The Emergence of Revenue-based Venture Capital

An interesting article on Entrepreneur magazine about the rise of revenue-based VCs, who are making a larger number of smaller bets based on the current revenue of the companies. They’re mostly targeting SaaS or similar industries with well-understood business models, where gaining a decent amount of revenue derisks most of the business and the rest is about having lots of capital to fund marketing as the company enters the growth phase. We’re starting to see a little bit of this thinking appear in New Zealand, which will mean more companies getting funding once they have shown that their business model is viable at a small scale.

Read more here: https://www.entrepreneur.com/article/340384

Why Raising Capital is Challenging

Over at the Sydney Morning Herald, Richard Dale and Adrian Bunter have written an op-ed about why companies find it difficult to secure angel investment. In short, founders are unprepared for the level of documentation and interrogation needed, and expect to secure funding faster than the angel process allows.

At Matū, we recognise that not all projects are equal and will do our best to support early-stage ventures (particularly those led by academic researchers) that may not have had any experience in capital raising. We also try to move a little faster than angel investment groups (although it doesn’t always happen). But the article provides a good summary and checklist of elements that have to be formed and produced in order to get a company through due diligence.

Read more here: https://www.smh.com.au/business/small-business/the-real-reason-you-re-not-getting-angel-investment-20190822-p52juu.html

Matū on Governance at Southern SaaS 2019

Our Managing Partner Greg Sitters has just given a presentation to a full house of 400 people on early-stage governance at Callaghan Innovation’s Southern SaaS conference. A hot topic, given that there were two times more questions than any other talk so far!

Alongside Angel Association of New Zealand colleagues Deb Hall and Suse Reynolds, Greg will also be presenting a longer presentation on Governance 101 for early-stage founders as part of the conference.

Engaging with the investment, commercialisation, and start-up community is an important part of values at Matū. Under the principle of mohiotanga, we want to help share our knowledge and grow the talent pool. After all, it will make our jobs easier in the long-run too!

See the Southern SaaS program here: https://www.eiseverywhere.com/website/3805/programme/

Series A Fundraising Checklist

Pete Flint from US seed-stage venture firm NfX has published a 13-point checklist of key proof points that firms should have when pitching for a Series A. Many of these items are arguably needed for any business pitching for funding at any time, but are must-haves for Series A. We see a lot of project ideas that are missing several of these items, and it makes it very easy for someone to criticise the project when something just isn’t there. Crossing off everything on the list means that the investors can properly engage with the team and actually understand the strength of the idea/company.

Read more here: https://www.nfx.com/post/fundraising-checklist-13-proof-points-series-a

Four Simple Pitch Tips

Melanie Perkins, CEO and co-founder of Australian unicorn Canva, has shared four pitch tips with Forbes. They’re surprisingly simple, but they carry a lot of truth with them and are key for any sort of presentation, whether you are pitching for millions in investment capital or engaging with public audiences.

Read more here: https://www.forbes.com/sites/carminegallo/2019/06/06/four-remarkably-simple-pitch-tips-from-an-entrepreneur-who-turned-her-idea-into-a-25b-unicorn

Both Sides of the Table – Governance for Early Stage Companies

Mark Suster from Upfront Ventures, an early-stage investment fund based in Los Angeles, has written an excellent series on how to run a governance board for an early-stage company. It’s great because it’s written for both management teams (i.e. founders and CEOs) as well as board members, and has a lot of honesty. It also serves to highlight why early-stage governance is so different to governance for later-stage established companies.

Read more here:
https://bothsidesofthetable.com/startup-boards-ee3ad0389040

11 Lessons from Angel Investing

VentureHacks and Spearhead have published a list of 11 important lessons to keep in mind for angel investing, and many of the same principles apply for anyone in the early-stage investment space. While not all the lessons apply directly for our fund, the first couple are particularly important – we have to make some difficult calls sometimes and say no to investment opportunities that look pretty good, but aren’t quite good enough. We don’t have as much luxury here in New Zealand to just sit around and wait for founders to contact us – we have to work hard on improving deal origination so that we can help create more opportunities for everyone.

Read more here:
https://venturehacks.com/articles/11-lessons

The Art of the M&A Exit

Over at Forbes, Alejandro Cremades interviews Duke Rohlen – you may not have heard of him, but it turns out he has successfully grown and exited four medtech companies for a total of over US$1 billion. Thinking about potential exit strategies from the very beginning is key, alongside building integrity and trust with all parties. The trick is that Rohlen puts the business model first, then the team, and the technology last – often the opposite of what a lot of entrepreneurs do.

Read more here:
https://www.forbes.com/sites/alejandrocremades/2019/04/09/this-entrepreneur-sold-4-companies-for-over-1-billion-following-these-3-steps

Product-Market Fit

In the perennial argument around whether the product is more important than the team, or the other way around, this article by Marc Andreesen (of Andreesen Horowitz fame) from 2007 makes a strong case for arguing that the product-market fit is the only thing that matters. This reorients the discussion towards developing and building a market – it doesn’t matter how cool or shiny the technology behind the product is, and a strong team can waste a lot of time, if they are pointed towards a market that simply doesn’t exist or does not want the product. Read the article here: http://web.stanford.edu/class/ee204/ProductMarketFit.html

Build First, or Validate First?

Ren Butler offers some analysis over at Startup Daily about one of the common questions for very early-stage start-ups – given constrained time and resources, do we build the technology and product first so we have something tangible, or do we go out and validate the market first so we know if there are customers? Validating the market can be a scary proposition for new entrepreneurs, but it’s a critical step for improving the likelihood of success in a venture, and for wooing investors. Read more here: https://www.startupdaily.net/2019/02/how-to-validate-your-idea-before-you-build-and-avoid-a-world-of-hurt/