Darwazah Capital的动态

Just another ugly truth about how the Startup invetsments are faring. The 1000s Of pop up VCs and inexperienced analysts, advisors, managers at SWFs and Fanily office in the Middle East evaluating startups and convincing most Middle East SWFs to investment in them. Especially sitting in Middle East and evaluating the ones outside of their immediate market or real life overseas market expereince and at times trying their “luck” to manage the business themselves by removing the original founders. Chasing unicorns when they have no clue of how a business is run, what are market indicators, management teams execution capabilities and in a mad rush to play the “pump and dump” game in this unregulated hyper-valuations/invetsment “startup ecosystem”. Most of these analysts are often hired based on their qualifications after a couple of years of expereince in some major big four accounting or consulting firms. They are the people who build the models and cases for many of these SWFs on fail them. But seldom have any real life business expereince. For them it’s just a job. No consequences. And they end up as a partner in a VC soon after getting fired and seen raising a new fund for more such losses. And the so called Startup fever and billions in losses continue…. The core problem is in the serious Lack of accountability, hands on expereince, no real knowledge of market and business execution and absolutely no clue of revenue generation, market potential or growth. Instead the extensive focus on due deligence, Valuations, DCF models, exit strategies and risk profiles etc. have not really helped to make sound placements or good returns. Some make some narrow escapes and exit soon. And the SWFs and Family offices have more billions to burn by trusting such analysts. “Many great visions fail because they are handed over to under qualified leaders who hire qualified inexperienced management teams with no execution skills, accountability or market knowledge” #investments #Startups #sWF #fundraising #VC #capitalraising

Founders pitch, cheques are written, and companies scale—but what happens behind the scenes? Understanding a VC fund’s structure reveals how decisions are made and how incentives drive behaviour. Here’s a quick breakdown of the key roles and what motivates them. 1?? Analysts Most junior, handles market research, reviews startup pitches and conducts due diligence. Some funds skip this role entirely, starting with associates instead. Incentives: Typically salaried with little (if any) carry. Their main incentive is career progression, using the role as a springboard to higher positions at the fund, startups, or top MBA programs. 2?? Associates Take on more due diligence, build founder relationships, and source deals (though they don’t make decisions independently). They write investment memos, may sit on boards as observers, and support portfolio companies as needed. Incentives: Like analysts, associate carry is still minimal. The real incentive lies in building a network and demonstrating their ability to identify promising startups, perform thorough due diligence, and write sharp, well-executed memos aligned with the fund’s thesis—ultimately setting the stage for a promotion to more senior roles. 3?? Principals Considered the mid-tier leaders of a fund. They actively source deals, negotiate term sheets, and often sit on boards post-investment. This is the proving ground for future partners, should their fund offer a partner track. Incentives: Principals typically receive a higher salary and meaningful carry in the fund. Their incentives are directly tied to identifying and nurturing portfolio companies that can generate strong returns. 4?? Partner / General Partner (GP) The decision-makers in the fund. They manage relationships with limited partners (LPs), oversee the fund’s strategy, and have the final say on investments while sitting on the investment committee. Incentives: GPs have the most significant carry in the fund, as well as a high salary. Since they invest their own capital in the fund (referred to as the GP commit), they have strong financial incentives to ensure the fund performs. GPs’ reputations are tied to the success of their investments, so their long-term incentive is to raise subsequent funds by delivering exceptional returns to LPs. 5?? Limited Partners (LP) The investors in a venture capital fund. They provide the capital that the General Partners use to invest in startups. LPs can be a mix of institutional investors and high-net-worth individuals. While LPs don’t participate in day-to-day operations or investment decisions, they are critical stakeholders in the fund’s performance. Incentives: For LPs, the long-term incentive is gaining exposure to high-growth opportunities in the private market. ?? When raising capital, focus on building relationships at all levels, but temper expectations, as decisions are collaborative and driven by a shared goal: backing exceptional, scalable businesses.

