From Seed to Series A: How to Scale with Speedinvest

This week, Workshop Wednesday. How's everybody's Wednesday going so far? We took a brief pause for SaaStr Europa, and we're so excited to be back. So thanks everybody for joining us. Was anyone in London with us? Had a great time. Obviously Marcus was our speaker today. Alright, let's go ahead and kick things off. So welcome everybody again to Workshop Wednesday. Hopefully you've been here before, but if this is your first Workshop Wednesday, we are here every Wednesday at 10 AM Pacific. To bring some expertise and give you the opportunity to answer some— get some questions answered and some good interaction. So super excited to be back this week with Markus Lang. He was a very popular session that we had at SAS for Europa, and so we asked him to come and bring his insights and content to our broader community. Markus, thanks so much for joining us.

Pleasure to be here. Thanks so much for the opportunity.

So Marcus is going to take us through his top 10 tips, or his golden rules, as he calls them, scaling from 0 to 100 employees. So some key things to keep in mind across functions and key areas. So some great tips. We'll also have plenty of time, of course, for your questions. So get them ready. Please drop them in the chat so we can queue you up, and then we will encourage you to come off camera and ask them live. All right, before, of course, we love to start with a few warm-up questions for our speakers. So we've got some questions for Marcus this morning to get to know him a little better before he tunes into his content. So Marcus, what is one of your investments that you or the firm made in the past year that you're really excited about?

Oh, um, great question. There's, there's quite many. We, we closed our fourth fund end of last year and did like a couple of deals since then. One company I'm particularly excited about is Sona, um, getsona.com. It's a workforce management software for frontline businesses. Why am I excited? I mean, one, and that's the boring answer that every other stage VC gives you, because it's just perfect founder-market fit. It's one of the best teams I've ever worked with. Their speed of execution, quality of execution is just insane. But then secondly, I really love to back businesses my fellow VCs consider boring. A lot of deals I've done over the last 10 years were like, I don't know, in procurement, in education, in workforce management, digitizing care homes, digitizing supply chains, right? This like, you know, long-tail businesses that were not yet digitized. And that's personally my thesis. I'd say that as a fund, yes, you have to back frontier tech, but you also— and that is also the exciting part around SaaS, right? You can build great SaaS businesses in many, many areas. And I like these big legacy industries the most.

Great, thank you. Next question, what has most surprised you about venture capital this year?

That's a tricky one. I'd say like how quickly markets can shift. That's a bit of a, like, you know, fortune cookie wisdom and everybody has been around and raised funds or like been on the market has seen this over the last 2 years, but I've had deals where like, I don't know, 2 years ago, Growth funds would write a $150 million check after 36 hours of due diligence, waiving their voting rights to win the deal. And then, you know, now the company needs a couple of million in bridge and to get like $3 million from the very same fund took like 12 weeks of due diligence and turning the company upside down. So I think it's really exciting. 'cause that might be tough, but also means that the pendulum can swing in the other direction very quickly. So the velocity in the market and how big asset allocators think about venture is really surprising even after all those years, yeah.

Yeah, different times for sure, but exciting times as well. So what are you most excited about in the next 12 months as you're looking forward?

I think there's, It's again, and as you've probably heard a couple of times before, but as we invest super early, right? Usually like, you know, teams of 5, 10, maybe 15 people. It's really even more than for other funds about the team, what they've done before, how they work together, and this founder-market fit. And what we have seen that while, you know, some of our growth-stage companies struggle to retain talent, many of those companies, many of those very experienced people start new gigs, right? Now, and I'm really excited to work with them and back them and see the next generation of great companies.

Great. Awesome. All right. Won't take up any more of your time. Without further ado, please jump into your content. Thanks again for joining us, everyone. Welcome, Markus.

