The Perfect Seed Round, Valuation Data, SaaS Benchmarks, Why Companies Stay Private Longer & More
Digesting Insights From the Data
👋 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.
Request Your Invitation for “The Future of VC” Investor Summit at Bits & Pretzels 30th Sept in Munich🥨
Following the great success of our virtual Data-Driven VC Summit early May with 29 speakers and close to 600 participants across 4 days, it's a natural evolution to bring our community physically together. As part of the unique Bits & Pretzels Founders Festival in Munich, we’ll host an “event within the event” with speakers from leading firms like Index, IVP, KKR, Lightspeed, and many more who’ll discuss their strategies and reflect how they find and get into the best deals.
The Perfect Seed Round: $2M ASAP
In the competitive landscape of startup funding, the ideal seed round is becoming clearer. Episode 1’s Adam Shuaib analysed data from 15,000 startups to find out what the optimal seed round looks like these days:
Optimal Raise Amount: Startups that raise $2M are most likely to successfully secure Series-A and Series-B funding. Raising more than $2M offers diminishing returns, showing no significant advantages.
Avoid Under-Raising: Companies raising less than $1M face significant challenges, being less than half as likely to advance to Series A.
Speed Matters: Startups that secure seed funding within 12 months of incorporation double their chances of progressing to Series A compared to those taking three years or more.
✈️ KEY TAKEAWAYS
Aiming for a $2M seed round and securing it quickly after incorporation can significantly boost a startup’s chances of reaching subsequent funding stages. Speed and optimal funding amounts are crucial in the early stages of growth.
Bootstrapped vs. VC-Backed Startups: Weighing the Pros and Cons
A question that many entrepreneurs struggle with in the early stages of their companies is whether to bootstrap or seek VC funding. Each path offers unique benefits and challenges that can significantly impact a startup's growth and sustainability. A recent analysis by Mark Birch reveals the details:
Control & Independence: Bootstrapped startups retain full ownership and decision-making authority, free from investor pressures.
Financial Discipline: Limited resources necessitate frugality and creativity, fostering efficient financial management.
Slower Growth: Without substantial capital, growth is often slower, making it harder to compete with VC-backed rivals.
✈️ KEY TAKEAWAYS
Bootstrapping = Ideal for founders seeking full control and independence, who can operate with limited resources and prefer a steady growth trajectory. This route is suited for startups in niche markets or with sustainable, organic growth models.
Venture Backing = Rapid scaling and operating in competitive markets where speed is crucial.
Fresh Q2 2024 Data on US Startup Valuations
New data from Carta’s First Cut—State of Private Markets: Q2 2024 reveals current trends in US startup valuations across various funding stages. Here's what they learned: