Female Foundry Week 60: Riding through the SVB storm. How to burn cash and not get burnt. Is your product needed after all? How many LPs is too little and too many? TechChill Riga.
Welcome to The Week 60, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In The News
London-based Unitary, co-founded by Sasha Haco, raises a €7.4m Seed round led by Global Founders Capital, to transform content moderation; Belfast-based GenoME Diagnostics, co-founded by Laura Feeney, bags a €1.5m funding round led by Ampersand Capital Partners, for more accurate detection of ovarian cancer; Berlin-based Secfix, co-founded by Fabiola Munguia, picks a $3.8m Seed round led by Octopus Ventures, to help small and medium-sized businesses comply with cybersecurity standards; Milano-based Holifya, co-founded by Alessandra Cestaro, bags a €500k Pre-Seed round led by Growth Engine and Exor Seeds, for personalized nutrition based on a DNA test.
The UK government pledges over £360m to support tech investment in a bid to make the country a "science and technology superpower" by 2030. For reference, in January, French state bank Bpifrance pledged another €500m to deeptech startups, in February, Germany launched a €1bn fund to invest in deeptech and climate tech startups.
Spotlight
Riding through the SVB storm.
The news of Silicon Valley Bank’s problems has been rocking the venture world since the finance giant announced it had to raise $2.25 billion in stock to fund its balance sheet obligations, selling all of its available-for-sale bonds at a $1.8 billion loss, and consequently raising red flags about its liquidity position on Wednesday.
SVB, that as of the end of 2022 had $209bn of total assets and $175bn in deposits, pointed to the high cash burn rates of startups and declining VC investments, as the cause of its recent shrinking deposits. But high inflation rates (and no proper risk management in place) are the most likely causes to blame. Since the news broke on Wednesday, a wave of VC firms had been rushing to get their portfolio companies to withdraw their deposits, fuelling a further avalanche of withdrawals, that has now been stoped by the bank’s collapse. On Friday evening, the US regulator, FDIC assumed control of SVB, but many now fear that SVB may not be an isolated case. This week, crypto lender Silvergate Capital said it planned to shut down. On Thursday, the S&P 500 Financials Index slumped 4.1% — its worst day since mid-2020. Read full story ➯
Fundraising
How to burn cash and not get burnt.
In the current uncertain market conditions, you have to have a clear understanding of how to manage your cash effectively. That means know how much cash you have to cover necessary expenses and pay off debt. You need to keep track of these expenses on a regular basis. But monitoring cash is not only useful to know your runway, if done well, it should provide you with valuable insights that drive your revenue and help you determine where your cash is most valuable. A good rule of thumb is that if a business is burning cash too quickly, it risks going out of business. Do you have less than 12 months’ of runway? Read this. If a business burns cash too slowly, it may indicate a lack of growth investment. Not sure where to start when calculating your cash burn? Check this. For a more detailed approach, check this calculator. Read full story ➯
Is your product needed after all?
This week, I spoke with a founder who had seen very little organic growth after releasing her app to the public last month. I see this happen a lot. First, founders find a problem to address. Then, they come up with that amazing idea. And then, after months of product development, they realise no one wants to pay for their product. “No market need” is the top reason why startups fail. And a “nice to have” product is a hard sell that almost never pays off. At the very least you should know where your product sits at the pain point spectrum. How do you know your product is a vitamin not a cure? The answer is not always obvious. Read full story ➯
Analysis
How many LPs is too little and too many?
With sluggish VC fundraising conditions in the past months, many venture capital funds have been struggling to reach a second close. To get themselves across the finish line, some GPs have been opting for coming back to their existing LPs for more cash, while others have been counting on traction with new small ticket investors. Data from a research firm Different Funds found that the average number of LPs in funds regardless of size or fund maturity had been steadily climbing since 2016. While raising operational and administrative costs, and increasing regulatory burden to run a VC fund, are pushing many GPs to find ways to cut costs, having too few LPs can lead to those investors potentially having unhealthy influence and authority within the fund in a long term. Read full story ➯
From the Community
TechChill x Female Foundry
Female Foundry is an official partner of the TechChill in Riga taking place on the 27-28 of April and we have 2 x €199 FREE passes to give away to the Female Foundry Community!
To enter the FREE ticket draw, submit your interest below. Deadline: March 17, 10pm BST. T&C of TechChill apply. I will announce the winners here next Saturday. Good luck!
Hiring
This week hiring:
StudentFinance ➯ Partnerships Manager | Pigment ➯ Business Development Representative | Skin+Me ➯ Head of Operations
For more listings, check Female Foundry Job Board.
Founder & Investor Meetups
Monday, March 13, Berlin ➯ Women Supporting Women in Green Tech & Climate Innovation | Tuesday, March 14, Online ➯ Pitch Your Startup to an Angel Investor | Tuesday, March 14, Online ➯ First Steps towards angel investing | Wednesday, March 15, Berlin ➯ Building data-driven products | Thursday, March 16, Amsterdam ➯ Female Ventures Monthly Networking Drinks | Saturday, March 18, Paris ➯ Women of the 11th meetup.
I hope you’ve had a good week. Enjoy your 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 Eden, and Mariangela Cordella from Nauta Capital for sourcing our weekly meetups.