Female Foundry Week 103: All eyes on family offices. Value vs price. The sweet spot. Female Foundry x TechChill Riga.
Welcome to The Week 103, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
UK biotech start-up baseimmune, co-founded by Ariane Gomes, lands a $14m Seed round led by MSD Global Health Innovation Fund; Scottish Wobble Genomics, co-founded by Nicola Broughton, raises a €10m Series A round led by Mercia Ventures and BGF to accelerate the new wave of biotechnology innovations; Paris-based Bene Bono, co-founded by Claire Laurent, fetches a €10m Series A round led by AXA Venture Partners to accelerate the fight against food waste; Amsterdam-based Carbon Equity, co-founded by Jacqueline van den Ende, Lara Koole and Liza Rubinstein Malamud raises €100m for a climate tech fund of funds.
Spotlight
All eyes on family offices.
With traditional institutional LPs reluctant to allocate more capital into alternative asset classes in the current high-interest rate environment, family offices see a new race among venture capital and private equity firms wanting to get access to their capital. Several emerging VC fund managers told me as part of the Female Foundry State of Gender Diversity report that HNWIs and family offices were currently their preferred Limited Partner option.
According to the report released this week, the number of family offices in the world has tripled (!) since 2019. There are currently over 4,500 family offices worldwide, about 40% of them are based in North America - check who the 20 biggest ones are here.
It is also estimated that family offices across the world currently manage about $6 trillion of assets. That is huge. - To give you a perspective, if all those assets were turned into cash, $6 trillion would be enough to cover the annual budgets of the UK, France, Spain, Italy and Germany combined.
The size of wealth captured by HNWIs and family offices today is a reflection of a wider trend where the pandemic, high interest rates and high inflation have all been driving more concentration of wealth globally. The number of billionaires in the world (there are about 2,600 of them) and the number of people in the world worth $100 million or more (90,000 of them) is also growing.
All this might offer some good news for VCs who are desperately looking for funding - and there are a few of them. It looks like not only is the number of family offices growing, but their appetite for alternative investments might be re-bounding too.
The freshly-released results of the KKR survey state that family offices will have 52% of their portfolios invested in alternative investments this year, up from 42% in 2022. The trend is driven largely by the opportunities due to the lack of liquidity across private markets. Since family offices have longer time horizons than other investors, preferring assets that will grow over multiple generations, they can invest in private business and alternatives that pay a premium for more patient capital. But the competition to get access to family offices’ capital is also heating up.
Blackstone, KKR and Carlyle have all been aggressively expanding their teams, funding events and building products catering specifically to family offices in recent months. Blackstone, for example, which has served wealthy individuals for decades through its Private Wealth Solutions business, is ramping up its Private Capital Group, which serves family offices, billionaires and the largest, most sophisticated individual investors. That team has doubled to 25 people over the past few years.
Fundraising
Value vs price.
Founders often ask me about the right valuation for their startup, and my response usually is, "Well, it depends." Remember: value does not equal price. Contrary to the misconception that your business is worth only what a buyer is willing to pay for it, as a founder, you have a considerable influence on your startups’ value. The key lies in preparing, presenting, and positioning your business to make it highly attractive to potential investors. As the Oracle of Omaha, Warren Buffet, put it eloquently: ‘Price is what you pay, value is what you get." Why is it important? As much as there are multiple methods to arrive at the price (e.g. as part of a funding round) - many VCs will also have their equity ownership targets - value is more nuanced and based intrinsically on the lack of transparency between a seller and a buyer.
For an investor, the aim is to pay an amount that reflects the company's true value or less. On the other hand, as a founder, your goal is to raise capital at the highest valuation possible. This information asymmetry is where the negotiation opportunity lies. Now, as much as due diligence process is meant to bridge the information gap, it is hugely in the hands of a founder to understand and showcase your business's value drivers effectively.
Analysis
The sweet spot.
Generally, it is assumed that around 2% of all startups will be acquired at some point in their development process. But what are the current chances for a startup to be acquired at each funding stage? Our partner, Carta, recently analysed 553 startups that were acquired in 2023 (please note this data is US-only) to get a clearer picture of acquisition activity among startups. In 2023, only 0.7% of all startups (over 20,000) were acquired at the Pre-Seed stage, 1.7% at the Seed stage, 2.5% at the Series A stage, 3.1% at the Series B stage, 2.6% at the Series C stage, and 2.2% at the Series D stage. Interestingly, contrary to the common belief that only Series C startups are the most valuable acquisition targets, the data suggests that Series B may actually represent the perfect equilibrium between value and price (as mentioned above), based on proven business models, technology, and potential for the continued high growth.
Community
Female Foundry x TechChill Riga
Female Foundry is an official partner of TechChill Riga taking place on the 16-17th April 2024 in Riga and we have 2x €179 General Passes to give away to the Female Foundry community!
To enter the FREE ticket draw, submit your interest below. Deadline: March 15, 10pm GMT. T&C of TechChill Riga apply. I will announce the winners here next Sunday. Good luck!
Ticket draw: START Summit | March 21-22nd | St. Gallen, Switzerland
The complimentary ticket winners are: Ilona (HcKd0) and Claire (JKvrG). I will get in touch with you shortly. You can view the draw here.
Programms
Zinc is closing its application process next week for its next impact venture builder cohort. Apart from providing £13,200 stipend to each founder for 6 months, Zinc provides operational support and access to its network. If you are an early-stage impact founder - apply now or refer someone you know.
Hiring
This week hiring:
GlycanAge ➯ Founders Associate | Rivero ➯ B2B SaaS Sales & Business Development | Planet A Foods ➯ Founders Associate.
See more jobs on the Female Foundry Job Board.
That’s it for this week. See you next weekend!
Agata
Written by Agata Leliwa Nowicka, an investor, a startup adviser, a two-time entrepreneur, and a founder of Female Foundry based in London.
Suggestions? Drop me an email.
Check femalefoundry.co for more fundraising tools and investor content. View other Female Foundry articles.