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Understanding the intricacies of Schedule K-1 is crucial for founders and business owners navigating the tax landscape. Schedule K-1, an IRS tax form, plays a pivotal role in the financial and tax reporting for entities such as partnerships, S corporations, and trusts. Its primary function is to report each partner's share of income, deductions, and credits, allowing these amounts to be taxed at the individual level rather than at the corporate rate. This mechanism is a cornerstone of the "pass-through" taxation model, which is fundamental to entities that distribute earnings directly to their members​​. Getting to Know Schedule K-1 The Schedule K-1 plays a crucial role in aligning the financial outcomes of entities like partnerships, S corporations, and trusts with the tax obligations of their individual members or beneficiaries. This alignment is pivotal, ensuring that income, deductions, and credits are reported transparently and accurately, directly impacting the tax filings of individuals involved in these business structures. What is a K-1 Form? The Schedule K-1 form is an essential tool used by the IRS to manage the complex "pass-through" taxation process, where the tax liability passes from the entity to the individual. This form reports the share of income, deductions, and credits from entities such as partnerships, S corporations, trusts, and estates to the IRS. Its primary purpose is to ensure that the income earned by these entities is taxed at the individual level, reflecting each member's or beneficiary's share of the entity's financial activities during the tax year. This approach avoids the double taxation typically associated with corporate earnings, ensuring a fair and equitable tax treatment for all parties involved. Who Needs to Fill It Out? The requirement to complete and file a Schedule K-1 extends to a diverse group of taxpayers. Partners in partnerships, shareholders in S corporations, and beneficiaries of trusts and estates must report their share of the entity's income, deductions, and credits through this form. This broad applicability underscores the form's importance in tax filing, ensuring that individuals accurately report their income from various sources and comply with federal tax laws. Related resource: A User-Friendly Guide to Startup Accounting Difference Between W-2s and K-1s Understanding the distinctions between Schedule K-1 and W-2 forms is crucial for accurately navigating tax responsibilities. While employers issue W-2 forms to report wages, salaries, and other compensation paid to employees, Schedule K-1s serve a different purpose. K-1 forms report the income, losses, and dividends distributed by partnerships, S corporations, and other entities to their partners or shareholders. This fundamental difference highlights the diverse nature of income sources and the importance of correctly reporting them to the IRS. The K-1 form ensures that income from pass-through entities is taxed appropriately at the individual level. At the same time, W-2s cater to direct employment income, each playing a unique role in the broader tax reporting ecosystem. Types of K-1 Forms by Business Structure Navigating the tax implications of business earnings requires understanding the different Schedule K-1 forms applicable to various entity structures. Each type of entity—partnerships, S corporations, trusts, estates, and foreign alliances—uses a specific version of Schedule K-1 to report the income, deductions, and credits attributable to its members, shareholders, or beneficiaries. This differentiation ensures that each entity complies with tax regulations while providing accurate information for individual tax filings. K-1 Forms for Partnerships The Schedule K-1 form (Form 1065) is vital for partnerships. It details each partner's share of the business's income, deductions, and credits, allowing this information to be reported on individual tax returns. Partnerships, including general partnerships (GP), limited partnerships (LP), and limited liability partnerships (LLP), utilize this form to distribute the financial outcomes of the business operations to the partners, reflecting their respective shares according to the partnership agreement or the proportion of their investment​​. K-1 Forms for S Corporations S corporations use Schedule K-1 (Form 1120-S) to report each shareholder's proportionate share of the corporation's income, deductions, and credits. This form facilitates the pass-through taxation feature of S corporations, where the income flows through to the shareholder's tax returns. It's essential for ensuring that shareholders accurately report their income from the corporation, maintaining compliance with tax laws while avoiding double taxation of corporate earnings​​. K-1 Forms for Trusts and Estates Trusts and estates report income, deductions, and credits to their beneficiaries using Schedule K-1 (Form 1041). This form is crucial for managing income distribution from these entities, allowing beneficiaries to include this information in their tax filings. Using Schedule K-1 by trusts and estates ensures that the income is taxed at the beneficiary level, providing a precise tax reporting and compliance​​mechanism. K-1 Forms for Foreign Partnerships The Schedule K-1 forms issued to U.S. partners regarding foreign partnerships include additional requirements and considerations. These K-1 forms must account for income earned in other countries, and U.S. partners must report this foreign income on their tax returns. The complexity of tax treaties and international tax laws necessitates careful attention to accurately report foreign income and claim applicable tax credits or deductions. This ensures U.S. partners comply with U.S. tax obligations and the tax regulations of the foreign country where the income was earned. Things to Consider While Filling Your K-1 Filling out your Schedule K-1 is more than transferring numbers from business documents to a tax form. This process involves nuanced considerations and complexities that can significantly affect your tax responsibilities and financial planning. It's crucial to approach this task thoroughly and understand the underlying principles and implications to ensure accuracy and compliance with tax laws. Partnership Agreements Partnership agreements are vital in reporting income, losses, and other items on Schedule K-1. These agreements outline the distribution of profits and losses among partners and can significantly impact the figures reported on each partner's K-1. Different contracts may allocate income and losses based on various factors, such as the percentage of ownership, invested capital, or other agreed-upon terms. This allocation directly influences each partner's tax obligations, highlighting the importance of accurately reflecting the partnership agreement terms on Schedule K-1. Basis Calculation The concept of basis calculation is central to understanding your financial stake in an entity and its implications on your taxes. Your basis in the partnership, S corporation, or trust represents your investment in the entity for tax purposes. It's crucial to determine the taxable portion of distributions you receive and calculate gain or loss on the sale of your interest in the entity. The basis starts with your initial investment and is adjusted annually by factors including your share of the entity's income, losses, and distributions. Understanding and accurately calculating your basis ensures you report the correct income or loss on your tax return, avoiding potential tax issues. Reporting Income Accurate income reporting on Schedule K-1 is essential for compliance with tax laws and minimizing your tax liability. Incorrect reporting can lead to audits, penalties, and interest on unpaid taxes. It's imperative to carefully review the K-1 form to ensure that income, deductions, and credits are correctly reported according to the entity's financial statements and tax returns. Any discrepancies should be resolved before filing to avoid potential issues with the IRS. Accurate reporting is crucial for preventing penalties and ensuring that you pay the correct amount of tax, neither overpaying nor underpaying. How to File Your Schedule K-1 Filing your Schedule K-1 is essential in complying with tax regulations for individuals involved in partnerships, S corporations, trusts, and estates. Understanding the process and ensuring the inclusion of all necessary information is critical to a smooth and accurate filing experience. What Information Should You Include? When completing your Schedule K-1, there are several critical pieces of information you need to ensure completeness and accuracy in your filing: Entity Information: This includes the name, address, and EIN (Employer Identification Number) of the partnership, S corporation, trust, or estate. This identifies the entity with the IRS and ties your tax situation to the correct business entity. Partner or Shareholder Information: Your name, address, SSN (Social Security Number), or ITIN (Individual Taxpayer Identification Number) must be accurately reported. This information links you to the entity and ensures that your share of income, deductions, and credits is correctly reported to the IRS. Tax Year: Indicate the tax year for which the Schedule K-1 is being filed. This specifies the period for which the reported figures apply. Share of Income, Deductions, and Credits: Detail your specific share of the entity's income, deductions, and credits. This section is the core of the Schedule K-1, outlining what needs to be reported on your tax return. It includes various types of income, such as rental income, interest, dividends, capital gains, and deductions and credits you're entitled to claim. Capital Account Analysis: If applicable, include changes in your capital account for the year. This involves reporting contributions, withdrawals, and any changes in the ownership percentage. Additional Information: Some K-1 forms may require further information, such as details on foreign transactions, alternative minimum tax items, or other specific adjustments. This is particularly relevant for entities involved in complex transactions or those with international aspects. Accuracy in reporting these details is paramount. The information provided on Schedule K-1 directly affects your individual income tax return and your overall tax liability. Errors or omissions can lead to audits or penalties from the IRS, making it crucial to double-check all entries and consult with a tax professional if you have any uncertainties. Schedule K-1 FAQs Navigating the complexities of Schedule K-1 can prompt many questions, primarily as taxpayers work to comply with IRS regulations and optimize their tax outcomes. Below, we address some of the most common queries related to Schedule K-1, aiming to shed light on its intricacies and help taxpayers understand their responsibilities. K-2 vs. K-3: What's the Difference? The distinction between Schedule K-2 and K-3 is primarily about the type of information they report, catering to the IRS's requirements for international tax dealings. Schedule K-2 is used by the entity (partnership, S corporation, trust, or estate) to report items of international tax relevance at the entity level. Meanwhile, Schedule K-3 is provided to the partners, shareholders, or beneficiaries, indicating their share of the global items reported on Schedule K-2. K-2 is for the entity's records, and K-3 is for the individual's tax return, ensuring compliance with international tax obligations. Related resource: What Is Form 3921, and How Does It Affect Your Employees? When Are K-1 Forms Due? The deadline for issuing Schedule K-1 forms varies depending on the entity type. For partnerships and S corporations, the K-1 forms should be issued by March 15th or the 15th day of the third month following the end of the fiscal year if the entity operates on a fiscal year basis. Trusts and estates have until April 15th, or the 15th day of the fourth month after the end of their fiscal year, to issue K-1 forms. These deadlines ensure recipients have sufficient time to include this information in their tax filings. Is K-1 Considered Income? Yes, the income reported on Schedule K-1 is considered taxable income for the recipient and must be included on their income tax return. This income can affect the taxpayer's overall tax liability, potentially altering their tax bracket and influencing the total taxes owed. It's essential to accurately report K-1 income to avoid underpayment penalties and calculate the correct tax liability. When Should I Get My K-1? Recipients should typically receive their Schedule K-1 by the abovementioned deadlines: March 15th for partnerships and S corporations and April 15th for trusts and estates. If you haven't received your K-1 by these dates, contacting the entity is advisable to inquire about the delay. Delays in receiving your K-1 can impact your ability to file your tax return on time, so proactive communication is key. If necessary, consider filing for an extension on your tax return to accommodate the late arrival of the K-1. Find the Right Investors for Your Startup Navigating the complexities of Schedule K-1 and understanding its implications is crucial for startup founders looking to maintain compliance and optimize their tax positions. Securing the right investors becomes equally important as you steer your startup towards growth. Leveraging platforms like Visible can streamline this journey, find investors, track a fundraiser, and share a pitch deck directly from Visible. Give Visible a free try for 14 days here. Related resource: EBITDA vs Revenue: Understanding the Difference

Latest Funding and Market Trends in EdTech (2023 and Beyond) The EdTech sector presents a landscape of both challenges and opportunities. Founders need to be agile and adaptable, with a focus on the key growth areas of AI, mobile learning, and data analytics. Despite the current downturn in venture capital funding, the sector's long-term growth prospects remain promising, driven by technological advancements and a global push towards accessible, quality education. Funding and Investment Trends In 2023, the EdTech sector is witnessing a notable decline in venture capital funding. Investments in the second quarter stood at $707 million, contributing to a total of about $1.8 billion in the first half of the year. This represents a significant 58% drop compared to the same period in the previous year. The forecast for total VC funding in 2023 is projected to be around $3.5 billion, a decrease from $10.6 billion in 2022 and far from the record $20.8 billion in 2021​​. The current investment climate has moved away from the "golden age of mega rounds." The recent period marked the second consecutive quarter without funding rounds exceeding $100 million, known as mega rounds. This cooling trend is attributed to a shift in market conditions, including a return to in-person learning and the expiration of federal aid that had previously boosted remote learning​​. Related resource: Top 18 Revolutionary EdTech Startups Redefining Education Opportunities and Growth Prospects Despite the current slowdown, the long-term outlook for EdTech remains robust. Most forecasters anticipate continued substantial growth in the sector throughout the rest of this decade. This optimism is rooted in the belief that technology will continue to be a significant driver of global growth in education by reducing costs and expanding access to learning​​. AI, mobile learning, tutoring, and data analytics are emerging as focal points in the EdTech sector. Innovations in these areas are expected to drive growth, with AI becoming a crucial component for startups. Mobile learning is also gaining prominence due to its widespread accessibility. Tutoring services are evolving, often combining AI, mobile technology, virtual/augmented reality, and gamification to offer more engaging and personalized learning experiences​​. Implications for EdTech Founders Navigating the Changing Landscape: EdTech founders must adapt to the evolving investment landscape, which may involve seeking smaller and more frequent rounds of funding. With the shift in investment focus, there is an increased emphasis on sectors outside of K-12, particularly in areas related to training and worker upskilling​​. Leveraging Emerging Technologies: Founders should focus on leveraging emerging technologies like AI and mobile learning to create innovative solutions. There is a growing market for platforms that use big data and analytics to personalize learning. Additionally, developing solutions in the tutoring space, particularly those that address gaps in K-12 education, can be a fruitful direction​​. Exploring Alternative Funding Sources: With the decline in traditional venture investments, it's crucial for startups to explore alternative forms of funding. This could include government funding, foundation-led philanthropic investments, and other non-traditional financing options. Diversifying funding sources can help sustain innovation and support the growth of new ideas​​. Emerging Technologies in EdTech For EdTech founders, emerging technologies offer a plethora of opportunities to innovate and create