Cool. Thanks. Thanks so much, Caitlin. Yeah. Thanks everybody for taking the time and for listening. Please put in your questions at all times. That talk at SaaStr Europe was meant to be highly technical, right? So everything that is in there, obviously, if you were to package the path from 0 to 100 people, the first like 3, 4 years of your company into 3 slides and 10 tips, it's obviously to some extent superficial and to some extent like catchphrases. So please take them with a grain of salt, but I think they, they should provide you with a good perspective. That's caveat number one, right? And caveat number two is we're European fund. We started off in Vienna, Austria of all places. And over the last like 10, 15 years, grew to pan-European fund with offices in Munich, London, Paris, Berlin, and so on and so forth. But it's a very European perspective. While I think, 90% of this is true globally, especially when it comes to some benchmarks. Other parts of the world might look at what is great at this point in time through a slightly different lens, just as a second caveat. Cool. Maybe two slides to warm up so that we speak about the same thing. There's 464,000 definitions about like, you know, early-stage venture and what, like, Building an early-stage company means and how you define product-market fit. It tries to really break it down in a very technical way, right? You have an idea that's minus 2 on that scale. And you know, you think about that idea and you start iterating on that idea and you go from minus 2 to minus 1 and you start working on that idea. But more often than not, you go back to minus 2 because you talk to somebody about the idea and you realize quickly, okay, this exists. So nobody's willing to pay for it. All your friends tell you it's a dumb idea and you shouldn't do it, or you Google it and see like, you know, there's 16 competitors out there. But then there's this one idea that keeps you awake at night where you start like, you know, talking to experts, potential customers, your friends, and like, you know, most people tell you, hey, it's a great idea, you should start working on this. Yes, the world would need this, right? And then there's this point of almost no return. I mean, obviously there's always a return, but like where you commit, right? Where you quit your former job, where you like after university decide not to work in consulting, but like, you know, start a company, this point of commitment. And then I'd say very like, you know, superficially speaking in early stage company building, there's phases from 0 to 1, from 1 to 2, and from 1 to 3 in that graph, right? From 0 to 1 is basically when you have nothing and you build a first MVP, right? MVP for me is a product that fulfills the main reason it's supposed to fulfill. If you build a car, the car drives from A to B. It might not look nice, it might not have like, you know, a good audio, air condition, might not even be a windshield, but it drives you from A to B. Building that MVP. From 1 to 2, finding product market fit, i.e., building a car that works and where like a first group of people is willing to pay money for, right? Processes might not be scalable, process might look messy, car might be too expensive, but there's some people within a niche that are willing to pay money for that. And then step 3, you scale that, right? You want to build a production line and you want to be able to sell 1,000, 10,000, 100,000 cars a year. And that roughly corresponds, at least in my world, with those first 3 funding rounds, pre-seed, seed, and Series A, right? You start off at one point in time and depending on like, you know, if it's deep tech or like rather, rather like, you know, on the surface from a tech perspective, if you need 20 developers to build a prototype or if you can test stuff quickly, that might be a bit earlier, might be a bit later, but usually You start off at one point in time, you raise a pre-seed round that helps you to build that MVP and start working towards product market fit. With the seed round, you wanna achieve product market fit, full product market fit, and like, you know, give people a first indication on how, like, you know, your product could work at scale. And then with the Series A, B, C, D, you basically pour additional money on it once you've identified your growth channels. Again, roughly, I'd say the 3 headlines could be this might work, I found something, and now let's grow it. The numbers on there, again, please take them with a grain of salt. Everybody has read about 20 million pre-seed rounds and like, you know, 500 million Series A. I just thought it makes sense to give you a rough ballpark on the median capital needs and valuations that we've seen, I'd say typically pre-seed round, a million to 2 million, typical seed round, like, I don't know, 4 million, sometimes 5, 6, sometimes 2, 3, and the Series A, a large variety, 10, 20, 30 million at the corresponding valuations. I'd say ballpark, you give up 15 to 25%. And yes, I know there's a big difference between 15 and 25%, but that then probably depends on your stage, how much you raise, how big the fear of missing out of your investors is. But like what is kind of common is, yeah, across the globe is what are the assets that you bring to the table and what is unknown, right? And for the pre-seed round, you have a big vision and a strong team and some basic idea on the technology. Everything else is basically not proven yet. For the seed round, you might have like 20, 30, 40K MRR, you have a first proof of concept on your product. You have a thesis on how your business model will look like. You have a thesis on your go-to-market, but it's not proven at scale. And like, you know, when you raise a Series A, ideally you have strong unit economics, you have strong