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As we advance into a technologically-driven future, gaming has evolved beyond mere entertainment. It converges art, technology, and commerce. For founders in the gaming industry, understanding the intricacies of current technological advancements, especially in AI, is not just beneficial—it’s crucial. AI’s transformative impact promises to shape the very fabric of gaming experiences, ensuring that they remain dynamic, engaging, and continuously evolving The investment landscape for gaming in 2023 is still very strong. Key trends spurring VC interest in gaming include: The rise of mobile gaming: Mobile gaming is the fastest-growing segment of the gaming market. In 2021, mobile gaming accounted for 52% of the global gaming market, and this number is expected to grow to 60% by 2026. This growth is being driven by the increasing popularity of smartphones and tablets, as well as the development of new mobile gaming platforms like Apple Arcade and Google Stadia. “Revenue in the Mobile Games market is projected to reach US$286bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 7.08%, resulting in a projected market volume of US$377bn by 2027. The average revenue per user (ARPU) in the Mobile Games market is projected to amount to US$148.80 in 2023.” Statista The increasing popularity of esports: Esports is a competitive video gaming industry that has seen significant growth in recent years, driven by the increasing popularity of live-streaming platforms like Twitch and YouTube, as well as the growing number of professional esports leagues and tournaments. Statista Report: Revenue in the Esports market is projected to reach US$3.75bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 9.54%, resulting in a projected market volume of US$5.40bn by 2027. The largest market is Esports Betting with a market volume of US$2.13bn in 2023. With a projected market volume of US$871.00m in 2023, most revenue is generated in the United States. In the Esports market, the number of users is expected to amount to 720.8m users by 2027. User penetration will be 7.5% in 2023 and is expected to hit 9.1% by 2027. The average revenue per user (ARPU) is expected to amount to US$6.47. The development of new technologies: New technologies like AI, virtual reality (VR), and augmented reality (AR) are also driving investment in the gaming industry. These technologies have the potential to create new and immersive gaming experiences that have never been possible before. Gaming Now and In The Future “Gaming is a massive market that will only continue growing. The growth is easy to see: In 2019, the global gaming market was $152 billion. By 2021, it reached $214 billion and is on track to generate over $300 billion in 2026. Bigger than all other forms of entertainment.” NFX The gaming industry is one of the fastest-growing industries in the world, with a market size of over $200 billion. The industry’s future will be heavily influenced by advancements in AI, Virtual Reality (VR) and Augmented Reality (AR). These technologies are shaping immersive gaming experiences and will continue to hold a significant role. However, the real game-changer will be the effective application of AI technologies. The five key areas where AI is having an impact on gaming: generative agents, personalization, AI storytelling, dynamic worlds, and AI copilots. By harnessing AI, games can become “neverending”, maintaining their appeal indefinitely through personalized experiences, AI storytelling, and dynamic, evolving worlds. The rise of social elements in games, powered by AI copilots and intelligent chat functions,.will drive engagement and longevity in the player base, heralding the future of social gaming Business Implications of AI in Gaming AI’s integration into the sector offers a transformative experience not just for players but also for gaming businesses. From enhancing player engagement to providing advanced monetization avenues, AI is in fact game-changing. Monetization Models Enhanced by AI Optimized In-Game Purchases: AI can monitor player behavior and preferences, offering real-time personalized suggestions for in-game purchases. For instance, if a player frequently struggles at a specific game level, AI might suggest a power-up or equipment purchase that can assist them. This not only increases potential sales but also enhances the gaming experience for the player. Dynamic Subscription Models: Instead of a one-size-fits-all subscription model, AI enables gaming platforms to offer tailored subscription packages. By analyzing a player’s gaming habits, frequency, and genre preferences, AI can suggest a subscription model that offers the best value, encouraging higher subscription rates. Smarter Advertisements: AI’s predictive analysis can forecast when a player is most likely to be receptive to advertisements, thereby reducing ad fatigue and increasing click-through rates. Furthermore, AI can customize ad content based on player preferences, ensuring higher engagement and conversion. Market Analysis and Forecasting Predicting Market Trends: AI can analyze vast amounts of data from forums, social media, and other platforms to spot emerging trends. By identifying what players are discussing or showing increased interest in, developers can prioritize certain game features, genres, or mechanics that are gaining traction. Player Retention Forecasting: AI can predict when players are likely to stop playing, allowing developers to introduce timely interventions, whether it’s through in-game events, updates, or other engagement tactics. This leads to increased player longevity and, consequently, higher lifetime value. Adjusting Game Development Strategies: By monitoring real-time feedback and player behavior within a game, AI can help developers understand which aspects of the game are most loved or which areas need improvement. This feedback loop can be invaluable, especially during beta testing, ensuring that the final product is better aligned with market demands. AI for Game Design & Player Experience The infusion of Artificial Intelligence (AI) into the gaming industry is not merely about adding smarter enemies or more realistic visuals. At its core, AI has the potential to revolutionize how games are designed and how players experience them. The intricate dance between game mechanics and player response is more sophisticated than ever, thanks to AI. Let’s dive deep into its multifaceted impact. AI Integration in Game Design AI in Procedural Content Generation: No longer are game worlds static or bounded by the limitations of manual design. With AI, games can generate levels, terrains, and even entire universes on-the-fly. This not only ensures each gameplay is fresh but also vastly enhances the replayability of games. Imagine embarking on a new adventure each time you play, with unpredictable terrains and challenges. AI in Game Testing: Quality assurance in gaming is paramount. However, with expansive game worlds and intricate mechanics, manual testing can be labor-intensive and might not cover all potential scenarios. Enter AI bots, which can simulate countless hours of gameplay, identifying glitches, and ensuring a seamless player experience. Dynamic Difficulty Adjustment (DDA): One-size-fits-all is a passé concept in modern gaming. AI can continuously monitor a player’s performance and adapt the game’s difficulty in real-time. This ensures that games remain engaging and challenging but stop short of being overly frustrating. It’s about striking the right balance to keep players invested. AI in Player Experience Player Behavior Analysis: Each player is unique, and AI recognizes that. By studying patterns, preferences, and behaviors, AI can modify game environments or suggest personalized paths, ensuring an immersive experience tailored for each gamer. Customized Game Narratives: Story-driven games have always been popular, but what if the narrative changed based on every choice you made? AI can weave intricate storylines that diverge and converge based on player decisions, ensuring that each gameplay tells a distinct tale. Your choices matter more than ever, and the narrative payoff is genuinely your own. AI in Multiplayer: The multiplayer realm benefits immensely from AI. Beyond crafting smarter Non-Player Characters (NPCs) that challenge even the most seasoned gamers, AI can step in when human players drop out, ensuring the game continues without a hitch. This seamless blend of AI and human intelligence creates dynamic multiplayer arenas that are unpredictable and exhilarating. Incorporating AI into game design and player experience has shown it’s not about replacing the human touch but enhancing it. It’s about crafting expansive, responsive, and deeply personal gaming worlds where every player feels seen, challenged, and, most importantly, immersed. Gaming Essentials to Include in Your Pitch Deck Overview of Your Game: Type/Category Supported Devices Revenue models, Key Performance Metrics (if known) Current progress stage Primary technology (like game engine) Consider incorporating a demo video, early versions, or visual snapshots. General Info: Brief game concept overview (1-2 sections) Titles that inspire you Fundamental gameplay elements Intended player demographic Game universe/background (Divide this into 2 or 3 slides for clarity) Distinguishing Features / Selling Points: What makes your game unique from competitors? Why players will be drawn to it Basic gameplay and overarching game narrative Primary game cycle Secondary game narratives Highlighted characteristics (Organize this info across 2-3 slides for visual appeal) Monetization Strategy: Free or Paid model? Plan for in-game purchases, advertisements, or both? Types of in-game offerings envisioned? If it’s a paid model, potential pricing? Artistic Direction: Showcase visual inspirations, preliminary designs, prototypes, animated sequences. (Recommendation: Integrate visuals from the actual game not just here, but throughout the presentation for consistency and immersion) Projected Development Journey and Funding Needs: Duration of current production time? Anticipated project milestones? Financial projections and needs? Beneficial to include: Visual representation of the development journey, manpower allocation, and post-release content strategy. Team: Your base location? Team size and roles? Competencies and strengths? Any previous successful launches? Your overarching mission and goals? Resources & Good Reads Gaming VC profiles in Visible’s Fundraising CRM YC Advice for Gaming Startups The NeverEnding Game: How AI Will Create a New Category of Games The Generative AI Revolution in Games Communities The International Game Developers Association (IGDA) is the world’s largest nonprofit membership organization serving all individuals who create games. The Game Developers Conference (GDC) is the world’s largest annual gathering of game developers. VC Firms Investing in Gaming Companies Konvoy Ventures About: Konvoy Ventures is a venture capital fund dedicated to esports & video gaming Thesis: We invest in the infrastructure technology, tools, and platforms of tomorrow’s video gaming industry. Wonder Ventures About: Wonder Ventures invests in entrepreneurs who build the world’s most innovative technology companies. Thesis: Our mission is to invest earlier than anyone in Southern California’s best founders. Lumikai About: We are India’s first gaming & interactive entertainment venture fund. We catalyse game-changing, early stage founders building the future of gaming and interactive media. Thesis: We are curating and supporting a select tribe of India’s most forward thinking, creative and talented founders. Our vision is to find and fund game-changing early stage founders with a bold vision for the future and to help them achieve outlier success. We bring decades of sector strategic experience and knowledge, while leveraging our all-star local and global networks to help propel our founders to success. Kakao Ventures About: Kakao Ventures (circa 2012 as K Cube Ventures, rebranded in 2017) is the most active seed stage VC in Korea, with over 190 portfolios and AUM of $300M (330B KRW) as of date. Kakao Ventures believes in harnessing the power of startups to change our world. Our mission statement is to be the backers of smart entrepreneurs who set their courses, in the form of startups armed with competitive edge, to solve real-world problems. Hence we hold entrepreneurs in the highest regard, and leads us to our raison d’être – making the world a better place for talented people to continuously make an impact to the world around theirs. Serena Capital About: Serena Capital caters to technology companies with seed, early, and later stage venture investments. Investment strategy: We handpick on average four to five teams per year and focus on helping them reach their maximum potential. We are not looking for early exits. We back Europe-based entrepreneurs willing to build continental or worldwide category leaders. We strongly prefer to lead or co-lead rounds. Thesis: Serena was founded by entrepreneurs on the belief that your VC should work for you and not the way around. We are not industry-specific as long as your business model is scalable and your product is digital. We have a special affection for DeepTech, enterprise software, marketplaces, and entertainment. BITKRAFT Ventures About: Built by founders for founders, BITKRAFT is a global early- and mid-stage investment platform for gaming, esports, and interactive media. We focus on Seed, Series A, and Series B investments in game studios, interactive platforms, and immersive technology. Sweetspot check size: $ 3M Traction metrics requirements: No hard requirements; preference for second-time or serial entrepreneurs Thesis: Vision of Synthetic Reality (https://www.bitkraft.vc/vision/)—the increasing convergence of the physical and digital worlds WndrCo About: WndrCo is a holding company that invests in, acquires, develops, and operates consumer technology businesses for the long term. Andover Ventures About: Andover is a venture fund investing in early stage software-enabled start-ups ranging from Pre-seed to Series A. We are sector agnostic; however, our team has a background in software development and financial technology. We make co-investments alongside larger funds, angel groups, and other family offices. Aura Ventures About: We are an early stage venture capital firm dedicated to investing in ambitious entrepreneurs to define and dominate a new generation of commerce. Velo Partners About: Velo Partners invests and manages a portfolio spanning the global gaming and gambling industry across mobile, online, land-based, real-money, social, B2B, and B2C assets. Thesis: Velo typically invests in Series A or early growth stage rounds. Our ideal investment candidates demonstrate strong early traction and a clear understanding of their unit economics and growth trajectory. We also work in association with a gaming accelerator called RNG FOUNDRY for earlier stage investment opportunities. Once invested, we typically follow our rights for later investment rounds and work with management to define good corporate governance and reporting. We will opportunistically evaluate later stage investments on an ad-hoc basis. Hiro Capital About: Hiro Capital invests in UK, European and North American innovators in Videogames, Esports, Streaming and Digital Sports. We invest in Metaverse technology founders and Game creators who are building the future. We believe that Games and Games technologies will be at the heart of next generation human societies. For us, play is deep. We are battle-scarred entrepreneurs who back next generation entrepreneurs. We have founded games and technology disruptors worth billions of dollars. We have led companies from startups to IPO in London and New York. We are gamers and sports nerds. We love games, stories, characters and deep tech. Thesis: We Invest in the innovators building the future of Games, Esports, Digital Sports Griffin Gaming Partners About: Griffin Gaming Partners is a leading venture capital firm singularly focused on investing in the global gaming market. We are founder-friendly, care deeply for our industry and bring decades of investment, advisory and operational experience. Andreessen Horowitz / a16z 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. Sweetspot check size: $ 25M 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. Makers Fund About: A venture capital fund created to support founders, combining deep industry experience with multi-stage investment across Seed to Series B. March Capital Partners About: March Capital Partners invest in breakthrough technology companies in Silicon Beach, Silicon Valley, and the world. Thesis: March Capital is a top-tier venture capital & growth equity firm headquartered in Santa Monica, California and investing globally since 2014. We identify entrepreneurs with a provocative vision to lead the future and later-stage companies poised for hyper-growth, then dare to go all in by leading rounds with deep conviction and concentration risk. Northzone About: We’re a multi-stage venture capital fund partnering with founders from Seed to Growth. Across Europe and the US. Bessemer Venture Partners About: Bessemer Venture Partners is the world’s most experienced early-stage venture capital firm. With a portfolio of more than 200 companies, Bessemer helps visionary entrepreneurs lay strong foundations to create companies that matter, and supports them through every stage of their growth. The firm has backed more than 120 IPOs, including Shopify, Yelp, LinkedIn, Skype, LifeLock, Twilio, SendGrid, DocuSign, Fiverr, Wix, and MindBody. Bessemer’s 16 investing partners operate from offices in Silicon Valley, San Francisco, New York City, Boston, Israel, and India. Follow @BessemerVP and learn more at bvp.com. Sweetspot check size: $ 15M Atomico About: Atomico is a risk capital group. They are entrepreneurs with global perspectives who invest their own capital in passionate entrepreneurs with powerful ideas. Through their experience building Skype, Joost and Kazaa, they understand the value of game-changing business models and have created a worldwide ecosystem to help accelerate the growth of the companies in which they invest. The Games Fund About: TGF is an early-stage VC fund founded by video game industry veterans. We invest in future leaders: game developers, gaming technologies, and services. We share best practices and offer our experience and personal touch. Looking for Investors? Try Visible Today! 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. Related Resource: Gaming VC profiles in our Fundraising CRM

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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: The Understandable Guide to Startup Funding Stages Just as a sales and marketing funnel starts by finding the right leads, the same is true for a fundraise. Founders raising venture capital should start by identifying the right investors for their businesses. If you’re a founder located in France and are looking for venture capitalists in your area, check out our list below: 1. Alven Capital Partners As put by their team, “Alven is an independent venture investment firm with a successful track record of 5 successive funds backing more than 130 startups over 20 years. Our team consists in seasoned investors and functional experts with significant startup experience, to identify promising startups and accelerate their growth.” Learn more about Alven by checking out their Visible Connect profile → Location Alven has offices in Paris and London and invests in founders across Europe. Portfolio Highlights Some of Alven’s most popular investments include: Algolia ChartMogul Stripe Funding Stage Alven attempts to be the first check into a business after angel investors — typically seed or series A. Their typical investment is between €500K and €5M. 2. Partech As put by their team, “Partech is a global investment platform for tech and digital companies, led by ex-entrepreneurs and operators of the industry spread across offices in San Francisco, Paris, Berlin and Dakar. We invest from €200K to €75M in a broad range of technologies and businesses for enterprises and consumers, from software, digital brands and services to hardware and deep tech, across all major industries.” Learn more about Partech by checking out their Visible Connect profile → Location Partech has offices across the globe and has multiple funds to invest in companies across the globe. Portfolio Highlights Some of Partech’s most popular investments include: Bolt The Bouqs Co. Zeel Funding Stage Partech has multiple funds that are geared towards different stages — from seed to growth stage. 3. Sofinnova Partners As put by their team, “At Sofinnova Partners, we focus on breakthrough innovations that have the potential to solve the world’s most pressing problems. Experience, agility, and diverse points of view push us forward, driving our ability to evolve in a complex environment. “Partners for Life” is a cornerstone of our identity: nurturing strong relationships through trust and transparency. We invest in people and science to create opportunity. We commit to long-term partnerships with entrepreneurs who are as passionate as we are about pushing the frontiers of innovation to contribute to a better future. Founded in 1972, Sofinnova Partners has backed more than 500 companies over 50 years, creating market leaders around the globe. Today, Sofinnova Partners has over €2.5 billion under management.” Learn more about Sofinnova Partners by checking out their Visible Connect profile → Location Sofinnova is located in Paris. Portfolio Highlights Some of Sofnnova’s most popular investments include: Avantium Kiro NuCana Funding Stage Sofinnova has 6 different fund strategies that are targeted on different stages and markets. They are: Sofinnova Capital Sofinnova MD Start Sofinnova Crossover Sofinnova Industrial Biotech Sofinnova Telethon Sofinnova Digital Medicine Related Resource: The Top VCs Investing in BioTech (plus the metrics they want to see) 4. Seventure Partners As put by their team, “Seventure Partners adopts an extremely rigorous but collegial process when selecting innovative companies for investment. Determining whether we can establish a relationship based on trust and work effectively with a company’s management team are key elements that we take into consideration. Investments are aimed at strengthening the equity capital of innovative companies at all stages: from seed to growth capital. As we are often the lead investor, we actively partner with entrepreneurs, encouraging and supporting them in reaching their full potential in order to achieve a leadership position within their fields. Our presence as directors on the company’s board or in a supervisory role creates a holistic approach that supports entrepreneurs in their development and companies throughout the key phases of their growth.” Learn more about Seventure Partners by checking out their Visible Connect profile → Location Seventure is located in Paris. Portfolio Highlights Some of Seventure Partner’s most popular investments include: Hivency Skinjay Sumup Funding Stage Seventure invests in companies across all stages — from seed to growth stage. Related Resource: A Quick Overview on VC Fund Structure 5. Eurazeo As put by the team at Eurazeo, “From fledgling startups to SMEs, mid-caps and multinationals, we detect, finance, accelerate and support companies that are inventing and reinventing themselves, innovative entrepreneurs, and emerging talent. We turn constraints into opportunities, challenges into ways to create value, and bold ideas into success stories. Every day, we work alongside management teams and investors at the grass-roots level. In the right place, at the right time, and over the long term, we help them reveal the best of themselves and, ultimately, contribute to creating meaningful growth.” Learn more about Eurazeo by checking out their Visible Connect profile → Location Eurazeo has offices across the globe. Portfolio Highlights Some of Eurazeo’s most popular investments include: Swile Grab Wefox Funding Stage Eurazeo funds companies across all stages. 6. Omnes Capital As put by their team, “Our Venture Capital activity, the historic heart of Omnes, with €700M under management, supports innovative European start-ups in the fields of deeptech. We back extraordinary founders executing on a clear vision and building worldwide leading businesses in the fields of techbio, cybersecurity, new space, quantum computing, new materials, carbone capture and novel food.” Learn more about Omnes Capital by checking out their Visible Connect profile here → Location Omnes Capital is headquartered in Paris. Portfolio Highlights Some of Omnes’ most popular investments include: Opensee Artifakt Gourmey Funding Stage As put by their team, “First investment from €2M to €7M with potential follow-on up to €20M.” 7. Vantech As put by their team, “Ventech is a global early-stage VC firm based out of Paris, Munich, Berlin, Helsinki, Shanghai and Hong Kong with over €900m raised to fuel globally ambitious entrepreneurs and their visions of the future positive digital economy. Since inception in 1998, Ventech has made 200+ investments such as Believe, Vestiaire Collective, Botify, Freespee, Ogury, Veo, Picanova and Speexx; and 90+ exits including Webedia, Meuilleurs Taux.com, Curse, StickyADS.tv and Withings).” Location Vantech has offices across Europe and Asia including Paris, Berlin, Munich, Helsinki, Hong-Kong, Shangai. Related Resource: 8 Most Active Venture Capital Firms in Europe Portfolio Highlights Some of Vantech’s most popular investments include: Adore Me Mobius Labs Picanova Funding Stage Vantech invests in companies across all stages. Related Resource: Private Equity vs Venture Capital: Critical Differences 8. Aster As put by their team, “Aster Capital arranges equity and debt-secured accounts for Proof of Funds uses on a fixed-return basis to facilitate various funding requirements, providing organizations and individuals the capability to meet on-going project needs. The investment process is simple and secure, and can be completed in as little as two banking days. Aster can arrange funding for various types of accounts and instruments for a broad range of requirements.” Location Aster has offices in Paris, London, and Nairobi. They make investments in companies located in Europe, US, and Israel. Portfolio Highlights Some of Vantech’s most popular investments include: Betterway Habiteo Candi Funding Stage Vantech funds companies that are raising anything from a seed round to series B. Looking for Investors? Try Visible Today! 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.

