Visible Blog

For the venture capital world, 2023 has largely been characterized by slowed fundraising activity. Over the year, we’ve seen thousands of founders utilize Visible to update investors, track key metrics, and manage their fundraising efforts. Learn more about how founders utilized Visible to strengthen relationships with current and potential investors during a challenging year below: Update Your Investors Over 672,000 investors received a Visible Update in 2023. The average Visible Update was sent to 56 investors — more than the number of current investors most founders have. We’ve seen founders leverage updates to nurture their potential investors to help strengthen relationships for when it is time to “actively” raise.” Check out a few Visible Update features we released in 2023 below: Build out updates using best practices from other founders with content blocks Add past updates to your Visible Data Room to help show potential investors your commitment to communication Turn your Visible Requests from investors into a shareable update with Visible AI Share Your Pitch Deck With 61,000+ Visible Deck views in 2023, we can learn how founders approach their pitch deck sharing. Like previous years, July and August saw pitch deck sharing slow down with activity picking up in October and November — surpassing activity from the spring and early 2023. We found that pitch decks with 12 or fewer slides receive the most activity/views from investors. Check out a few of the Visible Deck features we released in 2023 below: Add decks directly to your Visible Data Room Move investors down your fundraising funnel with call-to-actions Build Your Data Room We launched Visible Data Rooms in 2023! With data rooms, you can now manage all parts of your fundraising funnel with Visible. Find investors with Connect, our free investor database. Track your conversations in our Fundraising CRM. Share your pitch deck with potential investors. And communicate with current and potential investors with Updates. Over 30,000 files were uploaded to Visible Data Rooms in 2023. Learn more about data room improvements we released in 2023 below: Share your Visible Data Room via link Add a call-to-action to your Visible Data Room to help move investors down your funnel Preview documents and PDFs directly in data rooms Manage Your Fundraise Founders created 2,800+ Visible Pipelines in 2023. Like Decks, we saw the number of pipelines being created slow in the summer and pick back up in the fall — a promising sign for 2024. As fundraising has slowed in 2023, founders are utilizing Visible Pipelines to keep tabs on their ongoing conversations so they can raise faster when the time is right. Learn more about some of the Visible Pipeline features we released in 2023: Add multiple investors from Visible Connect, our free investor database, to your fundraising pipeline in one click. Better navigate between investors and stages with our new fundraising table and UI Automatically log conversations outside of Visible with BCC Track Key Metrics A core role of a startup founder is to track high-level metrics and share them with investors and stakeholders. For first-time founders, determining which metrics to track and who to share them with can be intimidating. To help, we analyzed our data to find what the most commonly tracked and shared metrics in Visible were in 2023: Revenue Cash Balance Runway Gross Profit FTE Headcount Check out some of the improvements we made to dashboards, metrics, and integrations in 2023 below: Display changes to key metrics with waterfall charts Liven up your charts with gradient charting options Improve dashboard sharing with our improved widget and dashboard design.

About Fuel Ventures Fuel Ventures is a UK-based venture capital firm founded by Mark Pearson in 2014. Today, Fuel Ventures manages over £350 million in assets and has a portfolio of over 160 investments. Fuel is considered one of the most active early and growth-stage investors in the UK. Fuel Ventures invests at the pre-seed and seed stage of globally scalable marketplaces, platforms, and SaaS companies. Fuel takes an active board role at all their companies and commits to supporting companies throughout their journeys. Learn more about Fuel Ventures. Fuel Ventures joined Visible in October of 2022. This case study includes feedback and insight from Oli Hammond and Mike Stevenson. Data disaggregation before Visible Before using Visible, Fuel Ventures' portfolio information was disaggregated in multiple Google solutions. Investment data was tracked in a master Google sheet file, qualitative information about companies was manually updated and saved to Google documents, and all of this information was stored in various Google Drive folders. As the Fuel Ventures portfolio grew, the master spreadsheet became harder to maintain. The team also found it cumbersome to have portfolio information stored in several different locations. “We felt we needed a solution where all portfolio information was stored in one place as Fuel’s single source of truth.” - Oli Hammond, Partner at Fuel Ventures Why Fuel Ventures chose Visible The Fuel Ventures team began researching the market for potential solutions that would meet their portfolio monitoring and reporting requirements. The Fuel Ventures' decision-making criteria included: A provider with a straightforward onboarding The ability to upload all of their historical data A solution that was at least 5x better (faster, more efficient, more accurate) than their current process Built-in flexibility to accommodate the details of their investments A solution with a justifiable return on investment The team at Fuel Ventures sat a tailored demo with Visible in the summer of 2022. Fuel chose Visible as the best solution to help their team better manage Fuel's portfolio and fund performance. Implementing Visible at Fuel Ventures Visible provided a hands-on onboarding experience to Fuel Ventures who needed to upload investment details for approximately 130 investments. “The Visible team was there to support us throughout the entire onboarding experience.” - Oli Hammond, Partner at Fuel Ventures When asked about what the learning curve was like for the team at Fuel Ventures, Oli Hammond commented, “It was easy. The team took to the platform really quickly.” How Fuel is using Visible today Adopting Visible significantly impacted the way Fuel Ventures monitors their portfolio companies. Visible provides the 20+ person team at Fuel with one centralized place for investment information, notes, and qualitative updates about portfolio companies. For Fuel Ventures, Visible’s investment tracking solution is especially beneficial because their team now has granular visibility into investments round by round and fund by fund which is something they had difficulty tracking in a master spreadsheet in the past. Visible also provides Fuel with a centralized place to store notes and company updates. This means the team at Fuel can now click into a company's profile on Visible and see a clear overview of initial investments, subsequent funding rounds, and narrative updates all in one place instead of having to dig through separate platforms. “Visible is our one source of truth for the wider team to find relevant company information instead of having to dig through various Google Drive folders.” - Oli Hammond, Partner Finally, the team at Fuel shared that Visible significantly improved the way they create bi-annual reporting for their Limited Partners. Minna from Fuel Ventures commented, “It’s now much easier to format the Tear Sheets we compile for our investor reporting. We really like that the Tear Sheets are automatically updated with live numbers instead of having to make updates in Word.” View more examples of tear sheets in Visible. Advice for other funds considering Visible Oli Hammond, Partner at Fuel shared "Visible is a great choice for funds who are looking to move away from fragmented systems and methodology (Word, Google Drive, spreadsheets) to one source of truth.”