growth, and the pitch is, okay, cool. If you now put $20 million on that, we can scale that. Why did I want to open with that? Simply because I think it makes sense to have a joint understanding on like, you know, what I mean when I talk about a pre-seed or a seed round. And I'd say usually, at least in our portfolio, many of the companies that have raised the Series A, once they gear up for Series B, on average, they hit this milestone of 100 FTs. Again, it depends how sales-heavy your business model is, how technology-focused you are, but I'd say typically pre-seed company has, I don't know, 3 to 10 people. Typical seed company has 10 to 25 people. Typical Series A company has 30 to 50 people. And then with that Series A, you wanna get to a point where you like, you know, get close to 100 FTEs. And if you're honest with each other, scaling a company is damn hard, right? On average, only 1 out of 5 companies that raises some sort of external money manages to raise a Series A, i.e., manages to grow to at least, I don't know, 50, 60 people, people plus. There's funds out there that would like advocate that their graduation rate is 50, 60, 70%, which they use as a good argument why you wanna work with them. But on average, when you look at the data Crunchbase, only 1 of 5 companies that raises some money can be a business angel round, can be a pre-seed round, can be something, manages to eventually raise that Series A. And again, for SaaS to Europe, I was asked to compile very tactically 10 rules around the team, the business, and fundraising that could help you to master that transition from like, you know, a 3-people pre-seed company to a 100-people company that is like, you know, out there, has somewhat sizable revenues and ideally continues to grow. Again, it's highly subjective and there's probably 3,000 of other things you have to consider that are very specific to your industry. But again, we thought it makes sense to break it down. When we start with the with the team, first category team. 4 pieces of advice I'd like to share. Number 1, spend more time on hiring than you likely will want to. And again, maybe one thing I should have mentioned before, many of those things, and we had a great discussion at SaaStr Europe about this, many of those things, if not all of them, to most of you will sound very obvious. I 100% get that, right? Everybody has built a company before knows, yes, it's important to hire. Yes, it's important to have a good relationship to your potential investors. I get that. Very likely you won't learn a lot of new things. I've just made the experience that when running a company, and that's the one thing I did before joining Speedinvest a decade ago, when running a company, you have so many things on your plate that it's super hard to prioritize, right? Well, all of us know that as a CEO, it's important to spend a lot of time hiring the best possible people. When then your inbox is full and people ping you on WhatsApp and you have 200 emails to answer and you want to talk to customers, right? Realistically, that's the point in time where, you know, you delegate hiring, where you, like, you know, let others take over and when mistakes happen. So All those 10 tips will maybe not sound super new, but I encourage you, as many of you are entrepreneurs, to think for yourself how often you live by these guidelines, be as you get caught up in all the 400 things you have to consider as a CEO on a daily basis. So number 1, really spend more time on hiring than you likely will want to, given your full agenda. It is worth your time. The first hire is even more important. Make sure that hiring and spending time with candidates is a priority and stays a priority for you. Number 2, also nothing that is entirely new, but where people then struggle to follow through due to opportunity costs and the sunk cost bias, is to hire slow and fire fast, right? Take some time to vet your candidates. Take some time to get to know them. Make sure that like, you know, your co-founders, your key hires, spend time with them. And if you learn that it doesn't work out, take action swiftly. I think over the last 10 years, we had 50, 70, I don't know how many situations in the portfolio. And I can tell you in 69 out of 70, when people parted ways too late, the number one feedback was we should have done it much earlier. I only have— and I'm sure there's like 50 examples in the room. We discussed this in London. I only know of one case where in hindsight it was a good decision to delay the decision because it turned out differently. The vast majority The one mistake people make is that they delay the decision and then important time is lost. Number 3, your first 10 hires will shape your culture 100%, right? You found the values are important. And of course, as the CEO, as the founders, you lead by example and the values that you bring into the company go a long way, but especially when you scale to 20, 30, 40, 50 people, The 2, 3 of you can't be everywhere, right? That means the first people that you hire that, you know, will hire the next people have a particularly important role in like, you know, shaping or frankly destroying your values that you've come up with as a founder. Make it very explicit what your desired culture is and don't compromise from day one. Similar to the hire slow, fire fast piece of advice, I've never seen a single case where I or one of my founders had doubts about a cultural— like about a candidate being a cultural fit. That only got worse over time and people should have acted earlier with the benefit of hindsight. And then number 4, It's a fine line, right? So on the one hand side, not overwhelm people with like processes and have 17 OKRs and 4 feedback cycles with a team of 9 people. But as soon as you scale, reach 20, 30, 