?? Mastering Exit Strategies: A Guide for Startups to Navigate Investment Rounds ?? 1?? Meaning of Exit Strategy ?? Definition: An exit strategy is a planned approach to withdrawing from an investment in a business venture, typically by selling the stake for profit. It outlines how investors can liquidate their holdings and realize returns. ?? Purpose: Ensures that both investors and founders have a clear understanding of how they will achieve a return, manage risk, and plan for the future. 2?? Uses of Exit Strategy ?? Investor Assurance: Gives investors confidence by showing a clear plan to cash out their investment eventually. ?? Business Planning: Helps founders and management make strategic decisions that align with long-term goals and potential exit scenarios. ?? Value Maximization: Helps maximize business value at exit by preparing for potential buyers or public offerings. 3?? Types of Exit Strategies ?? Initial Public Offering (IPO): The company goes public by offering its shares on the stock market. ?? Acquisition: The business is sold to another company, typically for a profit. ?? Secondary Sale: Investors sell their shares to other private investors or entities. ?? Liquidation: The company’s assets are sold off, and the business is closed down (usually a last resort). 4?? Calculation of Exit Value ?? Key Metrics: - Enterprise Value (EV): Total value of the company, including debt and equity. - Equity Value: Value attributable to shareholders after paying off debt. ?? Components: - Revenue Multiples: Value based on a multiple of the company’s revenue. - Earnings Multiples: Value based on a multiple of the company’s earnings (EBITDA). - Market Comparables: Valuation based on similar companies in the market. ?? Formula: Exit?Value=EBITDA* EBITDA?Multiple 5?? Real-Life Examples for Easy Understanding - Let's consider a startup that has raised an investment round and is planning for an exit via acquisition: (a) Current Revenue: $5 million annually (b) EBITDA: $1 million annually (c) Industry EBITDA Multiple: 8x ?? Step-by-Step Calculation: - EXIT Value= EBITDA * EBITDA Multiple - Exit?Value=1?million×8=8 million ?? Outcome: This means, that if the startup is acquired, it could be valued at $8 million based on its current earnings and the industry multiple. 6?? Practical Applications for Startup Founders: ?? Strategic Alignment: Ensure business operations and growth strategies align with the chosen exit strategy to maximize value. ?? Preparation: Prepare the company for exit by maintaining clean financial records, improving operational efficiency, and demonstrating growth potential. ??Negotiation: Use the calculated exit value to negotiate favourable terms with potential buyers or investors. - By understanding and planning for various exit strategies, startup founders can better navigate the investment landscape, meet investor expectations, and achieve successful outcomes for their business.

"To create wealth, one must concentrate risk, whether that is opening a business and taking that risk or concentrating their experience and skillset to be of extreme value." Bilal Abou-Diab, CFA, Vault's Co-Founder and Chief Investment Officer, reflected on the path toward building this venture and the shift from the institutional to the entrepreneurship world. Follow the link for more details: https://lnkd.in/d_vAaUAD #startup #founders Hub71

Capital raising is changing and many founders are going to go bust if they don't play along. Shifting investor priorities and heightened scrutiny are leading to a dynamic of the "raise" and the "raise nots". While select companies have secured record-breaking rounds... others are struggling. And if you're reading this and those statements annoy you, you likely fall into the second category. Here’s the issue: much of the market is stuck solving yesterday’s problems while chasing trends that don’t address today’s capital environment. Instead of rethinking how to position themselves in a capital-constrained world, many are doubling down on strategies from 2021... But those no longer resonate. Where does that leave things? The gap is widening between those who successfully raise capital and the many who struggle and fail. As a confluence, I'm seeing a lot of hubris... and some big missteps. Examples: - Chasing hype without substance: Companies are pouring resources into buzzword-driven pitches (e.g., "AI-powered X") - Not solving fundamental challenges or demonstrating ROI - Overlooking financials/fundamentals: Startups are still trying to raise capital without a clear pathway to profitability or framework for capital efficiency Investors are done rewarding growth-at-all-costs. Some other caustionary tales: - Ignoring investor diversification: Relying heavily on a single type of investor (e.g., institutional VCs) instead of tapping into family offices, private wealth, and alternative capital sources - Missing the execution narrative: Teams pitching grand visions without evidence of operational excellence to deliver results in a tough market So who's going to win the capital raising game in 2025? Companies that succeed will do the following: - Demonstrate value beyond trends: Founders must articulate how their solution tackles core pain points, not just incremental improvements or nice-to-haves - Have financial discipline: Cash burn, net dollar retention, and EBITDA will carry more weight than top-line ARR growth (though you'll still need it). Investors want resilience. - Strategic positioning: Startups need to show a compelling story about why their market, why the time is now, and why their team is align for success... and they need to back it up with data - Diversify funding sources: Smart founders are already building relationships with family offices, corporate investors, and debt providers to avoid overreliance on traditional VC. Even better if you can bootstrap - Build for scale: A polished product and GTM strategy are no longer optional Investors will reward companies that are ready to scale efficiently and profitably.

