This may actually be one of the best times in history to raise early-stage capital.

Common knowledge at this point is that deal volume is down considerably from pre-crisis times, but less clear is how early-stage startups have been impacted since most coverage we’ve seen is focused on large later-stage funding activity. Also unclear is how much valuations have been compressed (especially in California where VCs have long felt valuations were inflated). And, perhaps most importantly, we’ve wondered if certain market segments have gained or lost favor during a time of heightened volatility and potentially long-lasting economic changes.

These topics are vital for the founders and investors we interface with to understand, so we set…


This may actually be one of the best times in history to raise early-stage capital.

Common knowledge at this point is that deal volume is down considerably from pre-crisis times, but less clear is how early-stage startups have been impacted since most coverage we’ve seen is focused on large later-stage funding activity. Also unclear is how much valuations have been compressed (especially in California where VCs have long felt valuations were inflated). And, perhaps most importantly, we’ve wondered if certain market segments have gained or lost favor during a time of heightened volatility and potentially long-lasting economic changes.

These topics are vital for the founders and investors we interface with to understand, so we set…


A comprehensive list of outbreak-driven fundraising narratives we’ve heard from startup founders

Black Swan events deliver an initial systemic shock, but they also trigger sudden attitude shifts presenting new opportunities.

With half of Americans now ordered to “shelter in place,” we’re definitively in the throes of the Coronavirus (COVID-19) outbreak. In the startup world, venture capitalists have put the breaks on new deals as they assess the cash positions of their portfolio companies, potential systemic risks, and what the new normal may be. Meanwhile, scrappy startups seeking capital are evaluating strategic changes that will draw the attention of investors when deal activity resumes.

Sudden events with global implications are referred to as black swans — high-profile, rare and unpredictable occurrences that have an outsized impact on the status quo. Other…


Like the general population during a pandemic, startups fall into low-risk and high-risk groups.

A self-quarantined founder during the COVID-19 outbreak.

Baron Rothschild famously said “buy when there’s blood in the streets,” but when the metaphor is playing out in real-time it’s hard for any investor to imagine backing a venture deal. Though venture capitalists know there are plenty of great opportunities when markets are distressed, everyone puts on their breaks following a 7-day run of public market trading sessions that alternated ±4%, travel from Europe is halted, and the president has declared the first public health national emergency in the United States since the H1N1 swine flu outbreak — a virus which infected 60 million Americans in 2009 with a…


Not all economic slowdowns result in a crisis.

Many within the startup community believe we’re staring the next recession in the face. Founders I’ve been working with are trying to figure out what that means for go-to-market strategies reliant on venture capital. While I won’t attempt to predict when the next recession will strike, I will make some predictions about how the VC market will react.

1. Funds and investors will still be seeking deals

The venture capital market itself is an acyclical industry. When public markets are down, venture capital funds are still looking for opportunities. Given that venture returns will appear more attractive relative to equities…


Take 2019 by the horns by subjecting your goals to a premortem.

It’s the time of year when the founders in my orbit are discussing their company’s goals for 2019. Every one of them is excited to take the new year by the horns. Their goals are specific, impactful, and carefully modeled in spreadsheets.

Their teams and investors will surely be thrilled with their achievement… but 90% of companies don’t hit their goals due to inadequate implementation and resource planning. It’s a pain I know all too well as a repeat VC-backed founder myself.

That’s why we’ve embraced the premortem as a key component of our process. It’s a form of imaginary…


Why a Vision Statement is the most important line of code a startup will ever write.

Traditional Vision Statements are Exciting for the Company

A traditional vision statement is aspirational for a company; it describes where the company is going if it’s successful. It can also be limiting when viewed through the lens of a venture capitalist.

Tesla’s is an example of a good traditional vision statement: “To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” Tesla is stating that if it’s successful in its mission, “to accelerate the world’s transition to sustainable energy,” then it will have created the most compelling car company of the 21st century.

A fundamental change in travel behavior…


In Q3, ICO markets finally developed a demand for traction.

The ICO market has experienced a sudden cultural shift that has left concept-stage blockchain founders grappling with the same increased demand for evidence of traction that has long stymied founders trying to raise capital in traditional VC markets. The median ICO dollar size and overall volume of deals have dropped by half since a peak in Q1 of 2018.

Trends between ICO size and deal volume show that ICOs have become much fewer in number and raise smaller amounts of capital. [research: Foundational, source: Coindesk, ICOData.IO, ICODrops]

Pressure for earlier validation has mounted from their blockchain peers as well. At cryptocurrency conferences, technologists from established initiatives have been exhibiting an ostensible lack of acceptance for concept-stage projects. …


Dramatically improve the odds of your venture’s success by rooting out and mitigating knowable risks with a premortem.

In startup culture, optimism tends to flourish at the expense of honest pessimism. At Foundational, we embrace this by starting our strategy engagements collaborating with our clients to agree on how the world must be changing, what their teams are doing to bring about that change, and how we will measure the achievement of their inevitable success… we also use a novel process that quickly identifies the likely causes of failure well before they occur. It’s a simple and impactful technique that any team can do for themselves in under an hour.

What could possibly go wrong!?

Deep-down we all know that most startups fail…


What is Traction? Where does it come from? And, most importantly, how do you generate it?

Startups are in an endless pursuit of product-market fit. If they are very young, they might still be defining their vision of what the world will look like should they find it. If they are more mature, they are justifying to their next round of investors and strategic hires that they are strengthening their understanding of the early fit they’ve already established. This road is so well-traveled that the industry has adopted a name for the story of this pursuit: traction.

Just having product-market fit isn’t enough. A startup needs to prove it can achieve venture-scale.

Marc Andreessen eloquently defines…

Harlan Milkove

Managing Partner @FoundationalNYC. Repeat Startup Founder, Advisor, and Investor. @Reonomy @Toblytools

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