40 people, my piece of advice really would be to pick a few key processes. Like, I don't know, on the performance management side, on the goal setting side, on the feedback side, right? Don't overload your team with like, you know, a corporate-like list of like processes they have to follow, but pick the 1, 2, 3 most important ones for you. Introduce them, introduce them properly, but then also stick to them. I've seen many cases where then like, you know, founders introduced a performance management or a feedback tool, and then they were the first ones not to use that feedback tool because they were busy. Guess what? If you don't use the tool as entrepreneurs, nobody else else will, right? Start slowly, pick the tools and pick the processes you care about wisely, but once you've picked them, stick to them 100%. That's on the team side. On the business side, I'd say one thing to consider is, and that it's more of a like, you know, concept and a piece of advice. Not all revenue is created equal, right? We see this especially in fundraising. There is a difference in like, you know, selling POCs to innovation departments vs selling 2-year contracts. There is a difference between one-off contracts, between like, I don't know, integration process versus actual SaaS revenue. Pilot revenues, service revenues, right? I'm not saying this— I'm saying this partly from an investor perspective because investors will want to have a very, like, a fairly detailed overview on your different revenue sources and types. But I put it on this list mostly for you because diving deep on, like, you know, your customers and different types of revenues coming from different customers helps you to to like keep yourself and your co-founders honest when assessing a situation and to dive deep on where the company stands and where there is room for improvement. I'm not saying that you shouldn't do one-off revenues or service integration revenues, especially in the beginning. That can be a good tool, same with POCs, right? But keep in mind that like, you know, everybody on your cap table will deep dive. And for you having an honest discussion about like, you know, revenue sources and where you stand with your customers, especially in enterprise sales, can be a very helpful discussion to have amongst founders. Number 6, not a term that was around 3 years ago, but is now probably together with growth, the number one metric when it comes to fundraising and leading a company and steering your company through KPIs. That's the burn multiple. That's basically in a given period, in a month, in a quarter, in a year, how much money did you burn and how much money— and like, you know, that number you take and divide it by, like, you know, the new MRR— sorry, there's a typo— the new MRR that you've added in that period. And the concept behind it is fairly straightforward, right? If you burn a million in a quarter, that can be a lot or great, right? Depending on if in the same quarter you add $200K in revenues or $2 million in revenues. Now there's different opinions on what is a great burn multiple and it largely depends on the stage of your company. I'd say at Series A, the gold standard that like, you know, only a small percentage of companies manages to achieve is around 1. I'd say that's rare. I think for seed stage companies, 2 is also great. It depends a bit on how much like front-loaded product development you have versus sales, sales, sales. But you really wanna get your burn multiple down while keeping growth high, right? Which is exactly that fine line and super hard to navigate. But any investor will care about the burn multiple. And when it comes to the ideal profile of a company in 2024, this efficient or effective growth term is probably the most important one. And then a quick one, because I made the mistake in my previous company by myself, try to lead with data from day one. Data keeps you honest. Data is the best, if not to say the only source for for decisions, right? Or the greatest possible basis for decisions. I really think that anecdotal evidence can kill your company. I give you a personal example. My previous company, we grew over a period of 6 months, 20-25% month over month. And we were like feeling like, I don't know, tomorrow we'll be the next unicorn. And the reality is that the unit economics got worse over time, right? Because yes, We grew quickly, but costs grew even quicker. And again, that sounds like a very dumb and very obvious piece of advice, but the reality is that, you know, it takes a couple of weeks, you know, till you have that detailed cost overview. Revenues are ahead because, you know, you have, I don't know, your Stripe account connected to your phone. And in real time, you see subscriptions and you like, you know, see how the graph goes up and to the right. And only with a lag of like 6 weeks, 8 weeks, you have, you know, all the invoices and all the, like, you know, commissions that you have to pay to your sales rep and all that, like, you know, performance marketing costs. And then you suddenly come through the data and learn, yes, I've grown like 100% in a given period, but my costs went up 150% and my unit economics actually shit on my friend, right? So really take the time to define your North Star metrics, your key metrics, and then periodically from the very beginning, look at them. It's very easy to get distracted and you can learn a lot from data. Last slide, 3 pieces of advice on fundraising, obviously my home turf. Number 1, again, sounds incredibly stupid, but please have your house in order. The expectations of tier 1 investors or like all investors have changed. I think personally, that's a good thing. Happy to have a discussion about it, but you know, I've seen companies raise a pre-seed, seed, and Series A round on more