Pleased to share the 17th thought leadership article by the DWF Venture Capital Group entitled "UK Venture Capital Market: Resilience amidst challenges" This article, authored by Will Munday, Kartik D Monga and Tahmina Begum provides a comprehensive overview of key trends that have impacted the Venture Capital industry in 2024. ? You can find a link to the article on our website here: https://lnkd.in/d7TY3d_K. ? The UK venture capital (VC) landscape has faced significant headwinds in 2024, with deal making set to hit its lowest level since before the pandemic. As of Q3 2024, ￡10.9 billion has been invested across 1,879 deals, down from ￡15.5 billion and 3,138 deals in 2023. Despite this, London continues to be a European leader, raising ￡5.6 billion in Q2 alone. While deal volumes have dipped, focus remains on funding innovative companies in sectors like AI Hope you enjoy reading the article and that you find it helpful. If you would like to talk to us about our expertise and commitment to supporting investors, lenders and corporates in respect of Venture Capital transactions, please feel free to contact us. #VentureCapital #VC #VentureDebt #GrowthCapital #Corporate #Founders #Management #Investors #Founders #Legal #Insights #LawFirm #LawExperts #Team

My holding?has 100+ direct and indirect investments. Here is how I started 8 years ago and 10 personal lessons learned ?? 1) 2016-2018, my company was running thehub(.)io in Norway, I was getting tons of requests from founders to help them fundraise and scale. How could I help if I did not know what investors expect? I decided to learn. I took courses on angel investing, and started investing. 2) I knew 1 day I was going to fundraise for 1 of my companies (I did 2 years ago). Again, I had to understand how investors think and build my network with them. This is crucial. Understand how investors think, speak, and operate, and you are on the right track to close your fundraising round. 3) I wanted to multiply my future revenue streams - "make money work for you" they say. Who does not dream about?retiring early, right? Later in 2020, I sold 1 of my platforms, and reinvested everything in TheFactory(.)no. Giving me then access to their 50+ companies. I continued investing in accelerators and VC funds, and that′s when my portfolio really ??. ??Personal lessons learned: 1) Startup investing is high risk. One of the risks we rarely talk about is dishonest founders. 2) Watch out for dishonest and ego driven investors as well; their greed can kill a company. 3) Sometimes a solid contract is not enough to protect your rights, as an investor, especially if you are based in another country. 4) Angel investing is an expensive "hobby". Invest money you don′t need. Always be ready to lose it. 5) Be hands-on with the startups. Work with them and evaluate if they are coachable. So important. 6) Find founders who are numbers and sales-oriented. If they can't sell, run??♀?. 7) There are brilliant founders out there. It usually takes time to find them because they are focusing on clients. 8) Do it for the learning more than the earning. 9) You don′t need millions to start investing in startups. My tickets has been between 3000 Eur to 25 000 Eur. If you form a syndicate with other investors, you can invest much more all together ??. 10) Whether you are a founder in search of investors or an investor seeking great startups, your network is probably your most valuable asset. 8 years later, I have not had any exits yet. This is a VERY long term game. This year I am not investing in startups. I focus on building my own companies and advising CEOs on fundraising, personal branding and scaling. What are some of your lessons?learned as founders or investors when it comes to fundraising? --- Below link to my investments - in Norway.

??"Private Equity: Navigating the World of High-Stakes Investment"?? If you are active in the Financial Markets, you must have definitely heard of Private Equity; but do you know what is done in PE? Let’s check out…………… So as the name suggests, PRIVATE EQUITY, the investment is done in the Unlisted Space/Private Companies by buying a major stake (Equity Portion) in the company. Generally the companies are divided in three Categories which we will try to look at with real life examples: 1. Startups – Several prominent private equity (PE) firms, including Tiger Global and Info Edge Ventures, have made significant investments in Zomato through multiple funding rounds. The key aim of a PE firm when investing in a startup is to realize substantial profits, potentially achieving an exit strategy by propelling the startup to unicorn status or facilitating an IPO. ??RISK: HIGH 2. Established Companies – In 2007, Blackstone Group completed the acquisition of Hilton Worldwide for approximately $26 billion, taking the company private. Following the buyout, Hilton ceased trading on the NYSE, remaining under Blackstone's ownership until its successful return to the public market in 2013. The main objective in these kind of deals is to do a turnaround and make money from it. ??RISK: Moderate to High 3. Distressed Companies - McAfee, a cybersecurity company, was struggling with a range of operational and financial issues. TPG Capital acquired McAfee in 2017 and worked on restructuring and strategic growth initiatives. The company's valuation significantly improved, and McAfee went public again in 2019, demonstrating a substantial turnaround. The motive here is to buy the company at pennies and sell it again at dollars. ??RISK: VERY HIGH (Buying a Sinking Ship) ???The structure of a private equity (PE) firm is typically a Limited Liability Partnership, where partners pool a large sum of money from High Net Worth Individuals (HNIs) and invest in various companies. In return, the partners charge a management fee and share in the profits. We may think that these deals sound very risky? They are RISKY?? PE FUNDS are considered to be Mutual Funds for the Super Rich category. Reward of High Risk is High Returns. ?? ??A Glance at Indian PE Market ??According to various reports, private equity investments in India reached approximately $27 billion in 2023, marking a notable increase from previous years. ??Indian private equity and venture capital funds collectively raised around $8 billion in 2023. ??Technology and internet-based companies continue to attract significant PE investment, with the sector receiving approximately 30-40% of total PE funding in recent years. ??PE exits in India reached approximately $17 billion. I’m confident that the private equity sector in India is on the brink of an explosive growth phase, poised to unlock immense untapped potential in the coming years. Share your views on Private Equity in the comment section. #PE