In the dynamic realm of venture capital, where innovation meets investment, the success of startups often hinges on the expertise, networks, and strategic insight provided by the key players within VC firms. Venture partners, uniquely positioned within the VC ecosystem, offer a blend of expertise, networks, and capital that can significantly influence the trajectory of startups. Their role extends beyond mere financial investment, encompassing a broad spectrum of activities designed to nurture and propel startups toward success. This article delves into the nuances of venture partners' responsibilities, their distinct positions within VC firms, and the invaluable assets they bring to the startup world. Who is a Venture Partner? Venture partners are seasoned professionals who collaborate with venture capital firms on a flexible basis. Unlike general partners, who are integral to the VC firm's day-to-day operations and investment decisions, venture partners typically engage in a more focused capacity. Their primary function is to identify promising investment opportunities, leverage their expertise and networks to guide startups and represent the VC firm within the broader entrepreneurial ecosystem​​. The distinction between venture partners, general partners, and limited partners lies in their involvement level, compensation structure, and role in investment decision-making and firm governance. Venture partners often work on a part-time or project basis, may receive carried interest but not necessarily a salary, and usually do not have full voting rights on investment decisions​​. Related resource: 25 Limited Partners Backing Venture Capital Funds + What They Look For The Unique Role of Venture Partners in Startups Venture partners occupy a distinctive and influential position within the startup ecosystem, bridging the gap between VC firms and the innovative companies they invest in. Their contribution extends far beyond mere financial backing; venture partners bring a wealth of expertise, strategic insight, and invaluable networks to the table. Sourcing Potential Investments Venture partners are essential in VC for scouting startups and fostering founder relationships. They combine market research, sector expertise, and tech trends to spot investment opportunities. Through networking and direct outreach, they build early trust with entrepreneurs, offering advice and connections. This role is pivotal for VC firms to gain a competitive edge, ensure portfolio diversity, and maintain a consistent investment pipeline. In essence, venture partners' insights and networks enable VC firms to capture high-potential investments and sustain their market leadership. Offering Expertise and Guidance Venture partners offer crucial expertise and guidance to startups, leveraging their extensive experience and industry knowledge to mentor and advise companies within a VC firm's portfolio. They typically have a deep understanding of specific sectors, market dynamics, and the challenges that emerging companies face. This enables them to provide strategic advice on a wide range of issues, including product development, market entry strategies, scaling operations, and navigating competitive landscapes. Their guidance often extends to helping startups refine their business models, improve operational efficiencies, and develop go-to-market strategies that enhance their chances of success. Moreover, venture partners can assist in preparing startups for future funding rounds, advising on the best approaches to attract further investment. By acting as mentors, venture partners not only contribute to the immediate growth and stability of startups but also help build the foundation for long-term success. Their involvement can significantly impact a startup's trajectory, accelerating growth and reducing the risk of failure. Representing VC Firms Venture partners play a key role in representing VC firms within the broader startup ecosystem. By actively participating in events, conferences, and panels, they not only enhance the visibility of their VC firm but also engage directly with emerging startups, investors, and industry thought leaders. This involvement allows them to stay abreast of the latest trends, technologies, and opportunities, fostering relationships that could lead to future investments. Their presence at these gatherings underscores the VC firm's commitment to the startup community, facilitates the exchange of ideas, and positions the firm as a key player in the entrepreneurial landscape. Through these engagements, venture partners effectively bridge the gap between VC firms and the dynamic world of startups, ensuring their firm remains at the forefront of innovation and investment opportunities. Provides Access to Networks Venture partners significantly enhance a startup's growth potential by providing access to their extensive networks, introducing startups to potential clients, strategic partners, and key hires. This access can accelerate a startup's market penetration, expand its customer base, and secure partnerships that offer competitive advantages. Additionally, leveraging a venture partner's network for talent acquisition can help startups attract experienced and skilled professionals crucial for scaling their operations. This network access is invaluable for startups looking to navigate market challenges and capitalize on opportunities more efficiently, underlining the venture partner's role in facilitating connections that drive success and growth. Related resource: A Quick Overview on VC Fund Structure The 5 Types of Venture Partners Venture partners can be categorized into five distinct types, each bringing unique skills and focus areas to the VC firm and its portfolio companies: 1. Operating Partners Operating partners represent a vital resource within the VC ecosystem, offering a unique blend of operational expertise and strategic guidance to help portfolio companies navigate growth challenges and scale successfully. Their hands-on approach and deep involvement in the operational aspects of a business differentiate them from other types of venture partners and make them invaluable allies for startups looking to maximize their potential and achieve sustainable growth. Role and Responsibilities Operational Support Operating partners provide hands-on support to portfolio companies, helping them scale operations, improve efficiency, and navigate complex business challenges. They often work closely with the company's management team to implement best practices, optimize processes, and drive growth. Expertise in Specific Areas They typically have a wealth of experience and expertise in specific functional areas such as sales, marketing, finance, human resources, or technology. This expertise allows them to offer tailored advice and strategies to address the unique needs of each portfolio company. Value Creation The primary goal of an operating partner is to create value for the portfolio company by leveraging their operational expertise. This could involve leading turnaround efforts, driving go-to-market strategies, optimizing supply chains, or implementing technological innovations. Strategic Initiatives Operating partners may lead or contribute to strategic initiatives within the portfolio company, such as entering new markets, launching new products, or pursuing mergers and acquisitions. Mentorship and Coaching They often serve as mentors and coaches to the CEOs and leadership teams of portfolio companies, sharing insights from their own experiences to guide leaders in making informed decisions. Duration of Engagement The involvement of an operating partner with a portfolio company can vary, ranging from a short-term project to a long-term engagement, depending on the specific needs and goals of the company. How They Differ from Other Venture Partners The key differentiator of operating partners is their hands-on, operational focus. While other venture partners might concentrate on broader strategic, advisory, or networking roles, operating partners are deeply involved in the trenches with portfolio companies, working to solve operational problems and drive tangible improvements. Benefits to Startups and VC Firms Accelerated Growth and Scale By implementing best practices and strategic initiatives, operating partners can significantly accelerate the growth and scaling efforts of portfolio companies. Risk Mitigation Their expertise and oversight can help identify and mitigate potential risks before they become significant issues. Increased Value Through operational improvements and strategic guidance, operating partners can increase the value of a portfolio company, leading to better outcomes for both the company and its investors. 2. Board Partners Board partners serve as a bridge between the strategic oversight required by a board of directors and the operational support provided by the broader VC firm and its network. By leveraging their experience, networks, and strategic insight, board partners contribute significantly to the growth and success of portfolio companies. Their role underscores the importance of governance and strategic planning in the fast-paced startup environment, ensuring that companies not only grow but also adhere to sound business principles and practices. Role and Responsibilities Strategic Guidance Board partners provide strategic direction and advice to portfolio companies, helping them navigate complex decisions and align their operations with long-term objectives. Governance They play a crucial role in governance, often serving on the boards of portfolio companies. Their presence ensures that there is an experienced voice to guide decision-making processes, oversee the management team, and ensure that the company adheres to its strategic goals. Network and Connections Board partners leverage their extensive networks to assist startups in finding potential clients, partners, and even future employees. Their connections can be invaluable in opening doors that might otherwise remain closed to early-stage companies. Fundraising and Financial Oversight They can also play a significant role in helping startups secure further funding, providing advice on financial structuring, and preparing for rounds of financing. Their experience can be critical in negotiating terms with new investors and in financial planning. Crisis Management In times of crisis, board partners can offer seasoned perspectives to help navigate through challenging periods, whether the issues are financial, operational, or market-related. How They Differ from Other Venture Partners The main differentiation of board partners from other types of venture partners lies in their primary focus on governance and strategic oversight rather than operational support or deal sourcing. Board partners are specifically brought into the VC ecosystem for their ability to contribute at the board level, offering insights and guidance that can steer a company towards success. Benefits to Startups and VC Firms Improved Decision-Making With their extensive experience and strategic vision, board partners can significantly improve the quality of decision-making within a startup, steering it clear of potential pitfalls. Enhanced Credibility Their involvement can enhance a startup's credibility in the eyes of investors, customers, and partners, given their reputation and track record. Strategic Networking Board partners open up their network of contacts, providing startups with access to a broader ecosystem that can support growth and expansion. Risk Mitigation Their governance role ensures that the company adheres to best practices and regulatory requirements, thereby mitigating risks associated with compliance and operational missteps. 3. Fundraising Partners Fundraising partners facilitate the flow of capital that fuels innovation and growth within the VC firm's portfolio. By leveraging their expertise, networks, and understanding of the financial landscape, they ensure that both VC firms and their portfolio companies have the resources they need to succeed. Their role underscores the importance of strategic fundraising in the competitive and fast-paced world of venture capital, making them indispensable allies in the quest for growth and success. Role and Responsibilities Capital Raising for VC Funds Fundraising partners are instrumental in raising new funds for the VC firm. They engage with potential investors, articulating the value proposition of the fund, its investment thesis, and the track record of the firm to secure commitments. Supporting Portfolio Companies Beyond raising capital for the VC firm itself, fundraising partners often assist portfolio companies in their fundraising efforts, helping them to prepare for rounds of funding, from seed stage to later-stage financing rounds. Strategic Networking They utilize their extensive networks of investors, including institutional investors, family offices, and high-net-worth individuals, to introduce potential funding sources to both the VC firm and its portfolio companies. Market Intelligence and Trends Fundraising partners keep a pulse on market trends, investor sentiments, and the regulatory landscape to advise on the most opportune times to raise funds, the best strategies to employ, and the types of investors to target. Investor Relations and Communication They play a key role in managing relationships with existing investors, ensuring transparent communication, and keeping LPs informed about the performance of their investments and the progress of portfolio companies. How They Differ from Other Venture Partners The distinguishing feature of fundraising partners compared to other types of venture partners is their focus on the financial ecosystem surrounding venture capital and startups. While operating partners may delve into the operational aspects and board partners may focus on governance and strategy, fundraising partners are deeply entrenched in the financial networks and activities that fund the venture ecosystem. Benefits to Startups and VC Firms Access to Capital Fundraising partners open doors to capital by connecting startups and the VC firm itself with potential investors, crucial for both launching and scaling ventures. Strategic Fundraising Guidance They provide strategic advice on the fundraising process, helping to structure deals in ways that are attractive to investors while safeguarding the interests of the startup and its founders. Enhanced Credibility The involvement of a seasoned fundraising partner can enhance the credibility of a fundraising round, attracting more and potentially better-suited investors. Efficient Fundraising Process Their expertise and network can streamline the fundraising process, reducing the time and resources that startups need to invest in securing funding. 4. Sourcing Partners Sourcing partners serve as the bridge between promising startups and the capital they need to grow. Their ability to identify and evaluate potential investments, coupled with their deep understanding of market trends and networks within the startup community, makes them invaluable to VC firms looking to invest in the next wave of innovative companies. Through their efforts, VC firms can maintain a robust pipeline of investment opportunities, ensuring sustained growth and success in the competitive venture capital landscape. Role and Responsibilities Deal Flow Generation: Sourcing partners are responsible for generating a steady flow of investment opportunities by identifying promising startups and entrepreneurs. This involves attending industry events, networking, and staying abreast of emerging trends and sectors. Initial Evaluation and Screening: They conduct initial evaluations of potential investments, screening opportunities based on the VC firm's criteria such as market potential, team quality, product innovation, and fit within the firm's portfolio strategy. Relationship Building: Sourcing partners build and maintain relationships with startups and entrepreneurs, even before these entities are ready for investment. This helps in creating a pipeline of potential future investments and ensures the VC firm has early access to high-potential deals. Market Research and Analysis: They conduct market research and analysis to identify emerging trends, sectors, and technologies that present new investment opportunities. This insight helps the VC firm to stay ahead of the curve and invest in future growth areas. Collaboration with Investment Team: Sourcing partners work closely with the broader investment team to share insights, evaluate deals, and contribute to the decision-making process. Their on-the-ground intelligence is crucial for informed investment decisions. How They Differ from Other Venture Partners Sourcing partners differ from other types of venture partners in their primary focus on the top of the investment funnel—identifying and securing new deals. Unlike operating or board partners, who might engage more deeply with portfolio companies post-investment, sourcing partners are pivotal in the pre-investment stage, dedicating their efforts to discovering and vetting potential investment opportunities. Benefits to Startups and VC Firms Access to Opportunities For VC firms, sourcing partners provide access to a broad and deep pool of potential investments, including early access to high-potential startups that might not yet be on the radar of the broader investment community. Strategic Alignment They ensure that the investment opportunities align with the VC firm's strategic goals and investment thesis, optimizing the firm's portfolio for success. Competitive Advantage By building strong relationships with entrepreneurs and startups early on, sourcing partners can give VC firms a competitive edge in securing investments in highly sought-after ventures. Efficient Investment Process Their expertise and initial screening efforts streamline the investment process, enabling the VC firm to focus its resources on the most promising opportunities. 5. Business Development Partners Business development partners focus on leveraging strategic partnerships and growth initiatives to drive value creation within the portfolio of a VC firm. Their role is instrumental in helping startups achieve scale, access new markets, and develop sustainable business models. Through their efforts, business development partners not only enhance the growth potential of individual companies but also contribute to the overall success and return on investment for the VC firm and its stakeholders. Role and Responsibilities Strategic Partnerships Business development partners identify and facilitate strategic partnerships for portfolio companies. These partnerships can range from alliances with other companies, channel partnerships, or joint ventures that can help startups scale quickly and efficiently. Market Expansion They play a crucial role in helping portfolio companies enter new markets, whether geographic or demographic, by providing insights into market dynamics, regulatory environments, and competitive landscapes. Customer Acquisition and Sales Strategies Business development partners assist in refining and implementing effective sales and customer acquisition strategies. Their goal is to accelerate revenue growth and market penetration for the portfolio companies. Networking and Introductions Leveraging their extensive networks, they introduce portfolio companies to potential customers, partners, and industry influencers, opening up new opportunities for business growth and collaboration. Operational Scaling They provide guidance on scaling operations, from optimizing sales processes to enhancing product delivery, ensuring the company's infrastructure can support growth. How They Differ from Other Venture Partners Business development partners distinguish themselves from other types of venture partners by their focus on operational growth and market expansion activities. While sourcing partners concentrate on finding new investment opportunities and fundraising partners on capital inflow, business development partners are deeply involved in the strategic and operational scaling of existing portfolio companies. Their work is hands-on, directly impacting the revenue and growth trajectory of the companies they support. Benefits to Startups and VC Firms Accelerated Growth Business development partners contribute directly to the accelerated growth of portfolio companies through strategic initiatives and partnerships, enhancing the value of the VC firm's investments. Market Access Their efforts help startups gain access to new markets and customer segments, crucial for companies looking to scale beyond their initial niche or geographic location. Strategic Alliances By fostering strategic alliances, they enable startups to leverage the strengths and capabilities of other companies, potentially bypassing years of solo development and scaling efforts. Enhanced Revenue Streams Their focus on optimizing sales strategies and customer acquisition can lead to enhanced revenue streams and improved market positioning for portfolio companies. Expert Guidance The operational and strategic guidance provided by business development partners can be invaluable for startups navigating the complexities of scaling a business, helping to avoid common pitfalls and accelerate success. Qualities of a Successful Venture Partner A successful venture partner embodies a set of key qualities that enable them to contribute effectively to the growth of startups and add value to VC firms. These qualities include: Industry Expertise: Deep understanding of specific sectors, enabling them to provide valuable insights and guidance. Strategic Thinking: Ability to develop and advise on strategies that drive startup growth and innovation. Networking Skills: Extensive connections across the startup ecosystem, facilitating introductions and partnerships. Communication Skills: Clear and persuasive communication, crucial for representing VC firms and advising startups. Analytical Skills: Strong ability to assess market trends, financial data, and startup potential, guiding investment decisions. Mentorship: Commitment to supporting and guiding entrepreneurs through the challenges of scaling their businesses. Adaptability: Flexibility to navigate the fast-paced and ever-changing startup landscape. Integrity and Trustworthiness: Building trust with entrepreneurs and within the VC firm by acting with honesty and integrity. Start Your Funding Journey With Visible Venture partners represent a critical nexus between venture capital firms and startups, offering a combination of capital, expertise, and networks that can significantly accelerate a startup's path to success. Their multifaceted role underscores the collaborative spirit of the venture capital ecosystem, where diverse talents and resources converge to nurture innovation and growth. Start your funding journey with Visible, where you can tap into a wealth of resources, expertise, and connections to propel your startup forward. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: Private Equity vs Venture Capital: Critical Differences