In a world where technology evolves at a blistering pace, machine learning stands at the forefront, revolutionizing how we interact with the world around us. This article delves into the top 15 machine learning startups, each blazing a trail with innovative solutions and cutting-edge applications. These pioneers are not just crafting the future; they are actively redefining our present across diverse industries. From healthcare to finance, their impact is tangible, immediate, and profoundly transformative. Join us as we explore these groundbreaking ventures, showcasing the remarkable potential and far-reaching implications of machine learning in shaping our world. Related resource: 13 Generative AI Startups to Look out for Related resource: How AI Can Support Startups & Investors + VCs Investing in AI 1. Automata Automata, a startup focused on automating and optimizing business processes using machine learning, presents several interesting facets: Year Founded: 2015​​​​. Location: The company is based in London​​. Funding Amount/Type: Automata had raised $50 million in a Series B funding round​​. Funding Series: Their latest funding was a Series B round​​. Major Investors: The Series B funding round was led by Octopus Ventures, with participation from investors such as Hummingbird, Latitude Ventures, ABB Technology Ventures, Isomer Capital, In-Q-Tel, and others​​. Automata's role in the field of machine learning is particularly exciting due to its focus on automating entire lab processes, a significant advancement from its initial development of a robotic arm for handling individual tasks​​. This shift from providing robots for small, highly individual projects to automating complete workflows marks a significant step in streamlining complex processes, especially in the growing biotech and drug development sectors. The company's innovative approach in leveraging machine learning for automation demonstrates a scalable, impactful application of the technology, making it a standout in the field of machine learning. Automata's growth and expansion into the U.S. and wider European markets underscore the potential and applicability of its technologies in a global context. 2. Corti Corti, a Copenhagen-based startup specializing in AI applications for healthcare, offers a compelling example of innovation in the field of machine learning: Year Founded: 2016​​​​. Location: The startup is located in Copenhagen, Denmark​​​​. Funding Amount/Type: Corti has raised $60 million in its Series B funding round​​​​. Funding Series: The recent funding was a Series B round​​. Major Investors: The Series B investment was led by Prosus Ventures and Atomico, with participation from previous investors such as Eurazeo, EIFO, and Chr. Augustinus Fabrikker​​. Corti’s role in the machine learning domain is particularly notable for its focus on healthcare. The startup leverages AI to enhance the efficiency and accuracy of patient care. Their AI assistant can analyze patient consultations in real-time, significantly reducing administrative workload and improving the quality of patient interactions​​. This innovative approach to healthcare, utilizing real-time AI analysis, positions Corti as a pioneer in applying machine learning to improve healthcare outcomes. What makes Corti an exciting entity in the machine learning landscape is its potential to transform patient care. By integrating AI into healthcare interactions, Corti is not only streamlining complex workflows but also aiding clinicians in making more informed decisions, potentially leading to better patient outcomes. This combination of technology and healthcare demonstrates the vast potential of machine learning to make significant, positive impacts in critical sectors like healthcare. Corti's success and growth also highlight the increasing importance and applicability of AI in practical, high-stakes environments. 3. Flock Safety Flock Safety is an Atlanta-based startup that focuses on developing camera technology to enhance public safety: Year Founded: 2017​​. Location: The company is headquartered in Atlanta, Georgia, United States​​. Total Funding Amount: Flock Safety has raised a total of $380.6 million in funding over seven rounds​​. Funding Series: The latest funding round for Flock Safety was a Series E​​. Major Investors: Among its major investors are Tiger Global, 776, Spark Capital, Andreessen Horowitz, and Bedrock​​. Notably, a Series D funding round was led by Andreessen Horowitz, with participation from Meritech, Bedrock, Matrix Partners, and Initialized​​. Flock Safety is enhancing public safety by applying machine learning to advanced camera technology. Their systems, designed for crime prevention and investigation, automate the analysis of security footage to identify vehicles, track movements, and detect suspicious activities, significantly reducing manual monitoring effort. This innovative use of AI in public safety illustrates how machine learning can streamline critical workflows and contribute to societal well-being, making Flock Safety a notable innovator in the field. 4. UNISOC UNISOC, a prominent player in the semiconductor industry, offers several notable characteristics: Year Founded: April 2001​​. Location: Shanghai, China​​. Total Funding Amount: UNISOC has raised a total of $1.6 billion in funding across seven rounds​​​​. Funding Series: The latest funding round was a Series C, conducted on April 5, 2021​​. Major Investors: The major investors in UNISOC include Beijing Spreadtrum Investment, China National IC Industry Investment Fund (CICIIF or 'Big Fund'), and Intel (China). Other significant stakeholders are Shanghai IC Industry Investment Fund and China National Fund II​​​​​​. UNISOC primarily focuses on developing semiconductor technologies for mobile communications and the Internet of Things (IoT). While not directly involved in automating business processes through machine learning, UNISOC's chipsets play a crucial role in enabling various devices and applications that utilize machine learning algorithms. Their advanced chip designs, especially in the 5G and AI sectors, facilitate the efficient execution of AI tasks like image processing, voice recognition, and data analytics. This, in turn, indirectly supports the automation and optimization of numerous business processes across different industries. The significance of UNISOC in the field of machine learning lies in its foundational role in powering the hardware that drives AI applications. The company’s focus on IoT and mobile communication technologies is particularly relevant, as these areas are increasingly incorporating machine learning to enhance functionality and efficiency. By providing the essential components for smarter, connected devices, UNISOC is indirectly facilitating the integration of AI into everyday technology. This makes them a key enabler in the broader machine learning ecosystem, supporting the ongoing evolution and application of AI in various sectors. 5. Quantexa Quantexa specializes in developing advanced chipsets for mobile communications and IoT devices. Their technologies play a pivotal role in enabling machine learning applications across various industries, significantly contributing to the advancement of AI and IoT integration. Year Founded: 2016​​. Location: London, England​​. Total Funding Amount: Quantexa has raised a total of $370 million in funding​​. Funding Series and Amount: The company has undergone several funding rounds, including a Series E round in April 2023, raising $130 million, and a Series D round in July 2021, securing $150 million​​. Major Investors: Significant investors in Quantexa include Warburg Pincus, Dawn Capital, British Patient Capital, Evolution Equity Partners, HSBC, BNY Mellon, ABN AMRO, AlbionVC, and GIC​​​​​​​​. Quantexa significantly contributes to the machine learning ecosystem through its semiconductor technologies, primarily focused on mobile communications and IoT applications. While their primary role isn't directly in automating and optimizing business processes using machine learning, their impact in the field is noteworthy. UNISOC's chipsets power a wide array of devices, including smartphones and IoT devices, which increasingly employ machine learning algorithms for functions such as image processing, voice recognition, and data analytics. The company's innovative approach in chip design, particularly in the realms of 5G and AI, is vital for the advancement of efficient machine learning applications. Their developments in IoT technologies facilitate the integration of machine learning into various devices, indirectly aiding in the automation of business processes. UNISOC's global reach and influence in the semiconductor industry underscore their importance in supporting a wide range of AI-driven applications, making their contribution to the field of machine learning both significant and exciting. 6. Mistral AI Mistral AI, is a Paris-based startup specializing in generative AI models. Year Founded: 2023. Location: Paris, France​​. Total Funding Amount: Mistral AI has raised substantial funding in a short period, including $113 million in seed funding and approximately $415 million in a Series A round​​​​. Funding Series and Amount: The seed funding round, which raised $113 million, was led by Lightspeed Venture Partners. The Series A round, amounting to approximately $415 million, was led by Andreessen Horowitz (a16z) with participation from Lightspeed Venture Partners and other investors​​​​. Major Investors: Lightspeed Venture Partners, JCDecaux Holding, Exor Ventures, Sofina, Xavier Niel, Eric Schmidt, Rodolphe Saade, and Andreessen Horowitz​​​​. Mistral AI’s role in the machine learning domain revolves around developing new models of generative artificial intelligence for companies. This involves combining scientific excellence with an open-source approach and a socially responsible vision of technology. Their focus on generative AI signifies a cutting-edge approach to creating AI models that can generate novel content, ranging from text to images, based on learned data patterns. The excitement surrounding Mistral AI in the field of machine learning stems from its rapid growth and significant investment, highlighting the industry's confidence in their vision and capabilities. Their emphasis on generative AI places them at the forefront of one of the most dynamic and potentially transformative areas of AI research and application. By prioritizing open-source models and ethical considerations, Mistral AI stands out as not just a technological innovator but also as a company mindful of the broader implications of AI on society. This balance between technological advancement and social responsibility makes Mistral AI an exciting and important player in the evolving landscape of machine learning. 7. LabGenius LabGenius is a leading biopharmaceutical company known for its groundbreaking work in integrating machine learning into drug discovery and development. Utilizing their unique machine learning-driven evolution engine, EVA, they are revolutionizing the way therapeutic proteins are developed. Year Founded: 2012​​. Location: London​​, England. Total Funding Amount: Approximately $28.7 million​​. Funding Series and Amount: The most significant funding round was in October 2020, where they raised $25 million​​. Major Investors: Include Obvious Ventures, Kindred Capital, Atomico, and Acequia Capital​​. LabGenius, established in 2012, is a pioneering biopharmaceutical company. They stand out in the industry for their innovative use of a machine learning-driven evolution engine, EVA™, which merges cutting-edge technologies from machine learning, synthetic biology, and robotics. This integration is key to their role in automating and optimizing complex business processes, particularly in the biopharmaceutical domain. Their approach not only streamlines complex workflows but also significantly enhances the efficiency and effectiveness of drug discovery and development processes. The significance of LabGenius in the field of machine learning is underscored by their novel approach to combining human and machine intelligence for the accelerated discovery of advanced medicines. Their innovative strategies in managing complex data and processes demonstrate the transformative potential of machine learning in revolutionizing traditional industries, especially in the biopharmaceutical sector. With their substantial funding and support from notable investors, LabGenius is a prominent and exciting presence in both the biopharmaceutical and machine learning landscapes. 8. Recycleye Recycleye, a cutting-edge company specializing in artificial intelligence-driven waste robotics, is transforming the recycling industry with its innovative technology. Year Founded: 2019​​​​. Location: London, UK​​. Total Funding Amount: Approximately $26 million​​. Funding Series and Amount: Recycleye's significant funding round was a Series A in February 2023, where they raised $17 million​​​​. Major Investors: The Series A round was led by DCVC, with other key investors including Promus Ventures, Playfair Capital, MMC Ventures, Creator Fund, Atypical, and Seaya Andromeda​​​​​​. Recycleye plays a critical role in automating and optimizing business processes in the recycling sector through its use of machine learning. Their AI-powered waste-picking robots are designed to lower the cost of sorting materials, thereby making recycling processes more efficient and effective. This technology is not only innovative but also crucial in addressing the global challenge of waste management. What makes Recycleye particularly exciting in the field of machine learning is its application of AI in a practical, impactful way. Their approach to solving real-world problems, like improving recycling efficiency, demonstrates the tangible benefits of machine learning in industries beyond the traditional tech sphere. By leveraging AI to tackle environmental challenges, Recycleye is at the forefront of demonstrating how machine learning can be applied to create significant, positive changes in our world. 9. MedPay MedPay, a technology company specializing in artificial intelligence, is revolutionizing the healthcare payment landscape. Year Founded: 2020​​​​. Location: Bengaluru, Karnataka, India​​. Total Funding Amount: Approximately $1.85 - $1.9 million​​​​​​​​. Funding Series and Amount: MedPay's notable funding round was a Seed round on July 15, 2021, where they raised about $1.2 million​​​​​​. Major Investors: Investors include Sony Innovation Fund, Entrepreneur First, growX ventures, and others​​​​. MedPay's role in using machine learning to automate and optimize business processes is particularly evident in its development of India's largest Connected Care Network. This network connects offline primary care centers with online platforms and customers, effectively bridging the gap between digital and physical healthcare services. Over 40,000 pharmacies have joined MedPay's network, creating digital stores and enhancing the accessibility of healthcare services​​. The innovative approaches of MedPay in streamlining complex workflows are driven by their application programming interface (API), which integrates various healthcare stakeholders like doctors, pharmacies, diagnostic centers, and insurance companies into the digital economy. This integration is a significant step towards transforming the future of healthcare, making it more accessible and efficient​​. MedPay's focus on enhancing healthcare accessibility using machine learning makes it an exciting startup in the field. By leveraging AI to simplify and streamline healthcare transactions and interactions, they are addressing critical needs in the healthcare sector. This approach not only improves efficiency but also makes healthcare services more accessible, particularly in regions with a mix of digital and traditional healthcare practices. MedPay's innovation is a testament to the potential of machine learning in transforming essential services and industries. 10. RepVue RepVue is a groundbreaking company that operates a crowdsourced sales rating platform. Year Founded: 2018​​. Location: Chapel Hill, North Carolina​​​​. Total Funding Amount: Approximately $6 million over 2 rounds​​. Funding Series and Amount: The latest funding round was a Seed round in May 2022, raising $5 million. This round was led by S3 Ventures​​​​​​. Major Investors: S3 Ventures, TDF Ventures, Knoll Ventures, Alerion Ventures, GTMfund, and Triangle Tweener Fund​​​​. RepVue is revolutionizing the sales industry by automating and optimizing business processes through machine learning. Its platform crowdsources ratings for sales organizations and employs a unique algorithm to provide a comprehensive understanding of various sales roles. This approach offers sales professionals unparalleled transparency into the real-world conditions of selling for different organizations, allowing them to make well-informed career decisions​​. The platform's innovative approach includes gathering information from current sales employees on key categories such as sentiment scores, compensation data, quota goals, work culture, product scores, inbound lead flow, and diversity and inclusion. This data is then quantified and used to create detailed profiles for each company, helping sales professionals and organizations alike to better understand and navigate the sales industry landscape​​​​. What makes RepVue particularly exciting in the field of machine learning is its focus on the practical application of AI to solve real-world challenges in the sales domain. By aggregating and analyzing complex data sets, the company offers valuable insights that can significantly impact the efficiency and effectiveness of sales professionals and organizations. With around 4,500 sales organizations reviewed on its platform, RepVue is rapidly becoming an essential tool for both sales professionals seeking career opportunities and companies looking to attract top talent​​. 11. Apty Apty, founded in 2017, is known for its innovative digital adoption platform that enhances process compliance automation and offers a range of solutions for digital transformation, onboarding, training, and change management. The company's headquarters are located in Austin, Texas. Year Founded: 2017​​. Location: Austin, Texas, United States​​. Total Funding Amount: Approximately $12.9 million over 3 rounds​​. Funding Series and Amount: Apty secured $7.5 million in a Series A round on July 13, 2021​​​​. Major Investors: Some of the major investors include Reformation Partners, Companyon Ventures, and 645 Ventures​​​​. Apty's role in utilizing machine learning to automate and optimize business processes is evident in its digital adoption platform. This platform addresses the unique challenges enterprises face in synchronizing people, processes, and technology. With Apty, businesses can enhance employee engagement with their technology, enforce business process compliance, and accelerate digital transformation efforts​​. Their innovative approach includes providing on-screen guidance and on-the-job training content for faster software adoption, which reduces the dependency on IT resources. This functionality transforms any task into a self-guided wizard, guiding users step-by-step without the need for coding. Additionally, Apty enforces business process compliance with activity and goal-based tracking, ensuring that employees complete tasks accurately and reducing human error with added input field validations and automated process walkthroughs​​​​. 12. Streetbees Streetbees, established in 2014, is a London-based company renowned for its unique approach to understanding consumer behavior through machine learning and natural language processing. It operates as a human intelligence platform that collects and analyzes offline consumer behavior, offering insights that surpass traditional survey methods. Year Founded: 2014​​. Location: London, England​​. Total Funding Amount: Approximately $63.8 million over 8 rounds​​. Funding Series and Amount: The company raised $12 million in Series A funding and secured an additional $6.7 million as part of a Series B round​​​​​​. Major Investors: Investors include Future Fifty, TempoCap, and 645 Ventures​​. Streetbees' role in leveraging machine learning for automating and optimizing business processes is evident in its unique application of these technologies to decode consumer behavior. By using machine learning and natural language processing, Streetbees transforms raw, real-life data from consumers into actionable insights for brands. This approach allows for a deeper understanding of not just what consumers do, but also why they do it, uncovering the motivations, feelings, and desires that drive consumer behavior​​. What makes Streetbees particularly exciting in the machine learning field is its innovative method of combining the depth of qualitative research with the scale of quantitative analysis. This fusion enables a new level of understanding of consumer behavior, offering brands rich insights into various communities worldwide. Streetbees' commitment to enhancing its machine learning capabilities, as evidenced by its investment plans, indicates its dedication to continuously improving the accuracy and scope of its consumer insights. This focus on expanding data acquisition and machine learning capabilities signifies Streetbees' role as a frontrunner in transforming how businesses understand and interact with consumers globally​​. 13. SuperAnnotate SuperAnnotate, founded in 2018, is a leading developer of artificial intelligence-based annotation software designed to annotate, train, and automate machine learning pipelines. The company is headquartered in the United States and has been actively involved in enhancing the capabilities of AI and machine learning models through its innovative platform. Year Founded: 2018​​. Location: United States​​. Total Funding Amount: Approximately $17.5 million over 4 rounds​​. Funding Series and Amount: SuperAnnotate raised $14.5 million in its Series A funding round​​​​. Major Investors: The Series A round was led by Base10 Partners, with participation from Point Nine Capital, Runa Capital, Fathom Capital, Plug and Play Ventures, Berkeley SkyDeck Fund, and Seaside Startup Holding​​​​. SuperAnnotate plays a crucial role in automating and optimizing business processes using machine learning by providing a platform that simplifies the complex task of image annotation. This platform serves as a bridge between the world of raw visual data and the refined needs of AI and machine learning models. By meticulously crafting unstructured visual data into annotated information, SuperAnnotate enables the extraction of advanced AI insights from imagery​​. The company's innovative approach includes precision-crafted annotation tools and AI-assisted labeling. These features not only streamline the annotation process but also enhance it by deciphering complex patterns within images and suggesting labels that resonate with the essence of the visual data. Additionally, SuperAnnotate fosters a collaborative environment where team members' inputs combine to create a unified annotated dataset, demonstrating the power of teamwork and shared vision. The seamless integration of SuperAnnotate with machine learning models allows for the meticulous refinement of annotated data, fine-tuned to meet the advanced requirements of AI systems​​. SuperAnnotate's focus on precision and its ability to transform the annotator’s vision into digital reality make it an exciting startup in the field of machine learning. The company's dedication to enhancing the capabilities of AI and machine learning models through advanced annotation tools and collaborative efforts positions it as a key player in the evolution of AI technologies. This commitment to innovation and quality in data preparation for AI systems highlights SuperAnnotate's pivotal role in advancing the field of machine learning. 14. Logically Logically is a British multinational technology startup specializing in analyzing and combating disinformation. Year founded: 2017 Location: Brighouse, England, with offices in London, Mysore, Bangalore, and Virginia Total Funding Amount: $36.7 million Funding Series and Amount: $7 million in a 2019 seed round, €2.77 million in 2020 Major Investors: XTX Ventures and Amazon Alexa Fund Logically plays a significant role in automating and optimizing business processes through machine learning. Their innovative approaches are pivotal in streamlining complex workflows, particularly in the challenging arena of identifying and countering misinformation. This focus is particularly exciting in the machine learning field, as it represents a unique application of technology to address a pressing social issue—ensuring the integrity and trustworthiness of information in the digital age​ 15. Wefarm Wefarm is an agri-tech startup that provides a peer-to-peer networking platform for smallholder farmers, utilizing machine learning technology to connect farmers, even without internet access. Year founded: 2015 Total Funding Amount: $32 million Funding Series and Amount: Raised $11 million in a Series A round on March 9, 2021 Major Investors: True Ventures and LocalGlobe Wefarm's role in using machine learning to automate and optimize business processes is highly innovative, particularly in the agricultural sector. Their approach to connecting small-scale farmers globally through a peer-to-peer network is a groundbreaking application of technology. This allows farmers to share knowledge, access resources, and engage in commerce even in areas without internet connectivity. The startup's emphasis on empowering smallholder farmers through technology makes it a notable and exciting entity in the field of machine learning, as it addresses crucial issues in global agriculture and supports sustainable farming practices​ Find Machine Learning Investors With Visible Visible helps founders connect with investors using our connect investor database, find VCs specifically investing in web3 here. Related resource: 10+ Founder Friendly Venture Capital Firms Investing in Startups For machine learning startups, securing the right investors is critical as it goes beyond mere funding. These investors bring specialized expertise and strategic insights specific to the AI and machine learning sector and their guidance is invaluable in navigating the unique challenges and opportunities within the space. Use Visible to manage every part of your fundraising funnel with investor updates, fundraising pipelines, pitch deck sharing, and data rooms. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days.

Visible now lets investors add conditional blocks to a Request. This equips investors to build even more founder-friendly data Requests by only asking for relevant details from companies that meet certain conditions. What are conditional blocks? Conditional blocks are displayed only in a Request when a company meets predefined criteria (or condition) set by an investor. This way investors can keep Requests sent to portfolio companies as concise as possible. Related resource: What metrics should I be collecting from my portfolio companies? Examples of using conditional blocks in a Request An example of when an investor might add a conditional block to a Request is when an investor is collecting information related to companies' recent fundraising. In the example below an investor is asking for additional fundraising details based on the condition that the company is actively fundraising. By using a conditional block, companies who are not fundraising will not be asked questions that are not relevant to them. Over 350+ VCs use Visible to streamline their portfolio monitoring and reporting.

About Novel Novel is a Los Angeles-based software startup led by Joe DeWulf. Novel helps e-commerce brands easily embed shoppable short-form video content from social platforms like TikTok and Instagram on their websites. The result is an increase in the website visit duration and a 20%+ increase in webpage revenue for their customers. Joe pivoted the company towards the end of 2022 and officially launched Novel in January 2023. The company is demonstrating exciting traction with the number of influenced sales for their customers growing from one million per month in September to over five million influenced sales in November. Novel has been a Visible user since 2022 and during that time Joe has grown his engaged investor network from 100 to 500 investors and keeps them up to date using Visible. Cumbersome investor management in Excel Before finding Visible, Joe was tracking investor contacts in Excel documents which he noted was very cumbersome. He would manually keep investor records up to date and track basic information like ‘interested’ or ‘not interested’. Then Joe would send out one standardized email with his list of investors in BCC. This non-tailored approach wasn’t ideal because all investors received the same content even if their interests and characteristics varied. There was also no way to track open or engagement rates with the email. Joe thought there had to be an easier way to keep his investor contacts more organized in different lists so he could tailor his communications and went searching for a fundraising CRM for startups. Leveraging Visible to send regular updates to investors Joe’s primary use case when he joined Visible was to start sending out regular, professional investor updates to current and potential investors to increase awareness about their company’s growth and fundraising journey. The first update was sent on Feb 15, 2022 to 104 people and had an open rate of 78%. The content of the first update included: Business timeline Company overview & product in development Highlights Lowlights Asks Product By using Visible’s Connect Database, asking for investor introductions, and organically growing his network, Joe has grown his list of engaged current and potential investors to over 500+ people that he keeps up to date with Visible. Managing fundraising pipelines In addition to being able to more easily send out regular communication to investors using Visible, Joe is also able to more strategically manage potential investors using Visible’s fundraising pipeline. Joe commented that he’s now able to more easily keep track of multiple points of contact at an investment firm, typical check size, whether they are a lead or not. These criteria help determine whether the investor is a good fit before reaching out to the investor. Novel has multiple fundraising pipelines in Visible which mirrors the fluid approach required to raising capital in today’s highly competitive fundraising environment. Joe started with a pipeline targeting traditional seed-stage VCs and then widened the approach to also targeting high-net-worth individuals as well as investors who back companies at an even earlier stage. Joe commented that it was important to be able to quickly adjust his pipeline after paying attention to signals he was getting from investors that the prerequisites towards raising a seed round have changed. Joe shared some advice for founders currently looking to fundraise -- “You need to be able to adapt, do research, create new contacts, and new pipelines, and manage them appropriately.” The flexibility built into Visible’s fundraising pipelines lets startups quickly adapt to the feedback they get from the market and adjust their fundraising strategy accordingly. Making an impression with professional deck-sharing solutions Novel also utilizes Visible’s deck-sharing solution to socialize their company with potential investors. Joe said the deck-sharing solution is a major upgrade from his previous method of just sending a PDF because now he gets notified when investors are viewing the deck. He can also tell when the deck has been sent to other contacts and can understand which investors are spending the most time reviewing the deck. Novel hosts multiple versions of their deck on Visible including a short version to pique the interest of investors with the goal of them booking a call and a longer more detailed version after he’s had initial conversations with investors. Joe recently shared a popular LinkedIn post and in response was getting notifications that investors were going back and reviewing a pitch deck he had shared months previously. Novel conclusions Novel replaced disorganized Excel spreadsheets and lackluster investor communications with easy-to-use investor relations solutions designed specifically for founders. Today Novel uses Visible to keep its network of over 500 investors up to date about their company's traction and fundraising journey. Take the next steps with Visible Visible supports thousands of founders track key metrics, update investors, and manage their fundraising process from one platform. Start your 14-day free trial.

