It's time for pre-seed startup valuations for Q1 2023. Thousands of startups applied to @HustleFundVC this quarter, and we want to share it with all of you.

First interesting tidbit – we have seen a pretty significant uptick in volume. In March, we had 1k deal submissions!

Also of note – the increase was mostly post SVB.

In terms of overall valuation trends, we have seen a general rebound vs 4Q22 - median pre-seed valuations are again firmly above $6M USD

However, the increased variation in valuations we saw in 4Q222 persists - especially to the upside. Valuation is sometimes just as much about what you can get as where you are.

What's driving the rebound? A flight to quality. Startups with higher revenue (and, to a lesser extent, product) are seeing higher valuations, while startups with less traction are seeing declines.

This premium for traction is in pretty stark contrast to the YoY changes we have seen in 2021 and 2022.

One of the more interesting changes is for startups with $5K+ MRR. This cohort saw a valuation increase of $1.5M - one of the highest I've seen.

This big change is driven by a holistic shift in valuations for the cohort - In math terms - We have seen more outlier startups at the higher end of the valuation spectrum (AKA more startups in Orange on the left graph, and Avg<Median in the right graph.)

So where does that leave our rough benchmarks for valuation based on traction? With a significant premium on valuations for startups with $5k+ MRR! Definitely, something founders should keep in mind

As always - Would love to hear your questions, thoughts, and feedback. I would also love to hear what you use!

You can read the unrolled version of this thread here: https://typefully.com/will_bricker/D4T178q

Q1 2023 Pre-Seed Startup Valuations

There has been a lot of noise about VCs telling their startups to take their money out of SVB.

While I generally err on the side of shutting up on Twitter, I want to make an exception to my policy:

IMO, VCs were correct to advise startups to move their money from SVB.

First, I have to commend SVB for its role in helping build and support the entrepreneurial ecosystem for decades. Thousands of people and startups owe it a debt of gratitude. Also, regardless of its impact on entrepreneurship, no one wanted to see SVB blow up. Full stop.

That being said, Given the circumstances of SVB, keeping deposits there on March 10th was a bad strategy for startups. Why?

SVB was objectively in trouble and at risk of a run. I will skip the details here and point you to the pieces of far smarter people on the matter:


RE: how the combo of SVBs business model & the macro environment created a tough situation for any bank to manage -  @matt_levine
https://www.bloomberg.com/opinion/articles/2023-03-10/startup-bank-had-a-startup-bank-run?sref=PXt3sRh5

RE:  the state of SVB before its collapse -  Mike Cembalest’s EOTM https://t.co/ilFuHWtAiQ


There are 2 crucial things to consider here.

1. Given the position SVB was in, startups faced an asymmetrically bad trade when it came to keeping their deposits at SVB.

• Upside - no run, and everything is fine

• Downside - Lose their deposits or short-term access to their deposits, resulting in some combination of inability to pay their employees or shuttering their businesses altogether.

So while "hold the line" sounded nice (and is excellent advice in movies like the Gladiator), it was a bad strategy for startups at the moment regardless of the eventual outcome and the reverence the entire community had/has for SVB.

2. VCs have an obligation to do what is best for their startups.

When VCs invest in startups, they engage in an implicit social contract to support and assist them in whatever way possible - regardless of whether times are good or bad or whether it's easy or hard to do.

I know this sounds a little hokey, but I genuinely believe that this is a VCs responsibility and that most VCs deliver on it.

Given these points, advising startups to take their money out of SVB was the CORRECT move and something that VCs should have advised their startups to do.

This may not have been a popular piece of advice, and nobody wanted to see SVB go down, but that doesn't matter here. What matters is helping your startups do what is right for them.

It’s easy to write articles about VCs fighting and greedy hypocrites https://www.bloomberg.com/news/articles/2023-03-15/silicon-valley-bank-tests-vcs-run-exposes-rifts-in-typically-chummy-world?sref=PXt3sRh5

It’s fun to create an anonymous hall of shame website about VCs telling their founders to move their deposits https://svbhallofshame.wordpress.com/

But the story SHOULD be about VCs standing by their founders when times are tough, which is precisely what they should do, regardless of what you think of them in other contexts.

So I applaud all the VCs who did the right but unpopular thing, including my boss @ericbahn .


