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Are There Still Fundraising Seasons?

No longer.  But, also, kinda, yes…  It’s complicated.  When people talk about “fundraising seasons”, they mean that there are certain times of the calendar year when you should be running your fundraising process.  And conversely, there are times of the year when you shouldn’t, because venture capitalists won’t be paying attention.  In many people’s minds, … Continue reading Are There Still Fundraising Seasons?

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No longer.  But, also, kinda, yes…  It’s complicated. 

When people talk about “fundraising seasons”, they mean that there are certain times of the calendar year when you should be running your fundraising process.  And conversely, there are times of the year when you shouldn’t, because venture capitalists won’t be paying attention. 

In many people’s minds, this is effectively the VC calendar (U.S. version):

  • February to May (Memorial Day): Do some work, issue a term sheet or two
  • May to September (Labor Day):  Rest. Hamptons, Greece, Playa Del Carmen
  • September to November (Thanksgiving): Do some work, issue term sheets
  • November to late January:  Rest. Aspen, Lake Tahoe or Courchevel

So basically that would mean that, if you wanted to raise a round,  VCs are open for business seven months out of the year. The traditional rule of thumb is that you should get a term sheet before Memorial Day, if you raise in the first part of the year, and before Thanksgiving, if you raise in the Fall. 

Cue in all the jokes about VCs being rich people who don’t really do any work…

While I secretly wish some of the above was true (!), my sense is that this perception largely dates back to older times in the venture capital industry, when VCs held all the power in the investor-founder relationship, and could impose any timetable they wanted.   But the venture world has changed dramatically over the last few years, with much stronger competition and the balance of power shifting in favor of founders. 

Today, VCs simply can’t afford to take their eye off the ball for any prolonged period of time.  There’s simply too much competition. Term sheets routinely get signed in August, during Thanksgiving weekend, during the holidays, or at any other time.  In fact, some of the emerging, hungry new firms will make a habit to pursue deals during quieter times of the year, and will consider it an edge over their more established competition.  But some of the best known firms in the industry will be very aggressive from that perspective as well. As a result, most VCs are now in near-constant hustle mode.  

An important caveat, though: the above is mostly true for startups that, rightly or wrongly, VCs perceive as very desirable or “hot”. If you have all the metrics every VC looks for, or if what you do happens to be what VCs are excited about at that moment in time, or if there’s a competitive situation emerging with multiple firms circling around… then the calendar and seasons do not really matter. 

For all other startups (meaning, the vast majority of startups), perhaps some of the old rules about seasonality still apply, to some extent.  

I’ve certainly seen “investor fatigue” creep up before the Summer and towards the end of the year.  Not because people are lazy, but because the pace is pretty relentless before that. People won’t refuse to take new meetings, but their bar will go higher in terms of what they get excited about.

Also, at least for the investors that take board seats (typically those that lead Series A, B, C…), there’s a little bit of a “end of the year” phenomenon.  Those investors typically have informal goals around annual pacing, where they will get on 2 or 3 new boards maximum every year. Towards the year (December), the risk that they have already made those 2 or 3 new investments is higher.  Here as well, their bar will go higher, if they feel that their dance card for the year is already full. 

Finally, when you raise during quieter times of the year, there’s just more stuff that can get in the way of an optimal process: 

  • Some of the firms on your wish list may engage, but others that you would have liked to work with may not be able to do so, for whatever reason, resulting in a smaller pipeline and a lower likelihood of getting several competitive term sheets
  • The VC you are working with closely at a given firm may be pushing hard to get the deal done, but his or her partners may be on vacation at one point or another and it may be harder to schedule a partner meeting 
  • Whoever you need for reference calls may not be available, or slow to move: customers, partners, existing investors, etc. 
  • Your lawyer or external accountant  may be out, or slower to respond.

None of the above is a terminal issue in and of itself.  It’s just additional friction.  