What's new The investment overview table on portfolio company profiles is now more comprehensive. In addition to portfolio data collection tools, Visible also empowers VC firms with a source of truth for their portfolio investment records. Visible's investment data solution is more accessible and easy to digest than the status quo Excel file master sheet that many firms rely on... but don't really trust. With this recent update to our investment data tracking solution, we've made the overview table on companies' profiles more comprehensive so you can see the history of changes to fair market values and exits all in one view. Previously changes to fair market value were handled in a separate window which required users to take additional steps to make edits. What's included in a portfolio companies investment table overview The following details are included in a companies investment table overview: Direct investment details Visible supports the following investment types Equity, SAFE, Convertible Note, Debt, Token, and other Follow on investment details Visible lets investors track rounds even if they do not participate Changes to fair market value Visible lets users document the FMV justification, notes, and who it was approved by Exits Visible empowers investors to keep track of exit details which keeps their fund metrics up-to-date and accurate Related resource: VC Fund Performance Metrics 101 (and why they matter to LPs) Learn more about Visible's investment data tracking capabilities by meeting with our team.

15 VC Firms Investing in Web3 Companies In the evolving landscape of the internet, Web3 stands out as the next significant leap, offering a decentralized, blockchain-powered framework. Coined by Ethereum's co-founder, Gavin Wood, in 2014, Web3 embodies a trustless, permissionless internet that fundamentally alters digital interactions and transactions​​. This transformational technology has captured the attention of investors globally, as it heralds a new era of internet use where users regain control over their data and digital identities. For investors, Web3 companies represent a frontier in technological innovation, combining the promise of high-growth potential with the opportunity to shape the future of online experiences. Below we highlight 15 leading VC firms that are actively investing in this exciting new sector. Related Resource: 13 Generative AI Startups to Look out for 1. a16z/ Andreessen Horowitz Location: Menlo Park, California, United States About: Andreessen Horowitz was established in June 2009 by entrepreneurs and engineers Marc Andreessen and Ben Horowitz, based on their vision for a new, modern VC firm designed to support today’s entrepreneurs. Andreessen and Horowitz have a track record of investing in, building and scaling highly successful businesses. Thesis: Historically, new models of computing have tended to emerge every 10–15 years: mainframes in the 60s, PCs in the late 70s, the internet in the early 90s, and smartphones in the late 2000s. Each computing model enabled new classes of applications that built on the unique strengths of the platform. For example, smartphones were the first truly personal computers with built-in sensors like GPS and high-resolution cameras. Applications like Instagram, Snapchat, and Uber/Lyft took advantage of these unique capabilities and are now used by billions of people. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: Dapper OpenSea Ripple 2. Sequoia Capital Location: Menlo Park, California, United States About: Sequoia is a VC firm focused on energy, financial, enterprise, healthcare, internet, and mobile startups. Thesis: We partner early. We’re comfortable with the rough imperfection of a new venture. We help founders from day zero, when the DNA of their businesses first takes shape. Investment Stages: Seed, Series A, Series B, Growth Recent Investments: Polygon Binance Bitmain 3. Tiger Global Location: New York, New York, United States About: Tiger Global Management is an investment firm that deploys capital globally in both public and private markets. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: PDAX | Philippine Digital Asset Exchange Devron Novi Connect Related Resource: 12 New York City Angel Investors to Maximize Your Funding Potential 4. Coinbase Ventures Location: San Francisco, California, United States About: Coinbase Ventures is an investment arm of Coinbase that aims to invest in early-stage cryptocurrency and blockchain startups. Thesis: At Coinbase, we’re committed to creating an open financial system for the world. We can’t do it alone, and we’re eagerly rooting for the brightest minds in the crypto ecosystem to build empowering products for everyone. We provide financing to promising early stage companies that have the teams and ideas that can move the space forward in a positive, meaningful way. Investment Stages: Pre-Seed, Seed, Series A, Series B Recent Investments: Compound BlockFi Dharma 5. Paradigm Location: San Francisco, California, United States About: Paradigm primarily invests in crypto-assets and businesses from the earliest stages of idea formation through to maturity. Thesis: Paradigm is an investment firm focused on supporting the great crypto/Web3 companies and protocols of tomorrow. Our approach is flexible, long term, multi-stage, and global. We often get involved at the earliest stages of formation and support our portfolio with additional capital over time. We take a deeply hands-on approach to help projects reach their full potential, from the technical (mechanism design, smart contract security, engineering) to the operational (recruiting, regulatory strategy). Investment Stages: Pre-Seed, Seed, Series A, Series B, Series C, Growth Recent Investments: Chainalysis matrixport Fireblocks 6. Pantera Capital Location: Menlo Park, California About: Pantera Capital is the first institutional investment firm focused exclusively on bitcoin, other digital currencies, and companies in the blockchain tech ecosystem. Investment Stages: Seed, Series A, Pre-Seed, Early Stage, Series B, Series C, Growth Recent Investments: Ancient8 Stader Labs Offchain Labs 7. Ribbit Capital Location: Palo Alto, California, United States About: Ribbit Capital is a Silicon Valley-based venture capital firm that invests globally in unique individuals and brands who aim to disrupt the financial services industry. Founded in 2012 by Meyer “Micky” Malka, Ribbit believes the category is profoundly under-innovated and intends to support entrepreneurs who have already launched the businesses of the future. Ribbit has raised an inaugural $100M fund that will be aimed at driving innovation in lending, payments, insurance, accounting, tax preparation and personal financial management. Ribbit targets disruptive, early stage companies that leverage technology to reimagine and reinvent what financial services can be for people and businesses. The firm will mainly focus on investments in the U.S., Canada, Brazil, the United Kingdom, Germany, Italy, Spain, South Africa and Turkey. Investment Stages: Seed, Series A, Series B, Series C, Growth Recent Investments: Genesis Digital Assets Kavak Chipper Cash Related Resource: 8 Active Venture Capital Firms in Germany 8. Blockchain Capital Location: San Francisco, California, United States About: Blockchain Capital is a pioneer and the premier venture capital firm investing in Blockchain enabled technology companies. Investment Stages: Seed, Series A, Series B Recent Investments: Abra Securitize Anchorage 9. Digital Currency Group Location: New York City, New York, United States About: At Digital Currency Group, we build and support bitcoin and blockchain companies by leveraging our insights, network, and access to capital. Thesis: We invest in companies that are accelerating the creation and adoption of a better financial system using blockchain technology and cryptocurrency Investment Stages: Seed, Series A, Series B Recent Investments: Trust Machines Livepeer Elliptic 10. DWF Labs Location: Singapore About: DWF Labs is the global digital asset market maker and multi-stage web3 investment firm, one of the world's largest high-frequency cryptocurrency trading entities, which trades spot and derivatives markets on over 60 top exchanges. Investment Stages: Early Stage Venture, Initial Coin Offering, Late Stage Venture, Non Equity Assistance, Secondary Market, Seed. Recent investments: TRON Algorand Foundation Conflux 11. CMT Digital Location: Chicago, Illinois. About: CMT Digital is a venture capital firm engaging in the crypto asset and Blockchain technology industry. The firm focuses on asset trading, blockchain technology investments, and legal and policy. Investment Stages: Pre-Seed Recent investments: CFX Labs ZetaChain Trident Digital Group 12. NGC Ventures Location: Singapore About: NGC Ventures invests in early stage, web 3.0 infrastructure startups and projects. We identify projects with innovative ideas to today’s blockchain problems and work with them from ideation to strategy and market adoption. Thesis: We identify projects with disruptive innovation, aiming to solve problems with solutions that are characterized by simplicity, cost affordability, speed, uniqueness and a compelling product market fit. Investment Stages: Seed, Series A Recent investments: Polybase Smooth Labs Chainsafe 13. Bixin Ventures Location: Beijing, Chaoyang About: Bixin Ventures invests in early-stage infrastructure projects that cultivate and facilitate mass adoption of open finance through permissionless and decentralized networks. Thesis: Bixin Ventures’ mission is to invest in and build crucial infrastructure that enables the future of open finance through permissionless and decentralized networks. Our investment team works alongside founders to provide guidance and expertise for growth in Asia. These actions reflect our priority to transform open finance into a truly global ecosystem. Investment Stages: Pre-Seed, Seed Recent investments: Sei Earn Network zCloak Network 14. Spartan Group Location: Singapore and Hong Kong. About: Founded in 2017, Spartan Group is a leading player in the Web3 space. We are one of the most active venture investors and have backed some of the leading crypto companies and networks. We are also a leader in Web3 M&A deals and capital raises, leveraging our track record of working with world-class teams, deep expertise of the crypto industry, and unparalleled network to create collective value with exceptional founders. Investment Stages: Seed Recent investments: Wind Brine Fi DFlow 15. Alchemy Ventures Location: San Francisco, California About: Alchemy is a developer platform that empowers companies to build scalable and reliable decentralized applications without the hassle of managing blockchain infrastructure in-house. It is currently faster, more reliable, and more scalable than any other existing solution, and is incredibly easy to integrate! Thesis: At Alchemy, our mission is to provide developers with the fundamental building blocks they need to create the future of technology. Through Alchemy Ventures, we'll be accelerating this mission by dedicating financing and resources to the most promising teams growing the Web3 ecosystem. Investment Stages: Pre-Seed, Seed, Series A, Series B, Series C Recent investments: Acctual Bastion Unstoppable Domains Web3 Resources Web3 Report Q3 2021 – ConsenSys: The DeFi data, context, NFTs, tools, and trends that defined Web3 in Summer 2021. Coinbase Cloud is announcing a community for Web3 developers. Their forum for developers is live, searchable, and indexable. The Architecture of a Web 3.0 application ​​WEB2 vs WEB3 Twitter thread on Why Web3 Matters and What’s Next in Web3 Start Your Next Round with Visible These firms are not only financing the future of the internet but are also shaping the landscape of digital innovation. As the Web3 ecosystem continues to grow, staying on top of your business and connecting is key. Combine qualified investors from Visible Connect with your own investor lists to share targeted Updates, decks, and dashboards. Check out all our web3 investors here. After finding the right Investor you can create a personalized investor database with Visible. Combine qualified investors from Visible Connect with your own investor lists to share targeted Updates, decks, and dashboards. Start your free trial here. To help craft that first email check out 5 Strategies for Cold Emailing Potential. Related resource: 14 Gaming and Esports Investors You Should Know Related Resource: 14 Venture Capital Firms in Silicon Valley Driving Startup Growth Related Resource: 10 Venture Capital Firms in Canada Leading the Future of Innovation Related Resource: 7 Prominent Venture Capital Firms in Brazil

This year Visible made it even easier for investors to collect important information from their portfolio companies, transform it into meaningful insights, and share engaging updates with their teams and stakeholders. 2023 by the numbers 8k+ - The number of portfolio companies actively monitored on Visible 92k+ - The number of reminder emails investors didn't have to send 12k+ - The number of LP Updates sent to investors Check out Visible's highlighted 2023 product updates below. Updates to getting data into Visible Over 350+ VC funds are using Visible to streamline the way they collect and centralize data from their portfolio companies. Here's how the recent product updates make this process even easier. Automatically import KPI data with Visible’s Portfolio metric import tool. (Learn more) Request information from portfolio companies based on conditional logic. (Learn more) Easily collect 6 periods of historical and forecast data from your companies. (Learn more) Schedule a One-time Request to collect any data on a one-off basis. (Learn more) Ask for property information in Requests to keep company profiles up to date. (Learn more) Updates to transforming data into meaningful insights To get the most value out of portfolio data, investors need tools that make it easy to transform the data into portfolio intelligence. Visible's data analysis tools help investors unlock insights to improve the way they provide support and inform investment decisions. Compare performance across your portfolio with Portfolio metric dashboards. (Learn more) Customize and scale your LP reporting with Tear sheets. (Learn more) Slice and dice portfolio data with Segment metrics. (Learn more) Save time by applying a Dashboard template to all your companies. (Learn more) Updates to communicating portfolio information with stakeholders The most valuable types of insights are the ones that are easiest to communicate and share with others. Keep reading to learn how Visible made it even easier for investors to keep key stakeholders up to date. Integrate qualitative responses from companies directly into your Tear Sheets and Dashboards. Learn more. Track, visualize, and share 25+ fund metrics including IRR, MOIC, TVPI, DPI and more. Learn more. Portfolio companies can turn responses to Requests into narrative updates using Visible AI. Learn more. Join a community of over 350+ VCs streamlining their portfolio monitoring and reporting with Visible.

