A VC Christmas Carol

We find ourselves at that time of year where people are in more of a reflective mood than usual - myself included.

?

Beyond this season’s whirlwind of awards ceremonies, industry events and office parties, people are busy trying to clear their desks and make a clean break for the holidays. Goodness knows this is probably the only time of year where people can properly decompress and where email traffic slows if only or a day or two.

?

I often take this time to reflect on my performance and try and establish personal and professional goals for the coming year and in so doing am trying to learn from the lessons from another year in the fundraising and M&A trenches.

?

Last week, I was lucky enough to attend a Christmas Carol Concert where the choir were drawn from military wives and their spirit, cohesion and teamwork all working towards a common goal gave me an idea about how to frame some of the most important learnings from 2023, and if you will grant me some artistic licence, I thought I would tell you a story that is pertinent to both the state of the venture capital market and the season………(Disclaimer: any similarities to other known works is purely coincidental)

Scene: A City Office in the Middle of a Bitingly Cold Fundraising Climate

Once upon a time in a bustling technology accelerator unit in a City that may or may not bear a passing resemblance to London, there lived a young tech entrepreneur named Evan Geezer Stooge (hereinafter “Stooge” (sorry professional habit)).

?

Stooge was an ambitious and driven CEO, determined to grow his startup into a successful business. However, he was also notorious for prioritizing the tech and profits at the expense of his employees and the community, showing little regard for sustainability or social impact (let alone any SaaS metrics!). His leadership team lacked diversity and the least said about his management style the better - for he managed everything alone, and he alone made all the decisions - right down to the antiquated and undersized fossil fuel-based heating system.

One chilly venture-funding winter’s night, as Stooge drifted into slumber after a long day of pitching to investors, he was visited by three ghostly figures. The Ghosts of Venture Capital Past, Present, and Future appeared to him, each with a valuable lesson to impart.

The Ghost of Venture Capital Past showed Stooge scenes from last three or four years of venture capital. He witnessed the importance of resilience and adaptability among entrepreneurs facing economic downturns, market volatility and global pandemics. The ghost stressed the need for Stooge to be flexible in his approach to fundraising, to adapt to changing circumstances and market conditions, to plan well in advance and to focus on core metrics and KPIs as well as optimising customer satisfaction and retention rates in order to succeed.

Next, the Ghost of Venture Capital Present guided Stooge through the current landscape of fundraising. Emphasizing the growing significance of sustainable and impact-driven investment opportunities, the ghost highlighted the heightened importance bestowed by investors upon startups committed to environmental, social, and governance (ESG) principles. Stooge recognized the value of aligning his business model with sustainability goals and embracing a wider purpose and KPI measurement set beyond mere profits.

Lastly, the Ghost of Venture Capital Future led Stooge through a realm where a diverse and inclusive leadership were paramount. The ghost highlighted the transformative power of developing and incentivising diverse teams, revealing how this approach could unlock doors to venture investment otherwise closed to him. Stooge began to understand the strategic advantage of assembling a team with a broad range of perspectives and experiences.

He vowed to make changes in his leadership style, bring in a more experienced management team while overhauling business practices to reflect a new set of values and create a more sustainable and equitable future for all with an appropriate, tax-efficient equity incentivisation structure for key staff (subject to normal vesting provisions).

?

Stooge awoke with newfound clarity and determination. The lessons from the ghostly apparitions held profound implications for his venture capital fundraising efforts and he was determined to embrace the lessons shown to him and he vowed to change.

?

Newly enlightened, Stooge set out on a new path. He engaged with potential investors and articulated a clear commitment to sustainability and social impact. He actively sought diverse voices for his leadership team, acknowledging the strength and creativity such collaborations would bring.

Stooge became more adaptable in his approach to fundraising, seeking the wise counsel of others (such as Henley-based award-winning corporate finance advisers) and readjusted his valuation expectations in line with market. He forged strong relationships and networks, prioritizing transparency and clear communication with investors, openly discussing expectations and potential risks even where follow-on funding may be at a down round.

He was good to his word and because of his newfound understanding, Stooge’s startup flourished. He secured venture capital funding on favourable terms from investors who saw the value in his visionary approach. His commitment to sustainability, diversity, and transparency set him apart in the competitive fundraising landscape of 2024, and his journey served as an example to other entrepreneurs seeking to navigate the changing world of venture capital fundraising.

From that day forward, Stooge led his business with purpose and compassion, understanding that the lessons he had learned were as invaluable as any fortune. And in his success, he also found fulfilment, knowing that his efforts were making a positive impact on his team and wider society and soon his start-up became a scale-up which in turn became the envy of many a potential acquirer.

“And it was always said of Stooge, that he knew how to fundraise well, if any man alive possessed the knowledge.?May that be truly said of us, and all of us!”

?

Happy Christmas and Best wishes for 2024.

?