Gil and Nadav Cohen, co-founders of Imubit, which recently announced $50M in total funding.

Enterprise & Deep Tech Weekly

Angular Ventures Weekly
Aug 25 · 8 min read

Issue #111: For the week ended August 25, 2021

Narrative Alignment
Gil Dibner

For seed stage enterprise startups, closing the Series A (whatever that means these days $5M or $50M) is just another sale, but it’s the sale that makes the difference between survival and struggle.

Like any sale, there is a buyer: the lead VC who is ready to put down a term sheet with a commitment. And like any sale, there is a seller: you, the seed stage founder who, until today, was managing a pretty tight budget and who, hopefully, will tomorrow be scaling up a burn rate. But what is the actual product?

The product you are selling in that Series A conversation isn’t your “company” or even “equity” in your company. The real product you are selling is that narrative — the dream — and the trick to building a convincing narrative that someone will buy is to make sure that your narrative is locked up and aligned tightly within itself. Too many founders fail to grasp this until it’s too late.

The trick to nailing this is to recognize that every part of your company’s thesis (of your thesis as a founder and the potential investor’s thesis should she invest in you) is interconnected. Every claim you make, every story you tell, and every data point you provide must interact seamlessly with every other — in a way that combines to tell a single coherent story. A compelling narrative is made up of the relationship between the data points, not the specific data points themselves. The VC-oriented message in your slide deck needs to match the customer-oriented message on your home page (VCs will check), and that, in turn, needs to match what customers are really paying money for, and that has to align the the ROI they are actually getting and how you talk about that ROI to investors, and that has to match up with what they going to tell VCs on a reference call, and that has to line up with that big exciting category that your VC slide deck is telling investors that your company is about to define. It’s actually very easy for even one of these elements to fall out of line with the others and that can punch a whole in your entire narrative. For example, one big customer who is paying you a lot (yay!) but paying you for a value-prop other than the one you are messaging to VCs (boo!). Or a flagship customer that appears on a reference call to never had heard of the category you are claiming to be building. A classic one is the early customer who praises you effusively for your fantastic responsiveness and support while you are telling VCs how you have built a super intuitive product that is optimized for seamless self-onboarding. Another one I have head too many times is: “but the website didn’t relate at all to what they were saying in their deck.”

In reality of course, not everything aligns perfectly. There will of course be customers and use cases that don’t really support the main narrative you are trying to communicate. There will be some that directly contradict it. My advice is to get out in front of these discrepancies. Own them. Wrap your narrative around them proactively. Give the VCs you hope will lead your next round the tools to fit these outliers into your bigger story — and to tell your story to their colleagues in a compelling way. By way of illustration — don’t be afraid to sandbag your own numbers in the interests of a more compelling narrative: “Our total ARR was $700K, but we’re really only counting $300K because $400K of it was really for a different use case from two big customers that don’t really represent where we are going.” Or even: “Our biggest customer is actually Acme Inc, but I really don’t like talking about them because I don’t think they represent our main business. They found us, and we could easily meet their needs, but we are not pursuing customers with that profile.”

Narratives matter. They give shape and direction to early-stage companies. They provide guardrails that prevent small teams from spending time, energy, and capital on the wrong products, features, or customers. They can organize and motivate people. At the pre-seed and seed stage, where Angular typically invests, investors are backing pure unadulterated narrative. By the time a company goes out for Series A, the pure narrative is wedded to actions taken on the ground: real product releases, real customers, and real revenues. At this point, your narrative needs to flex and bend a bit to incorporate the reality. Make sure you are using your real world data point in a way that supports your narrative — and think carefully about real world actions before you take them. Does signing that customer or releasing that feature make your narrative clearer or harder to understand?

As a company scales, the ability to control and shape a narrative only gets more important, not less. (If you doubt this, just read some IPO prospectuses.) Series A investors are not just judging the quality of a narrative — they are judging your ability to shape your narrative and communicate it effectively.

If you are building an enterprise or deep tech company anywhere in Europe or Israel and want to test out your narrative, hit me up.

New book alert. I want to congratulate my friend Michael Eisenberg on publishing his new book, The Tree of Life and Prosperity: 21st Century Business Principles from the Book of Genesis. Michael is one of the most successful Israeli VCs and is a deep thinker on business, politics, religion, and philosophy. Check it out.

EVENTS

Sept 29 / Fireside Chat with Ben Braverman, Chief Customer Officer at Flexport
Ben Braverman, Chief Customer Officer, Flexport

Oct 13 / Fireside Chat with Leigh Moore, VP of Marketing at Snyk
Leigh Moore, VP of Marketing, Snyk

Oct 20 / Building Developer Products and Communities
Amir Shevat, Head of Product — Developer Platform, Twitter

FROM THE BLOG

The Great Acceleration of Seed Investing:
Can seed funds and accelerators work together?

