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 Saster Europa and we're so excited to be back. So thanks everybody for joining us. Was anyone in London with us at a great time? Obviously Marcus was our speaker today. All right, 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 10am 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 Marcus Lang. He was a very popular session that we had at Sasser Europa and so we asked him to come and bring his insights and content to our broader community. Marcus, 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 cue 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 bit bit 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?

Great question. There's, there's quite many. 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 sonar getsona.com it's a workforce management software for frontline businesses. Why am I excited? I mean one, and it's the boring answer that every stage receive 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. So this like you know, long tail businesses that were not yet digitized. And that's personally my, my thesis I'd say that as a fund, yes, you have to backfront your tech, but you also, and that is also the exciting part around Sasta, right? You can build great SaaS businesses in many, many areas. And I like these big legacy industries the most. Thank you.

Next question. What has most surprised you about venture capital this year?

That's a tricky one, I'd say, like how, 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 two years. But I've, I've had deals where like, I don't know, two years ago, growth funds would write 150 million check after 36 hours of due diligence, waiving their voting rights to win the deal. And then 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 because 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 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 five, 10, maybe 15, 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 found a market fit and what we have seen that while some of our growth search companies struggle to retain talent, many of those companies, many of those very experienced people starts 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, Marcus.

Cool, thanks. Thanks so much, Katyn. Yeah, thanks everybody for taking the time and for listening. Please put in your questions, like at all, all times. That talk at Sasto Europe was meant to be highly technically right? So, 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 free slides and 10 tips, it's obviously to some extent superficial and to some extent, like, you know, catchphrases. So please take them with a grain of salt. But I think they, they should provide you with a good perspective. That's, that's caveat number, number one, right? Caveat number two is the 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, 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 markets. You know, try to really break it down in a very tactical way, right? You have an idea that's minus two on that, on that scale. And you know, you think about that idea and you start iterating on that idea and you go from the minus two to minus one and you start working on that idea. But more often than not you go back to minus two 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, by the end 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, 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, I. E. 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, that is building a car that works in like your 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 three, you scale that, right? You want to build a production line and you want to be able to sell thousand, ten thousand, hundred thousand cars a year. And that roughly corresponds, at least in my world, with those first three funding rounds, Pre seed seed and series A. You start off at one point in time and depending on if it's deep tech or 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 want to, you want to achieve product market fit for product market fit and like, you know, give people a first implication on how 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 three 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 a 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 precede around a million to 2 million. Typical seed round, like I don't know, 4, 4 million, sometimes 5, 6, sometimes 2, 3. And the series a large variety, 10, 23, 30 million at the corresponding valuations, I'd say ballpark, you give up 15 to 25%. 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 what is kind of common is across the globe is what are the assets that you bring to the table and what is unknown. And for the Present round you, you have a big vision and a strong team and some basically at the end of 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 when you raise a CRSA 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, 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 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 to 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, three 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 want to get to a point where you like, you know, get, get close to 100 FTs. And if you're honest with each other, scaling a company is damn hard, right? On average only one out of five companies that raises some sort of external money manages to raise a series A, 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 56 to 70% which to use is a good argument why you want to work with them. But on average when you look at the data crunch base, only one of five companies that raises some money can be a business engine round, can be a precision round, can be something manages to eventually raise that series A. And again for SARS 2 Europe I was asked to compile very tactically 10 role around the team the business and fundraising that could help you to master that transition from a free people pre seed company to 100 people company that is out there, has somewhat settable revenues and the daily continues to grow. Again it's highly subjective and there's probably three dozens of other things you have to consider that are very specific to your industry. But again thought it makes sense to break it down when we start with the team first category team four pieces of advice I'd like to share. Number one, spend more time on hiring that then 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 Sasto Europe about this many of those things, if not all of them, most of you will sound very obvious. I 100% get that. Everybody who's 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 Speed Invest a decade ago. And running a company, you have so many things on your plate that is super hard to prioritize. Right. And while 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 of and people ping you on WhatsApp and you have 200 emails to answer and you want to talk to customers. Right. Realistically, that's then the point in time where you delegate hiring, where you 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. Yes, you get caught up in like you know, all the 400 things you have to consider as a CEO on a daily basis. So number one, really spend more time on hiring than you like 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 two, 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. Take some time to vet your candidates, take some time to get to know them, make sure that 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, 50 examples in the room. We discussed this