Go FOF yourself is the advice we got from Sequoia Capital, which means go find funds. Yes, there are plenty of funds, but where?
The Sequoia Capital story appeared in Fortune, which is behind a paywall. We won’t bother to offer a link. We find it ironic that you need money to access a story about saving money. Since we liked the tagline, we used Google to find the PDF. These stories all tell a familiar tale of The Hunger Games, which is either you earn or you burn. It feels like the Sequoia graphic below encourages us to burn as opposed to earn. Stick around for the end, we’ll share a radical concept.
Times are tough and most companies working on dreams are in for a rude awakening. We posted OneTrust laying off 950. Law360 reported Notarize cutting a quarter of its staff. Both are extremely well-capitalized companies that have raised $1.14 billion in total…yes, a billion. Yet, there were signs of distress. OneTrust latest round was a “bridge” round of $6.4 million, which was nowhere near the previous $210 million round. Notarize last round was undisclosed.
Bridge rounds will become a reality for most. AirSlate raised a hefty $51 Million at a $1.25 billion unicorn valuation. Yet, their previous round was $50 million. So while round sizes are still big, they seem to be hitting a ceiling. Does this mean that the well of infinite capital is drying up? Actually, the opposite. Never before have founders had so much choice in financing options and instruments. And these aren’t just in the States.
Feast on Funds
Last Friday’s dope drop revealed the number of new venture funds in 2022 was 139. Well, by Tuesday, that number jumped to 153 funds announced. These funds focus on areas ranging from a founder’s background, a company’s stage, or its impact on our lives. They aim to support people and products through various stages of their lifecycle. If you are an early stage / no revenue founder, there is $2.9 billion sitting on the shelf awaiting your submission. If you have a bit of revenue, there is access to $11.1 billion. Ready to retire? There is $5.3 billion in private equity looking to buy you out. Remember, this is real money pledged in the last 6 months.
If all else fails, sprinkle in some blockchain and get a slice of $9.5 billion. No kidding, despite the crypto meltdown, it is the single biggest area of focus for the new VC funds. While it has dropped slightly over recent weeks, the average size of a crypto company’s first round is $8.3 million. Kidding aside, The beauty of this abundance shows us the hunt for unicorns is still on. However, if you want to be hunted, you have to come out of hiding.
Capital from Customers
Raising capital from investors can never be an end goal. Companies are rediscovering the lost art of raising cash from customers. This radical practice is known as generating revenue. Btw, this also opens up the option for Revenue-Based Financing. Google it, and you’ll discover many fellow startups offering this financing instrument. Speaking of fellow startups, I’m happy to report that three of our customers have recently informed us of revenue growth. One is on the verge of becoming profitable. What do they have in common? They are in the business of helping companies reach customers. And the way to reach customers is by coming out in the open.
Along with our customers mentioned above, we also noticed this growth. We added 168 new profiles to Legalpioneer.org in two weeks. This is about 12 companies every day. Why the sudden surge? Companies need customers, so they are boosting their sales and marketing. The recently added weren’t all newly founded companies, but mostly dormant ones. Usually, these companies thrived on a few loyal, happy customers to grow via word of mouth. Perhaps now, the economy is shutting those customers up.
A founder’s reality is that a new product takes time for the market to adopt. Some ideas take longer than others to become sustainable. It takes crazy, slightly obsessive people from all backgrounds to keep going when the world tells them to stop. You can’t keep going if you and your loved ones go hungry or homeless. So we require money to eat, build, sleep. If more do this, it increases our chances to change the world, create jobs and a few bank accounts.
So where are those funds? They are now part of Spark Mini at, ironically, no extra charge.