impactful educational solutions. As AI and IoT continue to evolve, they will undoubtedly unveil new possibilities for enhancing learning experiences and educational outcomes. Embracing these technologies and integrating them into EdTech solutions will be key to addressing the evolving needs of learners and educators alike. AI-Driven Innovations Personalized Learning Experiences: AI's ability to tailor educational content based on individual learning styles and needs is more advanced than ever. Using complex algorithms, AI can analyze student performance data to create a uniquely personalized learning journey. This not only enhances student engagement but also improves learning outcomes. Intelligent Assessment Tools: AI is revolutionizing the way assessments are conducted. With advancements in natural language processing and machine learning, AI systems can now grade open-ended responses, provide real-time feedback, and even identify areas where students might need additional support. Automated Content Generation: AI is being used to develop educational content, from generating practice questions to creating interactive learning modules. This technology allows for the rapid creation of high-quality, dynamic content that can adapt to curriculum changes and evolving educational standards. AI Tutors and Assistants: AI-powered tutoring systems are becoming more sophisticated, offering students personalized guidance and support. These virtual tutors can answer questions, assist with problem-solving, and provide explanations, much like a human tutor but with the added benefit of being available 24/7. IoT in Education Smart Classroom Technologies: IoT is transforming traditional classrooms into smart learning environments. This includes the use of smart boards, IoT-enabled lab equipment, and connected devices that enhance interactive learning and provide real-time data to both students and teachers. Enhanced Learning Analytics: now it’s possible to gather extensive data on student engagement and classroom dynamics. This information can be used to optimize teaching strategies, classroom layouts, and even individualize student learning plans based on engagement levels and performance. Improved Resource Management: In educational institutions, IoT can help manage resources more efficiently, from tracking equipment usage to monitoring energy consumption. This not only reduces operational costs but also contributes to creating a more sustainable learning environment. Future Outlook: Trends and Predictions in EdTech The future of EdTech is marked by a landscape of continuous innovation and adaptation. For EdTech founders, staying abreast of these trends and predictions is crucial to developing solutions that meet the evolving needs of learners and educators. By embracing these changes and anticipating future needs, EdTech companies can not only contribute to the advancement of education but also thrive in a dynamic and growing market. Key Trends Shaping the Future Increased Adoption of AI and Machine Learning: AI and ML will continue to be at the forefront of EdTech innovation. They are expected to drive further personalization in learning, provide more efficient assessment tools, and enable the creation of dynamic, responsive educational content. Growth in Virtual and Augmented Reality: VR and AR are anticipated to gain more traction in the educational sector. These technologies will provide immersive and interactive learning experiences, making complex concepts more accessible and engaging. Rise of Microlearning and Bite-Sized Content: The trend towards microlearning is expected to grow. Short, focused learning sessions that fit into busy schedules are increasingly appealing, especially for continuous adult education and corporate training. Focus on Lifelong Learning and Upskilling: As job roles evolve rapidly, there will be a heightened focus on lifelong learning and upskilling. EdTech platforms that cater to professional development and career transitions will likely see increased demand. Expansion of Gamification in Education: Gamification will continue to be a key element in engaging learners. By making learning more fun and interactive, EdTech solutions can improve retention and motivation across various age groups and educational contexts. Greater Emphasis on Inclusive and Accessible Education: There will be a growing focus on making education more inclusive and accessible. This includes developing solutions for learners with disabilities and those in underserved communities. Predictions for Growth and Evolution Market Expansion: The global EdTech market is projected to continue expanding, driven by technological advancements and the increasing acceptance of digital learning solutions. Diversification of EdTech Solutions: Expect to see a broader range of EdTech products catering to different educational needs, including early childhood education, K-12, higher education, and adult learning. Integration with Traditional Education Systems: EdTech will increasingly complement and integrate with traditional education systems, bridging gaps and enhancing the overall learning experience. Adoption in Emerging Markets: Emerging markets will likely see a surge in EdTech adoption as internet penetration increases and digital devices become more affordable. Investment Shifts: While venture capital funding may fluctuate, investment in EdTech is expected to remain strong, with a shift towards more strategic and impact-focused funding. Key Players “In the future, entrepreneurs will sell knowledge over products.”- Ankur Nagpal founder of Teachable Source: CB Insights Pre-K Education: Learn With Homer– Raised a total of $93M and was then acquired. K-12 Education: Platforms like Kahoot! and Quizlet have brought an element of gamification to K-12 classrooms, making learning interactive and enjoyable. Meanwhile, EdTech platforms like Google Classroom and Canvas help manage classroom tasks and streamline communication between teachers, students, and parents. Other big players include Khan Academy a free world-class education platform and GoStudent for 1 on 1 tutoring. Higher Education: Tools like Coursera, edX, and Udemy are revolutionizing higher education. These platforms provide a wide range of courses from universities around the world, giving students access to quality education regardless of location. They also offer micro-credentials, which are becoming increasingly recognized by employers. Continuing Education and Adult Upskilling: LinkedIn Learning, Coursera provide professionals the opportunity to learn new skills, stay current in their field, and even transition to new careers. They offer a myriad of courses in fields ranging from business and tech to creative arts. Specialized Learning: Companies like Rosetta Stone and Duolingo make language learning accessible to everyone, while platforms like MasterClass provide expert-led courses in various domains, such as writing, cooking, acting, and more. Cohort-based Learning companies: EducateMe, Maven and and various boot camps such as LeWagon and Iron Hack for tech upskilling. “Microlearning” or Bite-sized Learning involves absorbing knowledge in small, digestible segments, usually less than 10 minutes in duration. This method addresses time constraints, a common hurdle for employee participation in workplace learning. It not only condenses learning periods, thus increasing student engagement but also promotes information retention through repetition. Several innovative microlearning platforms have adopted this approach some examples include GoodCourse and 7Taps. Companies Own Offerings: Google Classroom, Microsoft Teams for Education, and Apple’s educational resources. In the era of lifelong learning, the market for educational technology has expanded dramatically. As technology continues to evolve and integrate into the education sector, we can expect to see even more niche EdTech platforms arise to meet the diverse needs of learners. Unique Challenges Technological infrastructure, including reliable internet access, is still a hurdle in many parts of the world. Concerns regarding data privacy and security. User engagement and retention, particularly in the K-12 segment, require a fine balance between education and engagement. Articulating Unique Value Proposition for EdTech Founders As the EdTech marketplace starts to rapidly grow and is swarming with innovation, it is crucial for founders to effectively articulate the unique value proposition (UVP) of their startups. Your UVP is essentially the backbone of your business. Understanding and expressing your UVP is vital, particularly in the EdTech sector. This is because educational institutions, teachers, students, and parents – the primary stakeholders in EdTech – are looking for targeted solutions to specific challenges they face in the educational landscape. Whether it’s improving learning outcomes, enhancing teacher productivity, or increasing education accessibility, the ability to distinctly show how your solution addresses these challenges can make or break your fundraising efforts. Improving Learning Outcomes If your EdTech solution can improve learning outcomes, demonstrate this with data from pilot studies or user testimonials, showing how your product increases knowledge retention, improves grades, or develops specific skills. Highlight unique features of your product that facilitate these improved outcomes, such as AI-powered adaptive learning paths or gamified learning experiences. Enhancing Teacher Productivity EdTech is not only about students but also about empowering teachers. If your product can enhance teacher productivity, illustrate how it reduces their administrative burden, automates repetitive tasks, or assists in more efficient classroom management. Show how your product can help teachers spend more time doing what they do best—teaching and mentoring students. Increasing Education Accessibility In a world increasingly focused on equality and inclusion, EdTech solutions that increase educational accessibility have a powerful appeal. If this is your company’s strength, show how your product helps reach underprivileged communities, accommodates students with special needs, or allows flexible learning for those who can’t attend traditional classes. Concrete examples and stories will help your audience understand the real-world impact of your solution. EdTech Shower Thoughts First, a little flashback to the end of 2022- the value of 30 EdTech unicorns approached $100 billion, comparable to Fortune 500 companies like General Electric and American Express (that’s pretty impressive). According to research, students following personalized learning approaches significantly outperform their peers. AI helps to address the challenge of high student-teacher ratios, providing customized learning experiences. EdTech’s reach extends beyond traditional education, with remote work enhancing its importance in professional development. Automated identification of skill gaps and intelligent resource recommendations are seen as valuable to businesses and their employees. The potential impact of government funding on EdTech’s growth- the trend towards technology use in education might lead to a significant portion of the available $30 billion US government funding being allocated to EdTech. Learning Management Systems (LMS) is incredibly important in achieving scalability in EdTech. LMS not only helps manage large classrooms but also crucially harnesses data from personalized learning platforms, enabling educators to improve content and technologists to better understand user behavior. Resources EdTech VC connect profiles in our Fundraising CRM From Exploding Topics: 56 Fast-Growing Edtech Companies & Startups (2023) 12 Emerging Education Trends (2023-2026) $30B in government funding available to educators in the US HolonIQ: 2022 closed with 30 EdTech Unicorns around the world, collectively valued at $89B Accelerator- Imagine K12 (which is specifically focused on EdTech) Events: SXSW EDU, and Bett Show attract educators, and GSV Ventures hosts their annual ASU + GSV summit VCs Investing in the EdTech Space 1. NewSchools Venture Fund About: “NewSchools Venture Fund is a is a national nonprofit venture philanthropy working to reimagine public education. Since our founding, in 1998, we have invested nearly $200 million in 200 education ventures. Our investments were instrumental in the creation of nearly 470 new schools with the potential to serve more than 200,000 students, and the development of ed tech products that serve more than 60 million students and their teachers.” Thesis: “We are the first venture philanthropy focused on K-12 education. As a nonprofit and intermediary funder, we raise charitable donations and then grant those funds to early-stage entrepreneurs who are reimagining public education. While we have a rigorous investment process, we seek educational and social returns, not financial ones.” Stage: Pre-Seed, Seed, Series A, Growth EdTech Notable Investments: ClassDojo, Handshake, and Uncommon Schools. 2. EduCapital About: The largest European Edtech & Future of Work VC. Educapital invest’s in innovative European companies with the highest potential to scale and become European and global leaders. Thesis: We invest in Entrepreneurs shaping the future of education & future of work. Stage: Seed, Series A, Series b, Growth EdTech Lastest Investments: Tomorrow University of Applied Sciences, Edflex, Lunii 3. Bonsal Capital About: We support tech-enabled, mission-driven startups and funds and leverage our experience as educators, venture capitalists, and ecosystem leaders to empower you to find the resources you need, so you can better serve your end user and customer. Thesis: Bonsal Capital is a mission-driven partnership, and supporting education has been a core driver since our founding in 1999. With decades of experience in education as investors, practitioners, and volunteers, our principals have authentically grown a partnership that seeks founders and leaders who want to make a positive impact with a product and/or service, and who keep prospective scale and sustainability at the forefront. We support the growth of companies focused on tech-enabled services in education, and we have invested in and partnered with more than 20 such companies over the past two decades, providing human and financial capital, as well as other resources, that have made a positive impact on tens of millions of end users. We believe that, by fostering education, we can make the world a better place and feel good about our place in it. Stage: Seed, Series A, Growth EdTech Notable Investments: Upswing, Nepris, and Everyday Labs 4. Learn Capital About: LearnCapital is a venture capital firm focused exclusively on funding entrepreneurs with a vision for better and smarter learning. Thesis: “We back and build rapidly scaling tech-enabled companies that tackle the world’s biggest human-centered problems and help us all reach our full potential.” Stage: Seed, Series A, Growth EdTech Notable Investments: Udemy, Coursera, and Chegg. 5. Emerge Education About: LearnCapital is a venture capital firm focused exclusively on funding entrepreneurs with a vision for better and smarter learning. Stage: Pre-Seed and Seed EdTech Notable Investments: Tomorrow University of Applied Sciences, Edurino, and Colossyan 6. Owl Ventures About: “Founded in 2014, Owl Ventures is the largest venture capital firm in the world focused on the education technology market with over $2 billion in assets under management. The Silicon Valley-based firm was purposely built to partner with and help scale the world’s leading education companies across the education spectrum encompassing PreK-12, higher education, future of work (career mobility/professional learning), and “EdTech+” (intersection of EdTech and other major industries such as FinTech and healthcare).” Thesis: “We believe there is a digital revolution rapidly unfolding in education and workforce development. This revolution is creating a historic opportunity to invest in companies that are disrupting and improving the over $6 trillion global education market. The entire education and training sector is shifting rapidly as access to the internet and connected devices has flourished. Hundreds of millions of students and teachers around the world can now leverage innovative learning platforms.” Stage: We invest in companies at all stages from seed, early, growth, and later stages, globally. EdTech Notable Investments: MasterClass, degreed, Khan Academy, Schoology, and Knewton. 7. Reach Capital About: Reach supports the most promising entrepreneurs developing technology solutions for challenges in early childhood, K-12, and higher education. Thesis: “Education is a critical engine for economic mobility. Alongside health, wellbeing, career development and healthy relationships, we are interested in all ideas that empower people to learn, grow and succeed — in school, at home, for work … wherever they go.” Stages: “early, and support you at every stage of your journey” EdTech Notable Investments: Guild Education, Classcraft, and Merit America. 8. General Catalyst About: General Catalyst backs exceptional entrepreneurs who are building innovative technology companies and market leading businesses, including Airbnb, BigCommerce, ClassPass, Datalogix, Datto, Demandware, Gusto (fka ZenPayroll), The Honest Company, HubSpot, KAYAK, Oscar, Snap, Stripe, and Warby Parker. The General Catalyst team leverages its broad experience to help founders build extraordinary companies. General Catalyst has offices in Cambridge, MA, Palo Alto, CA and New York City. Thesis: General Catalyst is a venture capital firm that makes early-stage and growth equity investments. Stages: Seed, Series A, Series B, Growth EdTech Notable Investments: Chegg, Coursera, and Udacity. 9. Kapor Capital About: Kapor Capital invests in early stage gap-closing tech enabled startups. Thesis: Kapor Capital invests in tech-driven early-stage companies committed to closing gaps of access, opportunity or outcome for low-income communities and/or communities of color in the United States. Stages: Pre- Seed, Seed, Series A, Series B 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: EdTech VC connect profiles in our Fundraising CRM

