Female Foundry Week 55: Tech Nation - unplugged. Retention or acquisition? Try. Fail. Learn. Repeat. CVCs are winning more deals. Rising debt appetite despite higher distress.
Welcome to The Week 55, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where female investors and founders meet.
In The News
French-German startup The Exploration Company, co-founded by Hélène Huby fetches a €40m Series A round led by EQT Ventures and Red River West to make space travel more affordable; Berlin-based XbyX – Women in Balance, founded by Peggy Peichelt and Monique Leonhardt fetches a new funding round led by ECONA AG for its menopause marketplace; Portugese healthtech startup C-mo Medical Solutions, co-founded by Alexandra Lopes and Sara Lobo, picks a €4.8m Seed round led by Boehringer Ingelheim Venture Fund to bring its cough monitoring to the market.
Highland Europe closes a milestone $1bn VC mega-fund to support high-growth European internet, mobile, and software companies with over €10m in annualised revenues, and joins DTCF and EQT Ventures that recently also announced €1bn+ funds.
Spotlight
Tech Nation - unplugged.
Tech Nation, a renowned UK accelerator that since 2010 has helped Revolut, Darktrace, Deliveroo, Zilch and many more top European startups succeed (and raise £28bn+ of funding!), lost its £12m government grant this week and will be closing its doors. The announcement comes as a huge surprise to the entire tech community, and many question the integrity of the UK government decision that just last week vowed to make the UK the “next Silicon Valley”. Meanwhile, the IMF forecasts suggest that UK is the only major economy set to shrink this year. The hugely popular Tech Nation visa scheme that helped to attract global tech talent will also be closing. Following an open tender, the grant has been allocated to Barclay’s Lab. Some question why a private bank that makes £8bn pre-tax profits needs £12m of taxpayer funding. In defence, the UK government quotes mounting pressure of cutting R&D tax credits. So as Tech Nation searchers for a new home, ..all eyes are now on Barclay’s Lab. Read full story ➯
We crossed the 5,000 subscribers mark this week and I want to say - thank you.
This is a huge achievement given no marketing budget and only word-of-mouth growth! Some stats: Today, 41% of our community are VC investors (28% of them are men, 11% angel investors), 39% founders, 12% professional services providers and 8% are hard to identify (👀). We are mainly spread across Europe, but 18% of the readers come from the U.S. Our newsletter’s open rate is a whooping 48%! - Thank you for such amazing engagement! And this is just the beginning, we have some great projects in the pipeline this year. The future is bold and bright!
Fundraising
Try. Fail. Learn. Repeat.
Getting accustomed to failure might be the best way for you to achieve success. Read it again. That’s right. There is an acrobatic skill involved in failing and picking yourself up fast without losing your focus, or motivation. Learning that skill will mean shifting your mindset from what you can lose to what you are likely to gain, and once you master it, it will set you onto a whole new level of a startup building adventure. I must have failed 1,055,674,572 times when building my two startups - probably more. See, I stopped counting, because at some point, failure became my second nature - I would actually regularly encourage it, so I could get to the answer quickly. Think about it, the efficient process of finding a product-market fit, determining your product’s price, or identifying early adopters is all about building structured feedback loops that help you to repeatedly fail. And fail fast. On that, I would recommend this book. What is your relationship with failure? Is it holding you back? Read here ➯
Customer retention or acquisition?
It’s been a long-debated founder dilemma. Where should I put my cash and time, in customer acquisition or retention? Even though cash is expensive now and it’s challenging to fundraise, most founders I talk to put their retention efforts on slow burner without giving it much thought. Which often puzzles me. Retaining your customers allows you to tap into new revenue streams, is cheaper than acquiring new ones - data shows an increase in customer retention by 5% can lead to 25% profit growth, and as the recent report points, focusing on retention can deliver as much as 30% higher ROI. But enough statistics. A company cannot grow without acquiring new customers, so it’s never really about customer retention versus customer acquisition, but rather about finding the intricate balance between both, and that starts with your understanding of what your customer is worth. Read here ➯
Analysis
CVCs are winning more deals.
Corporate Venture Capital funds might soon emerge as a winning investor category due to their widely-adopted evergreen structures. As venture capital funds compete for cash from LPs, many of whom have reconsidered their VC allocations after the fall in public equity markets, CVCs, by contrast, are currently well capitalised by their parent companies, who set budgets before the market downturn. And that’s only part of the story. With a market-wide focus on profitability, CVCs offer access to networks that VC firms often cannot match, and recognition, putting them in a competitive spot for startups. In 2022 alone, CVCs participated in 2,375 deals, worth €42.6bn, representing 21.7% of all European VC rounds—the highest annual percentage to date, and, given the 2023 context, these numbers are now likely to grow further. Read full story ➯
Rising debt appetite despite higher levels of distress.
After nearly a decade of rapid growth, private debt could be up for a rapid awakening as higher interest rates threaten companies' abilities to service their borrowing costs. Yet big-name PE firms remain bullish about their debt strategy. Just 2 weeks ago, Muzinich & Co. closed an €800m pan-European debt fund, and has already made 18 investments. In December, KKR urged its limited partners to increase their allocation to private debt, claiming that private debt funds may be better positioned to negotiate more favourable terms with borrowers, and that adequately diversified portfolios, with disciplined managers will deliver lucrative returns. Time will tell whether this upstream strategy will bring promised returns. Listen full story ➯
From the Community
European Blockchain Convention | 15-17 Feb 2023 | Barcelona
The complimentary ticket winners are: Pavlina (1aqkxD) and Mark (23ghs0). Congratulations! I will get in touch with you shortly.
Hiring
This week hiring: Daye ➯ CRM Manager | Hertility ➯ Operations Associate | Cylib ➯ Founders Associate.
For more listings, check Female Foundry Job Board.
Founder & Investor Meetups
Sunday, February 5, London ➯ TEDxLondonWomen 2023 Monday, February 6, London ➯ Female Founders Growth Launch Thursday, February 9, Paris ➯ Paris 2023 Venture Capital World Summit, Amsterdam ➯ Women in AI Gala.
That’s all for this week! See you next Saturday!
Agata
Written by Agata Leliwa Nowicka, an investor, 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.
♡
Thank you, Mariangela Cordella from Nauta Capital for sourcing our weekly meetups.