But the question becomes: Why take the risk? Why take on that additional friction of raising off-cycle? There’s not much upside to doing that.  With a little bit of planning and thinking ahead, you can easily avoid it. 

In conclusion – fundraising seasons have largely disappeared, particularly if you have great metrics.  But, pragmatically speaking, founders might as well just run their fundraising process when things are easiest from a logistical standpoint.   In most cases, that probably still means starting your fundraising process in January or February, or right after Labor Day.

(This is the sixth post in this fundraising mini-series: quick, simple ideas that I’ve used in various fundraising conversations over the years, that I’m sharing here, one by one)

Source: http://mattturck.com/seasons/

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” The Leapfunder Note is a sensible and attractive way to place capital in start-ups in the Netherlands “

” Diversification is important in angel investing. Leapfunder is a platform that allows angels to spread their investments. “

” Leapfunder investing allows you to become actively involved in a start-up, just as in classical angel investing, while taking all the hassle out of transaction execution “

” Leapfunder is ideal for investing smaller amounts in a start-up in the very early stages. Such investments can be a powerful addition to a portfolio “

” With Leapfunder you get a great opportunity to build up a diversified portfolio of start-up investments, often investors can play an active role in developing the company “

” When I saw the Leapfunder proposition I thought straight-away: this is what start-ups need. I am an entrepreneur and wish this system had been available when I started my company. “

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Pieter ter Kuile

Investor

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Wouter Kneepkens

Investor

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Ronald Bazuin

Investor

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Eric van der Maten

Investor

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Eric van Gilst

Investor

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Donald Res

Investor

Source: https://www.leapfunder.com/companies/165

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Liquid Alternatives: Watch Out For These “Potholes” (Goldman Sachs)

Theodore Enders, Global Head of Goldman Sachs Asset Management (GSAM) Strategic Advisory Solutions, says that investors are sometimes disillusioned with their investments in alternatives. However, on closer analysis, it turns out that poor implementation choices within portfolios are more often the problem rather than flawed strategies.

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Liquid Alternatives: Watch Out For These “Potholes” (Goldman Sachs)

https://platodata.net/wp-content/uploads/2020/10/liquid-alternatives-watch-out-for-these-potholes-goldman-sachs.jpg

An incisive note from Goldman Sachs Asset Management details the three pitfalls in daily liquid alts investing.

Theodore Enders, Global Head of Goldman Sachs Asset Management (GSAM) Strategic Advisory Solutions, says that investors are sometimes disillusioned with their investments in alternatives. However, on closer analysis, it turns out that poor implementation choices within portfolios are more often the problem rather than flawed strategies. (GSAM)

GSAM used the equity market drawdown triggered by the coronavirus endemic in early 2020 as a case study.

Three common implementation pitfalls

 

·        Defining the term “alternative”

GSAM defines daily liquid alternatives (DLAs) more rigidly compared with Morningstar. In the opinion of GSAM, DLAs are similar to hedge funds because they reduce portfolio risk, better manage equity drawdowns, and provide differentiated returns from both equities and fixed-income. Several funds considered as alternatives by Morningstar do not fall within the ambit of this definition.

“During the Coronacrisis drawdown, the Morningstar funds that we exclude from our stricter definition exhibited sharp performance disparity—with nearly a quarter having deeper drawdowns than the S&P 500 (-34%),” writes Enders. “Investors owning these funds and expecting better performance were likely dismayed by the outcome.”

·        Lacking strategy diversification

Investors tend to crowd into the equity long/short strategy. However, there are other DLA strategies available such as tactical trading, relative value, and event-driven.

The problem with excessive use of the equity long/short strategy is that these funds also have the highest beta to equities.

“Therefore, they may disappoint exactly when investors hope to realize the benefits of alternatives,” says Enders. “During the Coronacrisis drawdown, the median Equity Long/Short fund fell -22%, double that of all other alternative funds.”

GSAM recommends the use of a multi-strategy approach.