There are not many people who have been in the role of a startup founder. For many startup founders, this means taking on new roles and responsibilities that they might not have experienced before. When facing these challenges, it helps to have someone guide you along the way — this can be an investor, peer, mentor, or someone else with experience. Soliciting feedback from the investors around you is a great way to tap into their network and experience to keep moving forward. Investors typically have had experience as operators themselves or the other founders in their portfolio. Understanding the Value of Investor Feedback As Seth Godin wrote in Beware of Experience Asymmetry, “There are things you’re going to do just once… In these situations, the institutions and professionals you’re dealing with have significantly more experience than you do…In these asymmetric situations, it’s unlikely that you’re going to outsmart the experienced folks who have seen it all before. It’s unlikely that you’ll outlast them either. When you have to walk into one of these events, it pays to hire a local guide. Someone who knows as much as the other folks do, but who works for you instead.” Many of the roles you face as a founder can fall into this bucket — raising capital, going through a merger or acquisition, going through legal counsel, etc. When facing these new roles and challenges, it often helps to find someone around you who does have experience. If you have investors, this can typically be a great place to start. Many investors have experience as operators but if they don’t, they typically have a large network of founders and other investors. This means that they’ve likely seen the challenges you’re facing, directly or not, before. Why Does Investor Feedback Matter? As we mentioned above, investors typically have experiences and a network that will lend useful feedback when it comes to fundraising, hiring, company strategy, etc. Related Resource: How to Build Trust Through Investor Feedback Investor feedback can be particularly important when it comes to raising venture capital. At the end of the day, you are pitching investors so welcoming feedback can be a great way to tweak your pitch for future investors. However, just because an investor offers feedback does not mean it is right for your business. Remember that you know more about your business than any investor so be critical about what feedback you put to use. Core Principles for Constructive Responses As we mentioned above, not all feedback will be relevant to your business. However, welcoming a conversation and hearing out their point is a great way to strengthen your investor relationships. Check out a few key principles for constructive responses to investor feedback below: Active listening If you are going to solicit feedback from an investor it is important to be respectful and actively listen. This includes hearing out what they have to say, even if you do not agree, and asking follow-up questions as you see fit. Reflecting and analyzing Just because an investor offers feedback does not mean you need to take it. At the end of the day, you know your business the best. It is important to reflect and analyze the feedback you receive. Seeking clarification Instead of assuming feedback means one thing it is important to seek clarification if there is any confusion. This will not only help you get to the bottom of their suggestion but will demonstrate to them that you are taking their feedback and time seriously. Collaborative problem solving If you are seeking feedback from an investor it should be someone you trust and value. By them offering feedback it is an open door to further the conversation and collaborate on the problem you are solving. This can not only lead to a better outcome but a strengthened relationship for future conversations. 5 Strategic Ways to Collect Investor Feedback Write a transition paragraph that introduces the next section. Feel free to add/remove/adjust the below techniques for gathering feedback 1. One-on-one meetings One-on-one meetings are likely reserved for investors with whom you have existing relationships. This means that they likely have some familiarity with your business and will be able to offer sound feedback. Advantages No bias from other investors or people in a meeting. Make specific asks based on their own skillset/experience. More personal and genuine feedback. Related Resource: The Complete Guide to Investor Reporting and Updates 2. Pitching and Events Pitching inventors or attending events can be a great way to get feedback from investors who are outside of your network. While they might be new to your business they can offer valuable feedback on how outsiders view your business and your pitch. This will allow you to tweak and improve your communication for future pitches. Advantages Receive feedback based on your pitch and presentation. Pitch feedback will help you improve your pitch for future meetings. Investors you are pitching are likely new to you and can offer a new perspective. 3. Investor Updates Regular investor updates are a great way to get into a rhythm of regularly asking your network of investors for feedback. This will not only allow you to solicit feedback but will help you strengthen relationships and become top of mind with your current and friendly investors. Advantages You can be targeted in asking for what areas you are asking for feedback. Anyone receiving your investor updates is likely invested in the success of your business and will offer honest feedback. You can stay top of mind with investors by asking for honest feedback. Related Resource: How To Write the Perfect Investor Update (Tips and Templates) 4. Board Meetings Board meetings are an important tool for startup founders. This is your chance to dig into several problems your business is facing and dig into them with your most trusted partners. Board members should know your business well and should offer pointed feedback that is worth hearing out. Advantages Board members are the most invested in the success of your business and will offer feedback that is best for the business. Board members know your business well and can offer feedback on factors specific to your business. You can set the agenda and lead the conversation and areas you need feedback at a board meeting. 5. Email & Phone Communication Email or phone communication is a great way to get real-time feedback and suggestions. This is typically less formal and allows investors to share honest and raw feedback that will lead to further conversation and collaboration. Advantages Someone you are willing to email/call is likely someone you trust/have a good relationship with. You can receive honest and real-time feedback when working with someone directly. This leads to easier conversation and digging deeper into the problem you are facing. Find Out How Visible Can Help You Connect With the Right Investors Visible is your hub to improve investor relationships. From sending investor updates to sharing a pitch deck to monitoring ongoing investor conversations — we’ve got you covered. Get started with Visible and give it a free try for 14 days here.

In today's rapidly evolving digital landscape, Artificial Intelligence (AI) stands out as a game-changer, revolutionizing industries and redefining the boundaries of technological capabilities. This article focuses on 20 trailblazing AI startups that are not just riding the wave of change but actively shaping it. From enhancing healthcare diagnostics to reimagining transportation and elevating customer experiences, these startups illustrate the vast potential of AI in crafting the future. Whether you're a founder, entrepreneur, or simply an enthusiast of cutting-edge technology, this article is a must-read to understand the profound impact of AI and how it's paving the way for groundbreaking innovations. Prepare to be inspired and informed about the transformative nature of AI and its pivotal role in driving the next era of technological advancement. How AI Impacts the Tech Landscape Artificial Intelligence (AI) technology is profoundly reshaping the modern world, representing a fundamental shift in how technology is developed and applied across various sectors. For founders and entrepreneurs, understanding this shift is especially crucial. Unlike fleeting tech trends, AI is a paradigm shift in computing, offering unprecedented capabilities in data processing, pattern recognition, and decision-making. Its deep learning algorithms can analyze vast datasets, outperforming traditional methods in accuracy and efficiency. This isn't just an improvement over existing technology; it's a complete overhaul of how we approach problems, offering solutions that were previously unimaginable. AI's versatility allows it to be integrated into virtually any sector. In healthcare, AI-driven diagnostics and personalized medicine are revolutionizing patient care. In finance, AI algorithms are used for risk assessment, fraud detection, and automated trading. The retail sector uses AI for personalized customer experiences and supply chain optimization. In manufacturing, AI enhances predictive maintenance and optimizes production processes. Even creative industries are leveraging AI for design, content creation, and more. Startups are at the forefront of AI innovation for several reasons: Agility and Specialization: Unlike larger corporations, startups can pivot quickly and focus on niche areas, driving innovation in specialized AI applications. Cutting-edge Research: Many AI startups collaborate with academic institutions, staying at the forefront of AI research and development. Venture Capital Interest: The transformative potential of AI has attracted substantial venture capital, providing the necessary funding for research and development. Talent Attraction: Startups often attract top talent interested in working on challenging and innovative AI projects. Transformative Nature of AI Companies: AI companies are not just improving existing products and services; they are creating entirely new categories of solutions. For instance, AI in transportation isn't just about making better cars; it's about reimagining transportation with autonomous vehicles. AI in healthcare isn't just about better diagnostic tools; it's about predicting diseases before they manifest. For founders, the key takeaway is that AI is not a peripheral technology to be adopted as an afterthought. It's a central driver of innovation and competitive advantage in the 21st century. Embracing AI can lead to the creation of novel products and services, opening up new markets and opportunities. The challenge for startups is not just to adopt AI but to thoroughly understand its transformative potential and leverage it to create solutions that address complex problems in novel ways. Related resource: How AI Can Support Startups & Investors + VCs Investing in AI 20 AI Startups You Don’t Want To Miss With AI reshaping industries and creating new possibilities, there are numerous startups leading this technological revolution. These companies are at the forefront of AI innovation, offering unique solutions and pioneering advancements that are setting new standards in the tech world and transforming how we work. 1. Uizard Uizard leverages AI to revolutionize how people build apps and websites. It stands out as a user-friendly collaborative design and prototyping tool, integrating machine learning and computer vision. This tool is specially tailored for non-designers, facilitating the creation of mobile and web app mockups with ease​​​​. Uizard's unique AI-driven approach to design and prototyping demonstrates how AI technology can make complex tasks more accessible and efficient, catering to a diverse range of users in the tech world. Location: Copenhagen, Denmark​​ Founding 2017​​ Founders: The company was co-founded by Tony Beltramelli, who serves as the CEO, Florian van Schreven (COO), and Henrik Haugbølle (CTO)​​. Target Market: Uizard targets a broad audience, with its most active users being startup founders, product managers, consultants, business analysts, engineers, marketing teams, and user experience professionals. Its design tool caters specifically to non-designers, democratizing the process of app and website creation​​. Funding/Current Stage: As of August 2021, Uizard had raised a total of $18.6 million in funding over three rounds. The latest funding round was a Series A round. Among its notable investors are LDV Capital, Insight Partners, and byFounders​​​​. 2. Cleerly Cleerly uses AI to enhance the diagnosis and treatment of heart disease. Their digital care platform works with coronary computed tomography angiography (CCTA) imaging to help clinicians precisely identify and define atherosclerosis earlier, enabling personalized, life-saving treatment plans. This non-invasive, AI-driven approach supports the understanding of plaques and offers comprehensive quantification and characterization of plaque buildup in the heart arteries​​​​. Location: New York City​​ Founding Date: 2017​​ Founder: James K. Min, who is also the CEO​​. Target Market: Cleerly's platform targets a broad spectrum of stakeholders in the care pathway, including imaging physicians, clinicians, patients, and payers. Funding/Current Stage: As of their latest funding announcement, Cleerly had raised a total of $54 million. This includes a $43 million Series B funding round led by Vensana Capital, with participation from LRVHealth, New Leaf Venture Partners, DigiTx Partners, the American College of Cardiology, Cigna Ventures, and existing investors​​. 3. Adept AI Adept AI focus is on creating a digital assistant capable of performing a variety of tasks based on simple text commands. This AI model can understand and automate any software process, effectively converting text instructions into digital actions. This approach is distinct from other AI startups that focus on generating text or images; instead, Adept AI studies how people use computers to navigate software and the web, training their AI model to perform similar actions​​​​​​​​. Adept AI's mission to create an AI that can automate any software process marks an ambitious and potentially transformative step in the field of artificial intelligence. Their focus on building AI systems that can work alongside humans in a creative and problem-solving capacity highlights the evolving role of AI as a collaborative tool in various industries. Location: San Francisco Founding Date and Founders: Founded by a team of AI researchers and data scientists, including David Luan (Founder and CEO), Zach Brock (Head of Product Engineering), Niki Parmar (Co-Founder and CTO), Erich Elsen (Founding Member), and Ashish Vaswani (Co-Founder and Chief Scientist)​​​​. Target Market: Adept AI aims to serve a broad market by providing an "AI teammate for everyone." Their technology is designed to understand users' goals expressed in plain language and execute tasks on various software tools used daily, making it versatile for a wide range of applications and users​​. Funding/Current Stage: The company has raised a total of $415 million in funding, including a $350 million Series B funding round co-led by General Catalyst and Spark Capital. This funding is being invested in productization, model training, and headcount growth. Adept AI's technology builds on the momentum of large foundation models for language and images, bringing a new kind of foundation model that can perform actions on any software tool using natural language​​. 4. SoundHound SoundHound specializes in audio and speech recognition, natural language understanding, sound recognition, and search technologies. The company's flagship products include Houndify, a Voice AI developer platform, SoundHound Chat AI, a voice-enabled digital assistant, and a music recognition mobile app named SoundHound. Recently, the company introduced Employee Assist, a conversational AI product designed to support restaurant employees by providing instant access to critical information, enhancing efficiency and operational flow​​​​. SoundHound's journey from a startup focusing on music recognition to a leader in voice AI technology demonstrates the evolving nature of AI applications in various industries, particularly in enhancing human-machine interactions through advanced speech and natural language processing capabilities. Location: Santa Clara, California​​ Founding Date: 2005​​ Founders: Keyvan Mohajer, Majid Emami, and James Hom. Target Market: SoundHound's AI solutions cater to a wide market, including developers through their Houndify platform and businesses requiring voice AI solutions. Their recent product, Employee Assist, specifically targets the restaurant industry, aiding staff in accessing information efficiently without manual interruptions​​. Funding/Current Stage: SoundHound went public on April 28, 2022, following a SPAC merger with Archimedes Tech SPAC Partners Co., and is listed under the symbol SOUN on Nasdaq. As of April 2023, SoundHound secured $100 million in strategic financing. The company has faced some challenges, including staff reductions and salary cuts, but continues to evolve and expand its AI offerings​​​​. 5. Arize AI Arize AI develops a machine learning observability platform for continuous model improvement. This platform is designed to assist machine learning teams in efficiently monitoring performance, detecting drift, ensuring data quality, and validating models. They offer solutions like embedding analysis and drift monitoring, which are vital for computer vision and natural language processing models. They also provide a tool for bias tracing to monitor and address model fairness metrics. Arize AI has been recognized as the "Best MLOps Company" and is pioneering the space of machine learning observability, which is crucial for the long-term sustainability of AI​​​​​​. Arize AI's focus on machine learning observability highlights the growing need for tools and platforms that can manage the complexities of AI model deployment and maintenance. Their success in attracting significant funding and collaborating with major industry players demonstrates the critical role such platforms play in the broader AI ecosystem. Location: San Francisco Founding Date: 2020​​ Founders: Co-founded by Aparna Dhinakaran and Jason Lopatecki, who serves as the CEO​​​​. Target Market: Arize AI targets machine learning teams across various industries, offering them tools to streamline their ML operations. Some of their notable customers and design partners include Uber, Chime, eBay, New York Life, ShareChat, Spotify, and Stitch Fix​​. Funding/Current Stage: In September 2022, Arize AI announced a $38 million Series B funding round led by TCV, with participation from existing investors Battery Ventures, Foundation Capital, and Swift Ventures. 6. Moveworks Moveworks is a generative AI platform that enhances employee productivity by surfacing information and automating tasks through natural language. It provides an AI copilot that integrates with various systems like Microsoft, Workday, and Salesforce. The platform, powered by GPT-class large language models, is tailored to understand the unique language of each organization, addressing thousands of use cases. Notable brands such as Databricks, Broadcom, DocuSign, and Palo Alto Networks use Moveworks' solutions for conversational automation across their business operations​​​​. Moveworks' focus on using generative AI to improve workplace efficiency and streamline operations across various industries underscores the growing importance of AI in enhancing enterprise productivity and operational effectiveness. The company's success in raising significant funding and achieving a high valuation reflects the strong demand for AI-driven solutions in the modern business landscape. Location: San Francisco Founding Date: 2016​​​​ Founders: Bhavin Shah, Jiang Chen, Vaibhav Nivargi, and Varun Singh​​. Target Market: Moveworks targets enterprises seeking to improve their employee experience through AI-driven solutions. The platform is designed to be versatile, catering to various industries and offering integrations with major enterprise systems​​​​. Funding/Current Stage: As of the last update, Moveworks has raised $315 million in funding and reached a valuation of $2.1 billion. The company is privately held and continues to grow and expand its offerings in the AI and cloud computing space​​. 7. Frame AI Frame AI has developed a next-generation Customer Intelligence system that leverages AI to estimate costs and predict revenue outcomes from complex customer interactions. By consolidating and enriching data across various channels like helpdesks, call centers, CRM systems, etc., Frame AI aids Support, Product, and Revenue leaders in reducing operational costs and improving outcomes​​. The company’s focus on AI-driven customer intelligence and its ability to integrate and analyze complex data from multiple sources demonstrates the growing importance of AI in enhancing customer experience and operational decision-making in the business world. Frame AI’s achievements in this space highlight the potential for AI to transform traditional customer support and revenue optimization strategies. Location: New York Founding Date: 2016​​ Founders: Brandon Reiss, George Davis, Jesse St. Charles, John Gu, and Robbie Mitchell​​. Target Market: Frame AI's solutions are geared towards businesses looking to enhance their customer service and support operations. The company's platform is particularly beneficial for enterprises seeking to optimize their customer interaction data across multiple communication channels to improve decision-making and operational efficiency​​. Funding/Current Stage: Frame AI is currently a private company and has raised a total of $7.6 million in funding as of their latest Series A funding round​​. 8. Tome Tome's AI-powered format turns ideas into visually compelling narratives, generating a presentation, a one-pager, a microsite, and more, starting with a prompt. Location: San Francisco​​ Founding Date: 2020​​ Founders: Tome was co-founded by Keith Peiris and Henri Liriani. Target Market: Tome caters to a wide range of storytellers, including founders, executives, students, teachers, creatives, and product and go-to-market teams. The platform is used for various purposes like business development, design portfolios, brand vision articulation, lesson planning, research sharing, venture capital raising, and more​​​​. Funding/Current Stage: As of February 2023, Tome has raised a total of $81 million in funding, including a $43 million Series B round. The funding supports the company's AI development roadmap and community growth​​​​. 9. People.ai People.ai develops a Revenue Intelligence System that collects, synchronizes, and manages data across various teams including sales, marketing, and customer success. This platform is designed to transform business activity through its innovative use of artificial intelligence, aiding in revenue operations and intelligence​​. People.ai's approach to integrating AI in optimizing revenue operations signifies the broader trend of employing advanced data analytics and machine learning in enhancing business processes and decision-making across various industries. Location: San Francisco Founding Date: February 3, 2016​​. Founder: Oleg Rogynskyy​​. Target Market: The company targets businesses looking to optimize their revenue operations through intelligent data management and analysis, catering specifically to sales, marketing, and customer success teams. Funding/Current Stage: People.ai has raised significant funding, with its latest funding round being a Series D, and has amassed a total of $100 million in this round. The company is private and continues to evolve in the field of artificial intelligence, focusing on revenue operations and intelligence​​. 10. Golden Golden uses machine intelligence to build a self-constructing knowledge base. This platform contains detailed information about various entities and allows users to create, contribute, and compare knowledge. It employs AI-assisted editing for automatically extracting summaries and infobox data from external web sources. Golden's AI also provides suggestions for quick updates to topics. The company aims to fill in gaps in Wikipedia's coverage, especially in areas like emerging technology and startups, by providing more in-depth and clustered information​​​​. Location: Golden is based in the SoMA district of San Francisco. Founding Date: 2017​​ Founder: Jude Gomila​​ Target Market: Golden targets a wide range of users, including private equity firms, hedge funds, venture capitalists, biotechnology companies, corporate innovation offices, and government agencies. It also serves as a valuable resource for anyone interested in emerging technologies and startups. The platform is known for its depth in covering tech-related topics, offering an alternative to more generalist platforms like Wikipedia and Crunchbase​​​​. Funding/Current Stage: Golden has raised significant funding, including a $14.5 million Series A round led by Andreessen Horowitz. The total funding raised by Golden is $19.5 million, with other investors such as DCVC, Harpoon Ventures, and Gigafund participating. The company has used this investment to enhance its AI-powered knowledge base and expand its offerings​​​​. 11. Memora Health Memora Health's unique position in the AI space is marked by its development of an AI-enabled platform that assists healthcare providers in managing complex care needs while digitizing essential workflows. This innovative approach addresses the growing need for more efficient and patient-centric healthcare delivery systems. Location: San Francisco Founding Date: 2017​​​​ Founders: Manav Sevak (Co-Founder & CEO) and Kunaal Naik (Co-Founder & CTO)​​. Target Market: Memora Health focuses on transforming care delivery by making healthcare more accessible, actionable, and always-on, specifically aiming at managing complex care needs and digitizing clinical and administrative workflows​​​​. Funding/Current Stage: Memora Health has raised a total of $80.5 million in funding over six rounds. Their latest funding was raised on June 27, 2023. 12. Tavus Tavus stands out in the AI space with its unique video personalization platform that leverages artificial intelligence to create personalized videos for each individual viewer, a technology that has significant implications for the way sales and marketing teams engage with their audiences. Location: The headquarters are located in Houston, Texas​​. Founding Date: 2020​​ Founders: Hassaan Raza and Quinn Favret​​. Target Market: Tavus targets the sales industry with its AI-driven video personalization platform, which is designed to enhance sales teams' outreach efforts​​​​. Funding/Current Stage: As of the latest information, Tavus has raised a total of $30.2 million in funding over five rounds, with the latest funding being a Seed round raised on September 7, 2023​​. 13. Synthesia Synthesia Synthesia stands out in the AI landscape through its innovative use of deep learning architecture to craft personalized videos. This technology streamlines the content creation process, significantly reducing the need for traditional video production tools like cameras and studios. By enabling users to generate custom videos from plain text, Synthesia not only simplifies content creation but also paves the way for novel approaches in both creative and business domains. Location: London, England.​​ Founding Date: 2017​​​​ Founders’ Names: Co-founded by Lourdes Agapito, Matthias Niessner, Victor Riparbelli, and Steffen Tjerrild​​. Target Market: Synthesia targets businesses with its AI-powered video synthesis platform, which enables the generation of personalized videos from plain text​​. This technology is designed to replace cameras with code, making it easier for users to create video content without the need for traditional filming equipment​​. Funding/Current Stage: As of the latest information, Synthesia has raised a total of $155.6 million in funding over four rounds, with the latest funding being a Series C round​​. 14. GoodVision GoodVision distinguishes itself in the AI industry with its advanced artificial intelligence and computer vision technologies. These technologies are adept at detecting, recognizing, and extracting objects, with a particular emphasis on enhancing traffic management and analytics. Such capabilities are vital in driving forward smart city projects and refining urban planning and traffic control strategies. GoodVision's contributions in this sector are pivotal for the evolution of modern, intelligent urban infrastructure. Location: London, England​​. Founding Date: August 2017​​ Founders’ Names: Daniel Stofan and Lukas Hruby​​. Target Market: GoodVision offers automation solutions in traffic projects, with a focus on traffic control, modeling, AI traffic data collection, and other related solutions. It is particularly known for its traffic analytics tool designed for vehicle traffic and pedestrian footfall data collection and analysis​​​​. Funding/Current Stage: GoodVision has raised a total of €3.7 million in funding over two rounds, with the latest funding raised on January 19, 2023, from a Venture - Series Unknown round​​. 15. Jasper Jasper's impact in the AI space is underscored by its ability to assist in overcoming creative blocks and generating original content, utilizing advanced AI to cater to a diverse range of content creation needs for businesses. Location: Montréal, Quebec, Canada​​. Founding Date: 2018 Founders’ Names: Dave Rogenmoser, John Hillip Morgan, and Chris Hull​​. Target Market: Jasper is an AI writing tool that primarily serves businesses, offering a creative AI assistant for on-brand content creation across various online platforms. Its AI-powered platform is particularly useful for the enterprise marketing sector, capable of generating a wide range of content including blog posts, product descriptions, ad copy, and social media posts​​​​​​. Funding/Current Stage: Jasper has raised a total of $125 million in funding. As of the latest available information, the company had undergone a Series A funding round, raising $141 million​​​​. 16. AEye AEye's impact in the AI space is characterized by its innovative lidar technology and software-defined solutions. The company's 4Sight Intelligent Sensing Platform, which combines solid-state active lidar with an optionally fused low-light high dimension camera, plays a pivotal role in advancing autonomous vehicle technology and smart infrastructure development. Location: San Francisco. Founding Date: February 19, 2013​​. Founders’ Names: Barry Behnken, Jordan Greene, Luis Dussan, and Ransom Wuller​​. Target Market: AEye focuses on developing adaptive, high-performance lidar systems for applications in automotive, trucking, smart infrastructure, and logistics. The company provides solutions for vehicle autonomy, advanced driver-assistance systems, and robotic vision applications in various regions, including the United States, Germany, Europe, and Asia​​​​​​. Funding/Current Stage: AEye is a public company, with its stock symbol listed as NASDAQ:LIDR. It has raised significant funding, with the latest deal type being a post-IPO equity round​​. 17. Bearing Bearing's impact in the AI space is especially significant in the maritime industry, where it brings innovative solutions to enhance operational efficiencies and assist in the digital transformation of shipping practices. The company's deep learning and AI technologies are tailored to address the unique challenges of maritime logistics and vessel management. Location: Palo Alto, California. Founding Date: June 2019​​​​. Founders’ Names: Co-founded by CEO Dylan Keil and Chief Engineer David Liu​​. Target Market: Bearing is focused on streamlining maritime shipping through the use of deep learning. The company provides AI-powered operational efficiencies in the maritime sector, leveraging cutting-edge technology to optimize vessel operations​​. Funding/Current Stage: BearingAI has raised a total of $10 million in funding over two rounds, with the latest funding round being a Seed round raised on August 17, 2022​​. 18. Eightfold AI Eightfold AI's presence in the AI space is notable for its comprehensive AI platform for talent management, which leverages AI to transform the entire process of talent acquisition, engagement, and retention. The company's approach to talent management using AI technologies represents a significant advancement in how enterprises handle their human resources functions. Location: Santa Clara, California​​. Founding Date: 2016​​. Founders’ Names:Co-founded by Ashutosh Garg and Varun Kacholia​​. Target Market: Eightfold AI develops a talent intelligence platform that addresses various aspects of the talent acquisition and management process. The company's technology is particularly beneficial for sectors such as healthcare, telecommunications, retail, and travel. Their AI-powered platform assists companies in finding, recruiting, and retaining workers​​​​​​. Funding/Current Stage: As of the latest available information, Eightfold AI has reached a Series E funding stage, with the latest funding amounting to $220 million​​. 19. Plenty Plenty's impact in the AI and agricultural space is marked by its innovative approach to vertical farming. By leveraging technology to grow a diverse range of produce efficiently and sustainably, the company is addressing key challenges in modern agriculture, including space constraints and environmental concerns. Location: San Francisco. Founding Date: 2014​​​​. Founders’ Names: Jack Oslan, Matt Barnard, Nate Mazonson, and Nate Storey​​​​​​. Target Market: Plenty specializes in indoor vertical farming solutions. The company aims to dominate the vertical farming market by growing a wide range of produce, excluding tree fruit and root vegetables. This distinguishes it from competitors who mainly focus on greens, herbs, strawberries, and occasionally tomatoes​​. Funding/Current Stage: Plenty has raised a total of $941 million over seven funding rounds. The latest funding was a Series E round raised on January 25, 2022​​​​. 20. Capacity Capacity has developed a cutting-edge AI-powered helpdesk platform. This platform is distinguished by its ability to automate support for both customers and employees, efficiently connecting various tech stacks to address queries, automate repetitive tasks, and solve diverse business challenges. Capacity's innovative use of AI, machine learning, and advanced algorithms for natural language processing, not only enhances operational efficiency but also significantly improves customer satisfaction, marking it as a leader in applying AI for workplace transformation. Location: Saint Louis, Missouri. Founding Date: 2017​​. Founders' Names: Co-founded by Alex Spanos and Dimitry Krakovsky​​. Target Market: Capacity primarily targets various industries and functional areas including: Teams like Contact Centers, HR & Ops, Customer Support, IT Support, and Sales & Marketing. Industries like Insurance, Banking, Education, Mortgage, Software, Senior Living, Utilities, and Healthcare​​. Funding/Current Stage: Capacity has raised a total of $62 million, including a round of $13.2 million in 2019 and an additional $27 million as an extension of a Series C round in 2020​​​​. Let Visible Help With Funding Your AI Startup Idea These companies showcase the potential of AI in reshaping everything from healthcare to finance, proving it to be an indispensable tool for modern business success. For startups and investment firms looking to navigate this dynamic landscape, effective communication with investors and stakeholders is crucial. Visible offers an all-in-one platform to simplify these vital interactions, ensuring clarity and engagement in your investor relations. Embrace the future of business with AI and streamline your stakeholder communication by creating an account with Visible today: Start with Visible. Related resource: The Ultimate Guide to Startup Funding Stages Related resource: A New Media and Entertainment Landscape: Trends + VCs Investing In The Space