Venture capital firms need to have a system in place to track the performance of their different investments. Limited partners want to understand how a specific fund is performing — especially when a general partner is raising a new fund. Multiple on Invested Capital (MOIC) stands out as a critical measure for investors aiming to track their portfolio performance . This article delves into the essence of MOIC, offering a clear guide on how to calculate it and its significance in the venture capital ecosystem. Related resource: Venture Capital Metrics You Need to Know What is Multiple on Invested Capital (MOIC)? In venture capital, MOIC is a crucial metric that measures the return on investment by comparing the current or exit value of an investment to the initial capital invested. It offers a straightforward ratio indicating how many times the original investment has been returned, making it essential for evaluating the financial performance of an investment. MOIC's simplicity allows venture capitalists to assess value creation, compare performance across various investments, and make informed decisions on future investments or exits. As a universal metric, it facilitates direct comparison across diverse portfolios, highlighting the efficiency of startups in generating growth and guiding investors in maximizing their returns. MOIC Formula The formula for MOIC is: MOIC = Current Value of Investment / Total Invested Capital Each component plays a crucial role: Current Value of Investment: The present market value or exit value of the investment. Total Invested Capital: The initial amount invested. Unrealized vs. Realized MOIC Unrealized and realized MOIC are two states of the Multiple on Invested Capital that reflect different stages of an investment's lifecycle in venture capital: Unrealized MOIC refers to the calculation of the multiple based on the current market value of an investment that has not yet been liquidated or exited. It represents a paper value, indicating the potential return on investment if the investment were to be sold at its current valuation. Unrealized MOIC is a snapshot of the investment's performance at a given point in time, offering investors a glimpse into the possible outcome of their venture, assuming the market conditions remain favorable until the actual sale or exit. Realized MOIC, on the other hand, is determined when an investment is actually sold or exited. It calculates the multiple based on the final sale price or exit value, representing the actual return on investment received by the investor. Realized MOIC is concrete, reflecting the tangible outcome of an investment after it has been fully liquidated. The key difference between these two measures lies in their timing and certainty: unrealized MOIC is speculative, based on current valuations that can fluctuate, while realized MOIC is definitive, based on actual returns received from an investment. Both metrics are valuable for investors to assess and monitor the performance and potential of their investments over time. MOIC vs. IRR MOIC and IRR are both used to evaluate investment performance, but they do so in fundamentally different ways: MOIC measures the total return on an investment as a multiple of the original investment. It's calculated by dividing the current or exit value of an investment by the initial amount invested. MOIC provides a straightforward, time-independent snapshot of investment performance, showing how many times the invested capital has been returned. IRR, on the other hand, calculates the annualized effective compounded return rate of an investment, considering the time value of money. IRR is the rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero. It provides a time-weighted annual return, making it especially useful for comparing investments with different durations. The primary difference between MOIC and IRR is how they incorporate time: MOIC is a simple multiple, useful for quickly assessing the magnitude of return without considering the investment period. IRR provides a deeper analysis by considering the timing of cash flows, offering a rate of return that accounts for the duration of the investment, making it possible to compare investments on a more nuanced level. While MOIC offers a clear, immediate measure of how much value an investment has generated, IRR gives insight into the efficiency and timing of returns, accommodating more complex scenarios where the timing of cash inflows and outflows is a crucial factor. Why MOIC is Important in Venture Capital MOIC plays a crucial role in evaluating investment performance by providing a clear, direct measure of the financial returns relative to the initial capital invested. It does this by expressing the return as a multiple, showing investors how many times their original investment has been returned in value. This simplicity and directness make MOIC an invaluable tool for quickly assessing the effectiveness of investments in generating financial growth. MOIC helps investors understand the value generated from their investments by offering a straightforward metric that reflects the total increase in value of an investment, without the complexity of accounting for time or the pattern of cash flows. It enables investors to gauge the overall success and efficiency of their investments in turning the initial capital into a larger sum. By comparing the initial investment to the current or exit value, investors get a clear picture of the investment's performance and its contribution to their financial objectives. Related resource: VC Fund Performance Metrics 101 (and why they matter to LPs) Compares Returns Across Investments and Funds By expressing performance as a multiple, MOIC standardizes the evaluation of investment returns across different startups and VC funds, making comparisons straightforward despite variations in initial investment sizes. This standardization is possible because MOIC calculates returns relative to the invested capital, providing a ratio or multiple that directly reflects how many times the investment value has increased. For instance, an MOIC of 3x indicates that the investment value has tripled, regardless of whether the initial investment was $100,000 or $10 million. This approach abstracts away the absolute dollar amounts and focuses on the proportional return, enabling investors to compare the performance of various investments on an equal footing. MOIC thus serves as a universal metric that simplifies the assessment of financial efficiency and success across the diverse landscape of startup investments and VC fund portfolios, facilitating more informed decision-making processes for investors. Provides a Benchmark for Success MOIC serves as a robust benchmark for success by offering a uniform metric that quantifies investment performance as a multiple of the initial capital. This simplicity allows stakeholders to assess and compare the absolute return on investments across various ventures, irrespective of their scale or the amount of capital deployed. In the competitive landscape of venture capital, where the goal is to maximize returns on investment, MOIC distills the essence of financial success into a single, comprehensible figure. It enables investors to quickly identify high-performing investments and make informed decisions based on the capacity of startups to multiply the initial funds provided. By setting a clear, quantifiable standard, MOIC helps define what constitutes a successful venture within the industry, guiding both investors and entrepreneurs in their pursuit of exceptional growth and value creation. Tracks Progress Over Time MOIC can be calculated at various stages throughout the lifecycle of an investment, offering investors timely insights into its performance and future potential. By comparing the current or exit value of an investment to the original capital invested at different points, investors can track the progression of their investment's value over time. This dynamic application of MOIC allows stakeholders to monitor growth trends, evaluate the effectiveness of strategic decisions, and adjust their expectations for future returns based on real-time data. Such periodic assessments of MOIC provide a clear, ongoing picture of an investment's health and potential, empowering investors with the information needed to make informed decisions regarding additional investments, exits, or strategic shifts to maximize returns. How to Calculate MOIC Calculating MOIC involves a straightforward process, enabling investors to assess the performance of their investments at any point in time. Here’s a step-by-step guide to calculating MOIC, along with an example to clarify the process: Identify the Total Invested Capital: Determine the total amount of money invested in the venture. This includes all capital contributions made towards the investment. Determine the Current or Exit Value of the Investment: Assess the current market value of the investment if it has not been sold, or use the exit value if the investment has been liquidated. Calculate MOIC: Divide the current or exit value of the investment by the total invested capital. The formula is: MOIC = Current Value of Investment / Total Invested Capital​ Example: Let’s assume you invested $100,000 in a startup. After a few years, the current market value of your investment is $400,000. Total Invested Capital: $100,000 Current Value of Investment: $400,000 Using the MOIC formula: MOIC = $400,000 / $100,000 = 4 This means your investment has generated a return four times the original amount invested, indicating a significant increase in value and showcasing the investment's performance. By calculating MOIC at various points during the investment period, investors can monitor the progression and potential future returns of their investments. This continuous assessment helps in making informed decisions, whether it's about holding onto the investment, considering additional funding, or planning an exit strategy. What Is a Good MOIC? A good MOIC (Multiple on Invested Capital) typically indicates that an investment has generated a substantial return relative to the initial capital invested. In venture capital, a MOIC of 3x or higher is often considered good, as it demonstrates that the investment has tripled the original amount invested, reflecting strong value creation and investment performance. Example of a Good MOIC: If an investor puts $1 million into a startup and later exits the investment for $4 million, the MOIC would be 4x. This is considered a strong performance, as the investor has quadrupled their initial investment. Conversely, a bad MOIC falls below 1x, indicating that the investment has lost value and the investor receives back less capital than they originally invested. Example of a Bad MOIC: If an investor invests $1 million in a company, but the investment's value decreases, and they can only exit at $800,000, the MOIC would be 0.8x. This signifies a loss, as only 80% of the initial investment is recovered. Track Your Fund Performance Data With Visible By leveraging Visible, investors can track critical portfolio company and investment data all from one place. Learn how to get started with Visible to track your crucial investment data here. Related resource: The Ultimate Guide to Startup Funding Stages

In the dynamic world of startups and technological innovations, founders constantly seek strategies to ensure growth, competitive advantage, and talent acquisition. One such strategic approach that has gained prominence is acquihiring. In this guide we’ll demystify acquihiring, offering insights into its definition, differentiation from traditional hiring and acquisitions, operational mechanics, and its myriad benefits for both acquiring companies and founders considering this pathway. By exploring the nuances of acquihiring, founders can better navigate the complexities, ensuring informed decisions that propel their ventures toward sustained success. What is Acquihiring? Acquihiring, a blend of "acquisition" and "hiring," describes the process where a company is acquired primarily to onboard its employees, not necessarily for its products or services. This strategy often provides a graceful exit for startups facing financial hurdles, while also offering acquiring companies rapid access to a skilled workforce​​​​. Acquihiring vs. Traditional Hiring and Company Acquisitions Acquihiring, traditional hiring, and company acquisitions are distinct strategies used by companies to grow their teams, acquire talent, and expand their business operations. Each approach has unique characteristics and serves different purposes within the corporate strategy. Acquihiring vs. Traditional Hiring Acquihiring is a strategy where a company acquires another company primarily to hire its employees, rather than to gain control of its products or services. This approach is particularly appealing when a company wants to onboard a whole team that has already demonstrated the ability to work well together, thereby bypassing the lengthy and often uncertain process of assembling a new team through individual hires​​​​. Traditional Hiring involves the process of recruiting individuals to fill specific roles within a company. This method focuses on assessing individual candidates through interviews, skill tests, and other evaluation criteria to fill a vacancy. Traditional hiring can be time-consuming and requires resources for sourcing, interviewing, and onboarding each new employee individually. Acquihiring vs. Company Acquisitions Company Acquisitions typically involve one company taking over another to gain control of its assets, including products, services, technology, and sometimes the workforce. The primary goal of a company acquisition is often to expand the acquirer's product line, enter new markets, or eliminate competition, not specifically to hire the talent​​​​. Acquihiring, while technically a form of acquisition, has a different focus. The main goal is to integrate the talent from the acquired company into the acquiring company's workforce. In many cases, the products or services of the acquired company may be phased out or significantly altered as the team is redirected towards projects within the acquiring company. Acquihiring is less about the acquisition of business operations and more about the rapid assimilation of a skilled workforce​​​​​​. Acqui-hire Example A notable example of an acquihire is Yahoo's acquisition of Tumblr for $1.1 billion, mainly to recruit Tumblr's founder, David Karp. Although the venture didn't turn out as successful as hoped, it illustrates the potential scale and intent behind acquihiring strategies​​. How Does Acquihiring Work? Acquihiring stands out as a strategic approach, blending acquisition with talent recruitment to enhance a company's workforce through the integration of entire teams. This method focuses on harnessing collective talent, ensuring a swift and effective transition of skilled individuals who have proven their ability to work together. 1. Target Identification and Initial Contact This step in the acquihiring process is critical for laying the foundation for a successful acquisition. During this phase, a larger company proactively scouts for smaller companies or startups that have a team with the skills, expertise, and cultural fit it desires. This search is often driven by the larger company's strategic needs, such as filling specific talent gaps, entering new markets, or enhancing technological capabilities. Once a potential target is identified, the larger company initiates contact to gauge interest in an acquisition. This initial outreach is typically done discreetly to maintain confidentiality and to prevent any unnecessary disruption to the target company's operations. The aim here is to open a dialogue about the possibility of an acquihire, discussing preliminary terms and understanding the smaller company's openness to such a proposal. This step requires meticulous research and networking, often involving the use of intermediaries such as investment bankers, venture capitalists, or mutual contacts to make introductions. The larger company must carefully assess not just the technical capabilities of the potential target's team, but also their compatibility with the larger company's culture and the feasibility of integrating the team into its existing structures. 