If you want to hear more about what @HustleFundVC things VCs and other investors should do, check out our newsletter https://www.hustlefund.vc/blog-investors

VCs Should have told Startups to Move Money out of SVB

It's once again time to talk about Pre-seed startup valuations (queue crowd roaring in excitement). Let's see what over 3,000 US startups who applied to @HustleFundVC in 2022 can tell us about the current state of fundraising and valuations.
#startups #entrepreneurship

First - What we have seen recently. Valuations have overall decreased for pre-seed startups in the 4th quarter. The gains we saw from the first half of the year have, by and large, been erased

Interestingly enough, while valuations have retreated, the volume of deals we are seeing has not (except for some normal seasonality)

Driving the correction in pricing are the earlier deals we are seeing. Startups that are pre-MVP & revenue saw the most significant declines in 4Q22

Drilling in a bit more, pre-product startups have been hit the hardest, seeing a roughly 50% decline in valuations. As
@MartinGTobias has said. - the days of big valuations for idea-stage companies seem to be behind us for now

Finally, round sizes have stayed pretty stable in % terms, with a slight downtick in dollar terms

I have some more detailed graphs here in case you want to go down the data rabbit hole a bit more https://www.notion.so/hustlefund/Pre-seed-Valuations-Dec-2022-c404ec6c42eb4eb690a28fd93c1ca4ef

As always - Questions and feedback are always welcome. Thanks for stopping by, and have a great end of 2022.

EOY 2022 Pre-Seed Valuations

It's time to share how we have built our tech platform to help us review 700 deals a month and manage over 400 portfolio companies at @HustleFundVC

#VC #Tech
🧵

The bigger piece is here. In it, you will find some insights into how we got to this design and a little more detail about how it comes together. But here are some TLDR-friendly tidbits. Shoutout to @vedikaja_in and @weekendfund  for inspiration.

https://medium.com/@willbricker/an-emerging-vcs-tech-stack-a-dive-into-hustle-fund-s-platform-fa4037bedc04

On the overall design - we use a bespoke model for our platform: we have a set of apps for data & UI, which we connect and automate through @zapier. We find this approach to be the highest ROI available.

Diving Into our core apps for investing

First off, our DB @airtable - it is excellent for storing, exploring, and interacting with data. However, it is expensive to scale beyond the "pro" package.

Our "Glue" @zapier  - a great tool for connecting and automating your stack

Our CRM  @pipedrive - A simple, affordable, and connected CRM option. We don't have that @Affinity money

Our workflow automation & management tool is @ProcessStreet - An attractive pricing model for an adequate & evolving workflow tool

Our fund management tool @cartainc  - while it has a lot of great features, it has been a struggle

Founder community & knowledge base @circleapp - hits a lot of our requirements, but it's a struggle to get people to use another app

E-signature tool is @DocuSign - it works, and we know it, but there are probably better options

Notes & Internal collaboration hub @NotionHQ - Note-taking is a very personal thing, but Notion is an excellent authoring & collaboration platform

BI & Reporting tool @tableau - Great & familiar, but it's expensive and not quite fit for purpose

Form tool @typeform - While it does a lot of what we need, I don't think it's the best pick

Others - @Calendly @vimcal @loom @Mailchimp @ScribeHow @SlackHQ @Superhuman @webflow @LumaHQ @flowdotclub @brdgapp

You can read the unrolled version of this thread here: https://typefully.com/will_bricker/o3y8gFW

An Emerging VC’s Tech Stack: A dive into Hustle Fund’s platform

Let's talk about what's on the minds of ~100 @HustleFundVC Founders and what they are doing in regards to burn and runway
#startups #Founders #VC 

during our quarterly survey, we ask founders what their top challenges are. Pictured here are several key topics and their prevalence across founders over time.

A couple of interesting things here...

1. The focus on fundraising has increased in 2Q22.

Also, the spread between US and Non-US companies (a trend that started at the end of 2021) remains large
  

2. companies are worried about growth (vs sales) and less worried about hiring 

Regarding runway - the trend is upwards. However, there is a decent spread (especially at seed)
Also interesting is how many of our companies got funding around Q3 last year (that big uptick)

Regarding burn - it has come down (especially if you exclude top outliers). This has helped increase runway -  a smart move for many startups given the current fundraising environment. 

Also interesting - burn has not come down to the same levels we saw at the end of 2021.


