Angular Ventures
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Angular Ventures

The Co-Founders of Januar, a Copenhagen-based Angular portfolio company which raised a historic €6M seed round, the largest seed round in Denmark, to become the compliant crypto gate for European businesses.

Angular Ventures Weekly

Issue #141: For the week ended May 10, 2022

Speed of learning
David Peterson

In the past week, the market correction that many pundits and investors have been foreshadowing (twice in this newsletter alone! 1, 2) may have finally arrived.

It’s been hard to escape the stories of doom and gloom, so rather than list off the tech stocks that are in freefall or recount the companies that have announced layoffs, I’d like to speak directly to the earliest stage founders out there.

If you’re still in the messy and uncertain stages of company building, most of the warnings from investors have probably felt a bit irrelevant to you. As just one example among many, see the latest from David Sacks at Craft Ventures:

This is undoubtedly true. In any downturn, you see a “flight to quality” among capital allocators as they look for the least risky place to put their money to work. And in the venture world, that looks like a high growth company with a moat, network effects, moderate burn and a long runway.

But what if you don’t have any growth to speak of, because you haven’t yet hit product-market fit? Or what if your growth is slow on purpose because you’re still trying to find the right go-to-market playbook for your product?

In other words, what does “quality” look like for an early stage startup that is still, by its very nature, highly uncertain?

There’s no specific set of benchmarks that will guarantee your next round, I’m sorry to say. But if you’re an early stage founder wondering what to do now to prepare for a fundraise that may need to happen in the midst of unfavorable market conditions, here’s my advice: focus on your speed of learning.

Perhaps you haven’t reached product-market fit yet. That’s all right. It’s early days. But what have you done to get there so far? What experiments have you run? What did you learn? And what’s up next?

Similarly if your go-to-market playbook is still a work-in-progress, make sure you have a handle on the metrics that drive your business, and show the progress you’ve made against them over time. Keep track of every step of the funnel, every interaction, every customer story, every use case, and make it undeniable that you’re moving, inexorably, towards a playbook that will scale.

Showing investors that you can learn and iterate quickly is about more than derisking the business. It’s also about derisking you and your team. Constant experimentation and iteration is uncomfortable, but it’s a prerequisite for any fast growing company. (As Elad Gil writes in his book High Growth Handbook, when you’re growing fast, “you have a different company every 6–12 months.”) By proving that you can learn quickly, you’re also showing potential investors that you’ll be able to evolve as the company scales.

This sounds simple enough, but the challenge is that it can take far longer to uncover the core insights that matter to your business than you first think. As Suhail Doshi, founder of the browser Mighty, tweeted this past week:

So cut burn if you can. Husband your cash. And give yourself the time to tinker, change tact, flail about, experiment, and most importantly, learn.

David

EVENTS

Jun 1 / The Importance of Culture and Values As You Scale a Business
Oren Kaniel, Co-Founder & CEO, AppsFlyer

FROM THE BLOG

Fewer, but Better Than Ever
The Israeli tech eco-system ponders a slowdown in startup creation.

Success Can be About Less Than You Think
Don’t fall victim to unfocused ambition.

Why Building a “Compound Startup” Might be the Next, Great, Non-Obvious SaaS Play
Or why “just focus” might be bad advice.

Enterprise & Deep Tech VC in Europe & Israel 2021
A data-driven look at a record-setting year.

EUROPE & ISRAEL FUNDING NEWS

France/Health Insurance. Alan raised $193M for its one-stop-shop for health insurance.
Lithuania/SME Payments. Kevin raised $65M for its payments infrastructure for online & in-store sales.
France/B2B Partnerships. Reveal closed $50M for its platform for partner relationship management.
UK/Lab Leather. VitroLabs closed $47M for its artificial lab-grown leather materials.
Germany/IT Infrastructure. HiveMQ raised $42M for its MQTT based platform for bi-directional flow of data between IoT devices and enterprise systems.
Israel/Security. ARMO raised $30M for its open-source Kubernetes security platform.
Poland/Payroll. Symmetrical raised $18.5M to help companies hire and pay people at scale through flexible headless payroll technology.
UK/Industrial Automation. SLAMcore raised $16M for its spatial intelligence software for robots and machines.
Romania/Employee Productivity. DRUID raised $15M for its AI-driven conversational business platform that gives every employee a virtual assistant.
Germany/ML Tooling. Deepset the startup behind the open-source NLP framework Haystack raised $14M to help companies build NLP apps.
Sweden/Legal. PocketLaw raised $10.5M to help SMEs with their legal contract automation.

WORTH READING

ENTERPRISE/TECH NEWS

UIPath’s valuation. Something is causing UIPath’s valuation to drop, and TechCrunch explored whether or not this is about more than the broad market repricing. One theory is that the company is struggling to verticalize its offering. “Amit Kumar, vice president of financial services at UiPath says that it could be just the start of more packaged automation solutions aimed at specific industries. “As customers pursue broad digital transformation efforts, they may need additional support from industry specialists, which could be in the form of secured infrastructure such as the Finastra platform as well as in process mining, process discovery, deployment and ongoing maintenance support,” Kumar explained.”

What the hell’s an NFT? The WSJ reports that NFT sales are flatlining. “The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November. NFTs are bitcoin-like digital tokens that act like a certificate of ownership that live on a blockchain. Rising interest rates have crushed risky bets across the financial markets — and NFTs are among the most speculative.”

Small drones make a big difference. Wired reports on how small commercial drones are having a huge impact on Ukraine’s apparently successful attempt to hold back Russia’s military. ““Drones changed the way the war was supposed to be,” says Valerii Iakovenko, the founder of Ukrainian drone company DroneUA. “It is all about intelligence, collecting and transferring data about enemy troops’ movements or positionings, correcting artillery fire. It is about counter-saboteurs’ actions, and it is of course search-and-rescue operations.” Iakovenko estimates that Ukrainian forces are operating more than 6,000 drones for reconnaissance and says these can link up with Elon Musk’s Starlink satellite systems to upload footage. “In 2014, drones became the center of attention of intelligence units, but their scale cannot be compared to what we see today,” he says. (Russia first began its invasion of Ukraine in 2014 with its annexation of Crimea.) Both Ukraine and Russia have used military drones during the war — and Ukraine received donations of drones from the US. These military drones can often fly at high altitudes for long periods of time and fire upon targets, including ships. However, the use of smaller commercial drones in such high numbers stands out, researchers say. These drones, which can sometimes be flimsy and can’t fly far from their operators or stay in the air for long periods, have provided tactical advantages in some cases. (Commercial drones have been used in previous conflicts, for instance in Syria, but not as extensively as in Ukraine.)”

HOW TO STARTUP
Building securely. Kelley Mak of Work-Bench offers some great insights and learnings on how enterprise tech founders should approach building security into their products and companies. “Enterprises will expect a certain level of security functionality in your product. This includes things like SSO, RBAC, and logging. But your early customer base should guide you on whether or not those features are necessary. If your initial target market is driven by bottoms up sales or has a product-led growth motion, you can likely ride that out as you capture the small and midmarket segment. Conversely, if your initial target market is sales driven and targeted at highly regulated industries, then having these features built in will be a requirement. At the same time, SSO is low friction and RBAC is hard to add in later, so adding them in advance can save on the headache later.”

Layoffs are here. Amanda Silberling and Natasha Mascarenhas of TechCrunch dig into the growing wave of layoffs in major tech companies. “Now feels like an inflection point, in which tech unicorns are realizing that they may have overpromised a growth trajectory, over-hired or overestimated their ability to raise that next round. They aren’t alluding to the market changing, they’re blaming it. The irony here is tough: The same workforces that helped companies meet a boom in pandemic demand are the same workforces on the chopping block when trends change.”

HOW TO VENTURE
No reservations. Laura Thompson of Sapphire Ventures, which is both a growth-stage fund and a significant LP in many early-stage VC firms, wrote a very thoughtful analysis of how VC funds should think about reserving. One of the key conclusions is that reserving only improves things under specific conditions: “Reserves need to be very concentrated in the highest multiple opportunities to be accretive to overall fund returns. A top performing fund depends on having winners, and a fund structure and strategy where a GP can put enough dollars into these outliers early enough to drive returns for the entire fund. For reserves, it is especially important to concentrate dollars into the winners because these investments are typically being made at higher valuations; if the upside isn’t there, there is risk that a fund’s net multiple decreases.”

PORTFOLIO NEWS

Januar raised a historic €6M seed round, the largest seed round in Denmark, to become the compliant crypto gate for European businesses. The round was led by Element Ventures and also saw participation from Angular Ventures, Outward VC, and early pre-seed backers byFounders.

Planable won a Webby Award for a fresh new category, Marketing and Content Management.

Vault Platform was named as a finalist in Fast Company’s 2022 World Changing Ideas Awards.

CruxOCM announced momentum led by massive talent growth in Q1 2022.

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Early stage. Enterprise Tech. Europe & Israel.

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Angular Ventures Weekly

Angular Ventures Weekly

Early stage. Enterprise Tech. Europe & Israel.

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