples on the fund and it really opens up the options when it comes to selling in secondaries in order to manufacture liquidity. Given the current dynamics in the market, I wonder if more funds will start to focus on sub $10M valuation rounds.

45

🚀 How do you get a pre-seed or seed round done *quickly* in NYC? ✅ Assemble a list of over 80 of the earliest-stage fund and angel investors in town ✅ Curate a dozen or so of them based on relevancy ✅ Break bread together. That's what nextNYC is doing with Checkwriters--and applications are OPEN. We're looking for pre-seed and seed NYC founders to pitch at our dinner next Wednesday night. The only criteria is that you have to have at least one *professional* investor committed to a currently open round--be it a fund, angel, scout, etc. 🗓 Applications are due *this Thursday*: https://lnkd.in/epJjny4P 🤝 Shoutout to the folks at Orrick Tech and Rho for helping to make this happen: Orrick is a tech-focused law firm passionate about helping entrepreneurs, innovators and investors push boundaries. Through our extensive client portfolio, deal volume, and relationships in the ecosystem, we provide commercial insight to each client’s strategy. From financing to protecting IP to retaining talent to advocating for innovation-friendly public policy, we offer a holistic solution across the tech & venture lifecycle. Rho is the business banking platform with everything founders need to manage their company cash and grow their business. See how they are supporting founders in NYC (https://lnkd.in/ef7uzDQv) – and earn rewards for switching your operating account to Rho.

55

7 Comments

What I love about our SPV model is the ability to hand-pick LPs that truly align with each investment. Our priority? Value-add LPs. These are the folks who’ve been there, done that. They’ve built within that category or industry, experienced the challenges, and achieved successful exits — or are actively building in the space. This is where they bring irreplaceable insight, specific expertise, and connections to help the company navigate what’s ahead. For us, these LPs come first. And this isn’t just about checks and quarterly updates. We introduce them as advisors, sometimes even board members, directly supporting the company’s journey outside of the SPV. It’s about professionalizing the company, connecting the dots, and preparing them for long-term success. They know the industry players, the talent, and the critical watchouts — invaluable knowledge from firsthand experience. The traditional approach of writing checks, skimming investor emails, and waiting for unicorn returns? That model works for some. But it’s not for us at this time. I believe every great company — even those that aren’t unicorns — deserves attention. These companies still drive economic growth, create jobs, and fuel innovation in their communities. Our model is about recognizing that value and actively supporting it.

7

2 Comments

I met Hersh Tapadia and Darrell "Jeremy" Freeman in late 2016 at NC IDEA LABS (formerly Groundwork Labs). We were a bunch of kids working on startups. We thought we had it figured out. You know the rest of that story....we had no clue! But Hersh and Jeremy did have it figured out. Not the specific thing they were working on. They pivoted a few times out of Groundwork Labs. But what they knew how to do as well as any founders was to be curious and listen to their customers. They WERE their customers. They were engineers building for engineers (leaders and teams). They were humble and knew what to ask. They were great at learning. Then they brought on Adam Dahlgren and the founding team felt complete. "Off to the races" means something different to every company. In Allstacks' case, it meant taking the disciplined, thoughtful, thorough approach to growth. And while the team is way more focused on executing for their customers than cheering about a funding announcement, it's also important that they do get their cheers. This is day 1 for these guys. They're building something incredibly big and incredibly impactful. And they're doing it the right way. And as a final side note, when I think of people I want in my corner - to confide in, to learn from, to grow with - I think of Hersh. He's a founder's founder. A CEO's CEO. And one heck of a guy.

8