Building a startup is challenging. On top of building a product, hiring a team, and scaling revenue — founders are responsible for securing capital for their business. For many startups, this comes in the form of venture capital. Learn more about the different funding stages and venture capital rounds below. What Are Startup Funding Stages? There are multiple stages of startup funding: Seed, Series A, Series B, Series C, and so forth. Startups should be conscientious about the funding rounds that they will go through, which are generally based on the current maturity and development of the company. Here’s an overview of the major startup stages. As of 2023. Source Crunchbase Seed funding is a startup’s earliest funding stage. Often, seed funding comes from angel investors, friends and family members, and the original company founders. An early-stage startup may also look for funding through bank loans, but angel investments are usually preferred. Seed funding is used to start the company itself, and consequently, it’s a fairly high risk: the company has not yet proven itself within the market. There are many angel investors that specifically focus on seed funding opportunities because it allows them to purchase a part of the company’s equity when the company is at its lowest valuation. Related Reading: Valuing Startups: 10 Popular Methods The next stage of the startup funding process is Series A funding. This is when the company (usually still pre-revenue) opens itself up to further investments. Series A funding is generally much more significant than the funding procured through angel investors, with funds of more than $10 million usually being procured. Series A funding is often acquired to help a startup launch. The business will publicize itself as being open to Series A investors and will need to provide an appropriate valuation. Finally, there’s Series B, C, D, and beyond funding. Later stage funding is sought by companies that have already become successful and are trying to expand that success. Each stage of the startup funding process operates very similarly, despite the different stages the business might be in. During the startup funding process, the company has to be able to establish it’s valuation and will need to have clear plans for how it is planning to use the money it procures. Each round of funding will also, by necessity, dilute the company’s equity. Related resource: The Ultimate Guide to Startup Funding StagesPre-Seed Funding Over the last few years, a new funding stage has emerged, pre-seed funding. A pre-seed round is a round of venture capital that is generally the first round of institutional capital that a startup raises. A pre-seed round generally allows a founding team to find product-market fit, hire early employees, and test go-to-market models. As a general rule of thumb, funding should last somewhere between 12 and 18 months. It should be enough capital to allow you to comfortably hit your goals and the forecast you laid out during your pitching and fundraising process. Related Reading: What is Pre-Seed? Average Pre-Seed Funding Amount The size of pre-seed rounds varies quite a bit from company to company. There is no cut and dry amount. Research shows that round sizes can range anywhere from $100,000 to $5M at the pre-seed round. At the end of the day, you will want to weigh your business needs when setting valuations and determining how much to raise. How to Acquire Pre-Seed Funding? Raising a pre-seed round mirrors a traditional B2B sales process. You will be talking and adding investors to the top of your funnel, pitching and negotiating in the middle of the funnel, and hopefully closing them at the bottom of the funnel. Learn more about building a fundraising process in our guide, “All-Encompassing Startup Fundraising Guide.” We sat down with Jonathan Gandolf, CEO of The Juice, every week during his pre-seed raise to breakdown what he was learning along the way. We boiled down the conversations into 8 episodes. Give it a listen below: Who Invests in Pre-Seed Rounds? One of the plus side of a pre-seed round is that it opens up more types of investors as the check sizes are generally smaller: Angel Investors — A common place to start for a pre-seed round. Angel investors are individuals that can write checks that are anywhere from a few thousand dollars to $500,000+ Accelerators/Incubators — Many accelerator programs will take place in tandem with a pre-seed or will potentially write follow-on checks after completing their program to help fund your pre-seed round. Related resource: Accelerator vs. Incubator: Key Differences and Choosing the Best Fit for Your Startup Dedicated VC Funds — Over the last few years, many dedicated pre-seed funds have popped up and become a staple in the space. More traditional and larger firms are also making their way into pre-seed rounds. Related Resource: How Rolling Funds Will Impact Fundraising Active Pre-Seed Stage Investors As we mentioned, there are many dedicated pre-seed funds that are popping up in the space. Check out a few of our favorites below: Hustle Fund Forum Ventures Bessemer Venture Partners Boldstart Ventures Connetic Ventures Expa Kima Ventures LongJump M25 Mucker Capital Starting Line TheVentureCity Find more pre-seed investors in our investor database, Visible Connect, here. Related Resource: What is Pre-Revenue Funding? Related Resource: 12 Venture Capital Investors to Know Seed Funding As we mentioned earlier, “Seed funding is a startup’s earliest funding stage. Often, seed funding comes from angel investors, friends and family members, and the original company founders.” More investors have become keen on being early investor into a startup so they have access to invest again at later stages. Raising seed-stage funding is a major accomplishment for a startup. Seed stage funding is the initial surge of capital into the business. At this point, a startup is largely an idea and will have little to no revenue. This stage is generally when a product and go-to-market strategy are being built and developed. Over the past couple of years, seed-stage funding has exploded in round size. What used to be regarded as a few small checks from family and friends has turned into a multimillion-dollar round. Check it out: Source Crunchbase How to Acquire Seed Funding There are generally a few ways founders can approach a seed round. First things first, founders need to find a list of investors that are relevant for their business. Not every investor will say “yes” so it is important to have a list of 50+ investors to target. From here, founders will need to reach out to potential investors, sit meetings, and share their pitch deck and vision to garner interest. Next, founders will work through due diligence with the hopes of adding new investors to their cap table. Related Reading: Seed Funding for Startups: A 101 Guide Related Reading: A Quick Overview on VC Fund Structure Related Resource: An Essential Guide on Capital Raising Software Series A Funding After raising a Seed Round it’s time for a company to advance to a later round of venture capital financing, which means Series A funding. Series A is a significant stage in a company's lifecycle and is a monumental moment in a startup's funding journey. A Series A startup typically has found some success, has found product market fit, and is ready to scale. At the time of Series A funding, the company has to be valued and priced. Thought must go into previous investments, as prior investors will have also purchased the business at a specific valuation. If an angel investor purchased into the company at a valuation of $100,000 just months ago, then new investors may balk at purchasing at a $10,000,000 valuation today. Once the funding round has been completed, the company will usually have working capital for 6 to 18 months. From there, the company may either be able to move to market or may instead progress to another series of funding. Series A, B, and C funding rounds are all based on stages that the company goes through during its development. It is important to remember that when raising your Series A you are setting goals and objectives for what that capital will do to your business. You need to raise enough capital to help you achieve these goals so you can go on to raise a Series B or future round of capital. Average Series A Funding Amount Source Crunchbase As of 2024, the average Series A funding amount is $18.7 million. A Series A valuation calculator can be used to get close to the number that you should value your company at, though you will also need to thoroughly justify your valuation. How to Acquire Series A Funding? A company’s valuation will be impacted by a number of factors, including the company’s management, size, track record, risk, and potential for growth. Analysts can be called in for a professional valuation of the business. During a Series A funding round, a business usually will not yet have a proven track record, and may have a higher level of risk. During a Series A round, investors will usually be able to purchase from 10% to 30% of the business. Series A investments are generally used to grow the business, often in preparation for entering into the market. The company itself will be able to decide how much it wants to sell during its Series A round, and may want to retain as much of the company control as possible. Let’s start out with a hard truth: sometimes revenue doesn’t matter much in a successful Series A raise. If you’re a seasoned SaaS entrepreneur with a strong team, raising your next round will be much easier than for a first-time founder. Many VCs will place the greatest emphasis on past success for the best indicator of future results—whether or not a company’s unit economics are solid or if they’ve reached the proper revenue benchmarks. Jason Lemkin claims he’d comfortably invest in a pre-launch SaaS company with $0 in ARR if the team is strong and experienced and the market and opportunity are huge. “This makes sense as in many cases, SaaS is an execution play,” Lemkin wrote on Quora. “Put the best team into a strong, upcoming (or disruptable, large market), and that’s a good bet to make.” Related Resource: 23 Top VC Investors Actively Funding SaaS Startups Related Resource: Who Funds SaaS Startups? Related Resource: 20 Best SaaS Tools for Startups Related Resource: 13 Generative AI Startups to Look out for But if you haven’t birthed any unicorns or shepherded any startups to 10x exits already, your benchmarks may be a little more concrete. In the same response, Lemkin wrote that he looks for unproven, bootstrapped startups to hit about $2 million in ARR. In an interview with SaaStr, Tomasz Tunguz estimated a lower mark. Tunguz said most of the founders he speaks with are looking to hit somewhere between $75,000 to $125,000 (or $900,000 to $1.5 million in ARR) in MRR before making their Series A pitch. Despite the wide range, it seems pretty tough for any new founder to conduct a strong Series A round without revenue nearing $1 million ARR in today’s fundraising environment. Without that, you’re going to have to lean more heavily on pitching your market opportunity or product superiority. Related Resource: 7 Startup Growth Strategies Recommended Reading: How to Write the Perfect Investment Memo Recommended Reading: How to Pitch a Series A Round (With Template) Series B Funding Once a business has been launched and established, it may need to acquire Series B funding. A business will only acquire Series B funding after it has started its operations and proven its business model. Series B funding is generally less risky than Series A funding, and consequently, there are usually more interested investors. As with Series A funding, the company begins with a valuation. From there, it publicizes the fact that it’s looking for Series B funding. The company will be selling its equity at the valuation that is settled upon, and investors are free to make offers regarding this valuation. A startup that gets to Series B funding is already more successful than many startups, which will not go beyond their initial seed capital. Once Series B funding has been procured, the business will need to use this money to further stabilize, improve its operations, and grow. At this point, the startup should be in a good position. If the startup needs further money after it develops, to grow and expand, it may need to embark upon a Series C funding round. Average Series B Funding Amount Source Crunchbase On average, Series B startups will usually get $30M or more. The bulk of the heavy lifting will already have been done by seed capital and Series A funding. Series B funding will simply be used to grow the business further and improve upon it. How to Acquire Series B Funding? Sometimes Series B funding will come from the same investors who initially offered Series A funding. Other times, Series B funding may come from additional investors, or from firms that specialize in investing. Either way, investors are usually going to be paying more for less equity than investors did in prior funding rounds, because the company’s valuation will have scaled. A Series B funding valuation will need to consider the company’s current performance and its future potential for growth. Analysts can be used to price a company looking for Series B funding. However, it should also be noted that the company itself has more negotiating power as a Series B company, as it has proven itself to be successful. Related Reading: How to Pitch a Perfect Series B Round Series C Funding Series C funding is meant for companies that have already proven themselves as a business model but need more capital for expansion. Like Series B funding, Series C investors will often be entrepreneurs and individuals who have already invested in the company in the past. A startup may connect with their angel investors and Series A and Series B investors first when trying to procure Series C funding. If a business has made it to Series C funding they are already quite successful. Whereas earlier stage rounds are used to help a startup find traction and grow, by the time a startup raises their Series C they are already established and growing. By raising a Series C a business will be able to make strategic investments. This could mean investing in market expansion, new products, or even acquiring other companies. Average Series C Funding Amount Source Crunchbase A Series C funding amount is generally between $30 and $100M settling on an average round of $50M. At this point, a startup’s valuation is likely over $100M and they are on a national radar looking to expand internationally. How to Acquire Series C funding? When approaching a Series C, the strategy will likely change from earlier rounds. As we mentioned, the average is around $50M. This means that your investors cutting checks between $1 and $5M from earlier rounds are no longer likely to lead a round. Previous investors may be keen to invest in your Series C but startups will need to fill out the remainder of the round from other investors. When approaching a Series C valuation, your company likely speaks for itself and will have more inbound requests from investors. These investors will likely be later-stage VC funds, private equity firms, and banks. Later Startup Funding Stages Depending on the business strategy, a Series C round may be the end of the road in terms of venture capital financing. At this point, the company is likely headed in a strong direction and owns a large % of an addressable market. However, some companies go on to raise their Series D, Series E, Series F, and even Series G. Series D Funding A Series D funding round may occur if the company was not able to raise enough money through its Series C. This often has implications for the business. Series D funding occurs when the business was not able to meet its targets with its Series C, and consequently it can mean that the business is now at a lower valuation. Being priced at a lower valuation is usually very negative for a business. If Series D funding is necessary, due to challenges that the company is facing, then it may be the only way for the startup to survive. However, it generally devalues the company, and may shake future investor faith. Series E Funding Series E funding may be necessary if Series D funding isn’t able to meet the company’s needs for capital. This is, again, a very bad sign, and very few companies are going to survive to Series E funding. Series E funding will only occur if the business still hasn’t been able to make up its own capital but the business is still struggling to remain active and private. Series F Funding Beyond Series E funding comes Series F funding. Very few companies will make it to Series F funding. This is many years into a company's lifecycle. Series F funding is largely used for capital-intensive businesses that need to fuel their next stage of growth, an IPO, an acquisition, or expansion. Series G Funding Next comes Series G funding. Even fewer companies will make it to a Series G. Like Series E or F funding, a Series G round is typically used for companies that are on to their next stage of growth, gearing up for an IPO or acquisition, or expansion into a new market. Related resource: Emerging Giants: An Overview of 20 Promising AI Startups Initial Public Offering (IPO): Accessing Public Markets for Funding An IPO has traditionally been the pinnacle of a startup’s success story. As put by the team at Investopedia, “An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance for the first time. An IPO allows a company to raise equity capital from public investors.” For startup founders and early employees, an IPO is an opportunity to cash out. Track Your Startup’s Fundraise With Visible No matter the series, size, or timing of your round, Visible is here to help. With Visible, you can manage every stage of your fundraising pipeline: Find investors at the top of your funnel with our free investor database, Visible Connect Track your conversations and move them through your funnel with our Fundraising CRM Share your pitch deck and monthly updates with potential investors Organize and share your most vital fundraising documents with data rooms Manage your fundraise from start to finish with Visible. Give it a free try for 14 days here. Related resources: Strategic Pivots in Startups: Deciding When, Understanding Why, and Executing How Multiple on Invested Capital (MOIC): What It Is and How to Calculate It Navigating the Valley of Death: Essential Survival Strategies for Startups Top 18 Revolutionary EdTech Startups Redefining Education Top Creator Economy Startups and the VCs That Fund Them Business Venture vs Startup: Key Similarities and Differences The Top 9 Social Media Startups

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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 Quick Overview on VC Fund Structure A strong sales and marketing funnel starts by identifying the right leads for your business. The same idea is true for founders looking to find investors for their business — find the right investors for your business. If you’re a founder located in Israel and would like to find the right investors for your business, check out our list of active investors in the area below: 1. Altair Capital https://connect.visible.vc/investors/altair-capitalAs put by their team, “We invest in the world’s most promising companies with disruptive ideas and great return potential. We invest in early and growth stage startups in sectors such as Productivity tools, Fintech, Insuretech, AI, Digital Health. Great and motivated teams, strong product vision, scalable business model and big potential market are a must!” Location Altair Capital invests in companies in Israel, the US, and Europe. Company Stage Altair looks for companies that have achieved initial traction. Preferred industries As put by their team, “We are interested in productivity tools/future of work, SaaS, Fintech, Insuretech, AI, Digital Health.” Portfolio Highlights Some of Altair’s most popular investments include: Miro Deel OpenWeb 2. Pitango Venture Capital As put by their team, “Pitango is home to visionary entrepreneurs and groundbreaking companies from stealth mode to growth. We partner with exceptional founding teams via three parallel funds Pitango First, Pitango Growth and Pitango HealthTech.” Location Pitango is located in Tel Aviv and invests in companies across the globe. Company Stage Pitango VC invests in companies from the earliest stages to growth stages. Preferred industries Pitango invests in multiple sectors and has funds dedicated to HealthTech and Growth stage companies. Related Resource: How Venture Capital is Funding the Future of Healthcare + 7 VC Firms Making Investments Portfolio Highlights Some of Pitango’s most popular investments include: Via Logz.io Tulip 3. Vertex Ventures As put by their team, “We’ve worked with some of the most iconic startups to come out of Israel. Our experience and diverse backgrounds support our founders in their journey to grow their companies and become industry leaders. Vertex Ventures Israel funds are consistently ranked as top performers. We invest cross-verticals, from Seed to B.” Location Vertex Ventures is located in Tel Aviv and invests in companies across Israel. Company Stage Vertex invests in companies from Seed to Series B and beyond. Related Resource: The Understandable Guide to Startup Funding Stages Preferred industries Vertex Ventures is industry agnostic. Portfolio Highlights Some of Vertex Ventures’ most popular investments include: Base Yotpo EasySend 4. Jerusalem Venture Partners As put by their team, “Founded in 1993 under the famed Yozma program by Dr. Erel Margalit, Jerusalem Venture Partners VP has created and invested in over 160 companies in Israel, the US and Europe. JVP’s investment strategy is spearheaded by a deep expertise in identifying opportunities from inception and growing them into global industry leaders. Through our theme-driven focus and strong network of strategic partners, we seek to stay ahead of the latest market trends and address the most relevant market needs.” Location Jerusalem Venture Partners has office locations across Israel. Company Stage JVP is stage agnostic and invests in companies from seed to growth stages. Preferred industries JVP invests across many industries and has a focus on Cyber Security, Big Data, Enterprise Software, and FoodTech. Related Resources: 10 Foodtech Venture Capital Firms Investing in Food Innovation and 15 Cybersecurity VCs You Should Know Portfolio Highlights Some of JVP’s most popular investments include: Dealhub Quali Nanit 5. Grove Ventures As put by their team, “Grove Ventures is a leading early-stage venture capital investment firm with over half-a-billion dollars under management. We partner early with exceptional Israeli entrepreneurs who believe that the Deep Future is now and are ready to build it.” Location Grove Ventures is located in Israel and invest in companies across the globe. Company Stage Grove Ventures is focused on early-stage companies. Preferred industries Grove Ventures is hyperfocused on Deep Future companies. Portfolio Highlights Some of Grove Ventures’ most popular investments include: Rapid Lamigo Navina 6. Viola Ventures As put by their team, “Viola is a multi-strategy investment house with focused, separate investment arms. We partner with companies from inception to growth. Each partnership operates independently with a dedicated investment team, investors, pool of funds, and portfolio companies, but shares access to added-value services, best practices and insights.” Location Viola is located in Tel Aviv and invests in companies across the globe. Company Stage Viola has 5 different funds that invest in companies across many stages. Preferred industries Viola uses their 5 funds to invest in companies across different industries and markets. Related Resource: FinTech Venture Capital Investors to Know Portfolio Highlights Some of Viola Ventures’ most popular investments include: Ridge Grove Addressable 7. Entrée Capital As put by their team, “Entrée Capital was founded in 2010 to provide multi-stage funding to innovative seed, early and growth-stage companies all over the world. Entrée Capital manages over $1.2 billion across nine funds and has invested in over 180 startups.” Location Entree has office locations in New York, London, and Tel Aviv. They invest in companies across the globe. Company Stage Entree invests in companies from Pre-seed to Series C. Preferred industries Entree focuses on a wide variety of different industries. Including everything from Crypto to SaaS to Games & Social. Related Resource: 14 Gaming and Esports Investors You Should Know Portfolio Highlights Some of Entree Capitals’ most popular investments include: Stripe Monday Deliveroo 8. Magma Venture Partners As put by their team, “Magma Venture Partners is a leading Israeli venture capital firm, dedicated to investing in Israel’s Information, Communications and Technology space (‘ICT’), including the software, semiconductor and new media spheres. We seek bright ideas at their earliest stages, and serve as a springboard for our entrepreneurs as they develop and evolve into industry leaders. Our goal is to enable a flow of innovation from the earliest stage all the way through until a company realizes its potential reach.” Location Magma Venture Partners is headquartered in Tel Aviv and focuses on companies across Israel. Company Stage Magma Venture Partners is focused on early-stage companies. Preferred industries As put by their team, “Information, Communications and Technology space (‘ICT’), including the software, semiconductor and new media spheres.” Portfolio Highlights Some of Magma Venture Partners’ most popular investments include: Guesty Waze Trink 9. Cardumen Capital As put by their team, “Our general partners are investors, founders and operators. We have over a decade of experience founding and operating companies and helping entrepreneurs build, scale, and sell tech companies in Israel, Europe and in the United States. Our team is a diverse group of people from different backgrounds and upbringings. We strongly believe that different perspectives lead to better decision-making.” Location Cardumen Capital is located in Israel and invests in companies across Israel, Europe, and the United States. Company Stage Cardumen Capital is focused on companies between Pre-seed and Series A. Preferred industries Cardumen Capital is industry agnostic. Related Resource: 17 Travel & Tourism VC Investors that can Fund Your Startup Portfolio Highlights Check out some of Cardumen Capital’s most popular investments below: Munch Peech Spotlight.ai Join Visible and connect with the right investors for your business 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.