In the intricate world of venture capital and private equity, liquidation preference is a pivotal concept that dictates financial outcomes during critical junctures like company sales or bankruptcies. Our article delves into the nuances of this key mechanism, exploring how it prioritizes investors' returns over common stockholders and its impact in various low-return scenarios. We'll guide you through the five primary types of liquidation preferences, each with distinct implications for investment returns and company dynamics. Particularly crucial for startups, understanding liquidation preferences is essential for navigating future funding and maintaining financial health. Join us as we unravel the complexities of liquidation preference, a crucial element in balancing the risk-reward equation in business finance. Liquidation Preference Defined Liquidation preference is a key term in venture capital and private equity, defining the order and magnitude of payments to investors in events like company sale or bankruptcy. This provision in preferred stock agreements prioritizes the return of capital to investors before any distribution to common stockholders. It's an essential mechanism in venture capital contracts to safeguard invested capital, especially in scenarios yielding low returns. For example, in a real-life scenario, if a company with a liquidation preference clause is sold, preferred investors are entitled to receive their investment amount before any payouts to common stockholders. This ensures that in a liquidity event such as a company sale, the downside risk to preferred investors is minimized, as they are guaranteed a return on their investment before others. However, if preferred stock converts to common stock in a qualified initial public offering (IPO), the liquidation preference often ceases to apply, aligning the interests of all shareholders​. The Importance of Liquidation Preference The importance of liquidation preference in venture capital and private equity cannot be overstated. Primarily, it provides financial security to investors by ensuring they recover their investment before any payouts to common shareholders in the event of a liquidation, such as a company sale or bankruptcy. This makes investing in high-risk ventures more attractive, as it reduces the potential losses in scenarios where the company does not perform as expected. Additionally, liquidation preference can influence company strategies and decision-making. It can impact negotiations during funding rounds, as terms can significantly affect how proceeds are divided in a sale or liquidation event. Moreover, for entrepreneurs and common shareholders, understanding liquidation preference is crucial in assessing how much control and financial benefit they retain in their company after external funding. In essence, liquidation preference is a key element that balances the risk and reward equation for both investors and company founders, making it an indispensable part of venture capital and private equity deals. Related resource: 5 Ways to Make Investor Communication Better The 5 Primary Types of Liquidation Preference As we delve deeper into liquidation preferences, it's important to understand that there isn't a one-size-fits-all approach. This financial tool comes in various forms, each with its unique characteristics and implications for investors and company founders. We will explore five primary types: Single or Multiple, Non-Participating and Participating, Participation Caps, Seniority Structures, and Dividend Preferences. Each type represents a different way of structuring payouts in liquidation events, offering distinct advantages and considerations. In the following sections, we'll break down these categories, providing clarity on how each operates and their potential impact on investment returns and company dynamics. 1.) Single or Multiple Single and Multiple liquidation preferences are two common structures used in venture capital and private equity to determine the payout order and amount to investors in a company's liquidation event. A Single liquidation preference, typically set at 1x the original investment amount, means that an investor with this preference gets paid back their full investment amount before any shareholders lower in the priority stack receive their payouts. This is the most common type of liquidation preference and is seen as a standard protective measure for investors​​. A Multiple liquidation preference, on the other hand, is less common and involves a multiple greater than 1x, such as 2x or 3x. In this scenario, an investor with, for instance, a 2x liquidation preference would be paid back double their original investment amount before any other shareholders receive anything. While it offers greater protection for the investor, high multiple liquidation preferences can become contentious in subsequent funding rounds and may negatively impact the ability of founders and employees to see a return, as these groups are pushed lower in the preference stack​​. For an example of a Single liquidation preference, consider a scenario where an investor invests $1 million for a 25% stake in a company that is later sold for $2 million. With a 1.0x Non-Participating Liquidation Preference, the investor would receive $1 million from their 1.0x preference, ensuring the recovery of their full investment. In this case, the remaining $1 million would be distributed to the common shareholders​​. An example of a Multiple liquidation preference is more complex and less common. For instance, if an investor has a 2x liquidation preference and invests the same amount in a company with the same sale price, they would be entitled to receive double their investment (i.e., $2 million) before any payouts to common shareholders. However, in this example, since the sale price is only $2 million, there would be nothing left for common shareholders after fulfilling the investor's 2x liquidation preference. This highlights how a multiple liquidation preference can significantly impact the distribution of proceeds, potentially leaving common shareholders with little to no return. 2.) Non-Participating and Participating Non-Participating Liquidation Preference allows investors to choose between receiving their initial investment back (usually at a 1x multiple) or converting their preferred shares to common shares and receiving a proportionate share of the sale proceeds. In other words, they can either get their initial investment back or participate in the profits like common shareholders, but not both. Participating Liquidation Preference, on the other hand, enables investors to receive their initial investment back (again, usually at a 1x multiple) and then also participate in the remaining distribution of proceeds as if their shares were common stock. This means they first recover their investment and then also get a share of any remaining proceeds. For example, if a company with a Non-Participating 1x Liquidation Preference is sold, and an investor's initial investment was $1 million, they would have the choice to either take back their $1 million (if the sale proceeds allow) or convert their shares to common and take their share of the total sale proceeds. In contrast, with a Participating 1x Liquidation Preference in the same scenario, the investor would first take their $1 million and then also receive a portion of the remaining proceeds as if they were a common shareholder. 3) Participation Caps Participation Caps in liquidation preference set a limit to how much preferred investors can receive in liquidation events, essentially capping their payout. This cap is usually expressed as a multiple of the original investment. For instance, in a capped participation preference scenario, an investor may have a cap set at 2x or 3x the original investment. This means they will participate in the liquidation proceeds on a pro-rata basis until their total proceeds reach this set multiple. After reaching this cap, they no longer receive additional proceeds, and the remaining funds are distributed to other shareholders. For example, suppose a venture capital firm invests $5 million in a company with a capped participating preference set at a 3x cap. If the company is later sold or liquidated, the VC's payout preference would be capped at $15 million (3 times the $5 million investment). In this scenario, the investor will first receive their $5 million preference and then share in the remaining proceeds until their total proceeds equal $20 million. After reaching this cap, the remaining funds are distributed to other shareholders, such as co-founders​​​​​​. This cap serves as a safeguard to prevent preferred shareholders from over-dominating the payout distribution, thus ensuring a fairer distribution among all shareholders, including founders and common shareholders. 4) Seniority Structures Seniority Structures in liquidation preference determine the order in which investors are paid in the event of a company's liquidation based on the seniority of their investment. This structure can vary, but generally, it prioritizes the most recent investors over earlier ones. A common form of seniority structure is Standard Seniority, where the liquidation preferences are honored in reverse order, starting with the most recent investment round. For instance, Series B investors would receive their liquidation preferences before Series A investors. Another form is Pari Passu Seniority, where all investors are treated equally regardless of their investment round, meaning they all receive a part of the liquidation proceeds proportionate to their initial investment. Lastly, there's Tiered Seniority, a hybrid model where investors are grouped within their funding rounds, and within each tier, payouts follow the pari passu model​​. An example of how seniority structures work can be illustrated as follows. Assume a company has received investments from seed investors who committed $2 million and Series A investors who committed $1 million, each with a 1x liquidation preference. If the company's assets after a sale amount to only $1 million, according to Standard Seniority, the Series A investors would receive the entire $1 million, leaving the seed investors with nothing. This example demonstrates the "last in, first out" principle, where investors who funded the business in its later stages, perhaps during more challenging times, are paid out first​. 5) Dividend Preferences Dividend Preferences refers to the rights of preferred stockholders to receive specific dividends before common stockholders. These dividends are usually set at a fixed amount or rate and are prioritized over dividends to common shareholders, especially in liquidity events. This clause ensures that preferred stockholders not only get priority in the distribution of dividends but also in the accumulation of those dividends if the underlying asset faces a liquidity event. For example, participating preferred stockholders with Dividend Preferences might be entitled to a set dividend rate, in addition to having a liquidation preference. In a scenario with a 2x liquidation preference, these stockholders would receive twice the amount of capital they initially invested in the company in the event of a liquidity event, provided there are sufficient funds to meet this requirement. Additionally, they have the right to convert their participating preferred shares into common stock if they choose to do so​​. This type of preference is significant in providing an extra layer of financial security to preferred stockholders, ensuring they receive their due dividends in addition to any capital returns in the event of a company's sale, merger, or other liquidity events. How Liquidation Preference Works As we've explored various types of liquidation preferences, it's clear that they play a critical role in shaping the outcomes for investors and company founders in liquidity events. Essentially, liquidation preference determines the order and amount in which different shareholders are paid in the event of a company sale, merger, or bankruptcy. This system prioritizes the returns for preferred shareholders, often venture capitalists, over common shareholders, such as employees and founders. The preference can be structured in multiple ways, each having distinct implications on the distribution of proceeds from a liquidation event. Understanding how these preferences work is key to grasping the dynamics of venture capital and private equity investments, as they significantly influence the financial returns for all parties involved in a company's journey. The Best Liquidation Preference For Startups Determining the best liquidation preference for startups depends on various factors including the company's stage, the nature of the investment, and the interests of both investors and founders. Generally, a simpler liquidation preference, like a 1x non-participating preference, is often considered favorable for startups. This type ensures investors get their investment back in a liquidation event, but doesn't excessively dilute the payouts to founders and other common shareholders. A 1x non-participating preference is balanced, offering protection to investors without overly penalizing common shareholders. This type of preference is vital for early-stage startups where future funding rounds might require more attractive terms to new investors, and excessive liquidation preferences can make follow-on funding difficult or unattractive. However, the "best" preference can vary. For more established startups with a clearer path to profitability or exit, different structures might be more appropriate. It's crucial for startups to consider how liquidation preferences might impact future funding and the company's overall financial health. Consulting with financial and legal experts is advisable to determine the most suitable liquidation preference for a startup's specific circumstances. Related resource: What Are Convertible Notes and Why Are They Used? Visible: The Ultimate Resource for Founders We've explored liquidation preference, a key aspect of venture capital and private equity that shapes the financial outcomes in events like company sales or bankruptcies. This mechanism ensures that investors' capital is prioritized over common stockholders, especially in low-return scenarios. We've examined the five primary types of liquidation preferences – Single or Multiple, Non-Participating and Participating, Participation Caps, Seniority Structures, and Dividend Preferences, each with its implications on investment returns and company dynamics. The choice of liquidation preference is crucial for startups, influencing future funding and overall financial health. Overall, liquidation preference is an essential tool in balancing risk and reward for investors and founders in the complex world of business finance. Let Visible help you succeed- raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: Navigating the World of QSBS: Tax Benefits and Eligibility Criteria Explained