2. Due Diligence and Valuation This is a pivotal phase in the acquihiring process where the acquiring company undertakes an exhaustive assessment of the target company's overall health and worth. This comprehensive review encompasses an evaluation of the target's financials, assets, liabilities, legal standings, team capabilities, and any other pertinent factors that could affect the acquisition's value and viability. Financial Analysis: The acquiring company scrutinizes the target's financial statements, revenue models, cash flow, and future financial projections. This helps in understanding the financial health and sustainability of the target company. Asset Evaluation: Beyond financials, tangible and intangible assets including intellectual property, technology, customer databases, and brand value are assessed. This evaluation helps in understanding what the acquiring company is precisely gaining beyond the talent. Liability and Legal Review: Potential liabilities, including debts, legal disputes, and contractual obligations, are closely examined. The acquiring company also reviews compliance with laws and regulations to identify any potential legal risks. Team Assessment: A crucial part of due diligence in acquihiring, this involves evaluating the target company’s team's skills, experience, and cultural fit within the acquiring company. Understanding team dynamics and potential retention strategies is key. Valuation: Based on the comprehensive due diligence findings, the acquiring company develops a valuation of the target. This valuation reflects not just the tangible assets and financial health of the company but also intangible aspects like the team's potential contribution to the acquiring company’s future growth. Making an Offer: Armed with a valuation, the acquiring company formulates an offer to acquire the target company. This offer considers the due diligence findings and reflects a price that accounts for both the assets and liabilities uncovered during the evaluation. 3. Negotiation and Agreement In this step, both the acquiring and target companies engage in detailed discussions to finalize the terms of the acquisition. This stage involves a series of negotiations to align the interests and expectations of both parties regarding compensation, roles of key team members, and the plan for integrating the team into the acquiring company. The main components of this step include: Compensation Negotiation: One of the primary focus areas is the negotiation of compensation packages for the key team members of the target company. This includes not only salaries but also bonuses, stock options, and other benefits. The aim is to ensure that the offers are attractive enough to retain the top talent post-acquisition. Roles and Responsibilities: Discussions around the specific roles and responsibilities that the acquired team members will assume within the acquiring company are essential. It's important to clarify expectations and career paths to ensure a smooth transition and integration. Integration Plans: Both companies collaborate to develop a comprehensive plan for integrating the acquired team into the acquiring company. This includes detailing how and when the team will be integrated into existing projects, training programs to acquaint them with new processes and systems, and any cultural assimilation activities. Legal and Contractual Agreements: Once the terms are agreed upon, drafting a formal contract becomes imperative. This contract encompasses all the negotiated terms, including compensation, roles, integration plans, and any other agreements made during the negotiations. Legal teams from both sides review the contract to ensure it adheres to all regulatory and legal requirements. Signing the Contract: The final step of this phase is the signing of the contract by representatives from both companies, officially sealing the acquisition agreement. This formalizes the acquihire, allowing the process to move forward to the announcement and transition phase. 4. Announcement and Transition By meticulously planning and executing the announcement and transition phase, companies can minimize disruptions, maintain operational continuity, and harness the full potential of the acquired talent, setting the stage for successful collaboration and growth. Key aspects of this step include: Official Announcement: This involves crafting and distributing a well-thought-out announcement that highlights the benefits of the acquisition to all stakeholders. The message is usually optimistic, focusing on the synergies between the two companies, the value the acquired team brings, and how the acquisition will drive future growth and innovation. Communication Strategy: Effective communication is critical during this phase. The strategy often includes Q&A sessions, meetings, and press releases to address any concerns and provide clarity. Transparency and openness in communication help in mitigating uncertainties and fostering trust among the team members of both companies. Integration into Projects: Following the announcement, the acquired team is gradually introduced to their new roles within the acquiring company. This involves aligning them with projects that benefit from their expertise and where they can start contributing effectively. The goal is to ensure a seamless integration where the new team members feel valued and can immediately begin making an impact. Cultural Assimilation: Integrating the acquired team into the company culture is equally important. This can include orientation programs, team-building activities, and mentorship arrangements to help the new team members understand the company's values, working style, and expectations. It's crucial for the acquired team to feel welcomed and for the existing employees to be open to the new ideas and perspectives they bring. Monitoring and Feedback: Throughout the transition, it's vital to monitor progress and solicit feedback from both the acquired team and existing employees. This feedback loop can identify any integration issues early on and allow for adjustments to the transition plan, ensuring a smoother assimilation process. 5. Integration and Role Assignment By carefully managing the integration and role assignment process, the acquiring company can maximize the value of the acquihire, ensuring that the new team members are engaged, productive, and committed to their new roles, contributing to the overall success and growth of the company. This phase can be broken down into several key activities: Role Alignment: Assigning the right roles to the new team members is crucial. This involves understanding their strengths, experiences, and career aspirations and matching them with the needs and opportunities within the acquiring company. The objective is to place these individuals in positions where they can make the most impact and feel fulfilled in their work. Retention Strategies: To ensure the long-term success of the acquihire, the acquiring company must implement retention strategies that address the unique needs and expectations of the new team members. This could include competitive compensation packages, career development opportunities, incentives aligned with company goals, and creating an inclusive culture that values their contributions. Cultural Integration: Beyond just assigning roles, integrating the new team members into the company culture is essential. This might involve orientation sessions, cultural workshops, and team-building activities designed to foster connections between new and existing employees, helping them to understand and embrace the company's values, practices, and expectations. Training and Development: Providing training and development opportunities is key to ensuring that the new team members can effectively contribute to their new roles. This could include technical training, leadership development programs, or mentorship arrangements to help them adapt to their new environment and responsibilities. Feedback and Adjustment: Continuous feedback mechanisms should be established to monitor the integration process and address any challenges or concerns that arise. This could involve regular check-ins, surveys, and feedback sessions that allow new team members to express their experiences and for management to make necessary adjustments to the integration plan. Advantages of Acquihires for the Acquiring Company Acquihiring provides immediate access to a skilled workforce, enabling faster integration and promoting team cohesion. Moreover, it is cost-effective compared to traditional hiring processes​​​​. Rapid Access to Skilled Workforce Acquihires provide immediate access to a skilled and experienced workforce, streamlining the process that typically involves individual recruitment efforts. This strategy is especially beneficial in industries where talent is scarce and the recruitment process is lengthy and competitive. Here's how acquihires facilitate rapid access to a capable team: Seamless Team Integration: Acquihiring a team means bringing on board a group of professionals who have already proven their ability to work together effectively. This existing synergy among team members can significantly reduce the ramp-up time for projects, as the team is accustomed to collaboration and has established workflows. Industry Expertise: Teams acquired through acquihires often come with specialized knowledge and skills tailored to specific projects or technologies. This expertise can be immediately leveraged, allowing the acquiring company to accelerate development timelines and innovate more rapidly. Cultural Fit: The process of acquihiring includes evaluating the cultural fit of the team with the acquiring company. A good match ensures that the new team members can quickly adapt to and thrive in their new environment, contributing to their immediate effectiveness and long-term retention. Reduced Training Time: Since the team is already familiar with working together on similar projects or technologies, the time and resources required for training are significantly less compared to hiring individuals from different backgrounds. This allows for a quicker transition to productive work. Strategic Advantage: By acquiring a team with a track record of success, companies can immediately strengthen their position in competitive markets. This rapid infusion of talent can enhance innovation, product development, and market responsiveness. Faster Integration The advantage of faster and smoother integration of the acquired team into the acquiring company's culture and operations is a significant benefit of the acquihiring process. This accelerated integration is primarily due to the collective transition of a team that has pre-existing working relationships and dynamics. Here's how this benefit manifests: Pre-established Team Dynamics: Unlike individual hires who may take time to adjust to a new team environment, acquihired teams already have established working relationships. This familiarity can lead to quicker project kickoff times and more efficient collaboration, as the team members already understand each other's working styles and strengths​​​​. Alignment with Company Goals: Acquihired teams often undergo a vetting process to ensure their goals and values align with those of the acquiring company. This alignment helps in smoother cultural integration, as the team is likely to share similar motivations and work ethics, reducing friction and misunderstandings​​​​. Streamlined Onboarding Process: The collective onboarding of an acquihired team can be more efficient than individual onboarding processes. Tailored orientation sessions can address the specific needs and questions of the team as a whole, ensuring they understand the company's operations, expectations, and culture from the outset​​​​. Leadership Continuity: In many cases, the leadership structure within the acquihired team remains intact, providing a sense of continuity for the team members. This can help in maintaining morale and productivity as the team transitions into the new company, with familiar faces guiding them through the process​​. Retention Strategies: The acquihiring process often includes discussions and agreements on retention strategies that are specifically tailored to the needs and expectations of the acquired team. This proactive approach can address potential concerns early on, ensuring that the team members feel valued and see a clear path for growth within the new company, further smoothing the integration process​​​​. Team Cohesion The pre-existing cohesion and established dynamics of an acquired team significantly contribute to enhanced productivity and innovation within the acquiring company. This effect is rooted in several key factors that stem from the team's history of collaboration: Efficient Communication: Teams with a history of working together have developed effective communication channels and understandings. This efficiency reduces misunderstandings and accelerates decision-making processes, allowing for faster project development and problem-solving​​​​. Trust and Mutual Understanding: The trust built within a pre-existing team encourages open discussions and the sharing of ideas without fear of judgment. This environment fosters creativity and can lead to innovative solutions, as team members feel comfortable proposing and critiquing ideas​​​​. Aligned Work Ethic and Values: Teams that have developed a cohesive work culture have aligned values and work ethics, which can seamlessly integrate into projects at the new company. This alignment helps in maintaining a high level of motivation and dedication towards project goals, directly impacting productivity and the quality of work​​​​. Rapid Conflict Resolution: Familiarity among team members means conflicts are likely to be resolved more quickly due to an understanding of each other's personalities and work styles. Quick resolution of disputes keeps the focus on progress and innovation, rather than getting bogged down in interpersonal issues​​​​. Collective Creativity: A team that has worked together successfully in the past has likely developed a collective creativity, where the sum is greater than its parts. This dynamic can lead to the generation of unique ideas and creative approaches to challenges, driving innovation within the acquiring company​​​​. Cost-effectiveness The cost-effectiveness of acquihiring, when compared to traditional hiring processes, is rooted in several key areas where efficiency gains and cost savings are realized: Reduced Recruitment Costs: Traditional hiring involves costs associated with advertising positions, sourcing candidates, conducting interviews, and potentially hiring recruitment agencies. Acquihiring bypasses many of these steps by bringing in an entire team at once, significantly reducing the per-capita cost of recruitment​​​​. Lower Training and Onboarding Expenses: Acquihired teams require less time and resources for onboarding and training because they are accustomed to working together and can leverage their pre-existing knowledge and skills. This contrasts with individually hired employees who may need extensive training to reach full productivity​​​​. Minimized Turnover and Retention Costs: Acquihiring often includes negotiations of terms that are specifically designed to retain key employees, thus potentially reducing turnover costs. High turnover in traditional hiring can lead to repeated cycles of recruitment, training, and lost productivity, all of which have significant financial implications​​​​. Immediate Productivity Gains: Since acquihired teams can hit the ground running, they contribute to projects and objectives much sooner than individually hired employees who may take months to acclimate and become fully productive. This immediate contribution can accelerate time to market for products and services, providing a competitive advantage and potentially increasing revenue sooner​​​​. Avoidance of Competitive Salary Bidding: In the competitive market for top talent, companies often find themselves in costly bidding wars to attract individual candidates. Acquihiring can sidestep this process, as compensation packages are negotiated at the team level, potentially avoiding inflated salaries that can occur in competitive hiring scenarios​​​​. Related resources: Types of Venture Capital Funds: Understanding VC Stages, Financing Methods, Risks, and More A Quick Overview on VC Fund Structure Why Would a Founder Consider Being Acquihired? Exploring the concept of acquihiring reveals its attractiveness to founders seeking not just an exit but also growth opportunities within larger entities. This strategic choice blends financial benefits with the potential for continued innovation, presenting a path for both personal and project advancement. Next, we'll delve into the reasons driving founders towards acquihiring as a viable and beneficial option. Financial Incentives Acquihires offer financial rewards and security for founders, especially when traditional funding routes prove challenging. This acquisition strategy not only provides founders with immediate financial benefits, often in the form of upfront cash and stock options in the acquiring company but also