Female Foundry Week 49: Goodbye high-valuations era. How to set OKRs. Inside data room black box. Insider-led rounds land bigger checks. LPs' appetite for growth VCs drops.
Welcome to The Week 49, 2022 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In The News
Paris-based deep-tech startup Pathway, co-founded by Zuzanna Stamirowska and Claire Nouet, which helps companies to better handle streaming data, raises a €4.5m Pre-Seed round from Inovo and Market One; London-based corporate housing booking platform, AltoVita, founded by Karolina Saviova and Vivi Himmel, fetches a £7.6m Series A round co-led by VC Novum Capital Partners and Fifth Wall; Amsterdam-based Pixyle AI, co-founded by Svetlana Kordumova grabs a €1m Seed round led by South Central Ventures to boost fashion retailer sales.
Spotlight
Goodbye high-valuations era.
According to Atomico’s State of Tech in Europe report published this week, over $400bn has been erased from the value of Europe’s tech industry this year. The prices of some of the most successful private tech scaleups in Europe might have fallen as much as 50% in the last 18 months. Over the past few years, the cost of capital was kept at unsustainable levels nearing zero. However, with interest rates raising, high inflation, and the prospect of a global economic downturn, the cost of capital has significantly risen and very few companies have been left untouched by the situation - two of the most successful startups in Europe, Stripe and Klarna, have seen their valuations slashed by 28% and 85%, respectively, this year. This is the end of the high-valuations era, and with it, it’s time to remove the stigma of down rounds. Read full story ➯
Fundraising
Aiming for success with OKRs.
Regularly defining specific, ambitious goals for your startup can not only improve your team's performance and motivation but also bring the needed clarity when planning the execution roadmap for your company’s vision. But determining exactly what those goals should be and how to set them, while gathering customer feedback, releasing new product features, and fundraising, is challenging. Done well, an OKR framework can help you to identify those key objectives, decide on the most desirable results and understand your startup’s next value inflection points. Do you struggle with defining relevant metrics for your startup? This book explains them very well. Is it difficult for you to visualise what OKRs are? I recommend this article. Do you struggle prioritising overall? Read this short note from Geoff Ralston. Read full story ➯
Inside the data room black box.
You have just had a great call with an investor who asked for granular information on your traction. Now what? A well-organised data room allows you to promptly share necessary information with an investor at any point in the investment process. The mystified “room” is just a folder stored on Google Drive or Dropbox that includes files with key startup information. As creating a comprehensive range of documents takes time, I recommend that you set up a data room well ahead of kick-starting your fundraising process and keep the files up-to-date. I also recommend that until an investor issues a term sheet, you share only individual files, instead of giving access to all the data, and only when a VC investor requests them—offering access to your data prematurely might hinder investor interest—I have seen it happen! Having a well-organized data room is a must for the post-term sheet due diligence process. See this article to know which documents typically go into a data room and this one to know how to organise it. What data should you track ahead of time? Read here ➯
Analysis
Insider-led rounds land bigger checks.
Adding a fresh source of capital to a financing round in the form of a new lead investor is a valuable move and along with other benefits, provides market validation for the new share price. The preference is typically to have a new outside lead investor for every new series of preferred shares. So surely, the rise of insider-led rounds in the past months cannot be a good thing for either startups or investors? Not so easy. Interestingly, freshly-released data shows that in 2022, new financing rounds led by existing investors are almost three times the median size of non-insider-led rounds ($14.1m vs $5.5m). What does this mean to startups? What does this mean to investors? Read full story ➯
LPs’ appetite for growth VC funds drops.
The report published this week shows that almost 70% of LPs’ private markets portfolios are at the lower end of their target capital allocation and that 30% of LPs see increased exposure to lower mid-market buyouts as a way to protect themselves against current market disruption. The risk-averse mindset of LPs is also shown by the diminished appetite of LPs for venture capital - only 14% of LPs reported are planning to increase commitments to growth funds over the next twelve months, a fall of 13% since Q1, 2022. Similarly, the portion of investors planning to increase VC exposure over the next twelve months has fallen from 22% in the first half of the year to 15%. Read full story ➯
From the Community
Three Point Zero Podcast: Raising capital with angels, building early MVPs and breaking the taboos around teen health with Jas Schembri and Jo Goodall, the co-founders of Luna.
This week, I spoke with Jas Schembri and Jo Goodall, the co-founders of Luna, who recently raised a £600k Pre-Seed round from multiple angel investors (see Week 46).
In the episode, we talk about Jas’ and Jo’s mission to break taboos, raising capital from angels, and developing early MVPs to learn from users and prove traction to attract capital.
Hiring
Check Female Foundry Job Board, and join female-founded startups.
Altovita ➯ Reservations Manager | Pixyle ➯ Account Executive | Sequence ➯ Product Manager
That’s it for this week. Stay warm!
Agata
Written by Agata Nowicka, a founder of Female Foundry, a serial entrepreneur, and an investor based in London.
Suggestions? Drop me an email.
Check femalefoundry.co for more fundraising tools and investor content. View other Female Foundry articles.