Female Foundry Week 80: Dry-powder mountain keeps growing. Drawing the line. The range of deal sizes narrows. Three Point Zero with Sara Larsson, the founder of Freshsound.
Welcome to The Week 80, 2023 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
French quantum computing startup Quobly co-founded by Maud Vinet picks a €19m Seed round led by BpiFrance; German startup Consalio, co-founded by Felicia Mundhenke fetches a €1.2m Pre-Seed round to bring for more transparency in consulting costs; London-based Prolific, co-founded by Ekaterina Damer, raises a £25m Series A round co-led by Partech and Oxford Science Enterprises; Lithuanian GoRamp, co-founded by Ugne Palionyte, raises a €3m Seed round led by Lead Ventures to expand into Europe and the US; London-based, Bloom Money, co-founded by Nina Mohanty, picks up a £1m Pre-Seed round led by Zinal Growth to digitise finance for ethnic communities.
Spotlight
From the dry powder mountain hilltop.
Global private equity dry powder is soaring. According to the data released this week, a mountain of dry powder as high as a record $2.49trn is currently quietly waiting to be deployed. KKR and Blackstone are leading the pack of funds holding up the biggest amount of capital, with over $40bn in uncommitted capital each. Interestingly, another analysis released this week also suggests that even if the US private equity returned to its pre-pandemic levels of liquidity and stayed this way, in 2035 there would be still a $360bn capital build up of lingering assets caused by the combination of the explosion of new deals in 2021 and the current slow exit market.
What’s clear, returning to pre-COVID exit activity levels is unlikely to happen soon, and so, if the current exit rate continues, funds raised in 2017, and earlier, could soon be reaching their expiration dates with as mach as 26% of invested capital still tied up in assets (!), consequently impacting fund performance and future capital raises. Unsurprisingly, some PE firms are already trying liquidity workarounds, such as net asset value lending and LP- and GP-led secondaries. Understandably then, as most private equity firms are hesitant to sell assets at lower-than-expected prices, these more creative methods may be among the very few currently available ..as fund maturity dates get closer. Read full story ➯.
Fundraising
Drawing the line.
I caught up with a good friend of mine this week who after months of pitching for funding and doing his best to generate growth momentum with his corporate clients, has recently decided to close his startup. It had been three years in the making.
The idea of stopping, of letting go, of giving up, is the hardest decision many (if not most) founders will face along their entrepreneurial journey. At which point should you draw the line, especially when your desire to materialise your vision is still burning? That’s hard to determine. Is it when you have pivoted so many times to find the product-market fit that you no longer have any ideas as to where your startup could go next? Is it when you have struggled for five consecutive months to align with your co-founder on your product vision? Is it because you simply have no cash to keep going, having used up all your (and your family and friends’) savings?
I do not know.
I remember, as a founder, I would regularly hit rock bottom just to wake up one morning with a spark of a new idea that could make things work!
Giving up is not failing, and giving up at different stages of the development of your startup will look differently. Is your startup just an idea or you have been generating revenue, have a board and a string of investors? Whatever your case is, remember, you are not alone. Only 1 in 3 seed-funded startups based in the U.S. between 2011 and 2018 raised post-seed funding. I would recommend this book that fleshes out the common startup pitfalls.
Now, if you have clients, investors and a board and you have hit the wall, SPEAK about it with your board, it might be daunting, but if you want to move on, your focus should be on preserving your company’s value. Here are a few subjects I would recommend you to face head on. Here is a step-by-step guide on what the process of closing a company would normally entail. How to speak with your investors about it? Here. And with your employees. Here. How to sell your company, if you find a buyer? Here is a great guide. ..and how to find a buyer. Here. Once it is done and dusted. Take a break. Gain perspective. ..and do it again?
Analysis
The range of deal sizes narrows.
There has been an interesting trend developing in the fundraising market highlighting the intricate relationship between the broader equity market and VC-backed businesses. Due to the delayed impact of market forces on earlier stages, VC rounds are now seeing remarkably similar median check sizes for both late-stage and early-stage companies. What is causing this trend? Late-stage companies, especially those that raised substantial rounds in 2021 or 2022, and reduced costs, have had an advantage in postponing fundraising in the current slow market. Meanwhile, the market has seen a continued growth in early deal sizes and valuations, which is the only stage where growth has persisted. How long will the trend last?
From the Community
Three Point Zero Podcast
Shaping the future of the music industry with Sara Larsson, the Co-Founder of Freshsound.
It was great to speak with Sara Larsson from a Swedish startup Freshsound who recently raised a €2m Seed round led by Zenith Venture Capital and Aligned for its self-service platform to license commercial music. (see: Week 69).
In the episode, we talk about how the music industry works and why having a clear mind when innovating is necessary, how to get the best out of your investors and your board, and how to keep your investors in the loop.
Ticket draw: TechBBQ | 13 - 14 September 2023 | Copenhagen
The complimentary ticket winners to TechBBQ conference in Copenhagen are: Tzu-Ting (PO8a7d) and Chantal (BVhs23). You can view the draw here. Congratulations! I will get in touch with you shortly.
Hiring
This week hiring:
Eaze ➯ Founder’s Associate | Settly ➯ Sales Development Representative | AIRMO ➯ Office Administrator.
See more jobs on the Female Foundry Job Board.
Founder & Investor Meetups
Monday, July 31, Berlin ➯ Monthly Meet Up, London ➯ Stockhub Startup Pitch Night | Wednesday, August 02, Paris ➯ Réunion entrepreneurs et professionnels | Thursday, August 03, Warsaw ➯ Venture Cafe.
That’s it for this week. Have a great weekend!
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.