Craft Ventures advice to founders
If you’re in the early-stage world you’ve likely seen this frank and honest advice from Craft Ventures to their portfolio company founders. Their initial advice is that if you can avoid raising now then you should. If you must raise, they provide some metrics for what constitutes great, good and danger zone. While I agree generally that now isn’t the best time to raise, the fall in public market multiples has some investors waiting for a new pricing paradigm to be set, there are some investors (and I’ve spoken to multiple in the last week) who are looking for opportunities…and I’ve noted on multiple occasions how much dry powder is out there. It’s always been the case that great companies will get funding. The funding environment is such that investors will be more deliberate, will take more than 1-2 weeks to do diligence and will focus more on fundamentals with a view on different macro scenarios. Some of the biggest tech companies were founded, and funded, during the dot com bust and the global financial crisis. This is not a time for founders to be despondent but rather a time to step up and show that you’re building a world class business solving a critical pain point with great unit economics.
Note that the metrics presented in the video, as qualified by the presenters themselves, are for SAAS companies, not marketplaces or eCommerce companies.
The full video can be found here.
Inflection AI raises $225m
Inflection AI, which aims to make computers understand our language, has raised $225m. Funding companies that are attempting to innovate on a massive scale excites me. Sure, there’s a place for a SAAS or marketplace companies solving a specific pain point but pushing the boundaries of innovation and creating new paradigms for what is technologically possible is most exciting. What about the business fundamentals? They are obviously there in the long term if this works but the investors are backing the founders – that’s what great VCs do. More here
QuestBook raises $8.3 million
QuestBook provides grants to developers building in Web 3.0. Despite the crash in UST & Luna over the past week, Web 3.0 and crypto are not dead. We are still early in Web 3.0 and instability in any early product is common. No doubt many companies, developers and market participants have learnt a lot from the events over the last week and the ecosystem, infrastructure and products will come back stronger (more here).
Blinq raises $5m from Blackbird and Square Peg
Blinq, which creates a live business profile that can be shared via QR Code, NFC, web link, email etc.. has raised $5m in seed stage funding (more here).
A few thoughts:
1. It is super easy to create a Blinq profile and add it as an email signature – I did in 2 minutes…so the product works.
2. It’s a competitive space with LinkedIn, Linktree and Link Me all in and around the live profile space, especially for professionals and creators. I’ll be interested to see what sort of niche Blinq carves out and how the product differentiates further from those above following this funding round.
3. This an early investment for Square Peg in particular. A VC that traditionally played at later stages. Is this as a result of competition from international VCs who are investing in Australia at Series A and beyond.
4. As the article notes, this is the first investment Blackbird and Square Peg have made together since Canva. No doubt both have common investors and so I don’t expect them to be co-investing together all that much going forward either – otherwise why would investors invest in both.
5. $5m is a large seed stage funding round but the company has been around for 5 years, has a global audience from day one and the tech is certainly better than many seed stage products I’ve seen. Also, given the D2C nature of the product, a larger raise to bolster the marketing coffers is necessary.
6. However, I wonder when the deal actually closed and what market the pricing reflected – was this a $5m raise at 2021 pricing? I doubt there’s much revenue coming in and that’s ok because the monetisation will come once the network is established but other large network plays (e.g. Meta & Snap) have been thumped by the market over the last few months.
Taking money off the table
SecondQuarter Ventures is raising it’s second fund and is close to $100m in commitments. The secondaries market is Australia is underserved and it’s an important part of the ecosystem. Investors may want to sell before an ultimate exit of an asset to re-invest at the early stage. Enabling this is key to a functioning ecosystem. Founders (and team members) may want to sell because they are “asset-rich, cash-poor” and have family commitments. It’s important to be able to enable this. An alternative to requiring founders to sell to cash-out is providing financing to founders (likely with collateral). We haven’t seen this type of product in the Australian market…yet. Given the maturation of the Australian market I’m sure it’s not far away and I’m sure it would be well received by founders (more here).