Female Foundry Week 106: House of cards. Customers vs users. European banks eye AI startups. Female Foundry x Paris Blockchain Week.
Welcome to The Week 106, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
London-based Belong, founded by Avion Gray and Samantha Rosenberg, picks up a £2.95m Pre-Seed round for its wealth-building platform for millennials; Gothenburg-based DREV, co-founded by Arelys Sosa, raises a €700k Pre-Seed round led by Unconventional Ventures for its contamination control technology. German watttron, co-founded by Michaela Wachtel, lands a €12m Series B round led by the Circular Innovation Fund for its sustainable packaging startup; Porto-based healtech startup Tonic App, co-founded by Daniela Seixas, raises a €10.85m Series A, co-led by BlueCrow Capital and Iberis Capital; Paris-based medtech startup Metyos, co-founded by Olga Chashchina, picks up a €2.3m Seed round led by Cenitz for its chronic-pain technology.
Spotlight
House of cards.
With the prevailing dearth of funding within European startup ecosystem, the recently released data shows that those startups that are still able to raise debt financing, are increasingly entering into more complex structures.
In 2023, the volume of convertible debt issued to startups hit a record $2.5bn, up from $1.7bn in 2022, marking a significant power shift towards investors. But as deals become more complex, they also offer investors more upside and create more risks for founders. This can be seen across all stages.
I spoke recently with a few investors who all said that they saw debt deals become more and more complex, even at the early stages - Bye, bye simple SAFE? For early stage startups, convertibles now include clauses that grant investors more equity if profit margins drop below a certain level or if, for example, revenue targets are not achieved within certain timeline. At the growth stage, deals are being structured to incentivise founders to exit, for example, by having interest rates accrue over time.
At the early-stages, when business risks are inherently high, complex debt structures might deter future investors trying to navigate the terms, making it more difficult for startups to raise subsequent funding rounds. ➯ Read more.
Fundraising
Customers vs users.
It has been a great week - I spoke with a few Pre-Seed founders this week, including one that thought she was building a B2C tax-management app. Well, she thought.. but a few minutes into our conversation, it became clear that customers in her B2C model.. were not Cs but Bs - if it all sounds a bit confusing, well, it’s because it often is.
In some cases, it might actually be beneficial for you to shift the product cost (your revenue) away from the user to someone else with greater incentives (and deeper pockets) to drive a higher adoption rate for your product. The simplest example is tuition fees: parents (customers), for different reasons, want their children to go to school, but it is their children (users) who attend it. From the startup world, many B2B2C businesses operate in this dynamic. Take Slack, for example: a company (customer) might pay for a premium account, but it is actually their employees who use it. Other examples include Airbnb (Users: Travellers - Customers: Property owners), Instagram (Users: Followers on the platform - Customers: Brands, influencers, and businesses that pay for sponsored posts).
Always look for opportunities to monetise the value you create higher up in the spending power chain. If you do end up having two distinct entities for users and customers, make sure you also consider both the user and the customer when designing (and measuring) your journeys and feedback. But if in doubt, always prioritise making your customers happy.
Analysis
European banks eye AI startups.
Despite a downturn in overall venture capital activity, increasingly, European banks are taking the lead in AI investments. The report released this week finds that the world’s largest banks collectively made 92 new investments in AI startups in 2023. While this represented a 37% decline from the previous year, European banks accounted for a significant portion, contributing to 45% of the industry’s AI investments – the highest share recorded for the region. Notably, BNP Paribas, one of the backers of Mistral AI, ranked 3rd overall in terms of deal flow, just behind the US banks - Citigroup and Morgan Stanley.
Community
Female Foundry x Paris Blockchain Week
Female Foundry is an official partner of Paris Blockchain Week taking place on the 09-11th April 2024 in Paris and we have 5x €2900+VAT Tickets to give away to the Female Foundry community!
To enter the FREE ticket draw, submit your interest below. Deadline: April 03, 10pm GMT. T&C of Paris Blockchain Week apply. I will announce the winners here next Sunday. Good luck!
Let’s meet
The Business Mastery Day - London, May 02, 2024
Healthy business means strong financial performance. Strong financial performance is all about metrics. We all agree that being able to evaluate the financial health of a company is key to making sound strategic business decisions.
To me, being able to understand financial statements and build financial models has been tremendously useful both as a startup founder and an investor.
If you are an investor or a founder looking to strengthen your understanding of how SaaS P&Ls, cohort analyses, marketing performance metrics etc. work, join me and the array of fantastic tech investors and advisers for a half-day Masterclass in London with a focus on practical and actionable insights on how to utilise financial data.
Hiring
This week hiring:
Corma ➯ Stagiaire - Bras Droit CEO | DRUID AI ➯ Enterprise Account Executive | Klimate.co ➯ Founders Associate.
See more jobs on the Female Foundry Job Board.
That’s all for this week. Enjoy the Easter weekend and see you next week!
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.