or less the same deck. And everybody was so hungry to get into deals that 2, 3 years ago, Nobody gave a damn about a data room. I mean, a data room was not a thing in seed, right? You needed that maybe for a Series B round, but nobody really went deep on numbers. That's very different today. And I have one company in my portfolio, great company that is now in the process of raising really an amazing round and traction is great. We're on the brink of not being able to close the round because, you know, the potential new investor liked the team, liked the space, liked the growth, but then they wanted to dive deep into like, you know, the customer cohorts, into the P&L, wanted to understand the product in detail. And they like, you know, did not like, you know, do their accounts in a timely manner. And it took us like 3, 4 weeks of 18 hours cleaning up stuff a day. But that we were able to provide the requested data in time. And I'm personally fairly certain if we would not have been able to provide that, the round would have fallen apart. So I really advise you to, you know, yes, it's small companies in the beginning. No, you don't have a lot of resources to take care of that. And also nobody requests you to have a full-blown growth stage like, Data Room, but your core numbers, your core KPIs, keep them updated, work with your accountant, have your house in order. Otherwise, like, you know, you will have a tough time fundraising even though your product might be great. Number 9, again, sounds very obvious, but even like in our portfolio, there's founders where we have to bite hard to make them listen. Fundraising essentially is key account management. And there's still a fair amount of founders out there that approach fundraising very transactional, as in like, okay, now I need money. I go out, run a 6-week process, ideally get a term sheet, sign the round, and then luckily I don't have to talk to investors for 18 months. And while I understand that time is limited, and while I understand that, you know, As a founder, you have like, you know, many, many things to take care of. The best companies out there, at least one founder manages to build that pipeline and keep potential investors for the next round informed and add them to like, you know, their Excel over a course of like 1, 2 years, they build a relationship. And then when they go out and fundraise, It's really then a swift process because, you know, they already have 30, 40, 50 potential investors in the Excel. They've met them once or twice at an event over coffee for advice, and then really just send out the data and they simply can run a much leaner, faster process during fundraising. And also investors— there's this saying that investors invest in lines, not in dots. The bigger the rounds are, the more people want to build a relationship, want to get to know you, want to see how you do over time. So reaching out to people early, keep them informed. It can be really twice a year, right? Quick catch-up, meeting at an event, quick email, whatnot. But building a relationship really makes a ton of sense. And then the final one, and then I shut up. You raise round 1 on the promise and number 2 on the progress. What does it mean? If you're a good storyteller, there is no hard metrics you have to show for your pre-seed round, right? You have a big vision. We had this a couple of slides earlier. You have a big vision, you have a strong team, and that is what investors back, right? If you manage to sell the story. But 18 months later, when you raise a seed round, while you still have to be able to tell a convincing story. People will see numbers, right? And on customer acquisition costs, there is limited— there are limited storytelling possibilities. Your customer acquisition costs are what they are, and your revenue is what it is, and your growth rate is what it is, and your burn multiple is what it is, right? So there's only so much you can do. Yes, a bit of storytelling can help, But where I'm trying to get is that I advise to raise as late as possible and as early as needed, which means that especially in the very beginning, it's about you. It's about you defining the product. It's about you getting clarity on the problem, coming up with the first mockup of your product, building the first wireframes, right? Even if you have money in the bank account, it doesn't necessarily help you to act faster. So there are situations where it makes sense, especially during initial customer development and the exploration phase, to wait. But then there's this point in time where you need cash to accelerate, and that's probably the point in time where you want to go out. And especially in the current market environment, final piece of advice, I'd raise rather more. Of course, the question is, are you able to? Is there enough interest? But if you can, I think 2 years ago, the typical pre-seed round lasted for 12 to 15 months, and then people wanted to raise a second round of funding shortly thereafter. I think right now this is at least 18 months. In some cases, I've even seen pre-seed rounds of 24 months, because again, you raise that round on the promise. And if you have a complex product, it's probably better to have— to accept slightly higher dilution and in exchange get more time to build and prove so that you're not stuck. In the middle. Yeah, that's pretty much it. On many of the KPIs, we've done a bit of a cheat sheet blog post. If you have any questions, feel free to ask now, send an email. I hope that was somewhat helpful. Again, it's a 3-year journey packaged into 3 slides. So of course, it's superficial at the same time. We've backed roughly 70 SaaS companies. So I'd say there are some transferable learnings, and I hope one or another idea sparked some thoughts for you. Thanks so much.