ensures a safety net that is particularly valuable in uncertain economic climates or competitive industries. Founders facing difficulties in raising additional rounds of funding or looking to mitigate financial risks find acquihires an appealing option. The financial payout can significantly outweigh the potential returns from an uncertain future, providing both a secure exit and a rewarding transition into new roles with the stability of a larger organization behind them​​​​​​. Continued Legacy and Project Survival An acquihire offers founders a unique opportunity to ensure the continuity and further development of their projects within the stable and resource-rich environment of a larger, established company. This arrangement allows the founder's vision and project to survive and potentially thrive, even if the original startup faced hurdles in scaling or funding. By becoming part of a bigger entity, the project benefits from access to greater resources, including technology, expertise, and networks, which can accelerate development and expansion in ways that might not have been possible independently. Additionally, the alignment with a larger company's strategic goals can inject new life and direction into the project, ensuring its legacy continues while also contributing to the broader success of the acquiring company. This transition can be particularly gratifying for founders passionate about their work, as it allows their innovations to reach wider audiences and have a more significant impact, all while securing their financial future and professional growth​​​​​​. Access to Resources Becoming part of a larger organization through acquihiring opens doors for founders and their teams to a wealth of resources, advanced technology, and expansive networks that might have been inaccessible otherwise. This integration offers several key advantages: Enhanced Resources: Larger companies often have deeper pockets and more substantial budgets allocated for project development, marketing, and research. This influx of resources can provide the necessary fuel for accelerated growth and product enhancement, allowing founders to scale their projects more efficiently than on their own. Advanced Technology Access: Being under the umbrella of a well-established company means having access to cutting-edge technologies and tools. This access can significantly shorten development cycles, improve product offerings, and foster innovation, keeping the project at the forefront of technological advancements. Expansive Networks: Larger organizations usually have well-established networks, including industry contacts, potential customers, and partners. Being part of such an entity allows founders to tap into these networks for business development, strategic partnerships, and even mentorship opportunities, which can be invaluable for growth and expansion. Market Reach: The acquiring company's established brand and market presence can significantly boost the project's visibility and credibility. This enhanced market reach can open up new customer segments and territories, driving increased adoption and revenue streams. Connect with Your Next Business Partners with Visible Navigating through the complexities of startup evolution and expansion, this article has unveiled the strategic maneuver of acquihiring, showcasing its pivotal role in facilitating growth, competitive edge, and talent integration. Acquihiring stands distinguished, not only as a means to onboard a cohesive, skilled workforce swiftly but also as a conduit for ensuring the survival and prosperity of innovative projects under the aegis of larger, resource-abundant organizations. Stay up to date with our resources by subscribing to our weekly newsletter here. Raise capital, update investors, and engage your team from a single platform. Try Visible free for 14 days. Related resource: Portfolio Management: What it is and How to Scale it at Your VC Firm

CleanTech and Climate Tech sectors are more crucial than ever, driving innovation to address our planet's most pressing environmental challenges. As an entrepreneur in these fields, you are part of a transformative movement focused on sustainability and climate action. However, navigating this landscape requires a unique set of strategies and insights. This comprehensive guide will provide the tools to overcome common hurdles, connect with venture capital firms actively investing in CleanTech and Climate Tech, and leverage opportunities for growth and impact. Definition and Differentiation: CleanTech vs. Climate Tech CleanTech (Clean Technology): CleanTech focuses on reducing industries' environmental footprints by improving efficiency, reducing waste, and utilizing renewable resources. This includes innovations in energy efficiency, renewable energy (solar, wind, hydro), green transportation, water purification, and waste management. Climate Tech (Climate Technology): Climate Tech specifically targets mitigating climate change effects. This involves technologies that focus on carbon capture and storage, climate modeling and monitoring, and adaptation technologies to cope with the impacts of climate change. While both sectors aim to promote sustainability, CleanTech broadly addresses environmental impacts across various industries, whereas Climate Tech is directly aimed at combating and adapting to climate change. Current Trends and Market Analysis Growth and Investment The CleanTech and Climate Tech sectors are experiencing unprecedented growth, fueled by an escalating global emphasis on sustainability and stringent environmental regulations. This growth is a response to the urgent need to address climate change and a reflection of the sectors' potential for significant economic returns. CleanTech Growth: Global Focus: The international community's increasing commitment to sustainable practices drives growth. Countries are implementing aggressive policies to reduce carbon footprints, benefiting CleanTech innovations in renewable energy, energy efficiency, and waste management. Investment Surge: Investors are pouring capital into CleanTech, recognizing sustainable technologies' long-term value and necessity. In 2023, global CleanTech investments surpassed previous records, signaling strong confidence in the sector. Climate Tech Momentum: Net-Zero Commitments: Governments and corporations worldwide are setting ambitious net-zero carbon goals. This accelerates developing and deploying Climate Tech solutions such as carbon capture and storage, climate resilience infrastructure, and advanced climate modeling tools. Early-Stage Investments: Venture capital funding in Climate Tech has seen a notable increase, particularly in early-stage startups. This trend is driven by the recognition that early investments in disruptive technologies can yield substantial returns as these innovations mature and scale. Technological Innovations Rapid technological advancements are a cornerstone of growth in both CleanTech and Climate Tech. These innovations improve efficiency, reduce costs, and open new frontiers for sustainable practices. Renewable Energy: Solar and Wind Advances: Developing more efficient solar panels and wind turbines makes renewable energy more accessible and cost-effective. Innovations such as bifacial solar panels and floating wind farms are expanding the potential for clean energy production. Energy Storage: Breakthroughs in battery technology, including solid-state batteries and grid-scale energy storage solutions, address the intermittent nature of renewable energy sources, facilitating a more reliable and resilient energy grid. Electric Vehicles (EVs): Transformation in Transportation: The EV market is experiencing explosive growth, driven by technological advancements in battery life, charging speed, and vehicle range. Innovations in EV infrastructure, such as widespread charging networks and vehicle-to-grid technology, further support this transformation. Sustainability in Manufacturing: Companies are increasingly focusing on sustainable practices in EV manufacturing, including using recycled materials and reducing the carbon footprint of production processes. Climate Tech Breakthroughs: Carbon Capture and Sequestration: Significant progress in carbon capture technologies enables more efficient and cost-effective ways to remove CO2 from the atmosphere and store it securely underground. AI-Driven Climate Modeling: The integration of artificial intelligence in climate modeling is enhancing the accuracy of climate predictions and providing valuable insights for mitigation and adaptation strategies. Market Drivers: Regulatory Pressures and Incentives: Environmental Standards: Governments are implementing stricter ecological regulations, compelling industries to adopt CleanTech and Climate Tech solutions. These regulations are often accompanied by substantial financial incentives, such as tax credits, grants, and subsidies, to encourage compliance and innovation. Policy Support: Policy frameworks supporting green technologies, including renewable energy mandates and carbon pricing mechanisms, create a favorable environment for sector growth. Consumer Demand: Sustainable Products and Services: Increasing consumer awareness and demand for environmentally friendly products drive companies to incorporate sustainable practices into their operations. This shift is evident across various industries, from fashion and food to transportation and energy. Market Differentiation: Companies prioritizing sustainability are gaining a competitive edge, attracting a growing segment of eco-conscious consumers. Corporate Sustainability Commitments: Carbon Neutrality Pledges: Corporations commit to ambitious sustainability goals, including achieving carbon neutrality. These commitments enhance their brand reputation and drive investments in CleanTech and Climate Tech solutions. Strategic Partnerships: Businesses are forming partnerships with CleanTech and Climate Tech startups to integrate innovative solutions into their operations, further fueling sector growth. Key Challenges and Opportunities in Each Sector Challenges High Capital Requirements: Both CleanTech and Climate Tech startups often face significant upfront costs for research, development, and deployment of their technologies. Regulatory Hurdles: Navigating complex and varying regulations across different regions can be daunting and time-consuming. Market Adoption: Proving the viability and scalability of new technologies in real-world applications is critical and often challenging. Opportunities Government Support: There are numerous grants, subsidies, and incentive programs available to support CleanTech and Climate Tech initiatives. Investor Interest: Increasing awareness of climate change impacts attracts more investors to these sectors, creating a favorable funding environment. Technological Advancements: Ongoing innovations provide new avenues for startups to differentiate themselves and capture market share. Corporate Partnerships: Collaborating with established corporations can provide startups with essential resources, market access, and credibility. Related resource: The Future is Green: 15 Climate Tech Startups to Watch This Year Focus on Impact Metrics Highlighting the environmental impact and sustainability benefits of the CleanTech solution can attract socially conscious investors and customers. Patagonia Patagonia, an outdoor clothing and gear company, places a strong emphasis on impact metrics related to sustainability. The company tracks and publicizes its efforts to reduce carbon emissions, minimize water usage, and promote responsible sourcing of materials. By transparently communicating its environmental initiatives, Patagonia attracts loyal customers who align with their values, and the company’s commitment to sustainability becomes a significant driver of brand loyalty. Patagonia’s Page: Environmental & Social Footprint Ecolab Ecolab, a global provider of water, hygiene, and energy technologies and services, focuses on impact metrics related to water conservation and sustainable operations. The company measures and reports on water savings achieved through its solutions, helping businesses and industries reduce water consumption and environmental impact. By demonstrating the positive environmental outcomes of its services, Ecolab attracts clients who prioritize sustainability, leading to long-term partnerships and business growth. Ecolab’s 2030 Impact Goals Ecolab Releases 2022 Corporate Sustainability Report, Highlights Progress Toward 2030 Impact Goals Resources Impact Investors and Fund Managers to Know Climate Tech’s Evolution: The Maturation to a Competitive, Returns-Focused Thematic Investment Sector From Clean Tech 1.0 to Climate Tech 2.0: A New Era of Investment Opportunities The climate tech sector is booming—here are the applications VCs are most excited about The Database of State Incentives for Renewables & Efficiency (DSIRE) For impact investors, the Global Impact Investing Network (GIIN) offers a directory of its members, many of whom are impact investors interested in sustainable technologies. VCs Investing in Clean Tech and Climate Tech Startups Lowercarbon Capital About: Lowercarbon Capital invests in decarbonization technologies across various sectors, including energy, transportation, food, and manufacturing. They fund research and invest in technologies to reduce CO2 in the atmosphere. For too long, the world has ignored the scientists, inventors, and entrepreneurs who are pursuing solutions to lower emissions, remove carbon, actively cool the planet, and save human, animal, and plant life as we know it. We are working to fix that. Third Sphere About: Third Sphere works for founders transforming global systems. We’ve made over 100 investments in notable firms like Cove Tool, OneWheel and Bowery Farming. We’re usually a pre-customer investor and offer traditional venture as well as credit finance, along with coaching and connections to over 12,000 customers, investors focused on re-imagining our planet. Our team is ranked in the 99th percentile of climatetech investors on NFX Signal, and Techcrunch named us one of the top 10 VCs founders love the most. We know that climate is about more than carbon—it’s also about force multipliers like asset finance and distribution. We believe the best climate solutions don’t look like climate solutions at all, just better, faster, and cheaper products and services. We prefer rapid deployment that will get us close to 1.5C in warming while upgrading our systems to make them more resilient. But we’ll also look at moonshot opportunities because we know we need a plan B. Thesis: A real investment is about more than capital. We invest at the earliest stages, usually pre-customer, stay close to our founders, and work with them from the inception of our relationship so they can build relationships with other founders, investors, and customers. Breakthrough Energy Ventures About: Launched by Bill Gates, Breakthrough Energy Ventures invests in companies developing technologies to reduce greenhouse gas emissions. Breakthrough Energy is dedicated to helping humanity avoid a climate disaster. Through investment vehicles, philanthropic programs, policy advocacy, and other activities, we’re committed to scaling the technologies we need to reach net-zero emissions by 2050. Thesis: Breakthrough Energy Ventures provides reliable and affordable power without contributing to climate change. Energy Impact Partners About: Energy Impact Partners LP (EIP) is a global investment platform that invests in companies shaping the energy landscape of the future. EIP brings together entrepreneurs and the world’s most forward-looking energy and industrial companies to advance innovation. With over $2.5 billion in assets under management, EIP invests globally across venture, growth, credit, and infrastructure – and has a team of over 70 professionals based in its offices in New York, San Francisco, Palm Beach, London, Washington D.C., Cologne, and Oslo. Thesis: We bring together incumbents and innovators in a differentiated collaborative model to build and scale businesses for substantial impact. Generation Investment Management About: Co-founded by former US Vice President Al Gore, Generation Investment Management focuses on sustainable investments, including Climate Tech. Since its founding in 2004, Generation has played a pioneering role in the development of sustainable and environmental, social and governance (ESG) investing. Prelude Ventures About: Prelude Ventures is a venture capital firm partnering with entrepreneurs to address climate change. Since 2013, we have invested in over 40 companies across advanced energy, food and agriculture, transportation and logistics, advanced materials and manufacturing, and advanced computing. We have a long-term commitment to the sector, accept informed risks, and couple a fundamental emphasis on venture-level returns with an understanding of deep-tech and hardware development timelines. Prelude manages capital exclusively for Simons family philanthropic entities and is a founding member of the Breakthrough Energy Coalition. Thesis: We invest in the low-carbon economy. 