Raising funding for a business is challenging. At Visible, we like to look at the fundraising process similarly to a traditional B2B sales and marketing process — like a funnel. At the top of the funnel, you are finding potential investors via cold outreach and warm introductions. In the middle of the funnel, you are nurturing potential investors with meetings, pitch decks, updates, and other communications. At the bottom of the funnel, you are working through due diligence and hopefully closing new investors. Related Resource: A Step-By-Step Guide for Building Your Investor Pipeline Building relationships with leads is crucial to success for both a sales and fundraising funnel. Investors are typically investing hundreds of thousands or millions of dollars so building a relationship with investors will help them build conviction. Having a game plan for networking with potential investors can set you up for fundraising success. Check out our tips for networking with potential investors below: The Importance of Networking for Investors According to Brett Brohl of Bread and Butter Ventures, the average early-stage fundraise should take around five months. This means that investors are trying to deploy hundreds of thousands or millions of dollars within just a few months of meeting founders. In order to better your odds of fundraising success, this means that you need to start networking and building relationships with investors in advance of a fundraise. This will help investors build conviction and move quickly when it does come time to raising capital. Related Resource: 7 of the Best Online Communities for Investors Key Benefits of Effective Networking Founders have to take on countless roles and responsibilities when starting their business. For many founders, fundraising can turn into a full-time job — on top of their other daily responsibilities. By investing in networking throughout the year, you will be able to build momentum when it is time to “actively fundraise.” You will have already formed relationships with investors and will allow them to build conviction quickly so you can get back to your day-to-day. Check out a few key benefits of networking with potential investors below: Momentum when it comes time to fundraise. By networking with potential investors you’ll be able to speed up your fundraise as you’ve already built relationships. Introductions to other investors. Most investors will pass on a potential investment. However, they can make introductions to other investors that might be a fit for your business. Building out your network. The startup world is a tight-knit circle. Forming relationships with investors will allow you to grow your network and find introductions to peers, potential customers, hires, etc. Related Resource: 6 Helpful Networking Tips for Connecting With Investors Breaking Down the 9 Effective Networking Tips Networking might be easier said than done for many founders. Finding an introduction or way to network with potential investors can be challenging. Check out our tips for how you can effectively network with potential investors below: 1. Attend relevant investment seminars Investors are typically involved with different events in the venture capital space. Many are geared towards helping founders network with investors. If you are located in/near a larger city, chances are you will be able to find local events that are full of local investors and VCs. 2. Cultivate a strong online presence Venture investors typically have a strong online presence. One of the best ways to network with potential investors is by having an online presence yourself. You can start by following ideal investors and slowly start to engage with them. 3. Prioritize genuine relationships over quantity There are thousands upon thousands of investors. However, not every investor will be a good fit for your business. We recommend identifying your needs and building a list of “ideal investors” for your business. By focusing on building relationships with these investors, you’ll be able to make sure you are spending time on investors that will be beneficial to your business. 4. Stay updated with industry trends Investors seek to stay in the know when it comes to different industries and verticals. By staying up to date with your industry or focus area, you will improve your odds of being able to offer investors something of value and start building your relationships. 5. Master the elevator pitch If attending different networking events or seminars it is important that you have a plan for how to engage with investors. An aspect of this is likely having your elevator pitch dialed. A shaky or uncertain elevator pitch will be seen as a red flag to many potential investors. 6. Join investor groups and associations As we previously mentioned, the startup and VC world is a tight-knit community. There are countless investor groups and associations — some based in a specific region or city and others based on a vertical or market. Investor groups are a great opportunity to network with investors and peers who are a good fit for your business. Most will host different events and workshops that will allow you to further deepen relationships. 7. Leverage technology for networking In recent years there has been a rise in different technologies to help founders and investors connect. These tools typically include investor profiles that surface their firm’s vital information (some support profiles for startups as well). Related Resource: How Startups Can Use an Investor Matching Tool to Secure Funding Visible Connect, our free investor database, enables startup founders to filter and find the right investors for their business. We use the data and information that is crucial to finding the right investor — like check sizes, investment focus, investment geography, etc. From here, you can add investors directly to your Visible Pipeline to keep tabs on your fundraising conversations and actions. Give it a free try and find the right investors for your business using Visible Connect. 8. Consistent follow-ups Fundraising can be a long and arduous process. Investors are incentivized to move slowly and wait as more data and information about your company and market becomes available. It is critical to stay persistent and continuously follow up with potential investors. At Visible, we recommend adding potential investors to your monthly investor updates to keep them in the loop with your progress. Check out a template to nurture potential investors here. Related Resource: How To Write the Perfect Investor Update (Tips and Templates) 9. Mentorship and being mentored One of the best ways to network with potential investors is to seek out advice and mentorship from them. Going in with a true intent to learn from their experiences is a great way to hone your skillset and build a strong relationship — with them and their network. Related Resource: Startup Mentoring: The Benefits of a Mentor and How to Find One Find Out How Visible Can Help You Connect With the Right Investors As we mentioned at the beginning of this post, a venture fundraise often mirrors a traditional B2B sales and marketing funnel. Just as a sales and marketing team has dedicated tools, shouldn’t a founder that is managing their investors and fundraising efforts? Use Visible to manage every part of your fundraising funnel with investor updates, fundraising pipelines, pitch deck sharing, and data rooms. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days.

