C2V November Notes From The Trenches
Welcome friends! We’re pretty excited for this one, and not just because we actually saw some indication from at least one industry insider that the venture markets might finally be coming back around to early-stage investing. What’s that saying, “One newsletter does not a trend make”? Something like that, but consider us cautiously optimistic in any event. More on that (and a link to the post) in the news section below, but we promised you less math and more fun this month (plus, we’re pretty sure you know we’d come down on this topic, anyway), so without further ado, we give you, the first annual Spammy Awards… But first, our latest investment and portfolio news.
New Investment
We’re pleased to share the newest company in our Capital Partners II Fund, the robotics software platform AltitudeAI. As regular readers know, we generally look at robotics less as hardware products and more as software that happens to operate a mechanical device because that’s where the real IP, functionality, and moat for these products lie. Altitude’s product takes that even a step further, focused entirely on the software component of robotic industrial automation cells, particularly the efficiency with which that software is developed.
Leveraging new generative AI language models, Altitude’s platform allows industrial automation integrators to program manufacturing cells up to 100x faster. This is a particularly important breakthrough in the industrial automation space, where the time and expense of programming automation cells have long been the biggest headwind to more widespread adoption,
These complex, bespoke software builds are not only extremely expensive and time-consuming to implement, but they have also been difficult to maintain and nearly impossible to efficiently upgrade or re-task, where technicians would need to spend hours learning the original, entirely bespoke code for each cell (or even each component within a cell), more or less from scratch, before even beginning to diagnose and fix issues.
We believe Altitude’s AI-augmented scripting capabilities (and related capabilities, including building digital twins for use in running testing and simulations) has the potential to be a true step-change in the rate at which industrial automation is adopted, with far-reaching, transformative impacts on the manufacturing sector.
C2V Watercooler
With the election now behind us, Chris has had some exciting conversations with founders and fellow VCs about the potential impact of the new administration on our industry. When it comes to early-stage tech investing, there’s a mix of reactions—some categories seem poised to get a tailwind, while others might face some new headwinds. It’s interesting to consider how these shifts could play out across different sectors.
We’d love to hear your perspectives: What categories will gain traction, and which might find new challenges?
Newsletter Spotlight - NEWCOMER
Megafirm Domination of Late-Stage Investing Shifts VC Focus
Venture firms are pulling back from growth-stage investing, with limited partners (LPs) urging them to specialize in early-stage deals instead of competing with megafirms like a16z, Lightspeed, and General Catalyst. Key points include:
Growth Funds Struggling Outside Megafirms:
LPs see growth funds as viable mainly for large firms with the capital to dominate late-stage deals.
Smaller firms, such as CRV, are returning committed growth capital, citing a lack of opportunities.
The number of growth rounds has dropped significantly, with total deal value down two-thirds from the 2021 peak.
Shift to Early-Stage Focus:
Forerunner Ventures recently raised $500M for early-stage investments, a departure from its previous mixed $1B fund.
LPs prefer specialized managers over multi-stage funds, which are now considered a tougher sell.
Concerns Impacting Growth Investing:
Liquidity challenges: IPO and M&A slowdowns make cashing out even successful investments harder.
Valuation overhang from 2021 may lead to year-end write-downs.
Opportunities for Emerging Firms:
LPs see potential in newer, smaller firms with partners from prestigious VC backgrounds (e.g., a16z, Bessemer).
Unique strategies (e.g., Harry Stebbings’ podcast-driven approach) can provide a competitive edge.
Megafirms Resembling Private Equity:
As megafunds expand their growth-stage focus with multi-billion-dollar vehicles, they increasingly resemble private equity firms reliant on management fees.
In the current environment, firms are under pressure to stick to their strengths, particularly in early-stage investing, while leaving the late-stage game to the megafirms.
Portfolio News
Magellan AI Expands Podcast Ad Measurement for Non-Traditional Formats
Magellan AI has introduced tools to measure non-traditional podcast ad formats, such as sponsored interviews, branded podcasts, single-episode sponsorships, and feed drops. These features provide automated tracking, detailed attribution, and performance data alongside traditional ad reporting. The tools are designed to help advertisers, publishers, and agencies better assess the business impact of their podcast promotional strategies. Users can easily integrate these capabilities into campaigns via Magellan AI’s dashboard, with custom demos available to showcase its value.