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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 Quick Overview on VC Fund Structure A strong sales and marketing funnel starts by identifying the right leads for your business. The same idea is true for founders looking to find investors for their business — find the right investors for your business. If you’re a founder located in Latin America and would like to find the right investors for your business, check out our list of 7 active investors in the area below: 1. Bossanova Investimentos As put by their team, “Bossanova is the most active VC in Latin America; We invest in startups at the pre-seed stage; B2B or B2B2C companies with scalable and digital business models that are operating and making money.” Location Bossanova Investimentos is located in São Paulo and invests in companies that are headquartered in Brazil. Portfolio Highlights Some of Bossanova’s most popular investments include: FanBase Famefy Scooto Stage Focus Bossanova Investimentos is focused on pre-seed and seed stage companies. They typically invests between BRL 100k and BRL 500k. They also seek out companies that have at least BRL 20k in monthly income. Related Resource: The Understandable Guide to Startup Funding Stages 2. Canary As put by their team, “We believe that the first round is the best one to start a long-term relationship with a founder, especially in a young startup ecosystem like Latin America. We believe in the right money for the right stage of a company. And we are fully focused on being the best first investor. We believe our ecosystem is at a tipping point. The quality of founding teams is already world-class and improving at an accelerating pace, the entrepreneurial mindset is permeating universities and younger generations and our nation’s top talent is founding companies rather than looking for traditional jobs. All over the world technology is changing the way people do business and live their lives. LatAm is no different.” Learn more about Canary by checking out their Visible Connect profile → Location Canary is located in São Paulo and invests in companies across Latam. Portfolio Highlights Some of Canary’s most popular investments include: Alice Clara Trybe Stage Focus As put by their team, “We partner with founders at the first venture capital round, from pre-Power Point to Series A. We’ve invested in rounds as small as USD 250K and as large as USD 15M+. We prefer and typically lead the first round, investing the largest amount of capital and defining the legal terms.” Related Resource: 7 Prominent Venture Capital Firms in Brazil 3. Monashees As put by their team, “monashees is the pioneer venture capital firm in Latin America. It partners with outstanding founders who are revolutionizing large markets. The firm serves entrepreneurs starting with their very first movements, supporting their growth through its expansion funds. With a human-values-first approach, monashees helps founders challenge the status quo and improve people’s lives through technology.” Learn more about Monashees by checking out their Visible Connect profile → Location Monashees is located in São Paulo and invests in companies across Latin America and the globe. Portfolio Highlights Some of Monashee’s most popular investments include: Clara Loggi Nomad Stage Focus Monashees does not publicly state what stage and how much they invest in portfolio companies. 4. Redpoint Eventures As put by the team at Redpoint Eventures, “Our mission is to support Brazilian digital market entrepreneurs on their journey to create fast-growing companies. Together with its partners, prominent U.S.-based firms Redpoint Ventures and e.ventures, Redpoint eventures brings funding, Silicon Valley access and global best practices to promising startups. In addition to serving the companies in its portfolio, the fund’s team contributes to the development of the growing entrepreneurial ecosystem in Brazil.” Learn more about Redpoint Eventures by checking out their Visible Connect profile → Location Redpoint Eventures is located in São Paulo and invests in companies across Brazil. Portfolio Highlights Some of Redpoint Eventures most popular investments include: Pipefy Gympass Cortex Stage Focus Redpoint Eventures does not publicly state what stage companies they typically invest in and what check size they write. 5. Magma Partners As put by the team at Magma Partners, “We’ve backed 125+ startups with $80M+ to help founders solve Latin America’s biggest problems by building scalable, technology businesses in big markets. While we’re best known for fintech, insurtech and marketplaces, we are a generalist fund backing Latin America’s top entrepreneurs. We’d love to be your first investor, but if we missed you at pre-seed, we can invest all the way to Series A.” Learn more about Magma Partners by checking out their Visible Connect profile → Location As put by their team, “We invest most of our capital in Spanish-speaking Latin America and devote a smaller percentage of our capital to early stage Brazil-based companies. We invest in companies that are either based in Latin America, do business in Latin America, or will be expanding to Latin America imminently. We also invest in Latin American immigrants or US Latins who may do business in Latin America in the future, or would like to have some of their team in Latin America.” Portfolio Highlights Some of Magma Partner’s most popular investments include: HelloGuru Bexi Groupraise Stage Focus As put by their team, “We invest $50k to $5M to back founders raising venture capital at pre-seed, seed and series A in Latin America.” 6. Spectra Investments As put by the team at Spectra Investments, “We manage Latin American focused funds, offering sophisticated investors access to multiple strategies, through balanced funds, mitigating costs and risks. Our portfolios are hybrid, investing in theses such as Growth, Buyout, Venture Capital, Distress, Legal Claims, Mining, Search Funds and Special Situations, amongst others in the region.” Location Spectra Investments is headquartered in São Paulo and invests in companies across all of Latin America. Portfolio Highlights Some of Spectra Investment’s most popular investments include: Bratus Capital Oria Monashees Stage Focus Spectra Investments in focused on investing in growth stage companies and different venture capital funds. Related Resource: Private Equity vs Venture Capital: Critical Differences 7. DOMO Invest As put by their team, “DOMO Invest is a leading venture capital firm in Brazil that invests in best-in-class entrepreneurs. We back early-stage consumer-focused technology startups, helping them grow faster and establish themselves in competitive markets. We started from the collective desire of our founding partners to contribute to the success of the next generation of Brazilian entrepreneurs. DOMO’s multi-disciplinary team is supported by its Advisory Board whose members have solid and proven track records in creating, investing, advising, and financing tech startups of all sizes.” Learn more about DOMO Invest by checking out their Visible Connect profile → Location DOMO Invest is located in São Paulo and invetss in companies across Brazil. Portfolio Highlights Some of DOMO Invest’s most popular investments include: Loggi Gympass Hotmart Stage Focus As put by the team at DOMO, “​​We back early-stage consumer-focused technology startups, helping them grow faster and establish themselves in competitive markets.” Looking for Investors? Try Visible Today! 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.

At Visible, we oftentimes compare a venture fundraise to a traditional B2B sales and marketing 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: The Understandable Guide to Startup Funding Stages Just as a sales and marketing funnel starts by finding the right leads, the same is true for a fundraise. Founders raising venture capital should start by identifying the right investors for their businesses. If you’re a founder located in Brazil and are looking for venture capitalists in your area, check out our list below: Related Resource: 7 Best Venture Capital Firms in Latin America 1. Bossanova Investimentos As put by their team, “Bossanova is the most active VC in Latin America ; We invest in startups at the pre-seed stage; B2B or B2B2C companies with scalable and digital business models that are operating and making money.” Location Bossanova is headquartered in São Paulo and invests in companies across Latin America. Company Stage Bossanova is focused on pre-seed and seed stage companies. They invest between R$100k and R$1.5M. They look for companies with at least monthly income of R$20k Preferred industries Bossanova is focused on B2B or B2B2C companies. Related Resource: 60+ Active Seed Stage SaaS Investors & Fundraising Tips Portfolio Highlights Some of Bossanova’s most popular investments include: FanBase GrowthHackers Nimbly 2. Redpoint Ventures As put by their team, “Redpoint eventures is a venture capital firm based in São Paulo. Our mission is to support Brazilian digital market entrepreneurs on their journey to create fast-growing companies. Together with its partners, prominent U.S.-based firms Redpoint Ventures and e.ventures, Redpoint eventures brings funding, Silicon Valley access and global best practices to promising startups. In addition to serving the companies in its portfolio, the fund’s team contributes to the development of the growing entrepreneurial ecosystem in Brazil.” Location Redpoint eventures is headquartered in São Paulo and invests in companies across Brazil. Company Stage Redpoint eventures does not publicly state what stage companies they invest in. Preferred industries Redpoint eventures does not publicly state what their focused industries are. Portfolio Highlights Some of Redpoint eventures most popular investments include: Gympass Pipefy Bossabox 3. Canary As put by the team at Canary, “We are an operator fund: our partners are technology and investment entrepreneurs that have first-hand experience – and battle scars – from building and scaling products, teams, and organizations. Our approach is simple and supportive of founders.” Location Canary has office locations across Latin America and invests in companies across Latin America. Related Resource: 7 Best Venture Capital Firms in Latin America Company Stage As put by their team, “We’ve invested in rounds as small as USD 250K and as large as USD 15M+. We prefer and typically lead the first round, investing the largest amount of capital and defining the legal terms.” Preferred industries Canary is industry and business model agnostic. Portfolio Highlights Some of Canary’s most popular investments include: Alice Buser Trybe 4. Monashees As put by their team, “monashees is the pioneer venture capital firm in Latin America. It partners with outstanding founders who are revolutionizing large markets. The firm serves entrepreneurs starting with their very first movements, supporting their growth through its expansion funds. With a human-values-first approach, monashees helps founders challenge the status quo and improve people’s lives through technology.” Location Monashees is headquartered in Brazil and invests in companies across Latin America. Company Stage Monashees does not publicly state what stage they focus on and what check size they write. Preferred industries Monashees is focused on investing in companies operating in large markets. Portfolio Highlights Some of Monashees most popular investments include: Clara Jokr Loggi 5. Quona Capital As put by their team, “Quona Capital is a global venture firm focused on inclusive fintech. We invest in startups expanding access to financial services for consumers and growing businesses across India and Southeast Asia, Latin America, Africa and the Middle East. We focus on markets that are massively underserved by the legacy finance infrastructure, where we see the biggest opportunity for transformation into more equitable financial systems.” Location Quona invests in companies across the globe and have offices across the globe. Company Stage Quona is stage agnostic. Preferred industries Quona is focused on fintech companies across the globe. Related Resource: FinTech Venture Capital Investors to Know Portfolio Highlights Some of Quona’s most popular investments include: Yoco Pillow Monkey 6. Valor Capital As put by their team, “Valor was founded in 2011 as the pioneer cross-border venture capital firm bridging the US, Brazilian and international tech communities. We invest in early stage tech companies in Brazil and international companies looking to expand into Brazil and the region. We are stage and sector agnostic. We are full lifecycle investors. We invest in business models that are only possible through the use of technology and, most importantly, we partner with companies that we believe are best positioned to leverage our relationship-capital and cross-border playbook.” Location Valor Capital has office locations in New York City and Brazil. Company Stage Valor Capital does not publicly share the stage of the companies they focus on. Preferred industries Valor Capital is industry agnostic but has a focus on crypto companies. Related Resource: 10 VC Firms Investing in Web3 Companies Portfolio Highlights Some of Valor Capital’s most popular investments include: Bitso BlockFi Coinbase 7. Astellas Venture Management As put by the team at Astella, “We support missionary founders building the future by leveraging the possibilities around consumer internet, software-as-a-service, and marketplaces We see ourselves as mentors. Our team brings a diverse, complementary and cohesive background around key growth disciplines We understand founders have two main paths to exponential growth: sheer brute force or intelligence. We believe that the right mix of knowledge and capital provides the best route for fast and efficient growth.” Location Astella Investimentos is headquartered in Brazil and invests in companies in Brazil. Company Stage Astella Investimentos is focused on early-stage companies. Preferred industries Astella Investimentos is focused on consumer internet, SaaS, and marketplace companies. Portfolio Highlights Some of Astella’s most popular investments include: Birdie BossaBox Zygo Elevate your investor outreach with Visible 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.

Impact investments can be made across many different sectors and asset classes but target startups whose mission is to produce environmental or social benefits. These industries can include electric cars, renewable energy, sustainable agriculture, or affordable and accessible housing, healthcare, and education. Impact investing aims to target areas that are often missed by sustainability-themed approaches in an effort to tackle global problems as well as go after the underserved in the global economy. For each investment target, an SDG might invest in a range of companies that support that. For example, if the target is climate change their investments might go after green buildings and renewable energy. There is a growing focus of funds understanding the importance of embedding ESG practices into their investment thesis. Robeco defines ESG funds as “portfolios of equities and/or bonds for which environmental, social and governance factors have been integrated into the investment process. This means the equities and bonds contained in the fund have passed stringent tests over how sustainable the company or government is regarding its ESG criteria.” Mercer breaks down the following when it comes to key elements in investing and implementation. “Key elements of impact investing: Intentionality: contributing to positive social or environmental outcomes Measurability: the intended social or environmental impact needs to be measured and reported on clearly and reliably Additionality: pursue social or environmental benefits that would not have otherwise occurred without the investment. How to implement impact investing Investors typically approach an impact investment allocation with three key issues in mind: 1) intention and themes to target; 2) portfolio allocation and implementation options; 3) how outcomes will be measured and reported to different stakeholders. There are many ways that themes or topics can be identified and prioritized by investors. We have identified those that we believe are key from an impact investment perspective, in both environmental and social categories.” Events SOCAP is the largest and most diverse impact investing community in the world The GIIN Investor Forum is designed to advance and scale the impact investing market by bringing all the crucial elements of the world’s impact ecosystem together in one place. Social enterprise and impact investing events in 202Social enterprise and impact investing events in 202 Investors and Accelerators in the Space Impact investments are made by both institutional and individual investors such as private foundations, NGOs, individual investors, fund managers, family offices, as well as religious and financial institutions/ banks. Here are our top pics from our Connect Investor Database. Buoyant Ventures Location: Chicago, Illinois, United States Thesis: Digital Solutions for Climate, we look to make investments that adapt to and mitigate from climate change at the speed and scale required. Investment Stages: Seed, Series A Recent Investments: Raptor Maps SupplyShift FloodFlash Better Ventures Location: Oakland, California, United States About: Better Ventures backs mission-driven founders leveraging breakthrough innovations in science and technology to build a more sustainable and equitable economy in which both people and planet thrive. Thesis: We back founders on a mission to build a better world. Investment Stages: Pre-Seed, Seed, Series A, Series B Recent Investments: SMBX 54gene agathos Obvious Ventures Location: San Francisco, California, United States About: Obvious Ventures brings experience, capital, and focus to startups combining profit and purpose for a better world. Thesis: Let’s reimagine trillion-dollar industries together. Investment Stages: Seed, Series A, Series B Recent Investments: Anagenex MycoMedica Life Sciences Tandym Bethnal Green Ventures Location: London, England, United Kingdom About: Europe’s leading early-stage tech for good VC. Thesis: We invest in ambitious and diverse founders using technology to create positive impact at scale. Investment Stages: Pre-Seed, Seed Recent Investments: aparito Chatterbox Commonplace Blackhorn Ventures Location: Denver, Colorado, United States About: Blackhorn Ventures is an early stage venture firm that invests in capital-efficient companies redefining resource use, enabling the decarbonization of the toughest to transition sectors in our economy (Transportation, the Built Environment, Supply Chain, and Energy). Thesis:Blackhorn Ventures invests in world-class founders building digital infrastructure to redefine industrial resource efficiency. Investment Stages: Seed, Series A Recent Investments: CoFi Ecoworks.tech Iso.io Blue Bear Capital Location: San Rafael, California, United States About: Blue Bear Capital is a VC investor supporting companies that apply data-driven technologies to the energy supply chain. Investment Stages: Seed, Series A, Series B Recent Investments: Raptor Maps Copper Labs First Resonance Braemar Energy Ventures Location: New York, New York, United States About: Braemar Energy Ventures was formed in 2002 to create a venture capital firm with that expertise. Focused exclusively on technology and communications opportunities in the energy sector, Braemar Energy Ventures has both the industry and operating knowledge to select promising young companies, bring them into the larger energy world and guide them to reach their full potential. Investment Stages: Pre-Seed, Seed, Series A, Series B, Growth Recent Investments: Utilidata LO3 Energy Aledia Cultivian Sandbox Location: Chicago, Illinois, United States About: Cultivian Sandbox is a venture capital firm focused on building next-generation disruptive agriculture and food technology companies Investment Stages: Pre-Seed, Seed, Series A, Series B, Series C, Growth Recent Investments: Full Harvest Leaf Cooks Venture Core Innovation Capital Location: San Francisco, California, United States About: Core Innovation Capital is a venture capital firm investing in companies committed to empowering small businesses and everyday Americans. Investment Stages: Seed, Series A, Series B, Growth Recent Investments: Arrived Column Tax Ness CRE Venture Capital Location: New York, United States About: CRE Venture Capital finances and partners with entrepreneurs in technology-enabled startups in Sub-Saharan Africa. Investment Stages: Seed, Pre-Seed, Series A Recent Investments: Stitch Sabi Carry1st Resources IRIS+ is a great resource for developing impact measurement frameworks The GIIN’s Investors’ Council is a leadership group for active large scale impact investors. Start Your Next Round with Visible We believe great outcomes happen when founders forge relationships with investors and potential investors. We created our Connect Investor Database to help you in the first step of this journey. Instead of wasting time trying to figure out investor fit and profile for their given stage and industry, we created filters allowing you to find VC’s and accelerators who are looking to invest in companies like you. Check out all our investors here and filter as needed. After learning more about them with the profile information and resources given you can reach out to them with a tailored email. To help craft that first email check out 5 Strategies for Cold Emailing Potential Investors. 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.