If you want to dive into my graphs a bit more, I am going to try out publishing them https://hustlefund.notion.site/Tableau-Viz-on-Founder-Focus-5be2e8fbefac4d789de3c09592ac16b1

Also - important to say that there is a lot of context missing behind these numbers, every startup is different etc

As always - thanks for your time and comments/questions/feedback are always welcome.


You can read the unrolled version of this thread here: https://typefully.com/will_bricker/Q493bVk

Founder Survey Insights 2Q22

Hi - Back again with some data insights into pre-seed startup valuations.

This time, I want to talk about my favorite chart for both founders and VCs - The traction slide

#Startups #VentureCapital #Entrepreneurs #Founders

Explaining the chart - this is the median and mean valuation across 1300+ US startups (Ex-crypto) that submitted their deal to @HustleFundVC this year, bucketed by MRR and product status

Why I love it pt 1 - it's a great representation of what matters and how much it matters when starting your startup - building an MVP of product AND acquisition

Per the chart, the biggest boosts you get in valuation are from

- building something vs just an idea

- executing your initial acquisition process multiple times

IMO, the boost is because these are the most important milestones when initially building your startup


Why I love it pt 2 - I think this is a decent baseline for how the market is pricing startups at various stages within pre-seed.



To be clear, these values are far from perfect - many important factors are not represented here, each startup is unique, and there is a lot of variation (1Z=60% of avg value for each bucket!)

However, when it comes to the art of setting a valuation for your company, I think that a pattern that has held for several years based on statistically significant variables is a pretty good place to start and is hopefully helpful!


As always - thanks for your time!  All comments, questions, and feedback are appreciated.


You can read the unrolled version of this thread here: https://typefully.com/will_bricker/bHwwUgn

Pre-seed Valuations & Traction

Back by popular request - Pre-seed startup valuations!

Let’s look at over 4K pre-seed deal submissions @hustlefund  has gotten over the past year+ and see what's happening in the world of US pre-seed venture capital 🧵

#Startups #VC #Entrepreneurship

What we are seeing - valuations have trended lower in q2.

Valuations are back to EOY 2021 levels (~$6M USD)  down from all-time highs of ~$7M USD in 1Q2022


Things to note
- Data is based on submissions we received from  US non-crypto startups
- Pre-seed startups are all very different & there is a lot of dispersion in valuations. 
- Median trend <> the trend holds true for all pre-seed startups  

There are a couple of drivers I am seeing (and many more I am probably missing) 
#1 -  less high valuation startups & less dispersion in valuations. 

While 2021 saw wider valuation ranges, 2022 saw ranges narrow, especially for higher valuations

#2 - valuations for lower MRR startups decreased 

While higher MRR valuations decreased in the first part of 2022, valuations for lower MRR startups came down in Q2.

#3 - valuations for consumer startups decreased

While consumer startups had very similar valuations to enterprise startups for much of 2021, their valuations decreased more in 2022 than valuations for enterprise startups


Also of note - In addition to valuations coming down, we have seen a slight decrease in the volume of deals we are seeing. This means instead of 6-700 deals a month, we are seeing closer to 500.


Hope this has been helpful. 

As always questions, comments, and feedback are welcome. 

Thanks for reading!

You can read the unrolled version of this thread here: https://typefully.com/will_bricker/gE6FAlD

3Q22 Pre-seed startup valuation trends

Last time we talked about the intro blurb, now let's talk about pre-seed pitch decks
#Startups #Fundraising #VC #Entrepreneurship

For reference https://twitter.com/will_bricker/status/1529199893822066689?s=20&t=O9bNnnnJ5LCuLcVz9onmFQ

You need 2 Decks - 

1.  email deck - a short & punchy set of 5-7 slides that allow investors to get an idea of what you are doing in 30 - 60 seconds.
2. Pitching deck - the full set of slides to tell your story + an appendix of slides that you can optionally refer to

RE: Email deck - My boss @dunkhippo33  suggests - Problem, Solution, Traction, Team & Market. I think you can add a business model slide to that list... sorry boss

https://elizabethyin.com/2017/06/06/the-ideal-email-deck/


RE: Appendix

it should include slides that provide greater detail on key points or provide answers to questions that you get asked often. The goal is to provide optional aides to talk to and, by having them - demonstrate the quality of your visualization for your startup

EG. People often ask about unit economics of your product - have a unit economics slide in your appendix you can call upon

So what should you include in your decks?