in London. Um, I only know of one case where in hindsight it was a good decision. To delay the decision because it turned out differently. Vast majority, the one mistake people make is that that they delay the decision and then important time is lost. Number three, your first 10 hires will shape your culture 100%. Right? You founder 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 two, three of you can't be everywhere, right? That means the first people that you hire that will hire the next people have a particularly important role in 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 higher 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 four, it's a fine line, right? So on the one hand side not overwhelm people with like processes and have 17 okrs and four feedback cycles with a precedent team of nine 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, don't overload your team with a corporate list of 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 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, on the, 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 versus selling two year contracts. There is a difference between one off contracts, between like, I don't know, integration process versus actual SaaS revenue, pilot revenue, service revenues. Right. I'M not saying this, I'm I'm saying this partly from an investor perspective because investors will want to have a very like a fairly detailed overview on your 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 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 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 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 six Not a term that was around three years ago, but is now probably together with growth, the number one metric when it comes to fundraising and leading your company and steering your company through KPIs. That's the burn multiple. It'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 that number you take and divide it by the new mri. Sorry, there's a typo. The new MRI MRR that you've added in that period and the concept behind that is fairly straightforward, right? If you burn a million in a quarter, that can be a lot or great 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 it's series A. The gold standard that only a small percentage of companies manages to achieve is around 1. I'd say that's rare I think for seed stage companies. Tool is also great. It depends a bit on how much front loaded product development you have versus sales sales sales. But you really want to get your burn multiple down while keeping growth, 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 decisions 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 six months, 20, 25% month over month, and we were feeling like, I don't know, tomorrow will be the next unicorn. And the reality is that the unit economics got worse over time because, yes, we grew quickly, but costs grew even quicker. And again, that sounds like a very dump and very obvious piece of advice. But the reality is that, you know, it takes a couple of weeks, you know, till, 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, 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 leg of like six weeks, eight weeks. You have, you know that all the, all the invoices and all the, that like, you know, commissions that you have to pay to your sales rep and, and all the 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. Pardon my friend. So really take the time to define your noster 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. Three pieces of advice on fundraising. Obviously my home turf, number one. Again, sounds incredibly stupid, but please have your house in order. The expectations of T1 investors, or all investors have, 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 two, three 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, 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 the potential new investor, like the team, like the space, like the growth, but then they wanted to dive deep into the customer cohorts, into the pndl, 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 three, four weeks of 18 hours cleaning up stuff a day so 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, would have like, you know, falling 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 fund like, you know, you will have a tough time fundraising even though your product might be, might be, might be great. Number nine again, sounds very obvious, but even, even like in our portfolio there's, 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 six week process, ideally get a term sheet signed around 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 as a founder you have 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 their Excel over a course of one, two years, they build a relationship and then when they go out and fundraise, it's really then a swift process because 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, much leaner, faster process during fundraising. And also investors, there's the 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, 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, it makes a ton of sense. And then the final one and then I shut up. You raise round one on the promise and number two on the progress. What does it mean? If you're a good storyteller, there is no hard metrics you have to show for your precede round. 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 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, can help but where I'm trying to get is that I advise like 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 like you know, getting clarity on the problem, coming up with the first mock up of your of your product, building the first wireframes. Right. Even if you have money on 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 two years ago the typical pre seed round lasted for 12 to 15 months and then people wanted to raise the second round of funding shortly thereafter. I think right now this is at least 18 months. In some cases I've even seen pretty significant 24 months because again you raised it round on the 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 like 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 three year journey packaged into three slides so of course it's superficial. At the same time we've backed roughly 70 SaaS companies so. 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 Marcus, it's Jason Lemkin. Can I, can I kick off with maybe a question and a half before. I think maybe, 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. 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 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 U.S. yeah. But even in the, in the U.S. more than two years ago and significantly more all across Europe. I think if you, if you, if you like. I think if you like, as long as you grow quickly and I think you mentioned 1:1, 1 to 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 per multiple goals goes up. But also for, for those companies, at least at B and now had a series B, the company grew from, from like, you know, three point something to almost 13. And efficiency was a thing for both European and US investors. And I'd say two 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, they don't they. At a practical level, it's not that important. And that's what I see tactically. So I think strategically, founders need to be cons 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.