Hey, Markus, it's Jason M. Lemkin. Can I kick off with maybe a question and a half? Sure. I think maybe folks will understand this more toward the end of the year, but I still think one of the most confusing topics in fundraising is efficiency. If you have a top decile company today, right? Not everyone's struggling. Some folks are doing well. You talked about the scheduling company when you started. If you're growing from 1 to 5 in a year, 1 to 10, if you're triple, triple, double doubling or better, do you see that VCs really care about how efficient you are?

Less so in the US.

Yeah.

But even in the US more than 2 years ago and significantly more all across Europe. I think if you're like, as long as you grow quickly and I think you mentioned 1:5, which is really stellar growth, right? It's probably less of a concern, especially at this stage, because like, you know, around an A, people are willing to accept that a lot of product development needs to happen, which like, you know, usually means burn multiple goes up. But also for those companies, at least at B, and now had a Series B, the company grew from like, you know, 3-point-something to almost 13, and efficiency was a thing for, like, you know, both European and US investors. And I'd say 2 years ago, nobody would have cared at all. So yes, I think you can offset a higher burn multiple with high growth, but I think only so far. And the later the round is, the more people care about efficiency, I'd say. But I mean, what's your perspective on— on that, right? I mean, it's—

I want to make sure I ask you the follow-up question. My perspective is that there is much less sensitivity to burn unless it's crazy, if you're growing like a weed, and that confuses the discussion. I actually think what's happening in the markets today is the big funds actually have fewer and fewer opportunities to invest in. There's fewer breakout companies. And so actually what I think is happening, which is confusing, is they're actually flooding a smaller number of companies with capital because there aren't as many seeming unicorns. And while everyone would prefer they were profitable, I just don't think larger funds care because I feel like there's so few folks that are on the IPO trajectory today that that they don't— at a practical level, it's not that important. And that's what I see tactically. So I think strategically, founders need to be wary about VC advice, which is more focused on their existing portfolio. Like, if your existing portfolio has fallen out of top decile growth, the message from VCs is, is make the money count, make the money count. And VCs have so many companies that have fallen out of top decile growth that that advice on Twitter and LinkedIn is overwhelming. It's confusing to founders because you're getting two sets of advice to the existing portfolio. And then the reality that if you meet the bar, this is just my experience. If you meet the bar today, which is higher, there is so much capital that they don't have the luxury of caring. That's just why I think it's confusing. I more asked your opinion. You asked my opinion.

Yeah, yeah, yeah, yeah. I'm just, yeah. I mean, look, I think if you're really growing like weed, you're 100% right. But I like, even for really great companies with great follow-on investors, with great like US brand names, the number one topic of the first board meeting is again, efficiency. Wouldn't it be wiser to grow only 3x instead of 4.5, but in exchange not burn so much money? So I agree with you that again, you can, I think you can offset efficiency with high growth, but I think it's just much more a topic than, like, you know, in the past. Yeah.

And maybe the second question, which is maybe even more important tactically for this for founders to get your thoughts on. So many founders ask some version of this question. Do I get a pass on growth because I'm profitable? Is it okay to be— instead of growing 100% at whatever, $2 million, $4 million, pick your number, right? Instead of growing 100%, is it okay to grow 50% or 40% because I'm burning nothing? Is it okay to grow 50% instead of 100% because I'm not burning $3 million a month, I'm burning nothing? This is a question that I get constantly, and I blame Twitter. And can you distill that down across your— are Series A and B VCs giving founders a pass on growth? On outsized growth if there's high efficiency?

I'd say no.

Yeah, no fucking way, right?

There's no fucking way.

No way. Not even 1%. Not even 1%.

Because again, I think what has changed is that it's not growth at all costs. And coming back to the previous example, we were discussing growing 3.2 times instead of 4.5 times, and in exchange burn slightly less capital. I think those discussions happen, but the number one thing, like any VC, I think, irrespectively of the geography, wants to see is exponential growth, right? Because this is the number one reason why you underwrite the investment, that there's a path to defining a category. There's a path to $100 million. Like, I don't know, depends on the fund, what they would give out. But the unfair thing is that I feel many growth funds expect similar growth than 2 years ago, but significantly less burn and better efficiency metrics. But I still say even today, even in this fairly conservative market, maybe Europe even more conservative than the US, growth is still the most important thing.