In the dynamic world of business partnerships, understanding the nuanced differences between general partners (GPs) and limited partners (LPs) is crucial for founders. This article will dive into the roles, liabilities, control, and profit-sharing mechanisms that distinguish GPs from LPs, offering a comprehensive guide for those navigating the complexities of business partnerships. What is a General Partnership? A general partnership is an unincorporated business entity formed by two or more owners sharing business responsibilities. This structure is marked by its simplicity in setup and tax filing, but it comes with the caveat of unlimited personal liability for each partner. This means that each partner's personal assets are at risk for the business's debts and obligations​​​​. The Role of a General Partner Shifting the focus to the crucial role of a general partner, we enter the realm of leadership and active engagement in the partnership. General partners are at the forefront, steering the business through decision-making, financial oversight, and risk management. Their responsibilities are central to the partnership's operation, balancing the drive for growth with the interests of all partners. Management and Decision Making GPs play a pivotal role in the management and success of partnerships or investment funds, with their involvement being integral to both day-to-day operations and long-term strategic direction. Here's how GPs are actively involved: Management and Operations: GPs are deeply involved in the daily management of the partnership. This includes overseeing operations, managing staff, and ensuring that the partnership's activities align with its goals and objectives. Their hands-on approach ensures that operations run smoothly and efficiently​​. Decision Making: GPs have the authority to make key decisions that affect the partnership. This encompasses a wide range of areas from financial management, investment choices, to strategic planning. They assess various opportunities and risks to make informed decisions that will benefit the partnership over the long term​​​​. Investments and Strategy: GPs are responsible for the partnership's investment strategy. This involves identifying, evaluating, and executing investment opportunities as well as managing and divesting assets when necessary. Their goal is to maximize returns for the partnership while managing risk. This requires a deep understanding of the market, the ability to forecast trends, and the insight to act on these predictions in a timely manner​​​​. Alignment of Interests: By investing their own capital and making significant management decisions, GPs align their interests with those of the LPs. This ensures that their strategies and decisions are made with the best interests of the partnership in mind, fostering trust and commitment among all parties involved​​. Risk Management: GPs are also tasked with managing the partnership's exposure to risk. This includes financial risk, operational risk, and investment risk. They implement strategies to mitigate these risks, ensuring the partnership's stability and sustainability. This involves regular assessment of internal and external factors that could impact the partnership and adjusting strategies accordingly​​​​. Capital Contribution GPs typically invest a smaller portion of the total capital in a partnership or fund compared to LPs, yet the value of their investment is profoundly significant. This financial commitment aligns the GPs' interests with those of the LPs, ensuring a mutual focus on the partnership's success. By having "skin in the game," GPs demonstrate confidence in the partnership's strategies and decisions, reinforcing trust among LPs. This alignment not only motivates prudent risk management but also bolsters the partnership's stability and potential for growth, underscoring the critical role of GP investment beyond its face value​​​​. Liability and Risk Management GPs face unlimited liability, directly linking their personal assets to the partnership's financial obligations. This significant responsibility demands vigilant risk management and strict adherence to legal and regulatory standards to safeguard both the partnership and their personal finances. GPs must proactively mitigate risks and ensure compliance across all aspects of the partnership, a task that often requires expert consultation due to the complex nature of legal requirements​​​​. Fundraising and Investor Relations GPs play a critical role in securing the financial foundation of a fund through capital raising activities. Their responsibilities extend beyond merely attracting investments; GPs are deeply involved in fostering and maintaining relationships with both current and potential investors. This includes regular communication to keep investors informed about the fund's performance and strategic direction. The process of raising capital involves presenting the fund's value proposition to prospective investors, outlining potential returns, and articulating the strategic advantages of investing in the fund. GPs leverage their networks and industry knowledge to identify and engage with potential investors, employing persuasive presentations and detailed financial models to showcase the fund's potential. Maintaining investor relations is another key aspect of a GP's role. This involves providing timely updates and comprehensive reports on the fund's performance, including achievements, challenges, and strategic adjustments. Regular communication, such as newsletters, investor meetings, and performance calls, ensures transparency and keeps investors aligned with the fund's progress and long-term goals. Portfolio Management In the context of investment funds, GPs are pivotal in steering the fund's investment strategy, involving a multi-stage process of identifying, vetting, and managing investment opportunities. Initially, GPs undertake thorough market research and analysis to identify promising investment prospects, evaluating each for alignment with the fund's investment criteria and potential for returns. The vetting process includes comprehensive due diligence, where GPs assess the financial health, business model, market position, and growth potential of potential investments. This meticulous examination is critical to minimizing risks and ensuring that only the most viable opportunities are pursued. Once an opportunity is deemed suitable, GPs lead the deal execution, negotiating terms and finalizing investments. This phase requires a blend of financial acumen, negotiation skills, and strategic foresight to secure favorable terms for the fund. After the investment is made, GPs take on the ongoing management of portfolio companies. This involves active engagement with the management teams of these companies, providing strategic guidance, operational support, and sometimes, direct involvement in governance through board representation. The goal is to enhance value and ensure the company's growth trajectory aligns with the fund's investment objectives, ultimately leading to successful exits that generate returns for the fund's investors. What is a Limited Partnership? A Limited Partnership (LP) is a specific type of partnership that is distinguished by having one or more GPs who manage the business and are personally liable for partnership debts, alongside one or more LPs who contribute capital and share in the profits but have limited liability and are not involved in day-to-day management. This structure allows LPs to invest in the partnership without the risk of being held personally liable for the partnership's debts beyond their investment in the partnership. The general partner's role involves managing the partnership's operations, making key business decisions, and assuming full personal liability for the partnership's obligations. In contrast, limited partners act as passive investors, contributing capital and receiving a share of the profits but typically not engaging in the management or operational decisions of the partnership. This arrangement offers the benefit of pass-through taxation, similar to a general partnership, where the partnership itself is not taxed, but profits and losses are passed through to the partners to be reported on their individual tax returns. Limited Partnerships are commonly used for businesses that require investment without wanting to involve investors in daily management or for family estate planning to protect assets and manage tax liabilities. The formation of an LP requires compliance with specific state laws, including filing the necessary documents with the relevant state authority, usually the Secretary of State. The details of the partnership, such as the division of profits, roles of the partners, and operational procedures, are typically outlined in a partnership agreement. Related resources: 25 Limited Partners Backing Venture Capital Funds + What They Look For What Is a Limited Partnership and How Does It Work? The Role of a Limited Partner Unlike their general counterparts, limited partners contribute financially without immersing themselves in the day-to-day operational decisions of the partnership. This unique position allows them to invest and share in the profits while their liability is capped at their investment amount. As we delve into the role of a limited partner, we uncover the nuances of their involvement, the passive yet crucial contribution to the partnership's capital, and the protective bounds of their liability, setting the stage for understanding the symbiotic relationship between general and limited partners within the framework of a Limited Partnership. Capital Provision LPs are often passive investors, meaning they invest their money but do not take part in the day-to-day management or decision-making processes of the business. This category of investors typically includes institutional entities like pension funds, endowments, and insurance companies, as well as high-net-worth individuals who seek investment opportunities that do not require their active involvement in operations. The capital provided by LPs is vital for the fund's ability to pursue its investment strategy, whether it involves acquiring assets, funding new ventures, or expanding business operations. By contributing financially, LPs enable the partnership to leverage additional resources while limiting their personal risk to the amount they have invested. This arrangement allows LPs to benefit from the potential upside of the partnership's success, such as receiving a proportionate share of the profits, without the burden of unlimited liability or the complexities of daily management responsibilities​​​​​​. Limited Involvement in Management LPs play a distinct role within a partnership, primarily serving as financial contributors rather than being involved in the daily management or operational decisions. Their involvement is strategically financial, allowing the partnership to leverage their investment to fund projects, acquisitions, or growth initiatives without requiring their input on operational matters. The structure of a Limited Partnership is designed to benefit from the capital that LPs inject, while the GPs retain full control over the business decisions and management. This setup provides a clear division of responsibilities: GPs handle the operational aspects and decision-making processes, ensuring the business's strategic direction aligns with its goals, while LPs contribute financially, relying on the GPs' expertise to maximize the return on their investment. Limited Liability LPs liability is restricted solely to the amount of capital they have invested in the fund or partnership. This means that LPs are not personally responsible for any debts or obligations that exceed their investment. In essence, should the partnership incur debts or face financial challenges, the personal assets of LPs are shielded from creditors, ensuring that their maximum potential loss does not surpass the capital they have contributed. This protective measure is a defining feature of the LP structure, making it an attractive investment vehicle for individuals and institutions seeking exposure to the potential rewards of partnership investments without the risk of unlimited personal liability. It enables investors to participate in potentially lucrative ventures with the assurance that their risk is capped, providing a clear boundary between their investment and personal financial health. This limited liability encourages investment by reducing the financial risk to LPs, thereby facilitating the pooling of capital for the partnership’s activities​​​​​​. Monitoring Investment Performance Limited Partners (LPs) maintain oversight of their investments in a partnership through a structured approach to information sharing, facilitated primarily by General Partners (GPs). GPs are responsible for providing regular reports and updates that detail the partnership's financial performance, operational progress, and strategic developments. These communications are critical for LPs, as they offer insights into how their investment is being managed and its corresponding performance. The reports and updates typically include financial statements, performance metrics, market analysis, and updates on significant events or decisions. This transparency allows LPs to assess the health and trajectory of their investment, ensuring that their financial contributions are yielding expected results or identifying areas of concern that may need addressing. Beyond passive monitoring, LPs often play a role in key decision-making processes within the partnership. While they do not involve themselves in daily operations, LPs may have the right to vote on or approve major decisions that could impact the partnership's direction or financial status. This could include changes to the partnership agreement, substantial financial transactions, or decisions about the sale or acquisition of assets. Their involvement in these critical decisions ensures that their interests are considered in the partnership's strategic choices, aligning the partnership's operations with the expectations and goals of its investors. Receiving Returns on Investment LPs in a fund or partnership receive returns on their investment primarily based on the entity's financial performance. These returns are typically proportional to the size of their capital contribution, reflecting the principle that the greater the investment, the larger the share of the profits should be. The mechanism for distributing returns is designed to align with the partnership's success—when the partnership prospers, LPs benefit from higher returns, and conversely, their returns may diminish if the partnership faces financial difficulties. The distribution of profits to LPs often occurs after the partnership has achieved certain financial thresholds, ensuring that the operational needs and any preferential returns agreed upon for the GPs are met first. This structure incentivizes LPs to invest substantial capital, as their potential for financial gain is directly tied to the partnership's success, while also aligning their interests with the GPs, who are tasked with managing the partnership towards profitability. Differences Between General Partners and Limited Partners Having delved into the distinct roles and responsibilities of GPs and LPs within partnerships, it becomes evident that their contributions, while both crucial, diverge significantly in nature and scope. GPs are deeply entrenched in the day-to-day operations and bear unlimited liability, aligning their actions closely with the partnership's success. In contrast, LPs contribute capital and share in the profits while enjoying the protection of limited liability, remaining largely removed from operational decisions. These differences affect their involvement, financial risks, and the rewards they reap from the partnership. Management and Control GPs are crucial to the daily management and decision-making in a partnership, directly handling operations and strategic planning due to their unlimited liability. In contrast, Limited Partners LPs primarily offer financial investment, staying out of management to limit their risk exposure to their capital contribution. Liability GPs face unlimited personal liability, meaning that if the partnership incurs debts or legal claims that exceed its assets, GPs' personal assets can be used to fulfill these obligations. This unlimited liability reflects the GPs' active involvement in the management and operations of the partnership, holding them directly accountable for its financial health​​​​. In contrast, LPs enjoy a layer of protection from personal liability beyond their investment in the partnership. Their liability is limited to the amount of capital they have contributed, shielding their personal assets from claims against the partnership. This limited liability is a result of their passive role; LPs do not participate in the day-to-day management or decision-making processes of the partnership. Consequently, they are not held personally responsible for its debts or liabilities beyond their initial investment. Profit Sharing The distribution of profits and losses in a partnership typically aligns with each partner's investment and their role, as detailed in the partnership agreement. GPs, due to their active management and unlimited liability, might receive a share for their operational role plus a portion based on their investment. LPs, with limited liability, earn returns proportional to their investment, reflecting their financial contribution without direct operational involvement. The agreement also outlines how losses are shared, often paralleling profit distribution. This ensures a fair allocation based on each partner's stake and contribution to the partnership's success​​​​​​. Information Rights General Partners, who are actively involved in the day-to-day management of the partnership, have unrestricted access to all financial and operational data. This comprehensive access is necessary for GPs to make informed decisions, manage the partnership effectively, and fulfill their management duties. Their role requires a deep understanding of the partnership's financial health, operational challenges, and strategic opportunities, necessitating real-time access to all pertinent information. In contrast, Limited Partners typically have more restricted access to information. Their role as passive investors means they are not involved in daily management decisions, which is mirrored in their rights to information. LPs usually receive periodic reports that summarize the partnership's financial performance, significant operational updates, and strategic decisions. These reports are designed to provide LPs with a clear overview of their investment's performance without overwhelming them with the day-to-day details necessary for operational management. However, the extent of information rights for LPs can vary based on the partnership agreement. Some agreements may grant LPs rights to request additional information or detailed reports under specific circumstances, offering a mechanism for LPs to obtain further insights if they have concerns about the partnership's management or performance. Exit Strategies For General Partners, leaving can be more complex due to their integral role in management and operations. Exiting typically requires finding a replacement who can take over their responsibilities, which may necessitate approval from other partners, depending on the partnership agreement. Financial implications for GPs can include settling accounts related to their management activities and any personal liabilities tied to the partnership's debts. Limited Partners, given their passive investment role, usually have a more straightforward exit process. Their departure primarily involves the sale or transfer of their partnership interest, which can be subject to terms outlined in the partnership agreement, such as right of first refusal for other partners. Financially, LPs need to consider the market value of their investment and any potential capital gains tax implications. Both GPs and LPs must consider the partnership agreement's terms, which may specify conditions for exit, including notice periods, valuation methods for the partnership interest, and any restrictions on transfer. Additionally, the timing of the exit can significantly impact the financial outcome, with market conditions and the partnership’s performance playing crucial roles. Other Types of Partnerships While we've explored the traditional roles of general and limited partners in business partnerships, the realm of collaborative business ventures extends beyond these conventional structures. Each partnership type offers unique benefits, catering to specific business needs, risk appetites, and strategic goals. Other prevalent forms of partnerships that exist are: Joint Venture Partnerships: These are formed between two or more parties for a specific project or a limited period. Joint ventures allow entities to pool resources for a common goal, sharing profits, losses, and control, while still maintaining their separate legal identities. This structure is ideal for projects that require diverse skills, resources, or market access that a single entity cannot provide on its own. Limited Liability Partnerships (LLPs): Merging the features of partnerships and corporations, LLPs offer partners the operational flexibility of a partnership while providing a shield against personal liability for the actions of other partners. This is particularly attractive for professionals, such as lawyers, accountants, and architects, allowing them to benefit from the partnership's profits without risking their personal assets for the liabilities or professional misconduct of their partners. Partner With Visible for Expert Guidance and Access to High-Growth Ventures In this article, we've navigated the complexities of business partnerships, highlighting the distinct roles, liabilities, and contributions of GPs and LPs. Understanding these differences is crucial to forge successful partnerships, whether through traditional setups or alternative structures like Joint Ventures and LLPs. Each partnership model offers unique benefits and challenges, tailored to various business needs and goals. As you embark on or continue your entrepreneurial journey, aligning with the right partners and structure is key to growth and success. If you’ve read this post and determined that venture capital is a good fit for your company, let us help. Raise capital, update investors and engage your team from a single platform. Try Visible free for 14 days. Related resource: A Quick Overview on VC Fund Structure

What is an Investor Update? An investor update is a document that includes recent wins and losses, financials, team updates, customer wins, and core metrics. They are typically shared via email but can also be shared via PDF, deck, or link. For many startup founders, investor updates are shared every month but can also be shared on a quarterly (or more frequent) basis. Learn more about why and how to create investor updates for your business below: Why Send Investor Updates? Step into the shoes of your investors and it will help understand the importance of investor updates. Put simply, an investor’s (venture capitalist) job is to deploy limited partners’ capital by investing in startups, generate excess returns, and pay back their limited partners with the hopes of doing it again. This means that an investor’s success hinges on the success of their portfolio company. Put simply, your investors need you to succeed. Your investors likely have other investments and can’t be expected to know exactly where to help each company. In a crowded space building, strong relationships centered on trust and transparency is an easy way to stand out amongst other startups. By sending regular investor updates you can stay top of mind for your investors and tap into their knowledge, resources, and capital to continue to grow your business. Below you will find our guide to help you write the perfect investor update by understanding what metrics and data to share, properly asking for help, sharing big wins and losses, and raising additional capital. We’ve also included 7 of our favorite investor update templates. Related resource: What is a Capital Call? Essential Communication We believe that regular communication with investors and important stakeholders is key to a startup’s success. If your investors don’t know what’s going on in your business, they don’t know how to help. Building a reporting cadence with your investors is a great way to promote transparency and build a relationship focused on trust. Related Reading: Should You Send Investor Updates? Follow-On Funding One of the biggest reasons to report to your investors is the increased likelihood of follow-on funding. In our own research, we have found that companies that regularly communicate with their investors are twice as likely to raise follow-up funding. Try Visible to find investors, track your raise, share your deck, and update investors. Give it a free try for 14 days here. Networking Opportunity Generally speaking, investors' networks often have had experience as an operator and investors. Tapping into their network can be an easy way to find introductions to investors, partners, potential hires, and mentors. Getting an investor to go to bat for you will likely carry a bit more weight. As Tomasz Tunguz, VC at Redpoint Ventures, states; “Investors network frequently, work together, and have long-term relationships with each other so a referral should go a long way.” Finding Talent In hand with tapping into their network, investors are a great resource when it comes to hiring top talent. Between their other portfolio companies and previous experience most investors likely know a number of solid candidates to fill a role. If they don’t have someone in mind for the job, they can at least help talk you through the different candidates you are weighing for an open position. Knowledge and Experience Between their own experience and other portfolio companies, investors have seen just about anything. If you have an operational or tactical question investors are a great resource and can lend experience and knowledge. Related Resources: Our 15 Favorite Newsletters for Startup Founders How to Write the Perfect Investment Memo 3 Tips for Cold Emailing Potential Investors + Outreach Email Template Accountability & Reflection One of the often overlooked benefits of sending monthly investor updates is the reflection and accountability it offers founders. Investor updates can be a great forcing function for founders to look back at the previous month or quarter and better understand what is and is not working for their business. Related Resource: Investor Relationship Management 101: How to Manage Your Startups Interactions with Investors Tips For Writing Investor Updates Investor updates can be a tricky balance between informing investors and keeping things succinct and digestible. Most things boil down to keeping your updates consistent and regular. Keep the Cadence Consistent If you commit to sending a monthly update, you'll want to make sure you stick to sending an investor update every month. Skipping an update when times are tough can be a negative signal to investors. Keep Metrics the Same Make sure to keep the metrics you are tracking stay the same from month to month. For example, if you are calculating net new MRR using a certain formula, keep that consistent from month to month. Stick to a Format When creating an update, sticking to a regular format or template is a great way to help get the ball rolling every month. If you're not sure where to get started, we studied our data to understand the most popular components included in Visible Updates, check it out below: 81% of Updates include “Highlights” 47% of Updates include a “Team” section 42% of Updates include “Product Launches” 42% of Updates include a “KPIs” section 39% of Updates include a “Fundraising” section Investor Update Templates: Examples For Your Next Update Sending your first investor update can be a daunting task. We believe that the best place to learn is from someone who has been there before. Luckily, countless founders and investors have shared their templates and best practices for sending investor updates. We suggest starting with a template you like and tweaking it to your needs (more on this later). Once you’ve found your format, it is all about making sure you keep tabs on the data and context so you are not scrambling when it is time to send. A couple of small steps when sending your first Update: Gather your data — As you should be sharing other a few metrics with investors, it is important to keep tabs here. These should be vital to your business and something that you have on hand at all times. Review the month — A perk of sending an investor update is the ability to look back at the previous month. Think about any major highlights, lowlights, areas you need help, so you can start to craft your Update. Add context — Sharing your data without context can be dangerous. Do your best to explain any metric movements. Send it — Getting your update sent out a consistent basis is a win. If you’re looking to get an idea of when founders using Visible send their Updates, check out our post, “Most Popular Times to Send Your Investor Update.” 1. Techstars Minimum Viable Update In the “Minimum Viable Investor Update”, Jens Lapinski, Former Managing Director of Techstars METRO, lays out 3 items that he finds most useful in his portfolio early-stage company monthly updates. 2. Founder Collective “Fill-in-the-Blank” Investor Update Email Template An investor Update template for busy founders put together by the team at Founder Collective. Simply fill out the bolded sections and have your investor Updates out the door in no time. 3. Kima Ventures Investor Update Template An Update template put together by Jean and the team at Kima. Quickly fill in the quantitative and qualitative data Kima finds most useful. 4. GitLab Investor Investor Update Email Template A 6 part template put together by the team at GitLab. Built for investors to quickly read and locate the information that is most relevant to them. 5. Y Combinator Investor Update Template An investor update template from Aaron Harris of Y Combinator. Aaron recommends highlighting repeatable key performance indicators (KPIs) and major asks for your investors. 6. Shoelace: Investor Update Email Template A template based off of Reza Khadjavi’s, Founder & CEO of Shoelace, investor update email used to wow investors. 