Boostr and PureIntegration Announce Strategic Partnership to Drive AI-Powered Advertising Solutions for Media Companies
Boostr and pureIntegration have partnered to provide AI-powered tools that streamline advertising workflows for media companies. Their solutions combine Boostr’s CRM and OMS platforms with pureIntegration’s expertise in digital transformation. The partnership focuses on automating processes, improving ad management efficiency, and supporting media companies with next-generation technology for better profitability and scalability.
Digital Iron Update: Growth, Product, and Team Milestones
Digital Iron gathered in sunny Belfast to celebrate key achievements:
Revenue Growth: Achieved $50k ARR last month with a $1M+ sales pipeline and plans to test independent sales hand-offs.
New Opportunities: Exploring proximity-based parts recommendations and data-driven solutions for manufacturers and dealerships.
Transactional Revenue: Automated service kit orders with a 1.5% revenue share, aiming for 10-15% outside warranties.
AI Expansion: Models now handle six classifications, enhancing diagnostics, maintenance, and parts ordering.
Customer Onboarding: ReadyDig, a leading construction dealership, is integrating Digital Iron to streamline parts sales.
The team is focused on scalability, innovation, and customer success!
Job Opportunities
Eskuad is looking for a Mobile Flutter Developer.
C2V Deal Submission Awards (aka, “The Spammys”)
Cue the terrible awards show elevator music. Quick aside -- Can anyone explain why the Academy is still trotting out the same score from 80 years ago? Should you even be allowed to give awards for musical content when yours is basically the same soundtrack that always makes you want to get in and out of your local CVS as quickly as possible? We digress...
Quick background here: as we noted in our August 2022 newsletter about deal flow, we mentioned that one of our coping mechanisms while combing through the 50+ decks we get in an average week is to take a minute and enjoy some of the more… er… colorful submissions. So, we thought we’d dedicate our Thanksgiving newsletters going forward to honoring these brave folks who aren’t afraid to let it fly and (whether intentional or not) inject some joy into what would otherwise be one of the more monotonous aspects of our jobs. To the awards!
Best Cold Email Subject Line
“Invest in the Jockey, the Horse... or the Donkey?”
You’d expect this to be followed by having your mind blown by why “the Donkey” is the correct answer, right? Nope, it was the Horse. Still a bit confused by this one.
Best Company Tagline
Working in buzz words from two different tech bubbles, more than 2 decades apart? This is the startup equivalent of Tim Duncan winning NBA titles at ages 22 and 37. Bravo.
Best Superfluous (and More Than a Little Weird) Picture Included in a Cold Email
Your nominees:
This guy…
This gal…
And The Spammy goes to… Vinivia, for her ability to clearly and succinctly quantify her ROI (and because you generally don’t want reactions to your cold email outreach to include “wait, is he homeless?”).
The Name-Drop Awards
Most Over-the-Top
To the proptech company who managed to work a16z, Sequoia, Tiger, Google Ventures, Bank of America, Citibank, Blackstone, Max Levchin, Jay Z, and Will Smith into one, relatively short email.
Bonus points for dropping “ESG” and “middle-class wealth generation” into that same email.
Most Confusing
To the company whose second deck slide was the founder’s bio alongside a picture of him (at maybe age 7 or 8) with Bill Clinton.
Most Dated
To the company whose email subject line included “Boris Becker invested”
Raise your hand if you have any idea who Boris Becker is. Actually, scratch that; raise your hand if you even have an inkling of what Boris Becker is famous for. (Chris & Matt both remember Becker, but just barely, and we’re not young).
The “Still Waiting for the Founder to Realize My Name Isn’t [_______]…” Award
Gary (1 email)
Vincent (2 emails)
And your winner (in all the ways)…
Randy (3 emails & counting)
(And yes, this really happens. Surprisingly often.)
Worst AI Bot Name
3-way tie between “John,” “Daniel,” and “Frederic”
Folks, we need to talk about this. You cannot give your AI bot a common human name. Trust us on this: it does not land. Think about naming your bot like you'd think about naming your dog. Have you ever met a dog named "Jim"? Exactly.
