Female Foundry Week 66: An upside to necessity. Do you need institutional capital after all? Growth calculator. Family Offices are putting on breaks. When startups get acquired? Impact Shakers Summit.
Welcome to The Week 66, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In The News
Munich-based mbiomics GmbH, co-founded by Laura Figulla, bags a €13m Series A round led by MIG Capital to better understand the microbiome; London-based Abatable, co-founded by Maria Eugenia Filmanovic, bags a €12m Series A round led by Azora Capital for its carbon procurement platform; Glasgow-based SOLASTA Bio, co-founded by Shireen Davies, raises a £4m Pre-Series A round led by Yield Lab Europe for its nature-inspired insect control products; London-based Pai Skincare, founded by Sarah Brown, fetches a £14m Series C round led by Famille C Participations for its organic, vegan & cruelty-free cosmetics; Also London-based BeyondPlay, co-founded by Karolina Pelc, raises a €5m extension round led by Bettor Capital for its custom-build games streaming platform; Berlin-based SAIZ, co-founded by Marita Sanchez de la Cerda and Svenja Tegtmeier, picks a €1m Seed round for its fashion AI startup; London-based Little Journey, co-founded by Sophie Copley, fetches a €2.8m Seed round led by Octopus Ventures to support children undergoing healthcare procedures.
Bootstrap Europe, founded by Fatou Diagne and Stephanie Heller, raises its third venture debt fund of €130m to back sustainability startups across Europe.
Spotlight
An upside to necessity.
In 2008, as the economy melted down, Sequoia published the infamous memo entitled, ‘R.I.P. Good Times’, proclaiming to startups that ‘cuts are a must’ along with the ‘need to become cash flow positive’. 15 years later, we are all having a big déjà vu; VCs are struggling to attract LP capital, M&A is underperforming, exits and IPOs have gone over a cliff, late-stage startup funding is at its lowest level in five years, bridge rounds are on the rise - valuations are plummeting. Have we seen enough yet to call it a crisis?
John F. Kennedy once noted that the word “crisis” in Chinese is composed of two characters—one representing danger, the other opportunity. Among most successful companies known today, many were launched during crises. Disney, Netflix, AirBnB, the list is long. But before we make any Disney-like, romanticised conclusions, let’s be clear. Only the most agile, adaptable, creative and resilient companies, with clear value creation will weather this storm. This applies to both investors and startups. Will we see innovation? For sure. And for sure, on the other side, the venture ecosystem will be different. - My INSEAD professor recently published this great book on thriving in times of uncertainty.
Fundraising
Do you need institutional capital after all?
This week, I spoke with a founder who bootstrapped his company for 7 years before raising the first institutional round (of £8m). Yep. 7 years. When I asked, why did he wait for so long? He said he “wanted to focus on things that really mattered”. Admirable. I am not saying, wait for 7 years before you take on an institutional investor. Rather, have clarity of why you need an institutional investor at all.
Getting capitalised too early might encourage you to build product features that your customers do not need or simply do not want. I read a study last year stating that the scope of ‘minimal viable product’ tends to increase proportionally with the amount of money available. Just because you can afford to build a feature, does not mean that you should build it. Sure, getting an institutional investor onboard (along with their cash) might help you to grow faster, but it doesn’t guarantee it. As much as getting cash in the bank opens up new growth opportunities, you still need to create them. Most investors sound more helpful that they really are. It is still you - in the boots, on the ground, doing 99% of the work. One last thing: remember, getting an institutional investment is like shutting the door on your freedom. Now, you need to report your progress, stick to your agreed strategy, and hit the metrics (FAST and FOREVER). Are you ready? - A few tips on bootstrapping here.
Growth calculator.
I recently came across a clever tool that I thought it would be worth sharing. This interactive tool, that you might find useful to imagine your path to profitability, not only estimates how much funding your startup needs, assuming your expenses are constant and your revenue is growing, but it also shows when you are likely to reach profitability and how much capital you'll burn through before then. Enjoy!
Analysis
Family Offices are putting on breaks on direct deals.
Family offices have been able to invest directly in private companies (as opposed to investing through a fund structure) for decades. Yet the strategy has picked up on popularity in recent years. From 2010 to 2015, direct investment activity among family offices grew by a staggering 206%. In 2021, direct investments of family offices accounted for 13% of family office portfolios. However, many family offices are now putting on breaks on direct startup investments after experiencing losses due to inflation, rising interest rates, market volatility, and a slowing economy. Also, it appears that direct investments have been lucrative mostly among wealthier families with more resources to manage the due diligence process, but most single-family offices aren't as wealthy or sophisticated as one might imagine; It is suggested that a single-family office needs at least $250m of wealth to operate effectively and make direct investments on its own. Read full story ➯
When do startups get acquired?
According to the latest data from Carta, capturing 1,700+ company acquisitions in the US, Series A is the most popular purchase point for startup acquisitions, accounting for around 30% of all acquisitions. Pre-seed and Seed stage startups also see a fair amount of M&A activity, likely due to bolt-ons by larger firms. Late-stage startups make up a smaller percentage of all startup M&A, which makes sense, given that there are fewer late-stage firms. As a company gets closer to an IPO, the path to exit through acquisition becomes even more rare.
From the Community
Impact Shakers x Female Foundry
On the 5th of May, I will be speaking at the Impact Shakers Summit taking place in Brussels. Join me, and other investors and founders interested in impact for this full day of discussions, workshops, pitching, and networking.
Female Foundry is an official partner of the summit and we have 2 x €299 FREE passes to give away to the Female Foundry Community!
To get a 50% promo code on all ticket types, respond to this newsletter.
To enter the FREE ticket draw, submit your interest below. Deadline: April 27, 10pm BST. T&C of Impact Shakers Summit apply. I will announce the winners here next Saturday. Good luck!
Ticket draw: Podim | 15-17 of May 2023 | Maribor
The complimentary ticket winner is: Jessica (gfr5gh). Congratulations! I will get in touch with you shortly.
Hiring
This week hiring:
Beyondbmi ➯ Customer Acquisition Representative | Pai Skincare ➯ Trade Marketing Executive | mbiomics GmbH ➯ Executive Management Assistant.
Founder & Investor Meetups
Tuesday, April 25, London ➯ Breaking the myths of investing Berlin ➯ Female Founders Breakfast Club | Wednesday, April 26, London ➯ rev '23: Twenty VC's x 200 Founders | Thursday, April 27, Online ➯ Supercharge your Investing Online ➯ Female Founder Mastermind.
Have a great weekend! I am looking forward to my birthday week.
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.
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Thank you Eden, and Mariangela Cordella from Nauta Capital for sourcing our weekly meetups.
Hi 👋 would be interested in the 50% discount for brussels conference. Thanks