7. The Visible “Standard” Investor Update Email Template Our Standard Monthly Investor Update template put together from best practices and tips from Visible users. For more ideas, check out our investor update template library here. Related Reading: 4 Items to Include in Your Next Investor Update (If You Want to Drive Engagement) 8. Bread & Butter Ventures Update Template Bread & Butter Ventures is an early-stage VC firm based in Minnesota investing globally while leveraging their state and region’s unparalleled access to strong corporate connections, commercial opportunities, and industry expertise for the benefit of our teams. Learn more about what Brett Brohl of Bread & Butter Ventures likes to see in an Update below: Sharing Metrics and Data Determining what metrics and key performance indicators (KPIs) to share with your investors can be tricky. There are a slew of different key metrics and different investors may have their eyes on different things. Changing metric names or what you are reporting can be an easy way to break trust with investors. At the end of the day, it is most important that you share the same metrics from month to month. And as we’ve discussed before, it is okay to share bad months! We suggest sharing a handful of key performance indicators (KPIs) with your investors. Depending on your relationship, some may only want to see 3 metrics while others may want to see 10. Talk with your investors and discuss what types of key metrics they’d like to see. A couple of examples are churn rate, number of active users, monthly recurring revenue (MRR), burn rate, and more. Related reading: Startup Metrics You Need to Monitor Every company has missed the mark and any investor is aware that this happens. Building a company is hard! With that being said, we do have a few areas where investors would expect some data: Revenue Being able to generate revenue is essential to a business. However, you determine to measure revenue should be kept consistent from month to month. For example, don’t share bookings one month and revenue the next. For SaaS companies, including your monthly recurring revenue (MRR) and the movements are always good to include as well. Cash Flow Cash is king. Cash is the lifeblood of your business and investors expect some insight into how their capital is being managed and used. This is also a great way for you as a founder to stay accountable and on top of your spending as you continue to grow your business. Burn Rate As we mentioned above, cash is king. By tracking and reporting your burn rate, you will be able to avoid surprises with investors. A common mistake we see founders make is surprising their investors when their cash balance is low and months to 0 is nearing. Sharing your burn rate is an easy way to build trust with your investors and give them a better idea of when you’ll need to raise a new round. Margins Generating solid margins is a must for any successful business. Except the “gig economy,” Frank Mastronuzzi of Greenough Consulting Group suggest that every business should have at least a 55% margin. While likely more important during a fundraise, sharing your margins will help investors evaluate your COGS and acquisition costs. Number of Active Users Depending on your company goals and KPIs, the number of active users could be valuable to understanding growth. Churn Rate Being able to keep your burn rate under control is an easy way to grow your business. In the early days, some investors may want to keep close tabs on burn rates to understand what part of your funnel may be lacking. Customer Acquisition Costs Being able to efficiently acquire and expand customers is a surefire way to grow. Without a sustainable way to acquire new customers, a business will struggle to grow or even exist. Related Reading: Customer Acquisition Cost (CAC): A Critical Metrics for Founders Sharing Wins and Losses One of the most exciting aspects of being a founder is sharing and celebrating your victories. As we all know, with every victory comes plenty of losses. Investors are keyed in on your success so it is important to stress both wins and losses equally. Sharing Wins/Highlights With Investors Sharing your company’s accomplishments is generally pretty straightforward. Share why and how you accomplished your goal and carry on. Investors generally won’t be able to move the needle for your wins but is best to keep them informed so they can signal to their network of your successes. Most important is to call out individual contributors when it comes to sharing major accomplishments. All employees like to be recognized for their contributions and there is no greater place to do so than in front of your outside stakeholders. Along the lines of sharing individual kudos, it is also a great time to highlight new hires. A shout-out to new hires will make offer them a warm welcome and the chance to open up to investors. Sharing Losses/Lowlights With Investors The most dreaded and arguably the most important aspect of an investor update; sharing losses. Startups are hard and everyone involved with the process knows this. It is vital that you key your investors into any troubles you are facing and why you are facing them. We find it best to layout the lowlight and offer a solution to improve this moving forward (If you do not have a solution read on to the “Asking for Help” section below). Generally speaking, nothing is ever as good or as bad as it seems. Sharing bad news is an easy way to strengthen your relationship with investors and they know you’ll be open and honest with them moving forward. Most importantly, this gives your investors an opportunity to step in and help to keep you moving in the right direction. Related Reading: How to Deliver Bad News to Investors Asking Investors for Help Last but certainly not least is asking your investors for help. While every section mentioned above lends itself to asking questions, it is most important to lay out actionable questions where you believe your investors can help. By laying out a pointed list of areas you could use help, you can easily tap into your investors’ network, resources, experiences, and capital. A couple of key areas we see founders have the most success: Related Resource: Navigating Investor Feedback: A Guide to Constructive Responses Closing Deals From our article, “You Should be Asking Your Investors for Help. Here’s How.” “At its core, building a VC-backed business is about generating revenue. The biggest value add for a business? Closing more deals. Your investors are in the “deal-making” business and likely have a knack for closing deals. Use your investor’s professional networks to make an intro, set a meeting, or bring in the necessary backup to close a large deal. If you see your investor has a specific connection you’re looking for, don’t beat around the bush. Ask the investor for the exact intro you’re looking for and tell them how they can be of most value.” Help With Hiring Talent is the resource every company is in competition for on a daily basis. Any tool or resource you can use to find top talent for your business is worth leveraging. Investors generally happen to help fill an open role and often have an extensive network to do so. Be specific as possible about the role, as well as items like the experience level required, and target compensation to make it low-maintenance for your investors. Pro tip: Include a direct link to a LinkedIn search that fits the criteria of the person you’d like to hire to make it easy as possible for investors. Fundraising One of the main reasons to send investors monthly updates is the increased likelihood of raising follow on funding. If you have properly communicated with investors, chances are they will be more enthusiastic to invest in your next round. We have found that companies that regularly send investor updates double their chances of raising follow on funding. When it comes down to it and an investor has to make a decision between 2 investments; 1 that has been communicating and 1 that has not been communicating. It is easy to go with the one that has been transparent and has made an effort to build a relationship. Even if your investors are not interested in committing follow-on capital, they may be able to introduce you to other investors they know. Investors know other investors. Venture capital is a tight-knit community and one positive recommendation can make waves. Related Resource: 9 Tips for Effective Investor Networking Pro tip: Include a light version of your pitch deck that investors can circulate with investors they can make an intro to. Recommended Reading: How to Write the Perfect Investment Memo Investor Update Template Real Life Example If you’ve browsed through our investor update template, you’ve probably noticed they share a lot of similarities. Most of the Updates include the sections listed above. Of course, every business is different. The size, stage, and relationship with your investors will impact your Update template. In order to help you best write an Update, let’s use a real-life example. Let’s say we are a seed stage SaaS company that has recently raised $1M and we are starting to scale revenue: The Intro First things first, we need to write an introduction. This can be as personalized or informal as you’d like. We suggest something like the following: “Hey Investor Name — Hope all is well! I can’t believe August is already in the books. We had a great month that we’ll dig into below. As always, feel free to reply back to this email with any questions or give me a call at 123.456.7890.” Highlights We suggest starting with highlights. This will set the tone for the Update and give investors a quick rundown of what is going well for your business. This should include things like new hires, product updates, and growth (always try to quantify if you can!). Here is an example of some company highlights: We just hired person X to head up our sales team. They bring 10+ years of experience in the space and are going to be a great fit. You can connect with them on LinkedIn here. We have finally gotten New Product Y out of beta and into the hands of our users. Early signs show a big opportunity. We’ve increased usage by 50% week over week and have already exceeded our quarterly goal of Y users. Our sales team is on fire! We’ve closed our largest 2 clients to date — Big Name A and Big Name B. Both are great logos and are our largest contracts to date. Lowlights Sharing lowlights is never. However, it is a crucial part of building trust with investors so they can help you overcome pain points. Including steps for how you plan to fix the problem is always appreciated. Check out an example below: We have been struggling to find a customer success leader. We’ve opened up our search to new job boards and are offering a bonus to anyone who refers a new hire. If you know anyone that fits these parameters, please send them our way. New trials have been lagging behind pace. In order to help get this back on track, we are bringing in an SEO specialist to help us increase website traffic and website-to-trial conversion. Asks Ask are potentially the most beneficial aspect on an investor update. As you are requesting help from your investors, be as pointed and direct as possible to make it easier on them. Here are some examples: Here is our target list of investors for our Series A round and our most up to date fundraising deck. We’re looking for introductions to any of the investors listed in the ‘Research’ stage. We’re looking for introductions to candidates for this [specific job title] in the [specific industry]. Ideally, this person would work at a company with at least X employees and control his own budget. Do you know someone I should meet in [specific city]? I’ll be traveling there next month and am trying to fill my calendar. Metrics As we mentioned above determining what metrics to share is up to you and your investors. For our example, we’ll focus on a couple of key metrics every company should be tracking. Here is an example of how you might present that data: KPI 1 As we mentioned earlier, revenue has been cruising this month. It is our best month to date and we’ve closed our largest customers. KPI 2 As you know, our team has been rallied around improving our True North KPI. Our recent product pushes and GTM campaigns have really paid off as shown above. KPI 3 I feel great about our cash position. We have 18+ months of runway so I can stay focused on building the business and don’t have any immediate need to raise capital. Try Ranking Your Investors Just as investors are comparing you to their other investments don’t be afraid to rank your investors relative to their peers. As Brock Benefiel, business author writes, “Ranking investors can be an intimidating idea, but when done right can provide a useful way for founders to spur increased engagement from their investors and better illustrate their additional needs from the board. To handle it in the most tactful manner, focus less on creating a zero-sum, Game of Thrones-style battle between investors for the top spot and instead provide up-to-date developments on how investors have made a specific impact on the business.“ Related Resource: Investor Relationship Management 101: How to Manage Your Startups Interactions with Investors Related Resource: How to Find Investors Related Resource: 6 Helpful Networking Tips for Connecting With Investors Get Started with a Visible Update Template Getting in the habit of sending monthly investor updates is a surefire way to help with fundraising, hiring, and growing. To get started, pick a template from our library and tailor it to your business. Just remember that at the end of the day, sending anything is better than sending nothing at all. Related Resource: Best Practices for Creating a Top-Notch Investment Presentation Visible allows founders to update investors, track key metrics, and raise capital all from one platform. Try Visible for free to send your next investor update. To learn more about sending your first update with Visible, check out our guide (with videos).

In the dynamic landscape of small business financing, Qualified Small Business Stock (QSBS) stands out as a pivotal tax incentive designed to encourage investments in certain startups and small businesses. By offering substantial tax benefits, QSBS not only fosters growth and innovation but also provides a unique opportunity for founders and investors to optimize their financial strategies. This guide delves into the intricacies of QSBS, shedding light on the tax benefits and eligibility criteria essential for leveraging this advantageous provision. Whether you're a seasoned entrepreneur or a new investor, understanding QSBS can significantly impact your investment decisions and financial planning. Understanding Qualified Small Business Stock (QSBS) QSBS represents a significant tax advantage for investors and employees of small businesses, as defined under Section 1202 of the Internal Revenue Code. This legislation was introduced as part of the Revenue Reconciliation Act of 1993 with the goal of encouraging investment in small businesses, which are crucial to the American economy. For stock to qualify as QSBS, it must be issued by a domestic C corporation actively engaged in business operations, and the corporation's assets must not exceed $50 million before and after the stock issuance. This framework ensures that the benefits are targeted towards genuine small businesses in sectors that do not include personal services, banking, farming, mining, or hospitality, among others​​​​. Tax Benefits of QSBS One of the most compelling benefits of QSBS is the ability to exclude up to $10 million or 10 times the cost basis, whichever is greater, of gain from the sale of QSBS from federal income tax. This exclusion applies provided the stock was purchased after September 27, 2010, and held for more than five years. The exclusion percentages vary depending on the purchase date of the stock, with 100% exclusion for stocks purchased after September 27, 2010. For stocks acquired before this date, the exclusion can be either 50% or 75%​​​​. Another key benefit is the tax deferral for capital gains reinvested in another QSBS within 60 days of sale. This provision allows investors to defer taxation on the gain until the sale of the new QSBS, provided the original QSBS was held for at least six months and other Section 1202 requirements are met​​. The impact of these benefits can be significant. For example, if an investor purchases QSBS for $1 million and sells the stock for $15 million after more than five years, the entire $14 million gain could be excluded from federal income tax, assuming the stock was acquired after September 27, 2010. If the investor then reinvests the gains into another QSBS within 60 days, the tax on the gain can be deferred further. Compared to other investment tax benefits, QSBS provides a unique advantage by offering a potentially 100% exclusion on capital gains, which is not commonly found in other investment vehicles. For instance, long-term capital gains from non-QSBS investments are taxed at favorable rates, but not completely excluded. Additionally, other investment options may not offer the same tax deferral opportunities for reinvestments as QSBS does. Requirements for a Qualified Small Business (QSB) As we delve into the crucial elements that define a QSB under the Qualified Small Business Stock (QSBS) provisions, founders need to grasp the specific criteria that set the groundwork for eligibility. These standards are not only foundational for understanding how to position your business to leverage the QSBS tax benefits but also crucial in planning the strategic direction and operational scope of your venture. Requirements for a QSB: U.S. C-Corporation: Eligibility is exclusive to companies incorporated in the United States as C-corporations. This classification excludes other business structures such as S-corporations, partnerships, and LLCs, underscoring the importance of the corporate form in qualifying for QSBS​​​​. Active Business Requirement: A qualifying company must be actively engaged in one or more qualified businesses. The essence of this requirement is to ensure the company is operational and not merely acting as an investment vehicle or holding real estate​​​​. Assets under $50 million: To maintain a focus on small businesses, the QSBS provision stipulates that a company's assets must not exceed $50 million, both before and after the stock issuance. This threshold is designed to target the tax benefits towards smaller, growth-oriented companies​​​​. Prohibited Industries: Certain industries are excluded from QSBS eligibility, reflecting policy decisions about which sectors are seen as beneficial for targeted growth. These include financial services, banking, farming, mining, and hospitality, among others​​​​. Original Issue: Investors looking to benefit from QSBS must acquire their stock directly from the issuing company, in exchange for cash, property (other than stock), or as compensation for services rendered. This requirement ensures that the benefits of QSBS go to initial investors or employees who contribute directly to the company's growth​​​​. Holding Period: There is a minimum holding period of five years for the stock, emphasizing the policy’s aim to encourage long-term investment in small businesses. This requirement ensures that the tax benefits are aligned with the goals of sustained growth and investment in the qualifying small business sector​​​​. These requirements collectively ensure that the substantial tax advantages of QSBS are directed appropriately toward businesses that are poised to contribute to economic growth, innovation, and job creation. For founders, navigating these criteria is not just about tax planning; it's about strategically aligning your business to capitalize on these benefits while driving forward your company's growth objectives. How to Acquire QSBS Acquiring Qualified Small Business Stock (QSBS) and ensuring compliance with QSBS regulations involves a careful approach, both for investors seeking tax benefits and for small business owners aiming to attract investment under this provision. Here's a step-by-step guide along with best practices and tips for navigating this process effectively: Step 1: Verify Eligibility For Investors: Before investing, confirm that the business qualifies as a QSB under the IRS guidelines. This includes verifying the company's status as a U.S. C-corporation with active business operations in eligible industries and ensuring its assets do not exceed $50 million before and after the stock issuance. For Business Owners: Ensure your business meets the QSBS criteria by reviewing your corporate structure, asset levels, and business activities against the QSBS requirements. Consider consulting with a tax professional to verify eligibility. Step 2: Acquire Stock at Original Issue Direct Acquisition: Purchase or acquire the stock directly from the company at its original issuance. This can be through initial investment, as compensation for services provided to the company, or in exchange for property other than stock. Documentation: Keep detailed records of the stock issuance, including the purchase date, amount invested, and the company's compliance with QSBS criteria at the time of investment. Step 3: Observe the Holding Period Maintain ownership of the stock for at least five years to qualify for the QSBS tax benefits. The holding period is critical for both investors and business owners to monitor to ensure eligibility for tax exclusions or deferrals. Best Practices for Compliance Regular Reviews: Conduct periodic reviews of the company's compliance with QSBS requirements, especially before and after significant events like fundraising rounds or asset acquisitions that could affect the company's eligibility. Documentation and Record-Keeping: Maintain comprehensive records of all transactions, corporate actions, and business activities that could influence QSBS status. This includes financial statements, board meeting minutes, and records of stock issuances. Consult Professionals: Engage with tax advisors or legal professionals specializing in QSBS and small business taxation. They can provide guidance tailored to your specific situation, helping navigate complex regulations and ensuring compliance. Tips for Investors Due Diligence: Before investing, conduct thorough due diligence on the potential QSBS to ensure it meets all eligibility criteria. This includes reviewing the company's business model, financials, and future growth plans. Diversify: Consider diversifying your investments across multiple QSBS to spread risk and potentially maximize tax benefits. Tips for Small Business Owners Communicate Value: Educate potential investors about the benefits of QSBS and how your company qualifies. Highlighting the tax advantages can make your company more attractive to investors. Strategic Planning: Plan major business decisions, such as asset purchases or expansions, with QSBS eligibility in mind. Avoid actions that might push your company's assets over the $50 million threshold or venture into prohibited industries. Reasons Why Startups Lose QSBS Eligibility As we shift focus from acquiring to maintaining QSBS eligibility, it's crucial to highlight the key reasons startups may lose this status. This includes surpassing asset limits, engaging in ineligible activities, and not meeting holding period or original issue requirements. Recognizing these pitfalls is essential for startups aiming to preserve their QSBS benefits and avoid regulatory challenges that could affect their growth and investor attractiveness. Exceeding Asset Threshold One of the key eligibility criterias is the company's total gross assets, which must not exceed $50 million both before and immediately after the issuance of the stock. This asset threshold is designed to ensure that the QSBS incentives are targeted towards genuinely small businesses, fostering investment and growth within this segment. When a company's assets surpass this $50 million limit, it risks losing its QSBS eligibility. This can have significant implications for both the company and its investors, as the potential for tax-free or reduced-tax capital gains can be a substantial incentive for investment in startups. For founders, closely monitoring your company's asset growth and valuation is essential, especially around funding rounds or when acquiring significant assets, to ensure compliance with QSBS requirements. For businesses on the cusp of this threshold, strategic planning becomes crucial. This may involve timing asset acquisitions or structuring funding rounds in a way that maintains eligibility. Engaging with financial and tax advisors knowledgeable in QSBS regulations can provide valuable guidance, helping navigate these complex requirements while pursuing growth objectives. Adherence to the $50 million asset threshold is not just about maintaining eligibility for a tax benefit. It's about strategic financial management that aligns with your company's growth trajectory and investment strategy. Ineligible Business Activities For startups aiming to qualify for QSBS benefits, it's important to understand the restrictions on the types of business activities that are eligible. According to the IRS, certain service-oriented businesses are not eligible for QSBS. This exclusion primarily targets service businesses in sectors such as law, health, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, and any business where the principal asset is the reputation or skill of its employees. These restrictions are designed to focus the QSBS benefits on businesses that contribute to innovation, manufacturing, and product development, rather than those that primarily offer professional services or rely on the individual reputations or skills of their employees. For founders in the process of establishing or pivoting their business model, this delineation is crucial. It's not just about what your business does, but how it's structured and where the value is derived from that determines QSBS eligibility. Changing Business Operations Startups initially qualifying for QSBS can lose their status if they pivot into business activities that are considered ineligible under QSBS criteria or significantly alter their business model away from qualifying activities. Key Considerations for Maintaining QSBS Eligibility: Stay Within Eligible Business Activities: The IRS excludes certain types of businesses from QSBS benefits, notably service-oriented fields such as law, health, engineering, architecture, and financial services, among others. Monitor Business Model Changes: Significant alterations to your business model that deviate from the original qualifying activities need careful consideration. For instance, transitioning from a product-based to a service-oriented model in an excluded field could result in losing QSBS eligibility. Consult with Professionals: Given the complexities of tax law and the implications of business changes on QSBS status, consulting with tax professionals or legal advisors specializing in this area is crucial. They can provide tailored advice on how specific operational changes may impact your QSBS eligibility. Regular Compliance Reviews: Conduct periodic reviews of your business operations against QSBS requirements. Improper Stock Transfers Maintaining the benefits associated with QSBS is crucial for both startups and their investors. One of the foundational rules of QSBS is that the tax benefits are generally restricted to the original holder of the stock. This means that if the stock is transferred in a way that does not comply with QSBS regulations, such as selling the stock to another individual who is not an original holder, the special QSBS status—and thus, its tax advantages—can be lost. Key Points on Improper Stock Transfers: Original Holder Requirement: QSBS benefits are designed to incentivize and reward the initial investors or employees who received stock at the company's early stages. These benefits aim to stay with those who initially took the risk. Permissible Transfers: There are specific circumstances under which QSBS can be transferred without losing its beneficial status, such as certain types of gifts or upon the death of the holder. It's important to understand these exceptions to plan for estate or succession planning effectively. Consequences of Non-Compliant Transfers: Selling or otherwise transferring QSBS to a party not covered under the exceptions can lead to the forfeiture of QSBS benefits. This might include the significant tax exclusions that QSBS holders are otherwise entitled to. Professional Guidance Recommended: Given the complexity of QSBS rules and the potential financial impact of losing QSBS status, founders and stockholders are strongly advised to consult with tax professionals or legal advisors before making any decisions about transferring QSBS. Learn More with Visible In this guide we’ve outlined the QSBS framework, underlining its critical role as a tax incentive for fostering investments in startups and small ventures. The key takeaways focus on the need for businesses to qualify as U.S. C-corporations, adhere to a $50 million asset limit, ensure direct stock issuance to eligible investors, and observe a strict five-year holding period. It also cautions against the risks associated with changing business models or participating in activities that QSBS disqualifies, as well as the negative impact of improper stock transfers on QSBS eligibility. For founders, aligning with QSBS criteria is crucial for financial optimization. Regular monitoring and professional advice are recommended for maintaining QSBS eligibility. To leverage QSBS benefits and support your business's growth, consider using Visible for financial management and investor relations. Start optimizing your strategy try Visible free for 14 days. Related resource: Advisory Shares Explained: Empowering Entrepreneurs and Investors Accredited Investor vs Qualified Purchaser Liquidation Preference: Types of Liquidation Events & How it Works