Angular’s Brand Strategy:
Revisiting our brand as we launch our new website

Why we Invested in Levity.ai:
A no-code ML-powered workflow on every desktop

Why we Invested in Firebolt:
Next-gen cloud-native data warehouses (& Eldad Farkash)

EUROPE & ISRAEL FUNDING NEWS

Czech Republic/Cybersecurity. NortonLifeLock is set to acquire Avast for $8.6B for its antivirus and VPN software provider.
UK/Virtual Events. Hopin raised another $450M for its virtual events platform.
UK/Fintech as a Service. Rapyd raised $300M for its range of financial services all by way of an API for third parties to integrate quickly into their own service.
Israel/Cloud Recovery. OwnBackup raised $240M for its cloud services and recovery software.
Germany/Amazon Rollups. SellerX raised $110M for ‘Amazon aggregator’ service.
Ukraine/Sales Enablement. People.ai raised $110M for its revenue operations and Intelligence platform.
Germany/SME ERP. Xentral raised $75M for ERP for online small businesses.
Israel/Data Governance. Monte Carlo raised $60M for its platform that helps customers monitor their data inflows, finding issues and errors that could foul downstream data analysis.
Israel/Industrial Automation. Imubit raised $50M for its AI process optimization software for refiners and chemical operators.
UK/B2B Rebate. Enable raised $45M for its B2B rebate management platform, a next-gen channel incentive management platform that automatically helps distributors, manufacturers, and retailers track, calculate, accrue, and allocate B2B rebates.
Israel/Construction AI. Buildots raised $30M for its artificial intelligence computer vision technology to address construction inefficiencies.
Germany/Fintech. Moss raised $29M for its high-limit physical and virtual credit cards and an expense and invoice tracking software solution.
Netherlands/Car Financier. Moove Africa raised $23M to help provide revenue-based vehicle financing to mobility entrepreneurs across Africa.
UK/Sales Enablement. Aforza raised $22M for its easy to use industry cloud and mobile solution is democratizing sales for businesses of all sizes.
UK/No-Code Apps. Stacker raised $20M for their no-code platform where you can create a web application from a spreadsheet or a variety of sources to create a sophisticated business application automatically.
Denmark/UI. UIzard raised $15M for design tool platform for everyone: the world’s first AI-powered digital design assistant for non-designers.
Israel/Industrial Google Maps. 4M Analytics raised $11M for its underground ‘Google Maps’ which maps subsurface utilities like oil, gas, electricity, communications, water, and sewage.
Germany/Design. Zeroheight raised $10M for its DesignOps platform for UX teams.

WORTH READING

ENTERPRISE/TECH NEWS

Supply Chain Management. The supply chain management sector “has seen increased investor interest during a pandemic that upended the flow of goods around the world. At nearly $7 billion invested through July, venture funding to supply chain management companies in 2021 is on track to far exceed the previous industry peak in 2019 of $9.4 billion invested.” Get an inside look at 3 companies transforming supply chain management.

Working with the Military. “Military contracts have been traditionally viewed in Silicon Valley as a win-win — for the nation’s military superiority and for a company’s bottom line. Moonshot projects backed by the federal government’s financial resources also represented some of the most interesting workarounds for product-minded technologists. That relationship has been knocked off its bearings over the past several years, with employees at Microsoft, Google and Amazon, among other companies, seeking to distance themselves from all federal projects due to the revulsion of the previous administration’s policies. But with new leadership in Washington, companies and tech workers need to determine if the stigma against military work will become permanently ingrained or limited to one chapter in an evolving relationship.”

HOW TO STARTUP

Weak Investor Syndicates. Jason Lemkin wrote a great blog post on investor syndicates covering how weak investor syndicates can add substantial fundraising challenges for founders. Here are the questions founders should be asking their investors to better understand the strength of their investor syndicate.

Cap Table Strength. Expanding on Jason’s blog post, Homebrew’s Hunter Walk shares how and why startup CEOs should test the strength of their cap table every ~6 months to know where they stand with their investors. “The one point I want to emphasize is don’t ask these questions just when you’re closing the initial round or actively fund raising the next. Instead my recommendation is to ask every ~6 months or so in-between financings. Have a real discussion 1:1 with your major investors about how they’re thinking about this investment.”

Enterprise Playbook. Work-Bench put together a helpful Enterprise Playbook that outlines how to structure a POC, including a step-by-step framework and a POC agreement template.

HOW TO VENTURE

Bloodthirsty Capitalists. An interesting conversation with Chris Sacca about climate investing, why he’s keen on investing in economic engines in this space, and his new climate fund, Lowercarbon Capital.

PORTFOLIO NEWS

Forter fraud prevention unicorn makes Forbes Cloud 100 2021 list.

Aspecto released a new open-source: Malabi, an OpenTelemetry native Javascript framework that allows developers to improve assertion capabilities by making traces data accessible during testing phases.

Vault Platform’s CEO, Neta Meidav, shares why now is the time to raise the ethical standard in financial services.

Levity was named one of the top Berlin based Machine Learning companies by Futurology.

Levity’s CEO, Gero Keil, spoke at the at the No-Code Digital Summit about no-code AI automation in business operations.

Crux OCM was used to “auto pilot” a live, critical infrastructure, oil pipeline operation.

Imubit announced $50M in total funding to expand its AI process optimization platform.

Front welcomed Chief Product Officer and VP of Global Sales to drive business growth.

Sisense named a leader in ​​analyst report for augmented business intelligence platforms.