3×5 Partners About: In everything we do, we allow our love for each other and for the planet to be our guide. We seek out companies that are delivering advancements in clean air, food, water, shelter, education, healthcare, sanitation, and climate and environmental sustainability. When we find companies that align with our mission, we go beyond due diligence and take the time needed to build relationships grounded in trust, shared vision, transparency, and mutual accountability. Third Derivative About: We are building an inclusive, global ecosystem that rapidly finds, funds, and scales climate tech innovation and transforms markets. Thesis: We are mission driven and market focused. Rising to the climate crisis challenge is a once-in-a-generation, trillion-dollar economic opportunity. That’s why we were founded with purpose: to find, fund, hone, and scale the most-promising technologies to achieve larger, faster reductions in global carbon emissions. Evergreen Climate Innovations About: Clean Energy Trust is a cleantech accelerator that fuels innovation to create a healthier environment and more prosperous future. Clean Energy Trust is a 501C3 public charity. Our unique funding model gives us the flexibility to invest early in promising technology and young companies. We invest across the spectrum of cleantech including energy efficiency, agriculture, energy generation, energy storage, and transportation technologies. Sweetspot check size: $ 100K Greentown Labs About: Greentown Labs is a community of climate action pioneers working to design a more sustainable world. As the largest climatetech startup incubator in North America, Greentown Labs brings together startups, corporates, investors, policymakers, and many others with a focus on scaling climate solutions. Driven by the mission of providing startups the resources, knowledge, connections, and equipment they need to thrive, Greentown Labs offers lab space, shared office space, a machine shop, an electronics lab, software and business resources, and a large network of corporate customers, investors, and more. With incubators in Somerville, Mass. and Houston, Texas, Greentown Labs is home to more than 200 startups and has supported more than 500 since the incubator’s founding in 2011. These startups have collectively created more than 24,000 jobs, raised more than $4 billion in funding, and generated more than $9.8 billion in regional economic impact. Future Energy Ventures About: Future Energy Ventures is a unique venture capital platform that brings together corporate partners and world-class start-ups to shape the future energy landscape. Future Energy Ventures is the venture capital investment and collaboration platform of E.ON, one of Europe’s largest operators of energy networks and energy-related infrastructure and a provider of innovative customer solutions for about 50 million customers. Thesis: Future Energy Ventures is born from the energy industry, but it understands energy must converge with other sectors to create a sustainable and prosperous future. This is why we go beyond energy to invest in companies solving problems in cities or building frontier technology. The realization of our ambition relies on collaboration and partnerships; between people and companies from many different industries. 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: Clean Tech and Climate Tech VC profiles in our Fundraising CRM

Venture capital can be a game-changer for startups, offering not just financial backing but a whole ecosystem of support. However, it's not without its trade-offs. This article delves into the multifaceted world of venture capital, from the substantial resources and invaluable networks it brings to the potential for diluted ownership and pressure for rapid growth. Whether you're considering venture capital for your startup or simply curious about its implications, this guide will provide you with a balanced perspective. Advantages of Venture Capital for Startups Venture capital offers a plethora of advantages to startups that go beyond mere financial investment. It's about injecting your business with the resources, knowledge, and networks needed to thrive in competitive markets. Let's explore how venture capital can catalyze your startup's growth and success. Related resource: How to Find Venture Capital to Fund Your Startup: 5 Methods Access to Significant Capital Venture capital provides startups with significant capital that can be pivotal for scaling operations, research and development, and entering new markets. Unlike traditional financing, which may be limited or come with stringent repayment terms, venture capital offers a substantial financial runway, allowing startups to focus on growth without the immediate worry of financial constraints. Expertise and Mentorship Beyond capital, venture capitalists often bring a wealth of expertise and mentorship to the table. They offer strategic guidance, industry insights, and operational advice that can help navigate the complexities of scaling a startup. This mentorship can be invaluable in avoiding common pitfalls and accelerating growth. Networking Opportunities Securing venture capital also opens the door to a vast network of industry contacts, potential partners, and clients. These connections can be instrumental in business development, partnerships, and even future fundraising efforts. The right introductions can significantly accelerate a startup's trajectory. Credibility and Prestige When a VC firm decides to invest, it does so after thorough due diligence, assessing the startup's potential for growth, market opportunity, and the strength of its team. This rigorous evaluation process means that once a startup secures venture capital, it's seen as having passed a critical test of viability and potential. This perception can be incredibly beneficial in several ways: Attracting Further Investment: With the initial VC backing, other investors are more likely to take an interest in the startup. VC funding can serve as a validation of the startup's potential, making it easier to raise additional rounds of funding. The initial VC investment often acts as a catalyst for attracting more capital, as it reduces the perceived risk for subsequent investors. Talent Acquisition: Top-tier talent looks for opportunities that offer both growth potential and stability. VC funding enhances a startup's appeal to such individuals by providing evidence of both. The funding signifies that the startup has enough resources to scale and supports its long-term vision, making it a more attractive place for ambitious professionals looking to make their mark. Market Positioning: A startup with venture capital backing can also command more attention in its market. Customers, suppliers, and partners often view VC-funded startups as more credible and stable, making them more likely to do business with them. This enhanced credibility can be crucial for startups looking to establish themselves in competitive markets. Brand Visibility: VC firms often have extensive networks and platforms for promoting their investments. When a startup secures VC funding, it can benefit from this exposure, increasing its visibility in the industry and among potential customers. No Repayment Requirement One of the most significant advantages of VC funding over traditional loans is the absence of a repayment obligation if the startup fails. The advantage of not having to repay the investment if the startup fails frees entrepreneurs from the weight of debt, allowing them to focus fully on their vision and growth. This model not only facilitates innovation and risk-taking but also builds a partnership framework between investors and founders, where both parties are equally invested in the success of the venture. This risk-sharing model has several advantages for startups: Encourages Risk-taking: Knowing that failure will not result in crippling debt allows entrepreneurs to pursue innovative, high-risk ideas that could lead to significant market disruptions. Focus on Growth: Without the burden of debt repayment, startups can channel their resources into growth and development rather than diverting funds to service debt. Attracts Talent: The potential for significant returns without the personal financial risk associated with debt can make startups more attractive to top talent. Investor Support: Since VCs have a vested interest in the startup's success, they are more likely to provide support, advice, and connections to help the business grow. No Debt or Interest In traditional financing models, such as bank loans or debt financing, the borrower is required to repay the principal amount along with interest, regardless of the business's success. This obligation can place a considerable strain on a startup's cash flow, especially in its early stages when revenues may be unpredictable or non-existent. Moreover, in the event of business failure, entrepreneurs may still be liable for the outstanding debt, which can lead to personal financial ruin in the case of personally guaranteed loans. Venture capital, on the other hand, is invested in exchange for equity in the startup. VCs are well aware of the high risk associated with these investments, including the possibility that the startup may fail. Their return is contingent upon the success of the business, typically realized through an exit event such as an initial public offering (IPO) or acquisition. If the startup fails, the venture capital invested does not need to be repaid. This setup aligns the interests of the investors with those of the founders, as both parties succeed or fail together. Related resource: Pros and Cons of Crowdfunding for Your Startup Scalability Venture capital is a critical accelerator for startups aiming to make a market impact, providing not just funds but a springboard for rapid growth and scalability. This financial backing enables startups to swiftly penetrate and expand in markets, pushing innovation and product development at an accelerated pace. It facilitates the hiring of top talent essential for scaling operations and executing ambitious growth strategies. Furthermore, venture capital empowers startups to engage in strategic partnerships and acquisitions, enhancing their market reach and product offerings. It supports substantial investments in marketing and brand building, crucial for establishing market presence and driving customer acquisition. Additionally, venture capital aids in geographic expansion, opening doors to new markets and global opportunities. Disadvantages of Venture Capital While venture capital can be a powerful tool for startups, it's not without its disadvantages. The pursuit of venture funding comes with considerations that can affect your startup's trajectory and founding principles. Let's examine the potential downsides to be mindful of. Dilution of Ownership Accepting venture capital typically involves exchanging equity in the startup for financial investment, leading to a dilution of the founders' ownership stake. This means that founders own a smaller percentage of their company after the investment than they did before. While this influx of capital is crucial for growth, it also results in founders sharing control and potential future profits with the venture capitalists. This trade-off is an essential consideration for startups, as it impacts the founders' influence over company decisions and their share of the financial rewards in the event of the company's success. Less Control Venture capital investors frequently seek a say in business decisions as a condition of their investment, potentially leading to diminished control for the original owners. This involvement can range from strategic direction to operational changes, reflecting the investors' stake in the startup's success. While their expertise can be beneficial, it may also result in founders having to compromise on their vision or make decisions aligned with the investors' goals, rather than their own. This dynamic underscores a critical trade-off in venture funding: accessing significant capital and expertise at the cost of sharing decision-making power. Pressure for High Growth VC funding often comes with the expectation of rapid, substantial returns, placing intense pressure on startups to grow quickly. This urgency for growth can sometimes push startups towards aggressive expansion strategies that may not align with sustainable or prudent business practices. The drive for quick scalability and market dominance can lead to short-term decisions that prioritize speed over stability, such as overextending financial resources, neglecting quality control, or unsustainable customer acquisition practices. While rapid growth can propel a startup to success, this pressure can also risk its long-term viability and ethical standing, challenging founders to balance investor expectations with sustainable development. Length and Complex Process Securing venture capital is a time-consuming and complex process, marked by an extensive due diligence phase that demands significant attention and resources from startup founders. The journey to obtain venture funding involves multiple steps, including preparing detailed business plans, financial projections, and engaging in negotiations with potential investors. Venture capitalists conduct thorough due diligence to assess the viability, market potential, and team capability of the startup. This scrutiny can include deep dives into the startup's financials, business model, competitive landscape, legal compliance, and more. The process ensures that investors are making informed decisions but also requires startups to be transparent and well-prepared. This exhaustive vetting process, while necessary for securing investment, can divert founders' focus from day-to-day operations and delay immediate business development efforts. The complexity and length of securing venture capital not only test a startup's readiness and resilience but also its capacity to balance long-term fundraising goals with short-term business needs. Focus on Exit Strategy Venture capitalists typically enter investments with a clear exit strategy in mind, aiming for a significant return on their investment through a sale, merger, or public offering of the startup. This focus on exit events is fundamental to the venture capital model, as it dictates the timeline and manner in which investors expect to realize their profits. However, these exit strategies may not always align with the long-term vision of the startup founders. Founders often embark on their entrepreneurial journey with a passion for their product or service and a vision for long-term growth and industry impact. In contrast, venture capitalists' emphasis on an exit within a certain timeframe can pressure startups towards rapid scaling and market positioning that prioritizes short-term valuation increases over sustainable growth and development. This misalignment can lead to strategic conflicts, where founders are pushed to make decisions that optimize for an exit event rather than the long-term health and vision of the company. Navigating these differing objectives requires careful negotiation and alignment of interests between founders and their venture capital partners to ensure that the company can achieve both its immediate goals and long-term ambitions. Alternatives to VC Funding For startups wary of the potential downsides of venture capital, there are several alternative funding options available. These alternatives can offer different advantages, from less dilution of ownership to more aligned growth strategies. Let's explore a few of these options. Related resource: Types of Venture Capital Funds: Understanding VC Stages, Financing Methods, Risks, and More Angel Investments Angel investments represent a vital source of capital for startups, typically coming from affluent individuals who provide funding in the early stages of a company's growth. Unlike venture capitalists, who usually invest through funds with money pooled from various sources, angel investors use their own wealth to support startups they believe in. These investors often offer capital in exchange for equity in the company, acquiring a stake in the startup's future success, or sometimes through convertible debt, which can later be converted into equity. Angel investors not only provide financial backing but can also bring valuable expertise, industry connections, and mentorship to the startup. Their investment can be crucial during the initial phases when the startup may not yet qualify for venture capital or bank loans due to the high risk associated with early-stage ventures. By opting for angel investment, founders can secure the necessary funds to kickstart their operations, refine their product, or expand their market reach, all while potentially gaining a supportive advisor in their angel investor. This form of investment offers a blend of financial support and personal engagement, making it an attractive option for startups seeking both capital and guidance. Revenue-based Financing Revenue-based financing is a funding model where investors provide capital to startups in exchange for a percentage of the company's future revenues until a predetermined amount is repaid. This form of financing offers a flexible repayment schedule that directly correlates with the business's performance, making it distinct from traditional equity