·        Excessive manager concentration

The third pitfall identified by GSAM is the use by investors of only one or two managers. GSM points out that though the median DLA outperformed US large blend funds during the corona crisis, the range of outcomes was nearly 3 times as wide. This shows the greater potential of return dispersion across managers.

“If an alternatives sleeve was comprised of only one or two managers, investors were likely frustrated if those managers were at the bottom end of that range.”

GSAM’s recommendation: Use multi-manager strategies or hedge fund replication strategies.

Related Story:  Retail Investors Can Use Alternative ETFs To Their Advantage

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Source: https://dailyalts.com/liquid-alternatives-watch-out-for-these-potholes-goldman-sachs/

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Supernode Global rebrands with £28m fund for mediatech start-ups

Originally written by Timothy Adler on Growth Business

Supernode Global has rebranded with its £28m venture capital fund for media technology start-ups. The rebranded VC brings together Rooks Nest Ventures and media networking community Supernode in what CEO Michael Sackler believes will give media tech start-ups access to capital, while giving investors a route to the most exciting start-ups. Merging both sides of

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 Michael Sackler, CEO of Supernode Global

Evangelical: Michael Sackler believes venture capital has underserved or even ignored media start-ups

Supernode Global has rebranded with its £28m venture capital fund for media technology start-ups.

The rebranded VC brings together Rooks Nest Ventures and media networking community Supernode in what CEO Michael Sackler believes will give media tech start-ups access to capital, while giving investors a route to the most exciting start-ups. Merging both sides of his business will create a holistic platform.

To date, the old VC side, Rooks Nest Ventures, has made 14 early stage seed investments with an average investment of £400,000.

“We’ve done a little bit more and a little bit less,” said Sackler.

Supernode Global will invest in eight companies per year.

>See also: Draper Esprit raises £110m to invest in tech companies in just three days

Portfolio companies Sackler is particularly excited about include home workout app Fiit, which is in a Series B funding round; Rap Tech Studios, a rap app development company and social media platform for hip-hop fans; and Good Human, a searchable platform for sustainable brands, pitched as a cross between Amazon and Pinterest.

Supernode Global focuses on media infrastructure, both either consumer-facing user-generated-content platforms such as Rap Tech or the under-the-bonnet technology which powers those platforms.

“Any companies that are creating the picks and shovels of the media industry,” said Sackler.

He highlights mobile 3D games engine Unity, which sits under the hood of many of today’s popular games, as the kind of business he would like to invest in.

>See also: Over 1,000 tech start-ups have gone bust since lockdown

Sackler is evangelical about the potential of media technology, arguing the sector has been underserved or even ignored by most venture capitalists.

“These companies that are starting up now are going to have a huge influence on how individuals view the world and possibly even the way society even operates. It’s undervalued and possibly even ignored. You’re consuming media all day every day on these platforms,” he said.

Having founded Rooks Nest Ventures in 2017, the former film producer and angel investor began thinking about creating a global community for mediatech startups and investors last year.

Sackler said: “We thought, let’s focus on building a community which focuses on early stage media technology start-ups where they will get access to the best minds in the business. We didn’t want it to be just a top-of-the-funnel marketing exercise for us. We want to provide every resource we can for start-ups in this space, including venture capital.”

To date, Supernode is creeping up towards 1,000 handpicked members. Although membership is open to all – something which Sackler feels is important for diversity – those members are vetted before joining.

Sackler, a scion of the philanthropic Sackler family, believes that Supernode Global can act as a flywheel, accelerating the development of mediatech.

Sackler said: “We can provide access to a whole range of different services, whether it’s access to capital or talent, partners, workshops, peer-to-peer education, offering both access to start-ups and deal flow for investors.”

Further reading

25 of the most exciting fast growing technology companies in the UK

Source: http://s17026.pcdn.co/supernode-global-rebrands-with-28m-fund-for-mediatech-start-ups-2558200/

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