One-Percentiest Product
Honorable mention:
Dineoutwith.us – The app for sourcing and managing caterers for your dinner parties
Bonus points for doubling down on their lack of self-awareness with this email lead-in: “Given C2 Ventures' investment focus on dirty, dull, and dangerous verticals, I believe dineoutwith.us aligns with your portfolio.”
Your Winner (in a landslide):
PlaneKrafty -- "Solving the Private Jet Maintenance History Mystery"
Honestly, who among us hasn't thrown up our hands in frustration when our PJ wasn’t taxiing by the time our EV had closed its gullwing doors and parked itself? Dozens of people out there have never felt more seen.
Jokes aside, if you're serious about starting a tech company and it even once occurred to you (even for just 5 minutes in the shower) to build a startup focused on something your immediate circle of friends does in their leisure time, we would strongly encourage you to push pause, close your eyes and point to a spot on a map of the US, pack a backpack (and only a backpack), take a bus there (not a train or a car, and definitely not a plane; a bus), book yourself in a motel (with an "m" not an "h"), and stay there until you realize you were born halfway between third base and home (with no outs and a .380 hitter at the plate ) and you need to look outside your personal bubble for problems to solve because you and your friends have never actually experienced a real problem in all of your lives combined.
That or just forget about starting a company and get your mom or dad to hook you up with an investment banking job, or whatever.
The "Guns Blazing" Award
From the 2nd slide of a proptech company deck: "Problem: The National Association of Realtors is a corrupt cartel that pillages home buyers"
Yes, that's verbatim. Even we (not exactly shy in our commentary) were a little shocked by this one. Go get 'em, guys.
Zuckerberg-Musk Social Media Award for Biggest Potential Destroyer of the Social Fabric of Our Society
Two-way tie here:
Bleesie (a “best-friend bot”)
Forever Voices AI (AI boyfriends/girlfriends for a mere $1/minute)
These products advertising themselves as the solution to the current epidemic of growing depression/loneliness/isolation among young people (which, unbelievably, they both do) is right up there with addressing school shootings by arming teachers.
The "If Anyone Should Know Better Than to Blindly Trust Technology" Award
To a company whose seed round we had to pull out of at the 11th hour after discovering a couple of previously undisclosed (and quite significant) skeletons in their closet, who suddenly showed back up in our inbox a year-and-a-half later with a series of (clearly AI-generated) fundraising outreach emails.
It was both funny and tragic, not necessarily in that order.
The "Yes, You Can Turn Absolutely Anything Into Porn" Award
KinkBNB (for legal/HR reasons, we’ll let you all explore this one on your own)
Last but not least…
The Company Name Segment
As long-time readers will know, trying to guess what companies do based solely on some of the more fun names we see has been our sweet spot from the jump (see prior years’ lists here and here) and this year’s crop did not disappoint.
Best Displays of Self-Awareness
PipeDream
Lucky Hand
Good to see founders going into this thing with eyes wide open.
Most Likely to Be Followed by an Extensive List of Side Effects
Velotix
Denrgy
Rezzi
(Rezzi may cause fatigue, irritability, temporary loss of social graces, one or more club feet, and intense mayonnaise cravings...)
A Venue You’re Most Likely to Leave Divorced, Dead, or Both
KlubX
Anyone’s guess what goes on here, but we’re pretty sure it doesn’t end well.
Product You’re Most Likely to Be Offered Just Before Your Night at KlubX Goes Off the Rails
Spoonshot
Wippli
Mindgram
Zeekeez
Best Overall
MYANIML
Autobiography of [name any high-profile Bay Area VC or founder] that the NY Times calls "The most obnoxiously self-aggrandizing book ever written" and the Washington Post says, "Made me question my faith in humanity."
Dingus and Zazzy
Adam Neumann and Marc Andreessen's new TBS show?
Nibbles
A consumer pet tech company (for real)! Now, this is how you name a startup, folks. Sadly, the business is outside of our thesis, but it is better than 50/50 one or both of us end up naming our next dog "Nibbles".
BigLittleAI
We love this name! Seriously, we don't even have a joke here. Just keep an eye out for the launch of "BigLittleVC" in the near future.
That will do it for the inaugural edition of the The Spammys. We hope you enjoyed the show, and congratulations again to all of our winners. Please keep them coming so we can do this again next year.