or debt financing. In this model, repayments increase when revenue is high and decrease during slower business periods. This flexibility is particularly advantageous for startups with fluctuating revenue patterns, as it aligns repayment obligations with their financial capacity. Unlike equity financing, revenue-based financing does not require founders to give up ownership stakes, nor does it impose fixed repayment terms like traditional loans. Instead, the total repayment amount is usually a multiple of the invested capital, agreed upon at the outset. Revenue-based financing is attractive for businesses that generate consistent revenues but may not yet be profitable or for those looking to avoid dilution of ownership. It allows startups to access the capital they need for growth, such as expanding operations, entering new markets, or increasing marketing efforts, without the pressures of equity dilution or rigid debt schedules. This model promotes a partnership approach, with investors directly vested in the company's revenue growth and success. SBA Loans Small Business Administration (SBA) loans are a government-backed financing option designed to support the growth and sustainability of small businesses. These loans are facilitated by the SBA, a U.S. government agency, in partnership with banks and lending institutions. The SBA guarantees a portion of the loan, significantly reducing the risk to lenders and enabling more favorable terms and lower interest rates for borrowers compared to traditional bank loans. SBA loans are known for their relatively lower interest rates and longer repayment terms, making them an attractive option for startups and small businesses seeking funding without the burdensome costs associated with conventional loans. The variety of SBA loan programs caters to different business needs, from purchasing equipment and real estate to providing working capital and funding for expansion projects. One of the key benefits of SBA loans is their accessibility to businesses that might not qualify for standard bank loans due to requirements for higher credit scores or collateral. The SBA's backing means that businesses with solid plans and potential for success have a greater chance of obtaining the financing they need, even if they're in the early stages of growth or lack extensive credit history. However, the process of applying for an SBA loan can be more complex and time-consuming than other financing options, requiring detailed business plans, financial statements, and projections. Despite these challenges, the favorable terms, lower interest rates, and government support make SBA loans a compelling choice for small businesses and startups looking for a stable and affordable source of funding. Connect With the Right Investors for Your Startup With Visible Venture capital offers startups a blend of significant capital, expertise, and networking opportunities, propelling rapid growth and market impact. However, it also brings challenges such as diluted ownership and intense pressure for quick returns. Alternatives like angel investments, revenue-based financing, and SBA loans present different benefits and trade-offs, catering to various startup needs. For founders navigating these options, Visible provides a comprehensive platform to find and connect with the right investors, track a fundraise, share a pitch deck, and manage stakeholder communications effectively. Give Visible a free try for 14 days here. Related resource: A Guide to How Venture Capital Works for Startups and New Investors

Fundraising is difficult. Building a process and system to attract and close investors can help move a fundraise along. At Visible, we often compare a venture fundraise process to a traditional B2B sales and marketing funnel. At the top of a fundraising funnel, you need to find the right investors for your business. Like identifying a qualified lead for sales and marketing, you need to define the investor that is a fit for your business. In the middle of the fundraising funnel, you need to nurture potential investors with meetings, emails, pitch decks, and more. At the bottom of the fundraising funnel, you are ideally closing new investors and delighting them with regular communication. Related Resource: A Quick Overview on VC Fund Structure In order to help you find the best investors for the top of your fundraising funnel, we created an investor database, Visible Connect. If you’re a founder located in Japan, check out our list of investors using Connect below: 1. Genesia Ventures As put by the team at Genesia Ventures, “It would be no exaggeration to say that the world has entered a new era through digital technologies, and startups have played and are still playing pivotal roles in this game-changing transformation. The large industries and social infrastructure that have thus far led the world are on the brink of new development through the disruptive potential of the digital sphere. Simultaneously, developed regions are establishing new industries through a digital infrastructure that is not dependent on traditional modalities or assets. Through seed and early-stage investment in startups, we believe we can help achieve a thriving society heralded by digital technology, and we are committed to supporting these startups and accelerating their growth, ushering in a world in which everyone can create wealth and has equal opportunities.” Learn more about Genesia Ventures by checking out their Visible Connect profile → Location Genesia Ventures has offices in Japan, Indonesia, and Vietnam. They invest in companies across Southeast Asia and Japan. Portfolio Highlights Some of Genesia Ventures’ most popular investments include: Nudge Activaid Airboxr Investment Focus Genesia is focused on seed-stage and early-stage investments. Related Resource: The Understandable Guide to Startup Funding Stages 2. Global Brain As put by their team, “Global Brain’s mission is to “bring unimaginable innovation into society through business creation.” Our surrounding environment is significantly changing due to global risks including extremely intense global competition, pandemics, and global warming. We believe that in such a time of uncertainty lies the greatest opportunity. The power of startups is vital to overcome unprecedented situations. The global economy is now largely led by many companies created right after the financial crisis.” Learn more about Global Brain by checking out their Visible Connect profile → Location Global Brain has an office in Tokyo and 9 other office locations across the globe. Portfolio Highlights Some of Global Brain’s most popular investments include: Base Food August Fluently Investment Focus Global Brain invests in companies across all stages and all industries. 3. Monozukuri Ventures As put by their team, “Monozukuri Ventures is a venture capital firm based in Japan and North America specializing in hard tech. In addition to the investment, we have a dedicated team to support hardware prototyping, mass production, and business development. We aim to create a world where entrepreneurs and startups can quickly produce and sell high-quality products, even in small quantities. Our mission is to help the world’s entrepreneurs rapidly deliver high-quality products to the market, regardless of production volume. As a global ecosystem contributor, we provide founders with essential resources such as investment, mentorship, prototyping know-how, manufacturing expertise and community support.” Learn more about Monozukuri Ventures by checking out their Visible Connect profile → Location Monozukuri Ventures has offices in Japan and North America and invests in companies in Japan and the US. Portfolio Highlights Some of Monozukuri Ventures’ most popular investments include: Mira Sembient HiberSense Investment Focus Monozukuri Ventures invests across all stages and primarily funds companies building hard tech. 4. D4V (Design for Ventures) As put by the team at D4V, “We help startups deliver not only financial returns but also positive impact on the world. Our work aims to support and strengthen the culture of entrepreneurship in Japan and beyond, accelerating the growth of a more entrepreneurial economy.” Learn more about Design For Ventures by checking out their Visible Connect profile → Location D4V is located in Tokyo and primarily invests in entrepreneurs and companies located in Japan. Portfolio Highlights Some of D4Vs most popular investments include: Cinnamon AI HOMMA Nudge Investment Focus D4V is focused on early-stage investments. Some of the markets and verticals that they are focused on include: Digital Disruption and Industry Transformation New Lifestyles and Cultures Financial Tools and Wellbeing Lifelong Learning and Empowerment Personal and Public Health 5. Benhamou Global Ventures As put by their team, “BGV is an early-stage venture capital firm focused on global Enterprise 4.0 technology innovation. The partners at BGV drove successive waves of enterprise technology disruption in Silicon Valley and have years of company-building experience. Founded by Eric Benhamou, former chairman and CEO of 3Com, Palm and co-founder of Bridge Communications, BGV is comprised of global operating executives and investors, and is often the first and most active institutional investor in its portfolio companies.” Learn more about BGV by checking out their Visible Connect profile → Location BGV has offices across the globe and invests in companies across the globe. BGV has an office in Kyoto. Portfolio Highlights Some of BGV’s most popular investments include: Kardinal Everest Labs Anch.ai Investment Focus BGV is focused on early-stage investments and specializes in “Enterprise 4.0 companies.” As put by their team, “Enterprise 4.0 refers to a new wave of B2B startups that combine artificial intelligence, intelligent automation and proprietary access to data to deliver actionable insights for enterprise businesses. These disruptive startups provide full stack solutions in the form of hyper-niche vertical solutions, programmable cloud infrastructure or cloud-native security innovations to generate immediate business value and significant ROI improvements for their customers.” Related Resource: How AI Can Support Startups & Investors + VCs Investing in AI 6. Sozo Ventures As put by their team, “Sozo Ventures was formed in 2012 to invest in and support technology-enabled ventures with their global expansion. We invest in category leaders transforming global industries with advanced data technologies, ecommerce, enterprise cloud, fintech, IoT and healthcare IT, and other advanced solutions. We are structured to connect the most ambitious entrepreneurial teams with the world’s most advanced and respected customers and distributors. We are at our best when we can share our expertise well before expansion strategies are set.” Learn more about Sozo Ventures by checking out their Visible Connect profile → Location Sozo Ventures has office locations in Tokyo and Redwood City, CA. Sozo invests in companies across the globe. Portfolio Highlights Some of Sozo’s most popular investments include: Zoom Twitter Coinbase Investment Focus As put by the team at Sozo, “We look for companies that are at the ‘Readiness’ Stage – a term coined internally that details companies that have a strong management team and culture, stable long-term investors, credible and recognizable customers and traction, and appropriate organizational structures for target international customers. Readiness is achieved by different businesses at different stages – and Sozo is set up to be a long-term flexible supporter of companies that we partner.” 7. Beenext As put by the team at Beenext, “We don’t just invest in startups, we get ‘invested in them. BEENEXT is a partnership of the founders, by the founders, and for the founders. When a founder partners with us, it partners with the entire BEENEXT community. We provide an opportunity for co-creation, inclusive growth, knowledge-exchange, mentorship and capital support.” Learn more about Beenext by checking out their Visible Connect profile → Location Beenext has an office in Singapore but invests in companies in Japan, Southeast Asia, India, and the US. Portfolio Highlights Some of Beenext’s most popular investments include: AngelList SixSense Wellthy Investment Focus Beenext invests in companies across the globe and across many sectors and industries. 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. Related Resource: Private Equity vs Venture Capital: Critical Differences

Collecting updates from portfolio companies on a regular basis is an important part of running smooth operations at a VC firm. Well-organized, accurate, up-to-date portfolio data helps investors provide better support, make data-informed investment decisions, and share more engaging insights with LPs. However, collecting data from portfolio companies can also be a time-consuming and frustrating process if you’re not implementing best practices. On Thursday, March 28th, Visible hosted a product webinar covering tips for streamlining the portfolio data collection process for VCs. This webinar recording is not made publicly available. Reach out to our team to learn more about Visible. Webinar Poll Results Here are the results from the poll conducted during the webinar. The top three reasons VCs collect data from companies are: Understand company performance in general Send updates to current LPs Provide better support to portfolio companies Topics Discussed Why VCs collect data from portfolio companies (poll) Top 5 most common metrics to track Founder-friendly data collection What other investors are doing How to set your firm up for data collection success Advice from Visible customers Demo of recent product updates Time for questions This webinar recording is not publicly available. Reach out to our team to learn more about VC portfolio data collection best practices. Related Resources Portfolio Data Collection Tips for VCs The Best Practices for VC Portfolio Data Collection Streamlining Portfolio Data Collection and Analysis Across the VC Firm

Venture Capital funds dedicate a lot of time and resources to optimizing their pipeline processes. However, not all VCs apply the same level of intention and effort to their post-investment processes. This is why portfolio support is not only considered an important differentiator for funds but also a critical part of the success of the fund and its portfolio companies. Value-add portfolio support can help with everything from attracting better deal flow (don’t forget founders talk to each other!), improving brand recognition, raising capital from LPs, and most importantly, helping companies succeed. What is Portfolio Support? Portfolio support is a post-investment process that is intended to help portfolio companies perform, grow, and overcome potential hurdles. This typically includes some combination of the following: New company onboardings Hiring and recruiting Marketing and promotional support Future fundraising support Events Why is Portfolio Support Important? In the early days of venture, capital alone was enough to be a differentiator. As the venture capital market has evolved so have the expectations for VC funds. Formalized post-investment support for portfolio companies has become a differentiator for VC firms — it helps with brand recognition, portfolio company performance, and ultimately improves a firm's odds of increasing returns and raising a future fund. Who Owns Portfolio Support? Portfolio company support is typically owned by the person running a firm's platform. For larger funds, this might be a dedicated person or team (e.g. Head of Platform, Platform Manager, etc.). At a smaller fund, this likely falls on the shoulders of a partner. Related resource: VC Fund Performance Metrics 101 How Do Portfolio Companies Request Support? In Visible’s survey taken by VC Portfolio Operators, respondents shared that they are made aware of support needs from companies in a variety of different ways. The most common is directly from companies (44%) but also from investment team members (29%) and in third place, from Investor Updates from companies. From this data, it’s clear portfolio support requests are being shared in myriad ways with different team members at a fund. This highlights the importance of having open and transparent communication across your fund team so that portfolio support requests can be triaged quickly and by the right person. Getting Started With Portfolio Support Best Practices This guide is created for VC investors and operators who want to level up their portfolio support. The content of this guide is derived from Visible’s 2022 Portfolio Support Survey, Visible’s July 2022 Webinar on Building Scalable Portfolio Support, and the industry experience Visible has gained through supporting hundreds of investors around the world to improve their portfolio monitoring and management processes. Contents of the Guide: What is Post-Investment Support Who Owns Post-Investment Support How to Best Scale Your Post Investment Support Most Common Portfolio Support Requests + Resources Advice for First-Time Platform Managers Ready to take your support to the next level? Learn how Visible can help you with your portfolio management and reporting here.

