Female Foundry Week 64: Let's not write off unicorns (just yet). How pre-revenue valuations work. Make your board meetings count. Funding for female founders defies odds. VC valuations get a haircut.
Welcome to The Week 64, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In The News
Berlin-based Clue, co-founded by Ida Tin, raises a €7m round led by Balderton Capital for its digital family planning platform; Paris-based cybersecurity startup Sesame It, co-founded by Audrey Amédro, picks a €10m Series A round; Basque-based APlanet, co-founded by Johanna Gallo and Joana Paredes Alves, fetches a $4m round led by All Iron Ventures to integrate sustainability into business operations; Germany-based Recyda, co-founded by Vivian Loftin and Anna Zießow, raises a €1.75m Seed round led by Speedinvest, for its package recycling platform; Paris-based Inato, co-founded by Liz Beatty, bags a $22m Series A round led by Cathay Innovation for its clinical trials matching platform; Munich-based deepc, co-founded by Julia Moosbauer, fetches a $13m Series A round led by Sofinnova to improve diagnostics; Paris-based Iteration X, co-founded by Flora Michalon, bags a $4.7m Seed round led by Connect Ventures; Copenhagen-based Agreena, co-founded by Ida Boesen and Julie Koch Fahler, picks a €46m Series B round led by HV Capital; London-based EDITED, co-founded by Julia Fowler, bags a $15m growth round led by Delta-v Capital for its AI-driven merchandising experience platform.
Spotlight
Let's not write off unicorns (just yet).
Since 2019, the number of billion-dollar, venture-backed companies in the world has grown from 223 to 704 with a combined value of $2.3trn. In recent years, becoming a unicorn became the ultimate goal for many tech startups: it symbolised arrival and prestige. The recent research, however, points that many startups wanting to get on the top of the startup ladder, might have been overstating their valuations by even as much as 50%. Those that did, are now facing tough reality. More IPOs were seen in 2021 than in any year since 2000, but the market dramatically cooled last year—and remains cold. Only 200 companies in the last decade have IPO’d for over $1bn. And among those that did go public between 2008 and 2021, only 28% have been profitable. Should we then say a farewell to the unicorn era? Not so quickly. Yes, the number of young unicorns fell this year, but it still sits well above that of the era before the 2021 frenzy. In fact, the 77 early-stage unicorns minted in 2022 are more than double the next-best year of 2018, when 38 young unicorns were created. Read full story ➯
Fundraising
How pre-revenue valuations work.
I regularly meet founders who haven’t started generating revenue and are puzzled about how to calculate their startup's valuation. Believe me, it's not an easy task, and there is never a straight answer. I would start with building a cap table capturing the future investment rounds. Applying a dilution range of 15% - 25% (don’t forget about allocating a 5-15% employee pool) will allow you to see how much dilution you can afford to take on each round and help you get a rough valuation figure. Here is a good example of a model. But that’s just part of the story. Now, it’s important to assess your startup's exit potential. Why? It will help you to understand the equity holding an investor would need to achieve their target return, and therefore whether you can meet their expectations. This means researching enterprise value-to-revenue multiples in your industry to see what your potential exit multiples could be. Here are few examples. Voila! ..Always see valuation as a ballpark figure.
Make your board meetings count.
So you’ve brought on an institutional investor for the first time, agreed to a board structure in the legal docs, and now you have directors that must be kept up to speed on your company (and who have a say on how you run it). What’s next? First, take a deep breath. Remember, your board of directors is on your side. Stay organised: always send a bullet-point agenda 2-3 days prior to the meeting together with a snapshot of the key updates (formal approvals required by the board, sign-off of previous board meeting minutes, as well as sign-off on option grants for new hires/promotions go first, followed by financials). This will not only allow everyone to be prepared, but also ensure that you don’t waste time on updates at the meeting. What is this rush for? See, instead of focusing on impressing all the outstanding people you have collected around the table, always ask for advice and help. The last point. Remember, you are the captain of this ship, and therefore how you influence the dynamic around a table, will have an impact on the effectiveness of your board - I will cover more on that in the coming weeks.
Analysis
VC valuations get a haircut.
Venture capital has become more accessible to private investors in recent years, with investment trusts and listed funds becoming available to a wider audience. Tax-efficient venture capital trusts, VCTs, used to be the primary option for early-stage private business investment, but recently, venture capital has also entered mainstream investing. While in the past months, there has been a growing focus on piling management fees and liquidity, the key question about how to value private assets and businesses has been largely overlooked. The current discounts to net asset value for the listed VC funds indicate that the market values these assets at a lower price than what the fund managers value them. What drives this discrepancy? Read full story ➯
Funding for female founders in Q1 defies odds.
Recently published data finds that there were 465 VC deals involving startups with at least one female founder that raised a combined €2.1bn in Europe, representing the first quarterly increase in dealmaking since Q2 2022. Startups with at least one female founder represented a whopping 20% of all VC deals in Europe so far in 2023 - the highest on record, while startups with only female founders have raised 1.2% of all VC capital. UK-based female-founded startups closed the biggest portion of all deals and raised the most capital in Europe, representing 137 deals totalling €1.1bn. With 79 deals totalling €323m, France took the second spot.
From the Community
Three Point Zero Podcast
Building a coding teaching platform with Amanda Maiwald, the Co-Founder of Codary.
This week, I spoke with Amanda Maiwald from Berlin-based Codary who in September last year raised a €3.5m Seed round from Speedinvest, FJ Labs, Educapital, and Sparkmind.vc for her platform that teaches kids 21st century skills through gamified and adaptive coding content (see: Week 36).
In the episode, we talk about why teaching kids coding is a future-proof business opportunity, how to manage customer acquisition when your paying customer is not your user, how Codary decided to approach their international expansion, and leveraged university grants, angel investments, and its focus on unit economics to close the latest €3.5m Seed round. Tune in!
Hiring
This week hiring:
Recyda ➯ Full Stack Developer | Inato ➯ Product Manager | deepc ➯ Sales Operations Specialist.
For more listings, check Female Foundry Job Board.
Founder & Investor Meetups
Wednesday, April 12, Online ➯ Round Table Session Paris ➯ Future of French Tech | Thursday, April 13, Berlin ➯ Infobip Connect - Tech Meetup | Friday, April 14, Amsterdam ➯ Monthly Community Drinks Berlin ➯ Ask Female Founders: with Karla Schönicke | Saturday, April 15, London ➯ Networking event.
Enjoy the Easter weekend! See you next Saturday.
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.
♡
Thank you Eden, and Mariangela Cordella from Nauta Capital for sourcing our weekly meetups.