Right.

And then the reality that if you, if you meet the bar, this is my experience, if you meet the bar today, which is higher, there is just, 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 ask your opinion. You ask my opinion, right?

Yeah, I'm just. Yeah. I mean, look, I think if you're, if you're really growing like wheat, you're 100% right. But I like, even, even for really great companies with great, for long 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 and a half, 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 in the past.

Yeah. 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? Do I get a 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. Can you distill that down across your. Are Series A and VCs giving founders a pass on growth, on outsized growth? If there's a, if there's high efficiency, I'd say no.

Yeah, I think.

Right.

There's no way.

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

Because again, I think what, what like has changed is that like, you know this. It's not growth at all cost. And I've and I've ended coming back to the previous example, right. We were discussing growing free point two times instead of four and a half 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, why you underwrite the investment, that there's a path to defining a category. There's a path to 100 million. 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 two 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 is kind of talk about the two to one ratio, that growth is twice as important as efficiency. But 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 of. 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 a hundred 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 could lead to a lot of great M and 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 happen, but you can't invest based on that. Right? You still 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. And the accident 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 they 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 be. It's just a simple math. It's like you gotta. 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 AOPO 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. No, no, I think you could have hosted that given your experience in that image field. Right. But thanks for. 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 Marcus has a hard stop.

Gate.

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? 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 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, great, great question. And I'd say not a super straightforward answer. I mean, there's. My biggest piece of advice is I'd reach out to fellow founders that, like, you know, have had investors on the cap table that have spent the last decade either in venture or somebody in your network whom you trust, who has a good overview on the industry because it takes a couple of years to really understand who is out there. I think once you've narrowed it down, there's multiple ways you can ask for references. I don't know, there's online tools where you can rate your investor like in an anonymous way and then other founders can, 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, within like you know, your, your network whom you trust, who, who understands that VC fundraising game. I think there's no way around it. I'd say if you, if you, if you have never raised money, if you have never done this, I'd say get, get somebody to, 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'd always do is take which companies did they back and reach out to the founders. Ask for interest, ask for the experience and make sure that like, you know, you 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 speed, investors to build a pitch deck with which we go to the founders we want to work with. I mean that's industry standard by now, but like 10 years ago it wasn't. They really 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 are able to do that. But again, I think so that's the second step. The first step is really getting a crash course by somebody you trust, a fellow founder, somebody who has worked with. This is. I'm starting to repeat myself. Sorry.

Very good. Yeah, thank you. And real quick, Jason, for you, it's running Saster. We've been there and loved 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 don't know. I think Mark is at a good point. I think you're making it a little complicated. Here's my advice. I wrote this post years ago, I've updated it. 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 these inbounds, right? That's 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 Marcus and Jason reach out to you 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 your mor. Whatever. But just use it the same way you judge any inbound. See if you if it's great and just use your experience and just do one. By 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. 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.

It's like a whole new world to bootstrap people. And you're not cool. You're not cool. And then what happens? Ben Chestnut said this at Sasser Annual two years ago is 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 that 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 five or six or seven, you'll learn and just. And when they ask me 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, add an extra hour to your week and just force yourself to have a quota one a week and don't over. You'll know after five or six.

Great advice.

Guys, I think it's really good advice. Yes.

Yeah, that's great. Thank you. Marcus, do you have time for one more question if I ask 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 there a SaaS B2B startup of 10 people, including four co founders. What would be three things the CEO should not do in this stage?

The CEO should not do. A decision is 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 products 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 mediocre ideas that can steal a lot of 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 Justin has something to add.

Question? Yeah, Chris, I don't know if you have anything.

Thanks.

Awesome.

Well, Marcus, thank you so much. This is great. We have people joining us from London, Amsterdam, India, 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 and Marcus, but next week back here we have Logan Bartlett. He's the managing director at Red 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.