Venture Capital (VC) plays a pivotal role in the entrepreneurial ecosystem, fueling the growth of innovative startups and established companies alike. This comprehensive guide delves into the various stages of venture capital funding, from early seed investments to late-stage and bridge financing. It also explores exit strategies and offers real-world examples to elucidate the VC landscape. Whether you're an aspiring entrepreneur or an investor, understanding these facets of venture capital is key to navigating the complex world of business finance. An Overview of the Three Principal Types of Venture Capital Funding Venture capital funding, a critical catalyst for business growth and innovation, encompasses more than just the three principal types: early-stage financing, expansion financing, and acquisition/buyout financing. Within these broad categories lie several specialized types of funding, each tailored to different stages of a company's lifecycle and specific needs. Seed financing, for instance, caters to businesses at the idea or concept stage, providing the initial capital to get off the ground. Startup financing then takes over, helping slightly more established businesses that are ready to market their product or service. First-stage financing supports those in the early stages of selling their products. As businesses grow, they may seek second-stage financing for expansion, or bridge financing to cover short-term needs while preparing for a significant event like an IPO. Third-stage (mezzanine) financing is often used for further expansion or to prepare a company for acquisition or IPO. In the acquisition/buyout category, acquisition financing helps businesses acquire specific assets or other companies, while management (leveraged buyout) financing is used to buy out a company's existing owners. Each of these funding types comes with its own set of criteria, risks, and opportunities. The following sections will delve deeper into these various forms of venture capital funding, providing insights into what they entail, who typically funds them, the risks involved, potential exit strategies, and real-world examples to illustrate these concepts in action. This comprehensive exploration aims to provide a clear understanding of the intricate landscape of venture capital funding. Related resources: A Quick Overview on VC Fund Structure How To Find Private Investors For Startups Early Stage Financing Early-stage financing is provided to companies to set up initial operations and basic production. This type of financing supports activities such as product development, marketing, commercial manufacturing, and sales. It's intended for companies in the development phase, which are typically beyond the seed stage and require larger sums of capital to start operations once they have a viable product or service​​. Early-stage companies are generally defined as having tested their prototypes, refined their service model, and prepared their business plan. They might be generating early revenue but are usually not profitable yet​​​​​​. An example of a business that would seek early-stage financing is a tech startup that has developed a working prototype of a new software or hardware product. This company would have validated its product idea, perhaps through initial customer feedback or small-scale deployments, and now requires funding to scale up its production, enhance its product features, and expand its market reach. Regarding the overall market related to early-stage financing, the trends in 2023 indicate a mixed picture. While venture capital investment in Q3 2023 remained flat, with VC-backed companies raising $29.8 billion, which is comparable to the $29.9 billion raised in Q2 2023, there is a continued interest in certain areas like generative AI. Although economic uncertainty and the overhang from existing money in the market have limited investor appetite, early-stage companies are expected to experience more success in fundraising compared to companies trying to raise funds in later-stage rounds​​. However, the fund formation has continued to decline since the highs of Q1 2022, and Q3 2023 ranked as the lowest quarter for fund formation since Q3 2017. Expansion Financing Expansion stage financing is a type of funding used to scale businesses and expand their market share. This stage is typically reached when a startup is growing, the product is selling, and the company is generating significant revenue. It characterizes a new phase of development, often involving expansion into new markets and distribution channels, and can also be used for external growth through mergers and acquisitions​​. This stage of financing is usually pursued after a company has moved past the startup and early stages of its business life cycle​​. An example of a business that would seek expansion financing is a tech startup that has successfully launched a product in a local market and is now looking to expand its reach nationally or internationally. Such a company might use expansion financing to enter new markets, scale up operations, increase production capacity, or diversify and differentiate its product lines. The overall market trend related to expansion financing, the venture capital landscape saw a slight increase in deal count and invested capital in Q3 2023 compared to Q2 2023. Cooley reported 225 venture capital financings in Q3 2023, representing $6.8 billion in invested capital, an increase from 221 financings and $6.4 billion in the previous quarter. This upward trend began in Q2 2023 and ended the steady decline observed from Q4 2021 to Q1 2023. However, this increase in deal count was more pronounced in early rounds, with mid-stage rounds (which include expansion stage) showing a decrease, and late-stage rounds remaining consistent with the previous quarter​​. Despite these upward trends in deal numbers and amounts raised, the percentage of down rounds increased to 27% of deals for Q3 2023, up from 21% in Q2 2023. This marks the highest percentage of down rounds and the lowest percentage of up rounds since 2014, indicating a challenging environment for raising funds at higher valuations​ Acquisition/Buyout Financing Acquisition/buyout financing refers to the capital sources obtained to fund the purchase of a business, comprising a mix of debt and equity in the capital structure. It is specifically used in transactions where a business, usually by a private equity firm or a financial sponsor, is acquired with debt constituting a significant portion of the financing​​​​. The use of leverage (borrowed capital) is a key characteristic of this type of financing, especially in leveraged buyouts (LBOs), where the acquired company's assets are often used as collateral for the loans. An example of a business that might seek acquisition/buyout financing is a medium-sized enterprise in a mature industry, with stable cash flows and strong market presence, looking to acquire a competitor or a complementary business to consolidate market share, expand product lines, or enter new markets. Regarding the overall market trend for acquisition/buyout financing, it has faced significant challenges over the past year, akin to the most prolonged challenges since the 2008–2009 financial crisis. Factors like rising interest rates, geopolitical tensions, and recession fears have led to a sustained downturn in deal activity, which bottomed out in the first quarter of 2023. However, since then, there has been a cautious return to deal-making, and M&A activity seems to be stabilizing, although the pace of recovery varies across regions and sectors​​. According to BCG in 2023, M&A activity was significantly subdued compared to the frenzy observed in 2021 and early 2022. Through the end of August 2023, there was a 14% decline in deal volume and a 41% drop in deal value compared to the same period in 2022​​. Additionally, private equity and venture capital sectors experienced dramatic declines in deal activity, with existing investments facing sharp devaluations and numerous "down rounds" for VC-backed companies​​. This trend indicates a more cautious approach in acquisition/buyout financing, influenced by broader economic uncertainties and tighter financing conditions. Related resource: What is Acquihiring? A Comprehensive Guide for Founders What About Seed Financing, Bridge Financing, and the Other Types of Venture Capital Funding I’ve Heard About? VC funding is not a one-size-fits-all approach; it encompasses a diverse range of types beyond the principal categories of early stage, expansion, and acquisition/buyout financing. These include specialized forms such as seed financing, which nurtures business ideas into reality, and bridge financing, which provides interim support in critical business phases. In the following sections, we'll explore in detail: Types of Early Stage Financing: This includes seed financing, startup financing, and first stage financing, each addressing different needs of nascent businesses. Types of Expansion Financing: Here, we'll look at second-stage financing, bridge financing, and third-stage (mezzanine) financing, crucial for businesses in their growth phase. Types of Acquisition/Buyout Financing: Covering acquisition financing and management (leveraged buyout) financing, this section addresses the needs of businesses looking to expand through acquisitions. Each of these sections will delve into the specifics of what each financing type entails, who typically provides and receives the funding, associated risks, potential exit strategies, and real-world examples. Related resource: Understanding the Advantages and Disadvantages of Venture Capital for StartupsTypes of Early-Stage Financing Seed Financing Seed financing, the earliest stage in the capital-raising process for startups, is fundamental for getting a business off the ground. It is used for several initial operations, including market research, prototype development, and covering essential expenses like legal fees. This form of financing is typically equity-based, meaning investors provide capital in exchange for an equity interest in the company. Startups that receive seed funding are at their inception stage, and have a business idea or concept/ prototype. These businesses are typically pre-revenue and are seeking funds to turn their ideas into a viable product or service. Seed financing is often sourced from family members, friends, or angel investors, who are pivotal in this stage due to their ability to provide substantial capital. Some VCs or banks may shy away from seed financing due to its high risk. It's considered the riskiest form of investing, as it involves investing in a company far before it generates revenue or profits. That being said there are also many VCs that focus solely on investing at the seed stage. The success of a seed investment heavily depends on the viability of the startup's idea and the management's ability to execute it. If this is strong then the likelihood of finding seed funding from any investor is strong. Related resource: List of VCs investing at the Seed stage from our Connect investor database Seed financing is considered the riskiest form of investing in the venture capital spectrum. The primary risk stems from investing in a business far before it has proven its concept in the market, often without a clear path to profitability. This high risk, however, is balanced by the potential for significant returns if the startup succeeds. Exit strategies for seed investors might include acquisition by another company or an Initial Public Offering (IPO), but these are long-term outcomes. Another exit strategy could be the sale of shares during later funding rounds to other investors at a higher valuation. Despite its risky nature, seed financing can yield high returns. A famous example is Peter Thiel’s investment in Facebook. In 2004, Thiel became Facebook’s first outside investor with a $500,000 contribution for a 10% stake, eventually earning over $1 billion from his investment (source). Related resource: Seed Funding for Startups 101: A Complete Guide Startup Financing Startup financing refers to the capital used to fund a new business venture. This financing is essential for various activities, such as launching a company, buying real estate, hiring a team, purchasing necessary tools, launching a product, or growing the business. It can take the form of either equity or debt financing. Equity financing, often sourced from venture capital firms, provides capital in exchange for partial ownership, whereas debt financing, like taking a loan or opening a credit card, must be repaid with interest​​. Startup financing is commonly funded by angel investors, venture capital firms, banks, and sometimes through government grants or crowdfunding platforms. These entities typically fund startups that exhibit high growth potential, innovation, and a solid business model. Startups that receive funding usually have a unique business idea or a promising market opportunity. They are often in their early stages but have moved past the initial concept phase and have a detailed business plan and, in some cases, a minimum viable product (MVP). Investing in startups is inherently risky, given that about 90% of startups fail. The risks include market risks, where even a great idea may fail if there's no market for it or due to unforeseen changes in the market. The potential for high returns is counterbalanced by the high probability of failure​​​​. Common exit strategies for equity financing include acquisition by another company or an Initial Public Offering (IPO). Acquisition allows access to resources and can lead to economies of scale and diversification. An IPO provides access to capital for further growth or debt repayment. However, these strategies come with challenges like integration issues, financial risks, and regulatory hurdles​​​​​​. A classic example of successful startup financing is Airbnb. In its early stages, Airbnb raised funds from venture capital firms and angel investors, which helped it scale its operations globally and eventually led to a successful IPO in 2020. First Stage Financing First-stage financing, often referred to as Series A funding, is a pivotal moment for startups, marking their first significant round of venture capital financing. This phase is crucial for companies that have moved beyond the seed stage, demonstrating initial market traction and a working prototype of their product or service. The primary uses of Series A funds include further product development, bolstering marketing and sales efforts, and expanding into new markets. The funding for first-stage financing often comes from a variety of sources. Initially, startups might rely on funds from family, friends, or angel investors. As they progress, professional investors like venture capitalists or angel investors become significant sources of capital during the seed round, which is typically the first formal investment round in a startup​​​​. As for who gets funded, it's generally startups that have moved beyond the initial concept stage and are ready to ramp up their operations. This involves increasing production and sales, indicating that the company's business model is being validated​​. Typical exit strategies for investors within a 5-7 year timeframe include: IPO (Initial Public Offering): Offering shares on a stock exchange, providing liquidity and potential high returns. Acquisition: Selling the company to another entity for an immediate exit and payout. Secondary Offering: Selling shares to private equity firms or institutional investors for liquidity. An example of a company that successfully went through first-stage financing, specifically Series A funding, is YouTube. In 2005, YouTube raised $3.5 million in its Series A funding round, with venture capitalists as the primary investors. This funding was crucial in helping YouTube expand its services and grow its user base, ultimately leading to its position as a major player in online video and social media​ Types of Acquisition/Buyout Financing Acquisition Financing Acquisition financing is a process that involves various sources of capital used to fund a merger or acquisition. This type of financing is typically more intricate than other forms of financing due to the need for a blend of different financing methods to optimize costs and meet specific transaction requirements. Various alternatives available for acquisition financing include stock swap transactions, equity, all-cash deals, debt financing, mezzanine or quasi-debt, and leveraged buyouts (LBOs). Acquisition financing is used to fund the purchase of another company or its assets. It can be utilized for several purposes, including: Expanding a company's operations or market reach. Acquiring new technologies or products. Diversifying the company’s holdings. Eliminating competition by buying out competitors. The financing for acquisitions comes from multiple sources, each with its own characteristics and implications: Stock Swap Transaction: This involves the exchange of the acquirer's stock with that of the target company. It's common in private company acquisitions where the target's owner remains actively involved in the business. Equity: Equity financing is typically more expensive but offers more flexibility, especially suitable for companies in unstable industries or with unsteady cash flows. Cash Acquisition: In an all-cash deal, shares are swapped for cash, often used when the target company is smaller and has lower cash reserves. Debt Financing: This is a preferred method for many acquisitions, often considered the most cost-effective. Debt can be secured by the assets of the target company, including real estate, inventory, or intellectual property. Mezzanine or Quasi Debt: This is a hybrid form of financing that combines elements of debt and equity and can be converted into equity. Leveraged Buyout (LBO): In an LBO, the assets of the acquiring and target companies are used as collateral. LBOs are common in situations where the target company has a strong asset base and generates consistent cash flows​​. Acquisition financing is typically sought by companies looking to acquire other businesses. This includes large corporations expanding their market share, medium-sized businesses seeking growth through acquisition, or even smaller firms aiming to consolidate their market position. Risks in acquisition financing vary based on the type of loan, its term, and the amount of financing. The risks include: Type of Financing Provider: The wrong type of financing provider can pose significant risks, especially if the loan is collateralized, as in the case with most bank loans. Pressure from Lenders: Banks can exert pressure for repayment, particularly if they view the company primarily as asset collateral rather than focusing on future cash flow growth. Capital Shortage Post-Acquisition: Acquiring companies need additional capital post-acquisition for growth, and being capital-short can be a significant risk​​. Exit strategies for investors or owners in acquisition financing might include: Increasing personal salary and bonuses before exiting the company. Selling shares to existing partners upon retirement. Liquidating assets at market value. Going through an initial public offering (IPO). Merging with another business or being acquired. Selling the company outright​​. A prominent example of acquisition financing is Amazon's acquisition of Whole Foods Market. In 2017, Amazon acquired Whole Foods Market in a $13.7 billion all-cash deal. This acquisition allowed Amazon to expand significantly into physical retail stores and further its goal of selling more groceries. The deal involved Amazon paying a premium of about 27% over Whole Foods Market's closing price, indicating a substantial investment in future growth prospects Management (Leveraged Buyout) Financing A Management Buyout (MBO), a type of leveraged buyout (LBO), is a corporate finance transaction where a company's management team acquires the business by borrowing funds. This usually occurs when an owner-founder is retiring or a majority shareholder wants to exit. The management believes that they can leverage their expertise to grow the business and improve operations, generating a return on investment. Lenders often favor MBOs as they ensure business continuity and maintain customer confidence. Financing for MBOs can come from various sources: Debt Financing: This is a common method where management borrows from banks, though banks may view MBOs as risky. Seller/Owner Financing: The seller may finance the buyout through a note, which is paid back from the company’s earnings over time. Private Equity Financing: Private equity funds may lend capital in exchange for a share of the company, with management also contributing financially. Mezzanine Financing: This is a mix of debt and equity that enhances the equity investment of the management team without diluting ownership​​. Risks associated with MBOs include: Interest Rate Risk: High interest rates on financing agreements can be a challenge. Operational Risk: Business efficiencies anticipated may not materialize, causing operational problems. Industry Shock Risk: An unexpected industry shock can adversely affect the success of the MBO​​. Exit strategies for MBOs typically align with general business exit strategies and may include: Increasing personal salary and bonuses before exiting. Selling shares to partners or through an initial public offering (IPO). Liquidating assets. Merging with or being acquired by another business. Outright sale of the company. A classic example of an MBO is the acquisition of Dell Inc. by its founder, Michael Dell, and a private equity firm, Silver Lake Partners, in 2013. The deal valued at about $24.4 billion, involved Michael Dell and the investment firm buying back Dell from public shareholders. This buyout was funded through a combination of Dell's and Silver Lake's cash along with debt financing. The MBO aimed to transition Dell from a publicly traded company to a privately held one, allowing more flexibility in restructuring the business without public market pressures. ​ How to Obtain Venture Capital Funding Obtaining venture capital funding is a multi-step process that requires preparation, strategic networking, and clear communication. Here’s a guide on how companies can navigate this process. Present Your Idea With a Compelling Business Plan When presenting a business plan, start by tailoring your presentation to align with the VC firm's interests, emphasizing aspects of your business that resonate with their investment philosophy. Creating a visually appealing slide deck, complete with graphs, charts, and infographics, can help make complex data more accessible and keep your audience engaged. Practice is key, so rehearse your presentation multiple times to refine your message and improve delivery. During the presentation, begin with an attention-grabbing story or statistic and then provide a structured walkthrough of your business plan. Be prepared for a Q&A session afterward and handle questions confidently and honestly. Remember, if you don’t know an answer, it’s perfectly acceptable to acknowledge it and offer to provide the information later. Following the presentation, be proactive in providing any requested additional documents and maintain open lines of communication for future discussions. Key components of a business plan: Executive Summary: A concise overview of your business, including the mission statement, product/service description, and basic information about your company’s leadership team, employees, and location. Company Description: Detailed information about what your company does and what problems it solves. Explain why your product or service is necessary. Market Analysis: Provide a robust market analysis that includes target market segmentation, market size, growth potential, and competitive analysis. Organizational Structure and Management Team: Outline your company’s structure and introduce your management team, highlighting their experience and roles in the success of the business. Products or Services: Detailed description of your products or services, including information about the product lifecycle, intellectual property status, and research and development activities if applicable. Marketing and Sales Strategy: Explain how you plan to attract and retain customers. This should include your sales strategy, marketing initiatives, and a description of the sales funnel. Financial Plan and Projections: This is critical for VC firms. Include historical financial data (if available) and prospective financial data, including forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. Funding Request: Specify the amount of funding you are seeking and explain how it will be used. Also, discuss your plans for future funding. Exit Strategy: Describe the exit strategies you might consider, such as acquisition, IPO, or selling your stake in the business. This shows investors how they might reap a return on their investment. Your business plan is a reflection of your vision and capability, so ensure it is clear, concise, and compelling. It should effectively communicate the potential of your business and be able to capture the interest and confidence of the VC firm. Attend an Introductory Meeting to Discuss Project Details The introductory meeting with a VC firm is a pivotal moment for entrepreneurs seeking funding. Its purpose extends beyond mere information exchange; it's an opportunity to make a compelling first impression, establish the credibility and potential of your business idea, and assess the compatibility between your company's goals and the VC’s investment philosophy. During this meeting, several critical details will be discussed: Business Model: You will explain how your business intends to make money, focusing on its sustainability and profitability. Market Opportunity: Discuss the potential market size and how your company plans to capture and grow its market share. Competitive Landscape: Outline your key competitors and what sets your company apart from them. Financial Needs: Clearly state how much funding you need, what you will use it for, and your company’s valuation. Future Vision: Share your long-term vision for the company, including potential growth areas and exit strategies. Examples reinforcing the importance of this meeting include: Tech Startup: A tech startup might use this meeting to showcase their innovative technology, provide evidence of scalability, and present market research supporting the demand for their solution. For instance, a SaaS company could illustrate their recurring revenue model and discuss their rapid user growth and engagement metrics. Biotech Firm: A biotech company might focus on their cutting-edge research, its impact on healthcare, and the path to regulatory approval and commercialization. They could discuss clinical trial results or partnerships with medical institutions. Retail Business: A retail entrepreneur might discuss their unique brand positioning, market penetration strategies, and plans for online-offline integration. They could highlight customer loyalty data and plans for expanding their digital footprint. These examples underscore the significance of the introductory meeting as a platform to demonstrate the potential for growth, showcase the strength and expertise of the team, and articulate the viability of the business model. This meeting is not just an informational session; it's a strategic opportunity to begin building a relationship with potential investors. Remember, the goal of this meeting is to leave a lasting, positive impression that paves the way for further discussions and potential investment. It's as much about selling your vision and team as it is about presenting your business plan. Account for Business-Related Queries and Perform Due Diligence The due diligence phase is a critical part of the VC investment process. It's a comprehensive evaluation undertaken by potential investors to assess the viability and potential of a startup before they commit to an investment. This phase allows investors to confirm the details presented by the startup and to understand the risks and opportunities associated with the investment. During this phase, a wide range of information will be requested, covering various aspects of the startup's operations, finances, legal standings, and market position. Some key areas include: Financial Records: Detailed examination of financial statements, cash flow, revenue projections, burn rate, and historical financial performance. This also includes an analysis of the startup’s business model and profitability potential. Legal Documents: Review of legal documents such as incorporation papers, patents, intellectual property rights, legal disputes, and contractual obligations with suppliers, customers, or partners. Market Analysis: Assessment of the startup’s market, including size, growth potential, competitive landscape, and the company's market share and positioning. Product or Service Evaluation: Thorough evaluation of the product or service, including its development stage, technological viability, scalability, and competitive advantages. Customer References and Sales Data: Verification of customer references, sales records, and customer retention data to assess market acceptance and satisfaction. Management and Team Interviews: Interviews with key team members to evaluate their expertise, commitment, and ability to execute the business plan. Operational Processes: Review of internal processes, including supply chain management, production, and delivery mechanisms, to assess operational efficiency and scalability. Examples of Due Diligence Activities Customer Reference Checks: Investors may directly contact a few customers to gauge their satisfaction and understand the value proposition of the startup’s product or service. Product Evaluations: Technical assessment of the product to understand its uniqueness, technological soundness, and compliance with industry standards. Business Strategy Review: In-depth discussions about the startup’s business strategy, including market entry strategies, growth plans, and risk management. Management Interviews: Personal interviews with the CEO, CFO, and other key executives to assess their leadership and operational capabilities. Market and Industry Analysis: Engaging market experts or conducting independent research to validate the startup’s market analysis and growth projections. Due diligence is vital for both investors and startups. For investors, it mitigates risk by providing a clear picture of what they are investing in. It uncovers potential red flags that could affect the investment's return. For startups, this phase is an opportunity to demonstrate transparency, build trust, and potentially receive valuable insights from experienced investors. Related resource: Valuing Startups: 10 Popular Methods Review Term Sheets and Approve or Decline Funding A term sheet is a critical document in the venture capital funding process. It's a non-binding agreement outlining the basic terms and conditions under which an investment will be made. A term sheet serves as a template to develop more detailed legal documents and is the basis for further negotiations. It typically includes information about the valuation of the company, the amount of investment, the percentage of ownership stake the investor will receive, the rights and responsibilities of each party, and other key terms such as voting rights, liquidation preferences, anti-dilution provisions, and exit strategy. During the term sheet review, negotiations are a fundamental part. It's a give-and-take process where both the startup and the VC firm discuss and agree upon the terms of the investment. These negotiations are crucial as they determine how control, risks, and rewards are distributed between the startup founders and the investors. Areas of negotiation can include: Valuation: Determining the company's worth and consequently how much equity the investor gets for their investment. Ownership and Control: Deciding on the percentage of ownership the investor will have and how much control they will exert over company decisions. Protection Provisions: Negotiating terms that protect the investor’s interests, such as anti-dilution clauses, liquidation preferences, and board representation. Vesting Schedules: Discuss how the founder’s shares will vest over time to ensure their continued involvement in the business. Negotiations require both parties to compromise and agree on terms that align the interests of both the investors and the founders. Once the term sheet is accepted and signed by both parties, it leads to the drafting of detailed legal documents that formalize the investment. The actual disbursement of funds typically occurs after these legal documents are finalized and signed, a process that can take several weeks to months, depending on the complexity of the terms and the due diligence process. The funds are generally made available in a single tranche or in multiple tranches based on agreed-upon milestones or conditions. It's important for startups to understand that a term sheet, while not legally binding in most respects, is a significant step in the funding process. It sets the stage for the formal legal agreements and the eventual receipt of funding. The clarity, fairness, and thoroughness of the term sheet can set the tone for a successful partnership between the startup and the venture capital firm. Raise Capital and Keep Investors in the Know with Visible As a founder, it's essential to remember that venture capital is not the only measure of success. The true value of your venture lies in the problem it solves, the impact it creates, and the legacy it builds. Venture capital can be a powerful catalyst, but your vision, tenacity, and ability to execute are what will ultimately define your journey and success. Let Visible help you succeed- raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days.