Carried interest is a fundamental concept in venture capital (VC) that plays a pivotal role in shaping the financial rewards for venture capitalists. This financial term, often shrouded in complexity, directly influences the profits venture capitalists receive from successful investments. As founders navigating the intricate world of VC funding, understanding carried interest is crucial not only for grasping how VCs are compensated but also for appreciating the motivations behind their investment decisions. This article demystifies carried interest, detailing what it is, its importance, how it functions within a venture capital framework, and its implications for both fund managers and investors. By unpacking the intricacies of carried interest, founders can better position themselves to partner with venture capitalists, aligning interests towards mutual success. Related resource: How to Find Venture Capital to Fund Your Startup: 5 Methods What is Carried Interest? Carried interest, in the realm of venture capital, refers to the share of profits that general partners (GPs) of a venture capital fund receive as compensation, beyond the return of their initial investments. This form of income is contingent upon the fund achieving a return on its investments above a specified threshold, incentivizing GPs to maximize fund performance. Typically, carried interest amounts to about 20% of the fund's profits, with the remaining 80% distributed among the limited partners (LPs), who are the primary investors in the fund. Why Carried Interest is Important Carried interest is a critical component of the venture capital ecosystem for several reasons. It aligns the interests of GPs with those of the LPs, ensuring that fund managers are motivated to seek out and support businesses with high growth potential. Additionally, it serves as a reward mechanism for GPs, compensating them for the risk and effort involved in managing the fund and guiding the companies in their portfolio to success. How Does Carried Interest Work? Venture capital thrives on the principle of aligned interests, with carried interest at its core serving as the linchpin for this alignment. In this section, we’ll cover how carried interest functions, from incentivizing fund managers to maximizing investment returns- cementing the foundation for understanding its critical role in venture capital's operational and strategic framework. Fund Structure and Contributions Venture capital funds operate as partnerships between Limited Partners (LPs) and General Partners (GPs). LPs, including institutions like pension funds and high-net-worth individuals, provide most of the capital but are not involved in day-to-day management, limiting their liability to their investment amount​​​​. GPs manage the fund, making investment decisions and actively advising portfolio companies, with their income primarily derived from management fees (typically 2%) and carried interest (about 20% of the fund's profits), aligning their financial incentives with the success of the fund​​​​. The structure, usually a limited partnership in the U.S., offers tax benefits through pass-through taxation, allowing profits to be taxed once at the partner level, and establishes a clear separation of operational roles and financial responsibilities between LPs and GPs​​. This model ensures a strategic alignment of interests, with GPs using their expertise to grow the investments and generate returns, acknowledging the inherent high-risk, high-reward nature of venture capital investing​​. Related resource: A Quick Overview on VC Fund Structure Management Fees Management fees in venture capital funds are structured to cover the operational and administrative costs of managing the fund. These fees are typically calculated as a percentage of the fund's committed capital, ranging from 1% to 2.5%, and are charged annually to the fund's limited partners (LPs). The exact percentage can vary based on several factors including the size of the fund, the investment strategy, the fund's performance, and market norms. For instance, a fund with $100 million in committed capital charging a 2% management fee would incur a $2 million annual fee​​. The primary purpose of management fees is to cover day-to-day operational costs such as salaries, office rent, legal and accounting services, due diligence costs, and other expenses associated with running the VC firm. This ensures that venture capital firms can continue to provide investment opportunities and support to their portfolio companies without compromising on the quality of management and oversight​​. Management fees are an important consideration for both venture capital firms and their investors as they directly impact the net returns of the fund. While these fees are essential for the operation of venture capital firms, it's important for LPs to understand how they are structured and the factors that influence their calculation to ensure transparency and alignment of interests​​​​. Profit Wharing: The 'carry' Carried interest, or "carry," is a profit-sharing mechanism in venture capital funds, allowing fund managers (GPs) to receive a portion of the fund's profits, aligning their interests with the investors' (LPs). Typically, GPs earn carry after returning the initial capital to LPs, with a common share being around 20%, although this can vary from 15% to 30% based on market conditions and the fund's performance​​​​. Carry is distributed after certain conditions are met, such as the return of initial investments and possibly achieving a hurdle rate. The distribution models include European-style, focusing on overall fund performance, and American-style, based on individual investment performance. The taxation of carried interest at capital gains rates, lower than ordinary income rates, has been debated as a potential "loophole"​​. Hurdle Rate The hurdle rate is essentially a benchmark return that the fund must achieve before the fund managers (GPs) can start receiving their share of carried interest, which is a percentage of the fund's profits. This rate serves as a minimum acceptable return for investors (LPs) and ensures that GPs are rewarded only after generating sufficient returns on investments​​. There are two primary types of hurdle rates: hard and soft. A hard hurdle implies that the manager earns carried interest only on the returns exceeding the hurdle rate. In contrast, a soft hurdle allows the manager to earn carried interest on all returns once the hurdle rate is met, including those below the hurdle​​. The purpose of establishing a hurdle rate is to align the interests of fund managers with those of the investors, ensuring that fund managers are incentivized to achieve higher returns. The actual percentage of the hurdle rate can vary but is often related to a risk-free rate of return or a predetermined fixed rate. This mechanism ensures that fund managers focus on exceeding specific performance targets before benefiting from the fund's success​​​​. In the context of venture capital, the typical hurdle rate is around 7-8%, benchmarked against returns from less risky asset classes like public stocks. This reflects the expectation that investors locking their money in a VC fund for an extended period should achieve annual returns exceeding those of more liquid and less risky investments​​. Understanding the hurdle rate and its implications is crucial for founders considering venture capital funding, as it impacts how and when fund managers are compensated, ultimately affecting the fund's investment strategy and focus. Distribution Waterfall The distribution waterfall process in VC funds is a structured method to allocate capital gains among the participants of the fund, primarily the LPs and the GP. This process ensures that profits are distributed in a sequence that aligns the interests of both LPs and GPs, establishing fairness and transparency in the profit-sharing mechanism. Understanding the distribution waterfall is crucial for founders as it impacts how VCs are incentivized and how profits from successful investments are shared. This knowledge can be particularly beneficial when negotiating terms or evaluating potential VC partners. The waterfall structure typically follows a hierarchical sequence with multiple tiers: Return of Capital: This initial tier ensures that LPs first receive back their initial capital contributions to the fund. Preferred Return: After the return of capital, LPs are entitled to a preferred return on their investment, which is a predetermined rate signifying the minimum acceptable return before any carried interest is paid to the GP. Catch-up: This tier allows the GP to receive a significant portion of the profits until they "catch up" to a specific percentage of the total profits, ensuring they are adequately compensated for their management and performance. Carried Interest: In the final tier, the remaining profits are split between the LPs and the GP, typically following an 80/20 split, where 80% of the profits go to the LPs and 20% as carried interest to the GP. This tier rewards the GP for surpassing the preferred return threshold and generating additional profits. The distribution waterfall can adopt either a European (whole fund) or American (deal-by-deal) structure. The European model favors LPs by requiring the return of their initial investment and preferred returns before the GP can receive carried interest, enhancing long-term investment returns motivation. In contrast, the American model allows GPs to receive carried interest on a per-deal basis, potentially enabling them to realize gains more frequently but also includes mechanisms like clawback clauses to protect LP interests if overall fund performance does not meet expectations. Long-term Incentive Carried interest aligns fund managers' (GPs') interests with investors' (LPs') by linking GP compensation to the fund's long-term success. It rewards GPs with a portion of the profits only after meeting predefined benchmarks, such as returning initial capital to LPs and achieving a hurdle rate. This ensures GPs are committed to selecting investments and supporting them to maximize returns over the fund's life, often spanning several years. For founders, this means VC firms are incentivized to contribute to their company's growth and success genuinely, reflecting a partnership approach aimed at mutual long-term gains. Understanding Clawbacks and Vesting Clawbacks and vesting are key elements tied to carried interest in venture capital, designed to align the interests of fund managers (GPs) with the fund's long-term success and the investors' (LPs') expectations. Clawbacks act as a financial safeguard for investors. Imagine a scenario where a sports team pays a bonus to its coach based on mid-season performance, only for the team to finish the season at the bottom of the league. Similarly, clawbacks allow LPs to reclaim part of the carried interest paid to GPs if the fund doesn't meet overall performance benchmarks. This ensures GPs are rewarded for the fund's actual success, not just early wins. Vesting in the context of carried interest is akin to a gardener planting a tree and waiting for it to bear fruit. Just as the gardener can't harvest immediately, GPs earn their carried interest over time or upon meeting certain milestones. This gradual earning process keeps GPs motivated to nurture the fund's investments throughout its lifecycle, ensuring their goals align with generating lasting value for LPs. Together, clawbacks and vesting weave a tapestry of accountability and commitment in the venture capital ecosystem. They ensure that the journey to financial reward for GPs mirrors the fund's trajectory towards success, fostering a harmonious alignment of objectives between GPs and LPs in cultivating prosperous ventures. Carried Interest Calculation Calculating carried interest involves determining the share of profits that general partners (GPs) in a venture capital or private equity fund receive from the investments' returns. Here's a simplified process to understand how carried interest is calculated, keeping in mind that actual calculations can get more complex based on the fund agreement: Determine the Profit: Start with the total returns generated from the fund's investments after selling them, then subtract the original capital invested by the limited partners (LPs). This figure represents the profit. Profit = Total Returns - Initial Capital Apply the Hurdle Rate (if applicable): Before calculating carried interest, ensure that the returns have met any specified hurdle rate or preferred return rate. This rate is the minimum return that must be provided to LPs before GPs can receive their carried interest. Calculate Carried Interest: Once the profit is determined and any preferred return obligations are met, apply the carried interest rate to the profit. This rate is usually agreed upon in the fund's formation documents and is typically around 20%. Carried Interest = Profit x Carried Interest Rate For example, if a fund generates $100 million in returns with $80 million of initial capital, the profit is $20 million. If the carried interest rate is 20%, the GPs would receive $4 million as carried interest. Example Calculation: $20 million (Profit) x 20% (Carried Interest Rate) = $4 million (Carried Interest) Remember, this is a basic overview. The actual calculation may include additional factors like catch-up clauses, tiered distribution structures, and specific terms related to the return of capital. Fund agreements often detail these calculations, reflecting the negotiated terms between GPs and LPs. Tax Implications for Carried Interest Carried interest is taxed under the capital gains tax regime, which typically offers lower rates compared to ordinary income taxes. This tax treatment applies because carried interest is considered a return on investment for the GP of a VC or private equity fund, which receives this compensation after achieving a profit on the fund's investments. To qualify for long-term capital gains tax rates, the assets generating the carried interest must be held for a minimum of three years. This structure is sometimes debated for its fairness, with some viewing it as an advantageous "loophole" for high-income investment managers, allowing them to pay taxes at a lower rate compared to ordinary income rates​​​​. Unlock Venture Capital Opportunities with Visible Navigating the venture capital landscape can be a complex journey, but understanding the nuances of carried interest demystifies a crucial aspect of VC funding. This knowledge not only enlightens founders on how venture capitalists are rewarded but also sheds light on the motivations driving their investment choices. Through this exploration, we've delved into the essence of carried interest, from its foundational role in aligning GP and LP interests to its implications on fund structure, management fees, profit sharing, and more. Armed with these insights, founders are better equipped to forge partnerships with VCs, ensuring a unified path to success. As you venture further into the intricacies of raising capital and managing investor relations, remember that tools like Visible can significantly streamline your efforts. Visible empowers you to effectively raise capital, maintain transparent communication with investors, and track important metrics and KPIs. With Visible, navigating the venture capital process becomes more manageable, allowing you to focus on growth and innovation. For more insights into your fundraising efforts, Visible is the go-to platform. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: 25 Limited Partners Backing Venture Capital Funds + What They Look For

In the entrepreneurial world, the terms "business venture" and "startup" represent paths teeming with potential and challenge. Though intertwined by the spirit of innovation and growth, they differ in scale, strategy, and scope. In the article we’ll cover the fundamental nature of both paths, exploring their shared goals and contrasting approaches. From the inherent risks and innovative solutions to the pursuit of growth and funding strategies, we explore the complex terrain that founders must navigate. Whether you're laying the groundwork for a scalable tech startup or embarking on a profit-driven business venture, understanding these distinctions is crucial for aligning your vision with the right model. What is a Business Venture? A business venture refers to a new enterprise entered into for profit. It can encompass a wide range of business types and sizes, including partnerships, joint ventures, or sole proprietorships. These ventures, which can operate across various industries, typically start with a solid business idea or plan, possibly involving multiple partners and requiring formal business incorporation. Unlike a startup, which is typically technology-oriented and scalable, a business venture focuses on entering established markets with products or services that meet current demand. The goal is often to generate immediate revenue rather than disrupt the market. The key distinction between a business venture and a startup lies in their growth trajectory and funding sources. Business ventures may grow at any pace and often rely on traditional financing methods like loans, whereas startups aim for rapid growth, supported by investments from venture capitalists or angel investors. What is a Startup? A startup is defined as an entrepreneurial venture initiated to seek, develop, and validate a scalable business model. It's distinct from other new businesses in its focus on rapid growth, aiming to expand well beyond the solo founder. Startups are characterized by their innovative approach to addressing gaps in the market or creating entirely new markets, often with the potential to disrupt traditional business models. They typically face high uncertainty and risk of failure, but the goal is substantial success and influence​​. Startups are at the beginning stages of their life cycles, distinguished by their innovative stance, potential for rapid growth, and reliance on external funding. They can emerge across various industries, contributing to the vibrant startup culture that prizes creative, innovative thinking. The startup journey often includes multiple funding rounds, starting from pre-seed to potentially an initial public offering (IPO), with each stage aimed at scaling the business and increasing its market value​​. An example of a successful startup is Slack, which was developed initially as an internal communication tool for a gaming company. It transformed into a standalone product aimed at enhancing workplace collaboration. By integrating messaging, file sharing, and tools in one platform, Slack revolutionized how teams communicate, moving beyond traditional email to real-time messaging and collaboration. Its rapid adoption across various industries demonstrates the startup's ability to innovate and disrupt the conventional communication model, achieving significant market value and recognition. Related resource: 7 Essential Business Startup Resources Key Similarities Between a Business Venture and a Startup This next section will explore how both Business Ventures and Startups navigate the realms of risk, innovation, and the pursuit of growth and funding, shedding light on the entrepreneurial journey's universal aspects. Nature of Risk Both business ventures and startups inherently involve a degree of risk and uncertainty, a characteristic fundamental to the entrepreneurial process. This risk stems from various factors, including market volatility, competition, changing consumer preferences, and the challenge of securing adequate funding. Additionally, the uncertainty in predicting the success of innovative products or services in untested markets contributes to the risk profile of these endeavors. Entrepreneurs must navigate these uncertainties with strategic planning, market research, and sometimes, a willingness to pivot their business model in response to feedback and market demands. The high failure rates of startups and small businesses underscore the risks involved; however, these risks are often balanced by the potential for significant rewards, including financial success and market disruption. This balance between risk and reward is a defining feature of the entrepreneurial landscape, driving innovation and economic growth despite the inherent uncertainties. Innovation and Solutions Both business ventures and startups aim to provide innovative solutions by leveraging speed and in-house expertise to develop and deploy products that meet market needs efficiently. This approach allows them to quickly capture market share and adapt to emerging opportunities, emphasizing products that deliver compelling value with a focus on rapid market entry. The dynamic nature of these entities enables them to identify and fill gaps in existing markets or even create new ones, often leading to the disruption of traditional business models and practices​​. Seeking Growth Business ventures prioritize sustainable growth, focusing on core competencies and strategic innovation to scale. This approach aims for long-term stability and market adaptation, often exploring growth through entering adjacent markets​​. Startups, conversely, target rapid scalability and market disruption, aiming for quick expansion and significant investment to drive economic contributions such as job creation and innovation​​. However, focusing solely on scalability can overlook the importance of sustainable development, emphasizing the need for startups to balance growth with positive social and environmental impacts​​. Both models underline the importance of growth but approach it differently, highlighting the diverse strategies businesses adopt to achieve success and contribute to the economy. Investment and Funding Seeking external funding to fuel growth, is common for both and there are a variety of sources that founders can leverage, some of these include venture capital (VC), angel investors, and loans. Venture capital is a popular choice for startups aiming for rapid growth, with VC firms providing substantial funding in exchange for equity. These investments are not just financial but often come with strategic guidance, industry expertise, and networking opportunities to help startups scale. VC funding typically progresses through stages, from early rounds like Series A to later stages such as Series C, each with its own objectives ranging from product development to market expansion​​​​. Startup loans, including SBA loans, credit card loans, and short-term loans, offer another avenue for securing necessary capital. SBA loans, backed by the Small Business Administration, provide competitive interest rates and flexible use, though they require a solid business plan and a good credit history. Credit card loans and short-term loans offer quick access to funds, suitable for immediate needs but often come with higher interest rates​​. Angel investors also play a crucial role, offering smaller amounts of capital to early-stage startups. These high-net-worth individuals invest in startups with the potential for high growth, providing not just funding but valuable advice and connections. Angel investments are typically more accessible and flexible, making them a critical part of the startup ecosystem​​. Crowdfunding has emerged as a novel method of raising capital, leveraging the power of social media and crowdfunding platforms to gather small amounts of money from a large number of people. This approach allows startups to validate their business ideas through market interest while simultaneously financing their projects​​. While these funding options are theoretically available to both startups and business ventures, the choice of which to pursue will depend on the specific needs, business model, growth potential, and stage of the business. Startups might lean more towards VC and angel investment due to their potential for rapid growth and scale, whereas traditional business ventures might find loans and crowdfunding more accessible or suited to their growth strategies and financial needs. Related resources: The Ultimate Guide to Startup Funding Stages How to Find Venture Capital to Fund Your Startup: 5 Methods Why and How You Should Evaluate Startup Team Risk Key Differences Between a Business Venture and a Startup It's essential to understand the differences between a Business Venture and a Startup, as they shed light on the distinct trajectories and strategic choices each type of entrepreneurial effort embodies, shaped by their goals, operational methods, and long-term visions. We will dive into the variations in growth pace and magnitude, approaches to generating revenue, operational flexibility, and envisioned exit pathways, all of which serve to highlight the unique essence of startups in contrast to more traditional business ventures. Duration and Scale For founders, recognizing the growth ambitions of your venture is key. Startups typically aim for rapid expansion and large-scale operations, driven by a desire to quickly capture market share in innovative or disruptive sectors. Their growth model emphasizes scalability and establishing a dominant position swiftly to outpace competitors. In contrast, traditional business ventures often pursue a more gradual growth strategy, focusing on sustainability and profitability. They may prioritize building a solid foundation and expanding their market presence steadily, using external financing judiciously to maintain long-term stability. The choice between aiming for the fast scalability of a startup or the steady growth of a traditional business venture hinges on your strategic priorities, market, and resources. Understanding these different growth approaches can help guide your decisions and set realistic goals for your venture's development. Revenue Models For founders, selecting the right revenue model is essential for your venture's success. Startups often focus on growth before profit, employing models like freemium, subscriptions, or advertising to scale quickly and monetize a large user base later. These strategies hinge on innovation and market disruption, aiming to secure a broad audience first. In contrast, traditional business ventures prioritize immediate profitability with direct revenue models, such as selling products or services. Their strategies—centered on cost-plus, value-based pricing, or memberships—seek financial stability and a clear path to consistent income based on established market demand. Choosing your venture's revenue model requires understanding your market, customer behavior, and your unique value proposition. Whether leading a startup or a traditional business, your monetization strategy should align with your venture’s goals, ensuring a sustainable path to growth and financial success. Operational Approach Startups are known for their agility, often pivoting in response to market feedback to find the right product-market fit. This adaptive approach allows them to iterate on their offerings rapidly, taking advantage of new insights and emerging trends to stay relevant and competitive. The ability to pivot is a core strength of startups, reflecting their commitment to innovation and market responsiveness. On the other hand, traditional business ventures typically adhere to a more fixed operational plan. These businesses rely on proven models and market analysis, making deliberate changes based on long-term strategies rather than immediate feedback. This stability can be an asset, offering consistency to customers and stakeholders, though it may limit the ability to capitalize on sudden market shifts. For founders, understanding whether a flexible, pivot-ready approach or a stable, fixed plan suits your venture is key. Your operational approach should align with your market environment, business model, and strategic objectives, ensuring you can effectively respond to challenges and opportunities alike. Exit Strategy Exit strategies represent the culmination of a venture's journey, reflecting its ultimate goals and the realization of its founders' and investors' aspirations. Startups often aim for exit options like acquisition by larger companies or an Initial Public Offering (IPO), which can provide significant returns on investment. These exits are aligned with the high-growth, scalable nature of startups, where the goal is to build value quickly and then exit for a profit, offering a clear path to liquidity for investors and founders. In contrast, traditional business ventures may prioritize sustained profitability and long-term operation as their exit strategy. For these ventures, success is measured by the ability to generate consistent income and maintain a stable business model. While some may still consider acquisition or even an IPO, the focus is more on building a lasting legacy and potentially passing the business on to future generations or selling it when the time is right. For founders, choosing an exit strategy involves considering your venture’s growth trajectory, market positioning, and personal and financial goals. Whether aiming for a high-profile exit or building a business with enduring value, understanding these pathways can guide strategic decisions and help shape the future of your venture. Example of a Business Venture BrewDog, a Scottish craft beer company founded in 2007 by James Watt and Martin Dickie, exemplifies a successful business venture with a focus on high-quality craft beers. Unlike tech-oriented startups aiming for rapid scale, BrewDog targeted immediate revenue through direct sales, gradually expanding its presence internationally. The company utilized a mix of equity crowdfunding, dubbed "Equity for Punks," and traditional financing to fuel its growth, building a strong brand community in the process. BrewDog's approach highlights its commitment to product quality, innovation, and sustainability, setting it apart in the craft beer market. Instead of seeking a quick exit via an IPO or acquisition, BrewDog aims for lasting impact and brand identity, focusing on long-term sustainability and global expansion. This strategy underlines the potential for business ventures to achieve success through traditional and innovative funding, quality focus, and a growth model geared towards enduring market presence and brand loyalty. Example of a Startup Airbnb, founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk in San Francisco, epitomizes a successful startup. Originating from the idea to rent out air mattresses to help pay rent, it evolved into a global platform that disrupts traditional hospitality by connecting travelers with local hosts. Airbnb's journey highlights the startup model's core attributes: addressing market gaps with innovative solutions, achieving rapid growth, and leveraging external funding. The platform disrupted the hospitality industry by offering a more personalized, cost-effective lodging experience, appealing to both travelers seeking unique accommodations and homeowners looking to monetize their extra space. Key to Airbnb's success was its ability to scale quickly, facilitated by significant investments from venture capitalists and angel investors who saw the potential for massive market disruption. This infusion of capital enabled Airbnb to expand its offerings, enhance its technology, and grow its user base globally at an unprecedented pace. The company's platform-based model promotes flexibility, scalability, and a community-driven experience, challenging established industry norms. Airbnb's strategic growth and market disruption were validated by its highly anticipated IPO in December 2020, demonstrating the startup's ability to leverage innovation, strategic funding, and a disruptive business model to achieve substantial market impact and valuation. Fund Your Startup With Visible Both Business Ventures and Startups embody the entrepreneurial spirit in their approaches, though with different strategies, challenges, and goals. Understanding these differences is crucial for entrepreneurs to align their vision and strategies effectively. As we navigate the complexities of starting and scaling businesses, it's essential to choose the path that best suits one's goals, resources, and industry dynamics, whether aiming for steady growth in a traditional venture or seeking rapid expansion and market disruption as a startup. Use Visible to update investors, raise capital, and track metrics from a single platform. We also help support every part of your fundraising funnel with investor updates, fundraising pipelines, pitch deck sharing, and data rooms. Try Visible free for 14 days.