Yeah, for sure. Yeah, I mean, all the Bessemer and Meritech and other analysis kind of talk about the 2-to-1 ratio, that growth is twice as important as efficiency. But, um, anyway, I just want to get your— it sounds like you see the same thing across more companies. I just think what founders miss is that, look, the bottom line is the whole point of a venture investment is to produce an IPO. They don't all have to IPO, right? In fact, only a handful But there's, at an existential level, you can't make money in venture without IPOs. And what does it take to IPO? It takes getting to $200 million in revenue, growing 50% in a decade. It used to be $100 million. Now it's $200 million plus, growing 50%. Now you have a decade. You can have a rough, you certainly can have a rough quarter or two, or even a year from hell, but you can't lower growth. If growth falls too far, just put a, do a spreadsheet. You'll never get there.

Right.

You'll never get to 50% growth at $200 million if your growth is 50% at $10 million but profitable. That, that could lead to a lot of great M&A exits, right? But VCs can't fund that just because times are harder for some, right? For most, right? They just can't.

It still might, it still might happen, but you can't invest based on that, right?

You can't.

You just might be happy. Yeah, you still might be happy with a company that grows 100% and then eventually turns out to be a great M&A exit and might be life-changing for the founders. But at the time of investment, you have to believe exactly what you said. Nothing, nothing to add. I mean, yeah.

Yeah. And I just see so many founders sometimes even get angry these days. They're like, why, why won't you take the meeting? Why isn't this? Why isn't that? It's just, it's just beyond. It's just a simple math. It's like you've got to— you at least have to have the opportunity to be on that IPO track at day of investment. If you fall off it, and don't fail, that may be fine, right? For a VC, like, it's not— no one's going to get mad at you if you end up growing 50% at $10 million, right? No one's going to be mad. But if at the day of investment you're not on that IPO track, only the naive will— I mean, only in weird situations will a VC do it, especially Series A. They just won't do it because it just doesn't get there, right?

Yeah, 100%.

All right, thanks for— thanks for—

thanks for helping there. Yeah, no, no, I think you could have hosted that, given your experience in that field, right? But thanks for joining.

The US perspective. Thanks, Jason. All right, let's pull somebody else up. We've got a few more questions coming through, and I know Markus has a hard stop. Kate, you had a question. I'm going to pull you up here, or Mike Rendon, excuse me. Do you want to ask your question live?

There you go.

Oh, we can't hear you, Mike.

All right, can you hear me now?

Yes.

All right, very good. Well, thanks for having me. I appreciate the chance to ask the question. Small company growing and getting to the point now where every single day I'm getting calls, emails, people calling and saying they want to buy the company. Oh, I have a bunch of money to invest. And it's just, you know, nice to hear that, but kind of annoying in a way because I don't have time to figure out which companies are valid and who's just a guy with a bunch of money that wants to invest. As a founder, I don't want to take money from just some guy that, you know, maybe sold off a business and has a few million to spend or whatever. I really want to work with somebody that's going to bring value to this. So how do we as founders weed out all those kind of offers and find the valuable companies that really do have value to bring to the investment?

Well, a great, great question. And, and, and, and I'd say not a super straightforward answer. I mean, there's— I, I, my biggest piece of advice is I'd reach out to fellow founders that, that like, you know, have had investors on the cap table that have spent the last decade either in venture or like somebody in your network whom you trust, who has a good overview on the industry, right? Because it takes a couple of years to really understand who is out there. I think once you've narrowed it down, there's like multiple ways you can ask for references. You can like, I don't know, there's online tools where you can like rate your investor like in an anonymous way and then other founders can like, you know, look it up. But I think if you are like in the very beginning, I'd say talk to fellow founders and find somebody within like, you know, your network whom you trust, who understands that VC fundraising game. I think there's no way around it. I'd say if you have never raised money, if you have never done this, I'd say get somebody to support you. Ideally somebody you trust. And then once you've narrowed it down to a handful of people, I think the number one thing I always do is take which companies did they back and reach out to the founders, ask for— and just ask for their experience and make sure that like, you know, Do your own due diligence. I think that works in both directions, right? Founders are used to answering questions from investors, but I think it should be the other way around as well. The first thing we did at Speedinvest is to build a pitch deck with which we go to the founders we wanna work with. I mean, that's industry standard by now, but like 10 years ago it wasn't. We really like, you know, take 10 minutes to explain founders your positioning, why you do what you do, how you think you can help, which network you bring to the table, what's your thesis on the industry. And I think good investors investors are able to do that. But again, I think so that's the second step. The first step is like really getting a crash course by somebody you trust, fellow founder, somebody who has worked with VCs. I'm sorry, I interrupted myself. Sorry.

