C2V June 2020 Notes from the Trenches

Hello friends! It has been a unique and tumultuous year thus far, and the already tough job of running a startup has become even more difficult, making the need for support from investors and advisors that much more critical to startup success.  

As we all start to assess the bottom halves of our wardrobes in preparation for the transition back to human interaction, we’ve been hard at work here in the trenches on new ways to increase founders’ access to this critical support.

Lessons from Lockdown: Balancing Growth & Runway in Uncertain Times (featuring the team at Propeller Industries)

It will come as no surprise that venture activity has taken a hit of late. According to the Q1 Pitchbook-NVCA Venture Monitor, while overall deal funding was only down 2.2% from last year’s first quarter, the headline number was heavily skewed by a handful of mega-deals, as

  • Total number of deals was down 27%;

  • The average deal size was up 35%;

  • Total number of early-stage deals (sub-$5 million funding rounds) was down 17%; and

  • Total funding for early-stage deals was down 14%

While we’ve seen a noticeable pickup in deal flow and funding activity in the past few weeks, the overall Q2 numbers are likely to be even worse given the lag between commitments and closings, as well as the timing of the worst of the downturn (coming at the tail end of Q1). 

Much of this slowdown is undoubtedly due to increased caution among VCs (an indicator that funding should come back as the macro picture improves), but VCs have also used a material amount of their available capital to shore up their own portfolio companies, leaving less for new investments. 

The upshot of all of this is that venture funding will be harder to come by and runway risk will be much more pronouncedThe solution for more mature companies is a fairly straightforward focus on cutting costs and managing toward shorter-term profitability, but it’s not that simple for early-stage companies.  For an early-stage company, growth is key to everything from identifying critical product iteration needs and seizing on first-mover advantages, to protecting IP, reaching critical proof points, and even reaching profitability through scale. 

This makes stagnant growth as big a risk as running out of cash, which leaves founders with the dilemma of how to strike a proper balance. This is a key concern we’ve heard from many founders we’ve spoken with over the past three months and we’re excited to have our friends at Propeller joining us to co-host a digital strategy session on this topic on Tuesday, June 30th.

One of the leading providers of outsourced financial management for early-stage startups, Propeller’s 120-person team has been helping its client base (now numbering more than 200) navigate challenges like this for more than a decade. We’re excited to share their expertise and observations with and would strongly encourage all of you to join.

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Otari Launch

Earlier this month our portfolio company, Otari, a home fitness, screen-equipped, smart exercise mat that uses computer vision to personalize feedback and stream classes in real-time, had its commercial launch through Indiegogo. We’re excited to see consumers sharing our enthusiasm for the unique value that Otari’s product will provide.  

You can learn more about Otari in Founder/CEO Chris Kruger’s recent interview with Cheddar (including a real-time demo from co-founder and CTO, Skyer Erikson), and you can purchase your own Otari screen-equipped mat here. 

Stories

As we’ve previously noted, our Stories Summit had to be postponed from its original April 16th date. While we will still host the event (possibly outdoors) when it becomes safe and practical to do so, we’ve also been working on a plan to deliver on the Stories Summit mission of helping founders via a primarily digital platform.

We are thankful for leaders like Rich Antoniello, CEO of Complex Media who are helping us drive this mission forward, which for now we are just calling “Stories”.

MasterClass Meets The Athletic for Startup Founders

A subscription-based community for start-up founders, Stories will grant exclusive access to lessons and interactive guidance from the biggest personalities and leading voices in their respective domains. Subscribers will obtain demand-generated content (driven by founders themselves) in the form of live-streaming sessions and a library of archived resources.

The goal of Stories remains to bridge the resource gap and provide support to founders, sharing lessons learned by those who have been there before to help optimize limited resources and steer clear of avoidable mistakes. As we build out this platform, we will be hosting a series of digital sessions on timely topics impacting the founder community, which brings us to….

Elsewhere in C2V Land

Superpowers Podcast

Chris and Bill have officially hit the big time with their recent interview of NFL Network Insider, Ian Rapoport! Check out their discussion on how you should build your career around your passion instead of chasing dollars.

What If I Just Can’t Get Enough C2V?

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