It’s common for venture firms to start raising their next fund in the last year of capital deployment, typically years 3-4 of a fund’s life. This poses a sort of chicken-and-egg problem because many of the common fund performance metrics that Limited Partners use to drive allocation decisions only become reliable, and therefore more meaningful, around year six (Source: Cambridge Associates). Farooq Abbasi, founder and General Partner of Preface Ventures, created a Seed Stage Enterprise VC Funding Napkin to help GPS think through alternative fund metrics that help communicate performance outside the traditional indicators that LPs use to measure success for more mature funds. The Seed Stage Enterprise VC Funding Napkin helps answer the question "What is good enough to raise a subsequent fund in the current market conditions". Farooq from Preface Ventures joined us on Tuesday, February 27th for a discussion about the fund performance metrics GPs can use to benchmark and communicate fund performance when it's still 'early'. View the recording below. Webinar Topics The issue with ‘typical’ fund performance metrics for ‘early’ funds Overview of Preface Venture’s Seed Stage Enterprise VC Funding Napkin Deep dive into alternative early performance benchmarks How to keep track of alternative fund performance metrics How to leverage alternative fund performance indicators into your fundraising narrative Inside look into how Preface Ventures keeps LPs up to date Q&A Resources From the Webinar Christoph Janz's What does it take to raise capital, in SaaS, in 2023? Preface Ventures' A GP's View on VC Fund Performance When It's Early Diversity VC About Preface Ventures Preface Ventures is a New York City-based firm started in 2020 led by Farooq Abbasi. Preface invests $500-$2M at the pre-seed and seed stage into startups who are building the Frontier Enterprise structure. Preface has 20 active positions in Fund II and 7 active positions in Fund III. (Learn more)

In today's fast-paced business world, startups are constantly on the lookout for tools and technologies that can streamline their operations, enhance their productivity, and set them on a path to success. A significant driver of this efficiency is the adoption of Software as a Service (SaaS) tools. These cloud-based applications have not only made high-end software accessible to businesses of all sizes but have also introduced a level of agility and flexibility previously unseen. With the digital transformation accelerated by the pandemic, the reliance on SaaS tools has surged, reflecting the market's exponential growth. According to Statista, the SaaS market has shown remarkable growth, estimated to be worth approximately 197 billion dollars in 2023 and projected to reach 232 billion dollars by 2024​​. Moreover, the integration of Artificial Intelligence (AI) into SaaS has marked a revolutionary change, making these tools smarter and more intuitive. AI's role in automating complex processes, providing actionable insights, and enhancing user experiences has made its inclusion in SaaS tools a game-changer, paving the way for innovative solutions that cater to the dynamic needs of startups. Related Resources: Top SaaS Products for Startups What is a SaaS tool? At its core, a SaaS tool is a cloud-based software that provides users with access to applications over the internet, eliminating the need for internal infrastructure or hardware. This model offers several advantages, particularly for small businesses and startups, including scalability, cost-effectiveness, and accessibility. Tools like Slack, Zoom, Asana, Trello, and Google Workspace epitomize the value of SaaS by offering solutions that enhance communication, project management, and collaboration without the hefty upfront costs typically associated with traditional software. These tools are not just applications; they are catalysts for efficiency, enabling startups to focus on their core business strategies while managing operational tasks with greater ease and flexibility. Related Resource: The SaaS Business Model: How and Why it Works Team Communications At the core of every strong startup team is strong communication. As more teams move to a remote or hybrid environment, the importance of communication has been heightened. Teams that are intentional about communication while working remotely will set themselves up for success. Learn more about the most popular SaaS team communication tools below: 1. Slack Slack has become synonymous with startups. Remote or not, startups are leveraging Slack to communicate with their team members. With enhanced permissions and a solid suite of integrations, Slack (or a similar messaging tool) has almost become table stakes for modern communication. Learn more about Slack here. 2. Zoom Going hand in hand with the explosion of remote work has been Zoom. Now a verb in everyday life — Zoom has transformed the way startups work. Zoom is an easy-to-use video conferencing tool that is generally the standard. Most attendants will be familiar with Zoom and are comfortable getting on a Zoom call. Learn more about Zoom here. Project Management and Workflows One of the main differentiators of a startup is the ability to move quickly. In order to best build products, launch campaigns, and move quickly, startups need a tool in place to stay organized. Project management and workflow tools can be key to staying on top of ongoing projects and development. Related resource: 7 Essential Business Startup Resources Learn more about the most popular project management and workflow tools below: 3. Asana Asana has been a popular project management and workflow tool amongst startups for years. As they put it, “Teams use Asana to easily connect people, processes, and cross-functional teamwork in one place. Yep—more efficiency, without the meetings.” Learn more about Asana here. 4. Trello Trello is another popular project management tool amongst startups. As the team at Trello puts it, “Collaborate, manage projects, and reach new productivity peaks. From high rises to the home office, the way your team works is unique—accomplish it all with Trello.” Learn more about Trello here. 5. Google Workspace Google Workspace is an all-in-one tool that startups commonly leverage. Workspace is a suite of popular tools that can help teams with everything from email to organization to meetings. As the team at Google puts it, “Google Workspace business solutions seamlessly integrate everything you and your team need to get anything done, all in one place.” Learn more about Google Workspace here. Marketing In the realm of digital marketing, the right SaaS tools can be the difference between a successful campaign and a missed opportunity. Startups, in particular, need to leverage these tools to optimize their marketing strategies, engage with their audience, and analyze the performance of their campaigns. Solutions like SEMrush, HubSpot, Mailchimp, SurveyMonkey, and Hotjar offer a suite of features tailored for digital marketing, from SEO analysis and inbound marketing to email campaigns and user feedback. These tools empower startups to navigate the complexities of digital marketing, providing them with the insights and automation needed to reach their target audience effectively and efficiently. 6. SEMrush SEMrush, a cornerstone in content marketing for startups, now integrates advanced AI features, enhancing its all-in-one toolkit for SEO, social media marketing, and beyond. This platform not only facilitates SEO, content marketing, competitor research, PPC, and social media marketing from a single platform but now also leverages AI to offer smarter insights, content optimization, and more efficient strategy planning. As SEMrush evolves, it continues to provide comprehensive support for digital marketing efforts, making it even easier for teams to execute effective campaigns with precision and creativity. Learn more about SEMrush here. 7. HubSpot HubSpot is one of the largest sales and marketing tools for startups. HubSpot covers everything from a sales CRM to email marketing to landing page creation. As the team at HubSpot puts it, “HubSpot’s CRM platform has all the tools and integrations you need for marketing, sales, content management, and customer service. Each product in the platform is powerful alone, but the real magic happens when you use them together.” HubSpot has recently also significantly upgraded its platform with the use of AI and enhanced Sales Hub features. These updates include AI Assistants to streamline content creation and customer engagement, AI Agents for automating customer service, and AI Insights for predictive analytics. Additionally, new Sales Hub capabilities focus on efficient prospecting, advanced lead management, AI-powered sales forecasting, and deeper LinkedIn integration to improve sales productivity and customer connections​​​​​​. These advancements underscore HubSpot's commitment to leveraging AI to provide comprehensive solutions across marketing, sales, and customer service, helping businesses thrive in the digital age. Learn more about HubSpot here. 8. Mailchimp Mailchimp is a popular tool to help startups distribute marketing emails. The robust email marketing tool scales well with startups as well. As the team at Mailchimp puts it, “Win new customers with the #1 email marketing and automation brand* that recommends ways to get more opens, clicks, and sales.” Mailchimp has also recently launched a series of new features and updated powered by AI such as an Email Content Generator, to streamline the creation of targeted email campaigns. These advancements, aimed at small businesses and startups, encompass improved analytics, advanced segmentation, e-commerce automations, and SMS marketing, facilitating a more integrated approach to digital marketing strategies. Learn more about Mailchimp here. 9. SurveyMonkey SurveyMonkey, now enhanced with AI, streamlines survey creation and form building for marketers. Its new "Build with AI" feature uses GPT-3 technology and SurveyMonkey's rich data history to let users quickly generate surveys from simple descriptions. Alongside, SurveyMonkey Forms offers an intuitive platform for creating various web forms, equipped with customizable templates and integration options. These tools provide fast, efficient ways to gather insights, making SurveyMonkey a strategic asset for data-driven marketing decisions​​​​​​. Learn more about SurveyMonkey here. 10. Hotjar Hotjar is a comprehensive tool for understanding user behavior and feedback on websites. It offers features like flexible dashboards, sentiment analysis, and new integrations to help marketers and product teams gain deep insights. With Hotjar, users can customize dashboards to track key metrics, utilize AI for sentiment analysis of survey responses, and leverage integrations for more impactful campaigns. These capabilities make Hotjar an essential tool for improving website usability, increasing conversion rates, and enhancing overall user experience​​. Learn more about Hotjar here. Social Media Management In today's digital age, social media is a battleground where brands vie for attention, engagement, and loyalty. Social media management tools such as Sprout Social, Hootsuite, Buffer, and Canva are indispensable for startups aiming to establish a strong online presence. These platforms offer a centralized dashboard for managing multiple social media accounts, scheduling posts, analyzing engagement data, and creating visually appealing content. By simplifying the social media management process, these tools allow startups to maintain a consistent brand voice across platforms, engage with their audience in real time, and measure the impact of their social media strategies. 11. Sprout Social Sprout Social is a dedicated tool to help companies level up their social media marketing. As the team at Sprout Social puts it, “Our all-in-one social media management platform unlocks the full potential of social to transform not just your marketing strategy—but every area of your organization.” Learn more about Sprout Social here. 12. Hootsuite Hootsuite is a versatile social media management platform that offers a range of features to help users effectively manage their online presence across different platforms. Its key features include publishing and scheduling posts, social media analytics, AI content creation, optimal posting times, social listening, engagement tools, and more. These tools are designed to improve social media strategies through efficient scheduling, insightful analytics, and enhanced audience engagement. Hootsuite's integrations with popular social networks and tools like Canva enhance its utility. Learn more about Hootsuite here. 13. Buffer Buffer evolved significantly in 2023, introducing 26 new features, including an AI Assistant integrated with ChatGPT, helping users generate new posts, repurpose existing ones, and create endless new ideas. It supports various social channels like Facebook, Instagram, LinkedIn, and more, offering tools for publishing, analytics, and engagement. These developments make Buffer a powerful tool for social media management, allowing for organized content, streamlined collaboration, and efficient scheduling across multiple platforms​​. Learn more about Buffer here. 14. Canva Canva offers design tools that anyone can use — regardless of their design skills. Canva can help marketing teams create assets for their marketing site, email campaigns, social media, and more. As the team at Canva puts it, “Canva makes it easy to create professional designs and to share or print them.” Learn more about Canva here. Web Development Tools For startups, establishing a strong online presence is non-negotiable, and web development tools play a crucial role in achieving this. Tools like Zapier, GitHub, and Firebase offer powerful functionalities for building, deploying, and managing web applications. These platforms facilitate collaboration among development teams, streamline workflows, and offer scalable solutions for managing databases, backend services, and integrations. By leveraging these web development tools, startups can expedite their development processes, ensure high-quality outputs, and maintain flexibility to adapt to market demands, ultimately leading to a robust and reliable online presence. 15. Zapier Zapier is a powerful automation tool that connects different web applications to automate repetitive tasks without the need for coding. It's highly valued in web development for its ability to streamline workflows and enhance productivity by linking over 3,000 apps, such as databases, development tools, and project management services. This facilitates seamless integration and data exchange between services, making it easier for developers to focus on more complex tasks and project innovation. Learn more about Zapier here. 16. Github GitHub is a leading web development platform that enables collaboration on code, project management, and software development. It's renowned for hosting open-source projects, facilitating version control with Git, and offering features like pull requests, issues tracking, and GitHub Actions for automation. This makes GitHub indispensable for developers looking to work together on projects, share code, and integrate with various development tools, thereby streamlining the software development process and fostering innovation within the global developer community. Learn more about GitHub here. 17. Firebase Firebase is a comprehensive platform developed by Google to help build, improve, and grow web and mobile applications. It offers a wide range of tools and services, including hosting, real-time databases, authentication, analytics, and machine learning capabilities. Its ability to provide a backend-as-a-service saves developers time and effort in setting up servers and writing backend code, making it an excellent tool for rapidly developing high-quality applications with scalable infrastructure. Firebase integrates seamlessly with other Google services and supports both web and mobile platforms, enhancing the development workflow and user engagement. Learn more about Firebase here. Accounting and Financial Tools Startup leaders need to have a pulse on where their business is at financially. To achieve this, most startups need to adopt a bookkeeping or accounting solution. You might also consider hiring a professional firm for assistance in this area. The tools below are designed to integrate seamlessly with your existing systems, providing a comprehensive overview of your financial statements and ensuring that you have the insights needed to make informed decisionsl. Learn more about popular accounting and financial tools below: 18. Quickbooks Quickbooks is the defacto name in accounting and financial software. Quickbooks offers an array of products and tools to help with all aspects of accounting and finance. As put by the team at Quickbooks, “Easily track income, expenses, and more with accounting software designed for all kinds of businesses.” Learn more about Quickbooks here. 19. Xero Xero is a cloud-based accounting software tailored for small to medium-sized businesses, offering features such as invoicing, payroll, and bank reconciliation. It simplifies financial management with real-time reporting and compatibility with over 800 third-party apps. Xero's user-friendly platform allows for seamless collaboration between business owners and accountants, ensuring efficient financial oversight. Learn more about Xero here. Investor Relationship Management Leveraging the resources around you is a surefire way to help grow your business. For many founders, their investors can be a great source to help with fundraising, hiring, and developing your business strategy. Many times, investors have networks and resources that founders can tap into. To best do this, founders need to have a way to regularly communicate with their investors to build their relationships and trust. Learn more below: 20. Visible If you’re a startup that has taken on outside funding it is important to have a game plan in place to report and communicate with your investors. This will not only improve your odds of raising follow-on funding but will allow you to lean on investors for help with hiring, strategy, and more. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related Resource: How Startups Can Use an Investor Matching Tool to Secure Funding Search Engine Optimization Marketing teams running robust content programs may require dedicated tools to effectively manage their strategies. For instance, teams focusing on organic search as a key channel would benefit from tools designed to enhance and streamline their content efforts. Learn more about the most popular search engine optimization tools below: 21. Ahrefs Ahrefs is an all-in-one analytics tool to help marketers track their organic search efforts. As the team at Ahrefs puts it, “Ahrefs is everything you need to rank higher & get more traffic.” Learn more about Ahrefs here. 22. Moz Moz is another tool that helps marketers with all aspects of their content marketing efforts. As the team at Moz puts it, “SEO software and data to help you increase traffic, rankings, and visibility in search results.” Learn more about Moz here. Data & Analytics As the adage goes, “You can’t improve what you don’t measure.” Having a way to track and monitor key metrics and data is a must for startups. This might look different for companies at different stages. For example, a more mature product or startup might require more advanced analytics and tracking than a startup with no customers yet. Related Resource: Our Ultimate Guide to SaaS Metrics Learn more about the most popular data analytics tools below: 23. Google Analytics Google Analytics is a must-have for any startup that leverages its website to attract new customers. With Google Analytics you’ll be able to slice and dice different website data to see how visitors are interacting with your content. Learn more about Google Analytics here. 24. Segment Segment is a leader in customer data. With their suite of tools and APIs, startups can leverage Segment to collect and analyze data about their customers. As the team at Segment puts it, “Segment collects events from your web & mobile apps and provides a complete data toolkit to every team in your company.” Learn more about Segment here. Human Resources and Payroll On top of recruiting and hiring top talent, startup leaders need a way to manage their human resources and payroll. Luckily, countless SaaS tools can help leaders with everything from benefits to payroll. Learn more about the most popular human resource and payroll tools below: 25. BambooHR BambooHR is an all-in-one tool that helps startups with all aspects of human resources. BambooHR comes with tools to help with everything from hiring to onboarding to compensation. As the team at BambooHR puts it, “Create a great place to work at every stage of growth with all-in-one software from BambooHR.” Learn more about BambooHR here. 26. Gusto Gusto is a leader in payroll solutions. Gusto’s bread and butter is payroll and benefits for startups. As the team at Gusto puts it, “A well-supported team is the key to a successful business. With Gusto’s easy-to-use platform, you can empower your people and push your business forward.” Learn more about Gusto here. 27. ADP ADP has been in the payroll and HR business for a while. As the team at ADP puts it, “Fast, easy, accurate payroll and tax, so you can save time and money.” Learn more about ADP here. Get the Funding Your Startup Needs with Visible Startups are in competition for two resources — capital and talent. Having a system in place to attract and close capital for your business can help speed up a fundraise so you can focus on what matters most, building your business. Related Resource: The Understandable Guide to Startup Funding Stages Find investors for your startup, share your pitch deck, nurture them with updates, and track your conversations all from one platform — give Visible a free try for 14 days here.