Female Foundry Week 107: Think big, fund small. On vesting schedules. Join Female Foundry. The silver lining. Female Foundry x Dublin Tech Summit.
Welcome to The Week 107, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
UK-based Sparxell, co-founded by Silvia Vignolini, secures a $3.2m Seed round for its sustainable plant-based pigments; Finnish Onego Bio, co-founded by Maija Itkonen, fetches a $40m Series A led by NordicNinja for animal-free egg protein; Dublin-based Wellola, co-founded by Sonia Neary, picks up as €2.2m Seed round led by Elkstone for its digital patient management solution; Paris-based Pigment, co-founded by Eléonore Crespo, lands a €133m series D round led by ICONIQ Growth to redefine business planning; Stockholm-based Telness Tech, co-founded by Martina Klingvall, bags a €5m bridge round round co-led by Industrifonden and JCE Group to expand into the US.
Spotlight
Think big, fund small.
Tiger Global, a hedge fund and a prolific investor behind Spotify, Alibaba, Coinbase, Carta, Linkedin, Stripe, Facebook (the list is long) and others, closed a $2.2bn fund this week - about a third of the $6bn target it pitched to investors when it first announced the fund in 2022.
Why is it a big deal? So far, Tiger has been one of the industry’s top raisers. In 2018, it was reported that from 2007 to 2017, cumulatively, Tiger raised $12bn of capital - the highest amount of any venture backer in the world. And that was just a warm-up. In 2021, surfing on the global venture capital investment (and bitcoin aka blockchain) boom, Tiger closed its biggest ($12.7bn) fund to date - again, one of the largest funds ever raised in the venture capital industry.
What followed, however, was a spiral of overlapping unfavourable market events (including the FTX drama - Tiger invested heavily in digital assets, and the Chinese market crash - putting a spotlight on Tiger’s overexposure on China). Consequently, between the end of 2022 and mid 2023, Tiger Global saw a staggering $42bn decline in assets, eventually landing on a 62% portfolio valuation haircut (in monetary terms - one of the largest in hedge fund history).
Tiger’s bold fundraising has been a reflection of its bold culture.
In recent years, Tiger has changed the rules of the game in the venture capital industry by being founder-friendly: moving through simple due diligence with lightning speed, rarely wanting to take board seats or impose any control on companies it invested in, getting money out the door as fast as possible, and putting in high bids that fuelled valuations - rewriting historical norms of investment deal-making.
Putting it lightly, Tiger’s culture has been a crushing force that has allowed it to sweep the venture capital circle (and bag almost every unicorn it can name), often completing an investment by the time other firms got around to look at a startup’s investment deck.
Now, with a modest $2bn fund, will Tiger be able to keep up with its culture?
.. Meanwhile, this week, Andreessen Horowitz announced it was “weeks away” from closing on as much as $7bn in new funds, while Y Combinator announced it was raising $2bn in new capital.
Fundraising
On vesting schedules.
Every now and then, I get asked by founders about the best practices regarding founder vesting schedules. While you should always consider your own circumstances, chances are, if you are about to secure your first institutional investment, your backers will want to include a vesting schedule in the investment term sheet.
The concept behind the vesting schedule is really to help investors (and other co-founders) avoid a situation where a founder leaves a startup with a large equity stake. This is a big deal — having non-engaged, non-investor parties holding a significant portion of shares (let's say, 30%) can make your startup uninvestable in the future. So, vesting is designed to protect both investors and the company.
Now, what is a typical vesting schedule? It’s simple: 4-year vesting with a one year cliff. This means that if a founder leaves a company before the end of the first year, all the shares will have to be sold back to the company at no profit. After the cliff period, a percentage of the shares will ‘vest’ each month to the founder until all the shares have vested.
Now, as you can imagine, a vesting schedule is one of those term sheet items that can be negotiated depending on your circumstances so watch out on those terms: 1. Commencement date: This is usually the date of incorporation of the startup. If you are a founder who has worked on the business before then or invested significantly more resources/time in developing the company than other co-founders, an earlier starting vesting date can be considered. 2. Length of the vesting schedule: If your startup has a short vesting schedule, investors are likely to want to increase it before investment (typically, to 4 years). 3. Cliff or straight line vesting: You will want to think about whether the shares should vest only after a period of time has elapsed (cliff) or immediately (straight line) - for new founding teams, ‘no cliff’ might be hard to negotiate. 4. Frequency: Shares typically vest each month, but vesting could be quarterly or annually - here again, monthly is obviously a preferred (and more usual) option.
And remember, vesting is part of a bigger story. Unlike with public shares, the ownership story of private shares is more complicated. You first need to vest your shares (as described above), then sell or exercise options over them, and then think about your taxes!
Announcement
Join Female Foundry!
We are working on an exciting project and need additional help. Are you passionate about technology, startups, venture capital, and innovation and have great communication skills, or do you know someone who is available for the next few weeks? Please encourage them to apply by the 14th of April.
This is an 8-10 week opportunity with the possibility of a longer placement. Start date: late April. Weekly commitment: 15-25 hours. Location: London.
See the full description and application here. 👇
Analysis
The silver lining.
Global startup funding in Q1 of this year dropped by 20% compared to the previous year, marking the second-lowest point since early 2018, according to newly released data.
However, there's a silver lining: Q1 total funding also represents a 6% increase from the previous quarter. AI and healthtech attracted the most funding, with $11.4bn and $15.7bn raised, respectively. While seed funding decreased slightly (-2%), early-stage funding in general grew by 6% year over year. Despite a significant 36% decline in late-stage funding compared to the previous year, the IPO market also showed signs of life in Q1 with two successful IPOs, Astera Labs and Reddit, in March.
Community
Female Foundry x Dublin Tech Summit
Female Foundry is an official partner of Dublin Tech Summit taking place on 29–30 May 2024 in Dublin and we have 10x €335 + VAT tickets to give away to the Female Foundry community!
To enter the FREE ticket draw, submit your interest below. Deadline: April 12, 10pm GMT. T&C of DTS apply. I will announce the winners here next Sunday. Good luck!
If you would rather get tickets yourself, take advantage of a special 50% discount on all DTS tickets by using FEMFOUNDRY24 promo code.
Results Ticket draw: Paris Blockchain Week, Paris 09-11th April.
Paris Blockchain Week is starting on Tuesday, the 9th, if you still don’t have your tickets, I have 5x promo codes for a 50% discount! Just reply to this newsletter and I will send you your personalised code.
The complimentary €2900+VAT ticket winners are:
Nadia (Bu62hd), Sisi (pcDCM), Lydia (LArt28), Florence (89VOu) and Georgia (HcKd0). I will get in touch with you shortly. You can view the draw here.
Hiring
This week hiring:
Bene Bono ➯ HR & Payroll Specialist | Linio Biotech ➯ Marketing and Content Specialist | Toddl.co ➯ Business Development Intern.
See more jobs on the Female Foundry Job Board.
Founder & Investor Meetups
Tuesday, April 09, Paris ➯ Les Apéros de l'écosystème des entrepreneurs, Paris Blockchain Week, Berlin ➯ SILICON VALLEY AI STARTUP ROADSHOW & DEMO-DAY, Lisbon ➯ Demo Day - LISPOLIS IGNITE | Thursday, April 11, Paris ➯ Matinée financement des startups, Berlin ➯ Female Founders Breakfast Club@K.I.E.Z.
That’s all for this week, thanks for reading. Have a great week ahead!
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.