Midnight Venture Partners

Company A grew 20% from a base of $3M in sales last year while showing a positive EBITDA of $50k at year end. Company B grew 100% from a base of $3M in sales last year while showing a negative EBITDA of $400k at year end. These two companies are pursuing different strategies. Company A was more conservative but proved they can operate their business profitably. They can either continue to grow conservatively (as cash flow allows) or raise money from angels/friends & family and get more aggressive. Their growth rate is below the threshold that would normally attract VCs. Company B proved that they can achieve high growth while maintaining a relatively lean net burn rate (below $40k/month). A venture firm is significantly more likely to invest into Company B, willing to fund growth accompanied by manageable burn. Things are seldom black & white in the startup world. When you hear “growth at all costs is dead, focus on profitability” that is good advice, but if your intention is to become a category leader usually you’re going to have to grow quite a bit to get there. At Midnight we’ve been lucky enough to invest in brands that were profitable before the end of their first year in businesses, but some of our portfolio’s standouts couldn’t have gotten to where they are today without a few years in the red. As a founder it’s your responsibility to manage burn and make sure you’re getting what you pay for. Profitability is only ever a good thing, but if you want to pursue VC funding (not the best choice for every business) you should prioritize real growth as well.

Founders, navigating due diligence can feel intense, but it’s an opportunity to showcase your vision and build trust. Here are a few tips to make it smoother and more impactful: 1) Be Transparent: Investors appreciate a founder who openly shares both strengths and challenges. It builds credibility and shows you’re prepared to tackle what’s ahead. 2) Know Your Metrics: Have your data ready—revenue, retention, CAC, LTV. Strong numbers tell a powerful story, but gaps in data can raise red flags. 3) Tell Your Big Picture: Diligence isn’t just numbers; it’s about your long-term vision. Show us where you’re headed and why your mission matters. 4) Embrace Feedback: The diligence process is a two-way street. Ask questions, absorb feedback, and use it to sharpen your approach. 5) Highlight Your Team: Your team is the backbone of your success. Share their experiences and strengths, and emphasize what makes your team uniquely qualified to solve this problem. 6) Showcase Product Traction: Investors want to see proof of product-market fit. Whether it’s a user growth rate, customer feedback, or recurring revenue, highlight traction that signals momentum. 7) Be Ready to Explain Risks: Every business has risks. Acknowledge them upfront and share your strategies to mitigate them—it shows you’re proactive and realistic. 8) Bring Your Passion: Beyond numbers and presentations, we want to see your passion and commitment. Your excitement for what you’re building can be a powerful part of your story. Navigating diligence well is a skill, and it starts with preparation, openness, and passion for your vision. What’s your best diligence tip for founders? Midnight Venture Partners #VentureCapital #Startups #StartupFunding #Founder

Introducing Midnight Venture Partners ?? Midnight Venture Partners was born from a simple yet counterintuitive belief. There are not enough strategic capital sources for early-stage founders. Sure, every growth stage investor touts their “value add” to every founder in the back half of any serious pitch.. But let’s face it. The phrase has lost its meaning. Midnight was founded to shake up this tired status quo. From the beginning, we strove to set clear targets of where we could actually “add value,” and we spent close to a year forming a General Partnership that can deliver on the promises we make. Retail strategy, e-commerce execution, and operational support are where our team hangs our hat. We aren’t branding experts or viral social media influencers, and we’re ok with that. We’re go-to-market strategists aiming to help founders avoid early headwinds they may otherwise not know are coming. To our brand partners, our resources available to them (including capital) are all they care about, as they should. To our Limited Partners, our ability to source and secure allocation in the best founders behind the next wave of big ideas is everything. Our team has fostered decades-long industry relationships who serve unique deal sources and combine to create a best-in-class deal pipeline. We are grateful and proud to have become a trusted source of capital for the network of our friends and colleagues in our industry. A place where our network can direct founders they believe in because they trust us to provide straight answers and helpful insight, regardless of our investment decision. In short, Midnight is a platform to support the founders of tomorrow’s biggest consumer brands. We lean in to help our portfolio companies where appropriate and have the humility to stay out of the way when things are firing on all cylinders. We took the building of our General Partnership extremely seriously, and we treat the founders inside our portfolio with the same respect, care and attention. Stay tuned here for insights from our GPs, exciting announcements from our portfolio companies, and updates on current events within the consumer ecosystem. To the next generation of wellness, Team Midnight

No more stealth mode! Midnight Venture Partners could not be more excited about what is to come from Jim Donnelly and team! Look out for a Humanaut Health clinic in a market near you!