July's Most Relevant Content Across Startups, VC, Data & AI
Your Monthly Roundup
👋 Hi, I’m Andre and welcome to my newsletter Data-driven VC which is all about becoming a better investor with data & AI. Every Tuesday, I publish “Insights” to digest the most relevant startup research & reports. Every Thursday, I publish “Essays” that cover hands-on insights about data-driven innovation & AI in VC, and every Sunday, I publish “Picks” to spotlight the hottest Stealth, Early, and Growth Startups. Follow along to understand how startup investing becomes more data-driven, why it matters, and what it means for you.
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Welcome to our monthly wrap-up episode where we cover July’s most relevant content at the intersection of startups, VC, data & AI.
We read it all so you don’t need to - here we go👇
INTERESTING RESEARCH & REPORTS📈
How Much Is Sold in a SAFE Round?
Peter Walker from Carta ran the numbers here and this is what he found:
$𝟮𝟱𝟬𝗸-$𝟰𝟵𝟵𝗞: founders sell about 7% of the company; distribution still focused on the lower percentages
$𝟱𝟬𝟬𝗞-$𝟵𝟵𝟵𝗞: 11% sold or so; the most variation in the range. So highly dependent on the kind of founder, their experience, and the type of investor (have you moved beyond angels to real pre-seed funds here?)
$𝟭𝗠-$𝟮.𝟰𝗠: 16.4% median equity sold; kind of a seed round but also slightly small
$𝟮.𝟱𝗠-$𝟱𝗠: 21.4% sold on a median basis; very similar to the 20% we see for priced seed rounds
✈️ KEY TAKEAWAYS
There isn't a right answer here. Different founders will have different views on the utility of the cash and investors will vary in their willingness to take a lower ownership stake. It's all a negotiation.
Investing in Iconoclasts
Adam Shuaib from Episode 1 published insights into what they call the “iconoclast score”. They measure this property for the founders that they invest in to see how predictive for success it is. Spoiler alert: Iconoclastic founders tend to win!
Quirky backgrounds: Maybe they started coding at age 12, free-climb buildings for fun, quit university to live in Panama for a few years, or speak 6 languages
Unique assessment: E1 created 5 binary factors to assess how iconoclastic a founder is, spanning early childhood signals, quirky hobbies, unique career trajectories, and obscure skills. These factors combine to give each founder a score from 0 to 5
Predictive power: This iconoclast score was the single most predictive variable in E1's AI model (!). Founders with a top score were almost 6x more likely to raise a future Series-A/Series-B round
✈️ KEY TAKEAWAYS
Embracing unconventional backgrounds and unique skills can significantly enhance a founder's chances of fundraising success, far outweighing traditional metrics like elite education or top company experience.
INSPIRING TECH IN VC CONTENT💡
“Leveraging AI in Investment: A concise Overview”
By Simon Ludwigs here, exploring the impact of AI, LLMs and data-driven decision-making in mergers & acquisitions (M&A), private equity (PE), and venture capital (VC)
“10 Years On, 645 Ventures Is Using Software To Improve Its Odds At Seed”
By Gené Teare via Crunchbase News here, showcasing how 645 Ventures have been leveraging data & AI for Seed-stage deal sourcing and due diligence