Angular Ventures Weekly
Issue #150:
For the week ended July 19, 2022
The great hesitation vacation
Gil Dibner
Word on the street from founders meeting VCs these days is that no one is home. The summer of 2022 is shaping up to be a distinctly quiet one. VCs in the US, Europe, and Israel all seem to be on some sort of extended vacation. In many cases, they are on an actual vacation. I see it in my Twitter feed, I hear it in the VC podcasts I listen to, I feel it as I try to schedule meetings or hit autoresponders, and — most importantly — I sense it in the reports from founders going out to fundraise or even just build relationships: VCs are checked out.
In a lot of ways, this is perfectly rational and to be expected. VCs have been running flat out for at least three years and will take any opportunity to rest a bit. On top of that, market conditions are strange to say the least: No one knows how to price anything. And finally, a lot of VCs are deep in portfolio triage mode.
The result for founders is a disturbingly quiet atmosphere. Fundraisings are taking a lot longer than previously. Rounds that would have taken a week in 2021 (remember those days?) are now taking 1–2 months. Rounds that would have taken three months are now taking up to six. Many rounds — it seems — are just not going to happen. This is the quiet before the silence — before a lot of companies find themselves unable to raise and just quietly and painfully close their doors. This is also, however, the quiet before the hum of the new normal sets in. With every passing day of public market declines and private market layoffs and shutdowns, it gets clearer that the downturn we are in is likely to be a sustained one. But eventually, things will stop getting worse and will just start to move again.
For founders it’s important to keep plugging — even as it feels no progress is being made. Keep working customer leads and pushing them through the sales funnel. Keep reaching out to investors and updating them, even if they don’t immediately respond. We are all adjusting. And some of us are — indeed — hiding out on a sort of vacation. But no vacation lasts for long. The VCs that are hiding out this summer will be back in the fall. Make sure your metrics look slightly better then and that your story is slightly tighter. That round you are not able to close in the heat of summer may close in the cold of winter. The trick is to survive long enough to get there.
EVENTS
Sep 7 / The Evolution of Collibra’s Product Positioning & How They Created a Category
Stan Christiaens, Co-Founder & Chief Data Citizen, Collibra
Sep 21 / A Talk with Jason Green
Jason Green, Founder & General Partner, Emergence Capital
FROM THE BLOG
The Right Stuff
How to build a commercial team.
Mapping the New World of Business Collaboration
Why we invested in Reco.
What do a 2003 BMW and Microsoft Excel have in Common?
Leaving users feeling empowered and energized, rather than managed and disconnected.
Fewer, but Better Than Ever
The Israeli tech eco-system ponders a slowdown in startup creation.
EUROPE & ISRAEL FUNDING NEWS
France/Security. OneWelcome has been acquired for $100M by Thales for its customer identity and access management platform.
UK/Communications. Incident.io raised $34M for its incident management platform that the whole organisation can use.
Israel/ML Tooling. Deci closed $25M for its deep learning platform to help organisations deploy AI models.
Belgium/Financial. Oper raised $11M for its white-labelled software that allows lenders to streamline their mortgage distribution processes.
Ireland/Energy Systems. XFuel raised $8.25M for its technology that converts biomass waste into sustainable and net-zero road, marine and aviation drop-in fuel.
WORTH READING
ENTERPRISE/TECH NEWS
European & US startup funding. While, at the start of the downturn, some believed that the European startup ecosystem would be less affected than the US ecosystem, the Q2 numbers are demonstrating that simply isn’t the case. In fact, “funding to European startups across all stages reached $23.7 billion last quarter — down 38% from the peak of $38 billion a year earlier”. Comparatively, funding to North American startups totalled $62.7 billion in Q2 — down 25% from a year ago. Fortunately, in both markets, early stage has held up comparatively well relative to late stage funding. This isn’t surprising because early stage companies are “typically years away from a potential exit, so investors are less concerned about the shuttered IPO window, falling public tech valuations, and other market conditions of the moment. That said, venture backers are still pulling back, doing fewer deals and on average cutting smaller checks”.
James Webb Telescope. The biggest tech news of this past week was undoubtedly the unveiling of the first images from the Webb Space Telescope. With a whole new view of the distant cosmos, the Webb Telescope is already revolutionizing the fields of astronomy and cosmology. In episode 87 of the All-In podcast, David Friedberg gives a thoughtful view on how the Webb Telescope’s technological breakthroughs not only enable us to see images from 4.6B lightyears away, but they may help astrophysicists obtain answers to some of space’s deepest questions: from planet and star composition to dark matter and dark energy.
HOW TO STARTUP
Investor updates. Mahendra of Secure Octane Investments wrote a brilliant piece on the importance of investor updates and when founders struggle with them. A culture of reporting is incredibly powerful and often correlates to successful founders and companies. “Reporting is not about standing up in front of investors to get a pat on the back. It has very little to do with investors. It is about your own clarity and precision. It is about building your own muscle. It is how you share, care and communicate. Boldly. It is about building a culture of competence and transparency.” Additionally, investor updates are often underutilized and can be useful to send to both investors on the cap table — and off. For example, some astute founders send their updates to investors they may potentially want to work with in the future and some send them to investors who previously passed.
Outbound & PLG. Openview’s Kyle Poyer shared a thorough piece on how PLG companies can tackle outbound sales. While it may seem counterintuitive for a PLG company to introduce an outbound motion, “a whopping 54% of PLG companies on their B2B Tech Hiring Tracker are looking for sales development representatives (SDRs) or business development representatives (BDRs). This list includes well-known PLG companies like Figma, 1Password, Vercel, and Notion.” While the whole post is worth reading, Kyle’s tl;dr is great:
- “Plan for outbound and an SDR/BDR function to be part of your go-to-market mix, especially once you scale beyond $10M ARR.
- Your lowest-hanging fruit is for SDRs/BDRs to work with accounts who are already using the product. They can have up to a five times higher lead-to-close conversion rate.
- Work the account, not just the user/lead. You need to document the use case and get to the decision maker.
- Tailor your messaging to the audience and their product experience. Great product-centric messaging is usually a team sport.
- Treat your buyer experience as the North Star when making attribution and compensation decisions.”
HOW TO VENTURE
Angel investing AMA. Amir Shevat, ex-Microsoft, Google, Slack, Twitch and now at Twitter, did a fantastic AMA focused on angel investing. His response on best practices he sees founders do after the investment is particularly good. For more from Amir, check out the Angular Insights podcast he led on building developer products and communities.
PORTFOLIO NEWS
Datos Health is collaborating with Sheba Beyond and Project Rozana to set up a remote OB-GYN unit in the rural Hebron area that will be fully operated by Palestinian healthcare teams.
Valohai is enabling more eco-friendly machine learning and partnering with JFrog to provide continuous training and deployment for machine learning at the edge.
JFrog recently announced a new partnership with Microsoft Teams and launched a new DevOps innovation program for early-stage companies.