Very good.

Yeah.

Thank you. And real quick, Jason, for you, it's, you know, running Saastr, we've been there and, you know, love going to the Sessions, but is there some kind of tool that you guys have or someone else has that lists out all the top investment firms and all that kind of stuff?

I'll give you—

listen, I, I don't know. I, I think Mark is at a good point. I, I think you're making it a little complicated. Here's my advice. I wrote this post years ago. I've updated it. Um, if you're in a position— I mean, you're doing millions in revenue, right? And you've got a good industry position. That's why you're getting getting these inbounds, right? You're, you're pro— that's my, right? It just happens. If you're in B2B, even if you're not in the hottest category, when you cross $5 or $6 million, $10 million, especially $10 million, if you're starting to be known, people will start to reach out to you. Don't overanalyze it. Take one a week. It's, there's 52 weeks in a year. Just pick, use your life experience. If the email is dumb, skip it. If you're not sure you want, if, if, if Marcus and Jason reach out to you and, and the bottom of our email says junior analyst, and you're not sure you want to meet with the junior analyst, don't. If it says senior partner and you're more whatever, but just use it the same way you judge any inbound. See if it's great and just use your experience and just do one. After 10 of these, you'll know. And junior people can be good.

I'm not—

I don't mean to— I've written about it. Junior people often source the best deals. So, the meta-learning is don't skip a week. Just if it's new to you, are you bootstrapped? Is that why? Are you bootstrapped?

That's right.

So, it's like a whole new world to bootstrap people. You're not cool. You're not cool. And then what happens— Ben Chestnut said this at SaaS Annual 2 years ago. He's like, I was only able to raise money when I finally didn't need money. By the time I didn't need money at Mailchimp, I was overwhelmed with— they were camping at my office in Atlanta. I just didn't need them anymore. And so folks that have even raised a seed round or come out of an accelerator or got some money from Speed Invest, they kind of know this world. It's like totally foreign to you, right? So just meet one a week. Don't stress it. After 5 or 6 or 7, You'll learn. And just— and when they ask you for 10,000 follow-up meetings, just be really nice and just say you don't have time. Like, you can't let that meeting turn into 10 more follow-up meetings, but take one, give it 45 minutes, make— add an extra hour to your week and just force yourself to have a quota one a week and don't overanalyze. You'll know after 5 or 6.

Great advice, guys.

I think it's really good advice.

Yes. Yeah, it's great. Thank you, Marcus. Do you have time for one more question if I ask you rapid fire? All right, Chris, I'm going to ask your question for you just to keep things moving. But I thought it was a good one. So Chris says they're a SaaS B2B startup of 10 people, including 4 co-founders. What would be 3 things the CEO should not do in this stage?

The CEO should not do at this stage, I mean, it's tricky to say without knowing anything about the company. I think I'd make sure to, to not focus on like scaling and doing things that scale too early. I'd like make sure to make my initial customers happy and build out product with them. I also would not go to too many events. That's I think a pitfall you can, you can end up very quickly— there's a lot of shitty events, there's a few good ones where you absolutely should be, where you meet the right people, where you can, like, you know, great— can get great advice. But there's also a lot of mediocrity that can steal a lot of your, your, your, your time. And similarly, I think I would not, I would not take random meetings quickly. I know so many people, once they've they have like initial success, a lot of people reach out from like outsourcing agencies to headhunters to I don't know what. And I really would prioritize and like, you know, start— learn to ignore people and focus on making your customers happy, build the best possible product and focus on that. Even though it's a very broad question, maybe Jason has something to add.

Loaded question, yeah. Chris, I don't know if you have anything.

Thanks.

Awesome. Well, Marcus, um, thank you so much. This was great. We had people joining us from London, Amsterdam, India, um, California, and Michigan, lots of other places. So always love seeing the touch points of how we're connecting folks from all over the world. For you to share your lessons learned. We appreciate it. This kind of came up on questions with Jason M. Lemkin and Marcus Brownlee, but next week back here we have Logan Bartlett. He's the managing director at Redpoint Ventures. They're going to be giving their overview of kind of in the market and what they're seeing from Redpoint's perspective. So be sure to come back to share and hear more learnings. Thanks everyone, and we will see you next week.

Thank you.