I was fortunate to have some time with Daniel Glazer of Wilson Sonsini who is well known for his deep expertise and network in the US venture capital ecosystem. As promised, here are a few topics he often discusses with European-based founders who are considering raising from US-based VC investors. Please share widely as this is important information for all founders. Part 1 - raising advice: ? - It usually doesn’t make sense to Delaware flip ahead of reaching out to US investors. Just make clear to US investors you will do so if necessary and flip as needed as part of the financing transaction.?There’s a substantial difference between having a business that is interesting to US investors and simply having a Delaware parent company.?Spending money on a Delaware flip, only to find out that the business is not interesting to US investors from a commercial or operational standpoint, is not an optimal use of limited funds. ? - The earlier you raise from US investors, the more likely it is you will need to flip as a condition of the raise. ? - At Seed, roughly 75-80% of US investors leading the round will insist on it. Those with European offices often will not (most of the 20-25%). Rarer: some large US firms without European offices are comfortable with UK and some other European docs, and some but not many US-based investors will lead a Seed round before the company is ready to commercially and operationally expand to the US. ? - At A, about 20-25% of the time UK companies will need to flip when raising from a US-based VC investor leading the round; the percentages are somewhat higher for other European companies. ? - He virtually never sees it required of UK companies at B or later.?Again, the likelihood is somewhat higher for other European companies. ? - Post flip, the admin to run your business is more expensive. There is no Companies House or equivalent in the US. You are expected to keep your own house in order. This requires more regular interaction with US lawyers, in a manner that may seem strange or even off-putting to European founders. ? - Term sheets are typically more founder friendly in the US, in part because the US National Venture Capital Association (NVCA) model documents generally are more founder friendly relative to equivalent documents in Europe. No good/bad leaver provisions. Fewer investor consents. Founder non-competes are unusual.?On average, European term sheets tend to reflect a greater level of control over the business. ? - When negotiating term sheets, European founders would be well-served to get up to speed on US market-standard terms. #founders #startups #venturecapital #buildinginpublic #investinginpublic More at unbundled dot vc.

? What is Equity Dilution and how it affects you as a founder??? Fundraising is an important milestone for every startup founder looking to grow their business, but early investments often come at a cost – control. Here’s how to avoid the most common mistakes and protect your ownership. ?? Don’t raise more than you need Many founders face conflicting advice: raise as much as possible vs. raising only what’s necessary. The truth is, the first euros you take are the most expensive – your company has the least value, so each euro buys a larger equity stake. For example, raising too much can lead to significant dilution, especially if the valuation doesn’t grow as expected. Pro tip: Before raising, carefully estimate how much capital it will take to hit your next milestone. Investors will pay more as you de-risk your business. ? Know your funding tools Convertible notes, SAFEs, or equity rounds? Each has long-term impacts on your ownership, and knowing how they work is key. SAFEs and convertible notes are flexible tools, allowing early funding without setting a fixed valuation. However, rely on them too long, and you could be in trouble, especially when raising a follow-up priced round at a relatively low valuation. This would mean that you need to give a away more than 20% to early investors. Remember: Raising capital early through notes or SAFEs locks in significant dilution if your valuation doesn’t hold up. Use SAFEs? wisely and don’t over-rely on them before getting to a priced round. ?? Cap your option pools Building a team is essential, but be mindful of how much equity you allocate to employees. Most startups reserve 10-20% of their equity for option pools, whereas EU companies typically have smaller option pools than in the US. Giving away too much early on can dilute your own stake – and your investors'. The goal is to attract top talent while managing long-term dilution. ? Avoid super pro-ratas Super pro-rata rights, where investors demand the ability to increase their ownership in future rounds, can seem appealing in the short term, but they can scare away future investors. Standard pro-rata rights protect against dilution, but super pro-rata terms might lock up too much equity and deter new backers. Keep in mind: Later-stage funds typically want to secure a 10-15% stake. If early investors are taking a bigger slice, it might become hard to attract new capital. Negotiate wisely with investors who demand super pro-rata rights. ? The Bottom Line: Founders, it’s critical to understand every term and every funding tool at your disposal. Don’t rush to take the money. Do your homework, understand the math, and protect your company’s future. A few good moves today could save you from serious headaches (and loss of control) down the road. #Startups #Tech? #Fundraising #Equity #Founders #Venturecapital #Entrepreneurship #SAFEs #ConvertibleNotes #OptionPools