About Laurel & Hampr Laurel Hess is the CEO and Founder of hampr. hampr is a peer-to-peer, on-demand laundry app that provides magical wash-and-fold service at the push of a button! As the hampr website states, “The idea for hampr came after a chaotic weekend with kid sports games and 3 birthday parties. On top of that, there was still grocery shopping, cleaning the house, and oh, spending meaningful time with the family. Laurel was over it. So she thought “Hold on, why can’t laundry be as easy as ordering groceries with a tap of your phone?” And just like that, bam! hampr was born in 2020.” Quick facts: Founded Year: 2020 Headquarters: Lafayette, Louisiana Total Funding Amount: $9.7M Notable Investors: Techstars,VILLAGEx Learn more about hampr and give it a try yourself here The Power of Investor Updates for Laurel Investor updates can be a powerful tool for startup founders. Most VCS only hear from 10-50% of their portfolio companies on a regular basis. This is a major arbitrage opportunity for founders. Investor updates can help you stay top of mind with investors and secure help with fundraising, hiring, closing customers, strategy, etc — all in just an hour or less. As Laurel Hess wrote in her LinkedIn Post, “It boggles my mind how many founders don't do regular company updates to stakeholders (and potential investors!). So many people I know treat this as a chore - when it can be the highlight of your month (like it is mine!). Taking the time to review your business with your stakeholders is actually a really great opportunity for growth - if you view it that way, there is a ton of potential to unlock. I have gained the following from my regular updates: Intros to potential investors Additional capital for a round I'm working on Intros to new verticals for expansion Advice on strategy for a problem we are working on Intros to new mentors/advisors to unlock the next phase of growth Allllll this for just 1 hour of my time each month? That is the definition of no-brainer." Laurel’s Investor Update Template Sticking to a template and format can help build regular investor updates into your monthly rhythms. Laurel shared her monthly template that she uses in Visible via a LinkedIn Post, you can check it out below as well: “I have used Visible to manage my updates almost since the beginning. I love this company - they make it SO EFFORTLESS to send really factual, data-driven updates. SO, using Visible, this is how my monthly updates are typically structured: 1. Overview - this is a high-level, personal letter from me about the high notes and low notes of the update. Basically a TL/DR section. 2. Asks - I don't always have these but when I do, I have them right after my summary so it's high on the scroll. 3. Performance - I add charts on GMV growth month-over-month followed by membership KPIs in a chart (growth, churn and renewal). Then I add a summary with my insights/thoughts on each chart. Check out an example of a Visible chart below: 4. What we are excited about: A section on 1 or 2 things that the team is working on that we are really excited about - usually with a photo. 5. What we are Improving/Exploring: This is a realness section of challenges and concerns that we have and what we are doing to actively improve on them. AND THAT'S IT! It gives a super high-level overview of where we are, what our focus is, and how we are unlocking new opportunities. It's skimmable, it's concise and it's easy for everyone. AND because I use Visible.vc, it automatically ports in the numbers I need for my charts each month so all I have to do is replicate the previous month's email and then go to town. I can get a very thoughtful email out in 1 hour or less - and it gives me so much more in return.” Check out Laurel's template and add it to your Visible account below: Send Your Next Investor Update with Visible Join Laurel and the 3,300+ founders that use Visible to update their investors every month. Try Visible free for 14 days. Not sure where to get started? Check out our Update Template Library.

The deal flow process is arguably the most important operational functions at a VC firm. From an outsider's perspective, the way a VC firm runs its deal flow process can be mysterious. It’s the secret recipe that helps VC firms find and invest in the best-performing startups resulting in the biggest returns for their LPs. In this article we’re breaking down the deal flow process: what it is and why it matters. Defining deal flow in venture capital Deal flow is defined as the process investors run to attract potential investments, narrow down those opportunities, and then make a final investment decision. How a venture capital firm runs this process, and the quality of investments in their deal pipeline, is what separates great investors from the rest of the pack. The process of building great deal flow is similar to a sales funnel. Investors want a lot of leads (potential investments) coming to them at the top of their funnel to increase their odds of finding winners. What’s most important though is the quality of those leads. Too much inbound interest from startups that are not aligned with the fund’s thesis is overwhelming and distracting for investors. This is why it’s important for startups to do their research before reaching out to an investor. Similarly, it’s why investors often consider companies that come to them from a referral more credible opportunities -- those companies have already been pre-vetted by someone in their network. Ultimately, investors care about both volume and quality when building their deal flow pipeline. Maximizing the number of high-quality leads ensures investors are spending their time reviewing opportunities that can actually result in an investment. Why startups should be familiar with the deal flow process It’s important for startups to be familiar with the deal flow process so they can engage with the right type of investors, in the right way. When startups fundraise with a solid understanding of the deal flow process they can save themselves time and increase their likelihood of securing funding. According to a survey from more than 900 VC’s, investors are most likely to source a deal from the following channels: 30% - former colleagues or work acquaintances 30% - VCs initiating contact with entrepreneurs 20% - other investors 10% - cold outreach from startups 8% - existing portfolio companies What this means for startups is they shouldn’t rely on cold outbound alone. They’re more likely to stand out to an investor if they can get a warm intro from a personal connection, another relevant investor, or even from a current portfolio company. Founders should invest more time deepening relationships in their networks as opposed to a spray-and-pray cold outbound approach. A great way for founders to strengthen their relationships with their networks is to send out monthly communications to keep their potential investors, friends, and colleagues engaged. Get started sending regular updates with Visible. If a company is going to send a cold outreach to an investor it’s important to understand just how much inbound interest investors receive on a weekly basis. It’s reported that small VC firms receive about 30 inbound messages from startups per week while larger firms can receive more than 200 (source). Here's what this means for startups: Don’t be discouraged if an investor doesn’t respond to your cold outreach; they’re busy making their way through all the other inbound interest from the week Your pitch deck needs to be clear, concise, and compelling Make sure you research the investor in advance and are confident your company fits their investment thesis; otherwise, you’re wasting multiple people's time Related resource: Pitch Deck 101: How Many Slides Should My Pitch Deck Have? It’s also important for startups to understand that investors only invest in about 1% of the companies that go through their pipeline. While this may sound daunting, this advice from VC investor Krittr highlights the optimistic mindset founders should take. “This is the first thing that is important to understand — VC firms want you to succeed. We want you to get the money, and grow. All we want is a strong enough reason to give you the money. Remember this, this mindset shift does wonders.” Stages of the deal flow process in venture capital The deal flow process is commonly broken down into seven phases with a decreasing number of companies making it to the next phase. During this process, investors are collecting more information and building conviction about whether a company is a fit for their firm or not. A more in-depth breakdown of each step can be found below. 1. Sourcing Sourcing is the process of VCs finding potential investment opportunities. To source deals investors will do things like attend networking events (demo days, pitch competitions, industry conferences), research market activity, and meet with other VCs or incubators/accelerators to discuss deal opportunities. 2. Screening During the screening process, investors will rely on basic assets such as pitch decks to determine which opportunities are worth digging into on a deeper level. Share your deck with confidence and track engagement rates with Visible. 3. First meeting When investors believe the company has the potential to be a good investment opportunity based on their initial pitch deck, they will be invited to join a first meeting with the firm. At this stage, investors are trying to better understand the dynamics of the leadership team, whether the company has a competitive advantage, and the market health of the specific sector. This may lead to additional follow-up meetings where more in-depth questions are asked by the investment team. Learn more about preparing for the first meeting. 4. Due diligence If the investment team has built conviction on a company based on the initial meetings they will kick off a more thorough due diligence process. During this phase, the VC is trying to gain an in-depth understanding and evidence of the company’s financial, technological, legal, and market opportunities and risks. Here is a breakdown of the topics investors evaluate at this stage Market - The size of the market, level of maturity, predicted growth and trends, competitive activity, and regulatory changes Business - How does the product work, what are the early customer metrics indicating (CAC, Churn Rate, Average Order Size, MRR, Annual Run Rate, Cash Runway, Gross Sales, CLV), how is the team structured, what does the company operations look like Technical - Does the company have any intellectual property or patents Financial due diligence - Analyzing financial statements, unit economics, and performance rations Legal due diligence - Is the company complying with local and federal regulations 5. Investment Committee The next phase of the deal flow process is when the investment committee reviews all the due diligence information, listens to the company present another time, asks additional questions, and then votes on whether to move forward with the investment opportunity. The investment committee is usually comprised of the General Partners who have worked on the deal, some independent investment committee members, and possibly experts in the field. It is during this meeting that the firm decides whether or not to invest in the company. The VC Krittr explains that VCs can have different motivations for choosing to invest in a particular company. VC motivations can include: Conviction that this company will return 10x their investment (the VC power law) Balancing risk in the portfolio construction Building the right co-investing relationships Building a relationship with a great founder even if success may not come from this particular company Publicity or staying true to the firm's thesis/mission As a startup, it is beneficial to identify what is motivating the VC so you can leverage your strengths and build a good relationship with the VC. 6. Term sheet and negotiation Once the VC has decided to invest in a company they will give the startup a term sheet and negotiation begins. VCs and startups negotiate terms until both parties agree on key items such as: Deal size and ownership percentage - how much equity founders are willing to give to investors Cash flow rights - the financial upside that gives founders incentives to perform Control rights - the board and voting rights that allow VCs to intervene if needed Liquidation rights - the distribution of the payoff if the company fails and has to be sold Employment terms, particularly vesting - which gives entrepreneurs incentives both to perform and to stay at the company Pro rata rights - allows investors to retain their initial ownership percentage by participating in future financing rounds The goal of a term sheet negotiation is for both founders and VCs to feel fairly rewarded when the company succeeds, and protected if the company is missing milestones. (Source) Related resource: 6 Components of a VC Startup Term Sheet Related resource: Navigating Your Series A Term Sheet 7. Capital Deployment The final stage in the deal flow process process is the actual transaction of capital from the venture capital firm to the startup's bank account. Related resource: Navigating Pro Rata Rights: Essential Insights for Startup Entrepreneurs Key metrics venture capitalists track in the deal flow process To ensure a Venture Capital firm is running an efficient deal flow process they measure success based on a few key metrics. Volume - Investors measure how many new companies are added to their deal flow pipeline each week. It’s an indication of their brand recognition in the industry and awareness among founders. Relevance - VCs not only care about the number of investment opportunities that land in their inbox but also how relevant the deals are. If they are seeing a high number of irrelevant deals the VC may need to strengthen their branding and messaging to attract the right type of founders. Conversion rates - It’s important for investors to track how many companies are making it to each stage within their pipeline so they can identify any areas of inefficiency. For example, they may have too many deals making it to the first meeting stage and as a result, they may need to set up a more formal application process for companies to go through. Diversity - Investors measure the diversity of the deals they are evaluating to understand and remove bias from their deal flow processes. For example, if they’re mostly receiving referrals or inbound interest from a certain demographic, the firm likely needs to work on diversifying their network as a whole. Related resource: Improving Diversity at Your VC firm Find the right investors for your startup with Visible Understanding the venture capital deal flow process is fundamental if startups want to make a great impression while fundraising. Demonstrating an understanding of each of the seven phases of the deal flow process is a sure way to impress investors. Additionally, understanding what is required from startups at each step will help founders prepare for their next fundraise. Visible helps over 3,500+ startups with their fundraising process.