Raising capital as a startup founder is difficult. On top of building a product, hiring a team, and scaling revenue, founders need to make sure that their business is funded for success. If you are a founder starting to raise your seed round, check out our guide below: What is Seed Funding? Seed funding is capital that a company raises in its earliest stages — typically the earliest form of outside capital. Seed funding is integral to getting ideas off the ground and giving a potential company and idea life. After a seed round, startups go on to raise future rounds of capital — e.g. Series A, Series B, Series C, etc. You can learn more about seed fundraising and future rounds in our post, The Ultimate Guide to Startup Funding Stages. What is the Purpose of Seed Funding? The purpose of seed funding is simple. It is intended to give a founding team enough capital to pursue a certain idea or market to prove if the concept works. Different investors may have different requirements for a seed-stage company but generally, they are pursuing “product-market fit.” As Marc Andreessen, Founder of Andreessen Horowitz, defines it, “Product/market fit means being in a good market with a product that can satisfy that market.” Seed size rounds are exploding in size and the purpose may be vary quite a bit from company to company and investor to investor. When is it the Right Time to Raise Seed Funding? The timing to raise seed funding for a startup can be tricky. First and foremost you should approach seed investors when you believe you have a strong enough product, market, or team (or combination of those) to build a company that deserves to be venture-backed. This means that you can scale and grow to the valuations where an investor can generate a solid return on your company. As the team at Y Combinator writes, “Founders should raise money when they have figured out what the market opportunity is and who the customer is, and when they have delivered a product that matches their needs and is being adopted at an interestingly rapid rate. How rapid is interesting? This depends, but a rate of 10% per week for several weeks is impressive. And to raise money founders need to impress. For founders who can convince investors without these things, congratulations. For everyone else, work on your product and talk to your users.” If you believe that your business has what it takes to generate massive returns for an investor, it is likely time to start your fundraising process. Related Resource: What is Pre-Revenue Funding? How to Raise Seed Funding for Startups The key to successfully raising a seed round is to have a system and process in place to raise capital. Just as you have a systematic approach to your sales and marketing funnel the same should be done for your fundraising efforts. Regarding fundraising, we like to think of it as similar to a traditional sales and marketing funnel for a B2B enterprise business. In its simplest form, a traditional sales & marketing process can be broken into 3 steps: Attracting and adding qualified leads to your top of the funnel on a regular basis. Nurturing and moving the leads from through the funnel with the goal of closing them as a customer. (aka get them into a buying process) Serving customers and creating a great experience until they become evangelists or promoters. You can convert those same ideas into a “Fundraising Funnel” that looks something like this: Filling the top of your funnel with qualified potential investors. These investors generally come from cold outreach, warm introductions, or inbound interest. You want to make sure these fit your “ideal investor persona” — right sector, stage, geography, check size, etc. Nurturing and moving investors through your funnel. While you may not be actively trying to close new investors and add capital you should constantly be working the top of your funnel. Staying fresh on the mind of potential investors 365 days a year using traditional marketing tactics will pay dividends when it’s time to pull the string on a new round of capital. Pro tip: send them a lite version of your quarterly investor update. Building relationships and communicating with your current investors. Customer success is key to maintaining a strong relationship with customers once they reach the bottom of the funnel. The same can be said for your investor funnel. As a founder, one of the first places to look for capital is current investors. One of the first places a new investor will look to for guidance will also be your current investors. At the end of the day your current investors should be the ultimate evangelist for your business. Related Resource: Startup Mentoring: The Benefits of a Mentor and How to Find One Just like a standard B2B sales process, you need to have “leads” (read: investors) coming to the top of your funnel so you can move them through the funnel to ultimately close them (read: close your round). To get started, you need to understand who the right investor is for your business and how you fit into their greater vision and can be of benefit to them (more on this below). We sat down with Jonathan Gandolf, CEO of The Juice, to uncover his learnings and thoughts from his seed raise. Give episode 1 a listen below: How Much Seed Funding Should You Raise? The average round of seed funding has gradually grown since 2014. However, the last few years have been a turbulent time in the venture world, and have seen the average seed round size level out since 2021. Deciding how much seed funding you should raise is entirely up to you, the founder. As a general rule of thumb, you should raise enough to reach profitability or to the point where you can easily reach your next “funding milestone.” This can be a revenue number, user benchmark, etc. but generally speaking, should be within 12-18 months. To model this you need to have a thorough understanding of how your business functions and what it will take to get to the next milestone. Understand how much it cost to acquire a new customer, retain a customer, how much an engineer costs, salesperson, etc. To help, you can check out our popular financial modeling tools here. Related Reading: Building A Startup Financial Model That Works Types of Seed Funding for Startups There are a few types of seed funding. For the sake of this post we will mostly talk about raising venture capital but to cover off on a few other options: Friends & Family One of the most common sources of seed funding comes from friends and families. This often follows a similar approach to the funnel discussed above but likely less intensive as you, the founder, likely have an existing relationship with this group. Keep in mind that you are investing their capital in a highly risky asset class and they need to be made aware of this situation. Crowdfunding Another form of “seed funding” that is becoming more popular is crowd funding. Sites like Republic and StartEngine allow startups to raise equity rounds from individuals so check sizes can be as little as $100. Non-Traditional Firms More firms are coming out with new financial instruments to offer as an alternative to venture capital. Earnest Capital is one of our favorites. Earnest Capital provides early-stage funding, resources and a network of experienced advisors to founders building sustainable profitable businesses. Earnest Capital uses their own financing instrument called a Shared Earnings Agreement (SEAL). Check out other non-traditional investment funds here. Related Resource: Advisory Shares Explained: Empowering Entrepreneurs and Investors Incubators As put by the team at TopMBA, “A startup incubator is a collaborative program designed to help new startups succeed. Incubators help entrepreneurs solve some of the problems commonly associated with running a startup by providing workspace, seed funding, mentoring, and training. The sole purpose of a startup incubator is to help entrepreneurs grow their business.” Incubators are hit or miss if they come with capital. Some will include a small injection of capital while others are solely resources to help founders get their business off the ground. Check out our list of incubators and startup studios here. Accelerators As put by the team at Silicon Valley Bank, “Private startup accelerators do provide funding and the money helps cover early-stage business expenses, as well as travel and living expenses for the three-month residency at the in-person startup accelerators. However, the funds and guidance come at a price. Just like any other equity funding, signing an accelerator agreement typically means giving up a slice of your company. Startup accelerators generally take between 5% and 10% of your equity in exchange for training and a relatively small amount of funding.” Check out our list of active accelerators here. Angel Investors Angel investors are a great starting point for any founder. Similar to friends and family investors, an angel investor is an individual that is looking to diversify their investment portfolio and back intriguing startups. However, angel investors tend to be more seasoned professionals and generally have an understanding of the risks of investing in a startup. Related Resource: How to Effectively Find + Secure Angel Investors for Your Startup Corporate Seed Funding A newer form of seed funding is corporate venture arms and funds. As large corporations continue to seek innovation and new revenue streams, the development of corporate venture funds have become popular. Corporations generally partner with a proven VC (or launch a fund internally) and deploy capital across seed-stage companies that fit into the company's thesis or growth plans. How Long Does it Take to Raise Seed Capital Raising seed capital for a startup can be a burdensome process for founders. Brett Brohl of Bread & Butter Ventures, suggests five months to raise capital. It can be broken down into the following rules (which Brett calls the 1-3-1): One Month — Building investor lists and getting documents ready Three Months — Actively pitching and taking meetings with potential investors One Month — Closing investors and going through due diligence Brett's 1-3-1 rule is a great starting point. Other peers and investors will suggest a similar timeline — we typically see founders raise seed capital anywhere between three and nine months. Financing Options for Seed Rounds The different finance instruments and options available to founders raising a seed round can feel intimidating. There are countless options and different legal meanings that make things complicated. Seed round financing options can be broken into two buckets — convertible debt or SAFEs and equity. Convertible Debt & SAFEs Convertible debt and SAFEs have become the norm in the venture world over the last decade. YC popularizes SAFEs and has made templates available for startups across the globe. You can learn more about SAFEs in our post, "The Startup's Handbook to SAFE: Simplifying Future Equity Agreements." Equity Pure equity financing has become less common in the venture world since the emergence of SAFEs. Equity financing means setting a valuation and stock prices and selling new shares to investors. As always, we recommend consulting with a lawyer when determining the financing options that are best for your business. Related resource: Navigating Pro Rata Rights: Essential Insights for Startup Entrepreneurs How to Build Your Seed Round Pitch Deck Fundraising is very much a process. Along the way, there are tools and resources that founders can leverage to better tell their story. One of those tools is the pitch deck. Pitch decks are a powerful tool that can help you tell that story. Different investors will have different opinions about pitch decks. Some investors might want to receive them before a meeting, some might only want them sent via PDF or link, and some investors might not care if you have a pitch deck at all. A pitch deck is about the content that you are sharing. However, there is a fine line between beauty and functionality when building your seed stage pitch deck. Investors will likely have feedback that will require changes but you do want to display it in a meaningful way. To learn more about crafting the perfect pitch deck for your seed round check out our post, Our Favorite Seed Round Pitch Deck Template (and Why It Works). The 5 Most Important Elements of a Successful Pitch Deck There is no prescriptive pitch deck template that will work for every startup, but there are a few things investors generally want to and expect to see in a pitch deck: Concise & Compelling — you want your pitch deck to give investors the information they need in a concise and straightforward way. This includes your problem and solution. Related: How to Write a Problem Statement [Startup Edition] The Market — investors want to understand the market you are operating in and why you have an opportunity to seize a large percentage of the market and become a large company. Related: How to Model Total Addressable Market (Template Included) Acquisition Model — going hand-in-hand with the market is your acquisition model. You want to demonstrate to investors that you have a clear and scalable way to attract new customers. Related: Pitch Deck 101: The Go-to-Market and Customer Acquisition Slide Financials — Some investors will want to see financial projections and others might not care at the seed stage because they are typically wrong. So why include them? Investors want to see how you think about your future and are thinking through metrics and models correctly. Related: Building A Startup Financial Model That Works Traction — While it might be limited at the seed stage, investors want to see what you’ve done to date. What product have you built, customers, attracted, and more. Use Visible to share your pitch deck. Once you’ve built out your target list of investors, you can start sharing your pitch deck with them directly from Visible. You can customize your sharing settings (like email-gated, password-gated, etc.) and even add your domain. Give it a try here. How to Choose Investors for Seed Funding Once you have defined what your ideal investor looks like it is time to start researching, finding, and contacting them. To find the right investors we suggest browsing different databases and networks to find your perfect fit. You may already have investors in mind or have networked with investors in the past — awesome start! If you want to continue to find investors, Visible Connect is our free database built by founders, for founders. Visible Connect allows founders to find active investors using the fields we have found most valuable (like check size, geography, traction metrics, etc.). As you begin to browse and find investors for your startup, we suggest keeping tabs on them. You most likely have an involved CRM or process to keep tabs on your current and potential customers. Should the same be true for your investors? This can be in the Visible Fundraising CRM (you can add investors directly from Connect into the CRM) or a simple Google Sheet. No matter what you decide, make sure you have a system in place to track and monitor conversations to make your life easier moving forward. Related Reading: How To Find Private Investors For Startups Building Your Investor List As you start to build your list of potential investors — we suggest breaking it down into 3 “tiers” — Tier 1, Tier 2, and Tier 3. Tier 1 are the firms you believe to be most qualified, followed by tier 2 and 3. We highly encourage taking on these investors in “sets.” This means grouping investors in sets of ~5 (suggest trying to keep sets to 5 investors or less) so you have the opportunity to better evaluate and tailor your pitch as you move through your sets. As a rule of thumb, you’ll want to make sure you mix in Tier 1, 2, and 3 investors in each “set.” For example, if you pitch all of the Tier 1 investors in the first set, you’ll potentially miss an opportunity to tailor your pitch and only be left with less qualified (Tier 2 and 3) investors. Related Reading: What is an Incubator? What is the Difference Between Seed vs. Series A Funding? Series A funding is the next jump in a company’s funding lifecycle. In a seed round is the first capital into a business, a “Series A” is generally the next round of capital. As we defined in our Startup Funding Stages post, Series A funding is: “When a company is first founded, stock options are generally sold to the company’s founders, those close to them, and angel investors. After this, a preferred stock can be sold to investors in the form of a Series A. Series A allows investors to get in early with a business that they truly believe in. It’s a mutually beneficial relationship for both the company and the future stock holders.” When a company reaches their “Series A” they likely have product-market fit and are ready to scale their business to a $1M or more in revenue. At Series A you likely have solid revenue in place and a scaleable plan to bring on more customer sand revenue whereas at the seed round you may have little to no revenue. A seed round is used to demonstrate your product, service, or team can seize a market. A series A round is used to scale the product, service, or team to attack and scale in your market (or a new market). Additional Seed Funding Resources There are hundreds of resources out there to help you raise your seed round. At the end of the day the more entrepreneurs that raise capital the better the startup ecosystem does as a whole. At Visible, we do our best to curate and write the best resources to improve a founders chances of success. Here are a few of our favorite resources to help founders improve their odds of raising venture capital: Everything a Startup Founder NEEDS to Know about Pro Rata Rights Check out our guide and tips for handling pro rata rights during an early stage fundraise and negotiation. Our Favorite Seed Round Pitch Deck Template (and Why It Works) In our guide, we share a step-by-step guide to help build your seed round pitch deck. Plus, we offer a direct download to the template so you can get started immediately. Our Startup Funding Stages Guide Our in-depth guide covering all things related to the startup funding lifecycle. Understand what it takes to go from seed stage funding to Series A and later. Building A Startup Financial Model That Works Templates and resources to help you build your first financial model for your startup. In order to improve your odds of raising capital you need to understand the ins and outs of your business. Our Guide to Sending Your First Investor Update Tips and best practices for using investor updates to leverage your current and potential investors to help with fundraising, hiring, and strategic decision-making. Visible Connect: Our Investor Database Browse our investor database that is hand curated by the team at Visible. We include the fields and filters we find most important when searching for new investors. Visible Lite: Pre-Traction Template This template is intended for companies that are pre-traction/revenue. Even if it is simple, sending Updates from day 1 is a great way to stay top of your investors mind’s moving forward. We hope this guide is helpful to you as you kick off your seed round. To get your fundraise started check out Visible Connect, our investor database. Automatically add your investors into a pipeline to manage conversation and engagements so you can focus on building your business. Related resource: Top Creator Economy Startups and the VCs That Fund Them Kick Off Your Seed Round With Visible We believe a VC fundraise mirrors a B2B sales motion. The fundraising process starts by finding qualified investors (top of the funnel) and building relationships (middle of the funnel) with the goal of them writing a check (bottom of the funnel). Just as a sales team has dedicated tools for their day-to-day, founders need dedicated tools for managing the most expensive asset they have, equity. Our community can now find investors, track a fundraise, and share a pitch deck, directly from Visible. Give Visible a free try for 14 days here.

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. 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.