It varies by company, stage, and investor. In the comparison  below you can see  a hierarchy of importance
(Credit @maurizio_lacava for inspiration for the image)

The hierarchy is broadly: 
Tier 1 slides - Problem, Solution, Business Model, Team

Tier 2 slides - Product, Market Size, Traction, Competition, Financing Ask

Tier 3 slides - Why Now, Financials, Accomplishments

Tier 1 Slides =  essential items to have in any deck

Tier 2 - a subset   should be included depending on how they fit with the story you are trying to tell

Tier 3 - should only be included if there is a very important and pertinent point being made.


Re: Story - what slides to include and the order you present them depends on your startup and what aspects are most unique, impressive or important.

EG. If you are pre-seed - your financials and 5-year projections probably aren't that helpful, but demonstrating how quickly you have built and iterated is crucial. So move traction up and ditch the financials slide

Also - it should go without saying that you should include a title slide WITH YOUR CONTACT INFO!

Now a couple of resources.

The google sheet I used to create my image above 
https://docs.google.com/spreadsheets/d/1yORvgzOliRUWwXzdComIceSAu5mFaRj6yXM-sUpiE6M/edit?usp=sharing

My favorite all-in-one guide to designing your pitch deck
"The Ultimate Guide To Create A Brilliant Startup Pitch Presentation" by @maurizio_lacava
https://www.mauriziolacava.com/en/presentation-resources/the-ultimate-guide-to-creating-a-brilliant-startup-pitch-presentation/

A great data based guide by @DocSend 
https://www.docsend.com/blog/what-to-include-when-building-your-pre-seed-pitch-deck/



And my boss @ericbahn video "How To Create The Perfect Pitch Deck"

https://www.youtube.com/watch?v=2E19n8ETMSc


Thanks for reading and I appreciate any feedback or suggestions on future content 

Pre-Seed Pitch Decks

Lot's of great pieces on what is happening in the VC market and what founders should do about it.

I put together a couple of items that founders might find useful - a short 🧵

#Startups #Founders #VC #Entrepreneurship 

A one page summary of what's happening, why, and what VCs are telling founders to do

A live reading list of articles I have come across on the topic  via @getupnext

https://app.getupnext.com/list/nCdpSzHY41brRQiqheCB 

Spotlight article on founder advice - "39 Moves to Survive (& Thrive) in a Downturn: 2022 Edition" by @peteflint @NFX
https://www.nfx.com/post/39-moves-survive-thrive-downturn

Spotlight article that has a little bit of everything - "Good Times in The Great Revaluation" by @EricNewcomer

https://www.newcomer.co/p/good-times-in-the-great-revaluation?s=r

You can read the unrolled version of this thread here: https://typefully.com/will_bricker/KnDxvu5

Resources on the "Great Revaluation"

I've been helping a lot of our @HustleFundVC startups with their fundraising and I thought I'd share some thoughts with the Twitterverse. the 3 key fundraising artifacts are an intro blurb, email deck, & pitch deck. Let's talk Blurbs first! 🧵#entrepreneurship #Startups #VC


The goals of the intro blurb are to provide 1. an easy way for people to introduce you (forwardable) 2. a concise summary for investors of what your startup does and why it's great 3. resources for investors to dig in more and get back to you. 

Let's talk about the pieces!


*The Subject* - "Introduction to [Company Name]"
Note: the format is less important than making sure you have your company name in there

*The Intro Sentence* - tell who you are and provide any relevant context. Make sure to tailor it to a specific investor!


*Company Info* - 2-3 sentences on what you do, how you do it, and why it matters. 

*Key Insights* - 3-4 bullets on traction (revenue, team, & or product) and key talking points about your company.


*More Info* - deck (use something like @DocSend so you can get analytics and see who views it) & demo if you have it

*The Ask* - What you are asking for & maybe some personalization.


Here's a little example/diagram I made just in case it's helpful!

And if you don't care much for my thoughts, here are some resources from other VCs

First, my boss @ericbahn 's advice on what a blurb should look like 

Next, here is a great piece from @alexiskold  from @2048vc
https://www.startuphacks.vc/blog/2015/11/12/how-to-introduce-your-startup-in-an-email

and finally, another great piece from my former teacher  @roybahat from @BloombergBeta
https://also.roybahat.com/introductions-and-the-forward-intro-email-14e2827716a1

Hope this is helpful and let me know if you have any questions!

You can read the unrolled version of this thread here: https://typefully.com/will_bricker/5P2HdJT