Jim Gellas
@jgellas
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Tech-forward, Fractional CFO for Seed to Series B Startups Formerly @Xero head of Finance for NA
San Francisco
Joined October 2009
We are living in a wildly new world. Re-think all your approaches. It’s time to re-learn how to get things done.
Over the weekend, I found myself in an hour-long conversation during my drive with an AI. We jumped from discussing Cooper Flagg’s basketball stats at Duke to comparing Carlo Rovelli and Brian Greene’s competing theories of physics to talking about the history of San Francisco.
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If you are building a robotics company, don't let your business be constrained by supplier shortfalls. Quick lesson from Rivian: In Q3 they were unable to meet production goals because supplier concentration provided insufficient copper wiring to build motors. Have options!🤖
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This message comes from all the top voices in startupland. Provide regular and consistent investor updates. Share the good and the bad. It's worth the investment to get it done. Build it into your regular workflow, just like running payroll. #founders
#startups
#fundraise
Unless you are totally crushing it, Investors that do not get monthly updates rarely write a second check.
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That's a wrap on the livestream. An amazing presentation by @PeterJ_Walker and @datalarkey ! Thank you both!
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Question on down rounds: still working the rat through the snake and expecting continued impact for later-stage rounds. Less so for earlier rounds as these should have gotten right-sized from 2021's drunken valuation party
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Oof! Terrible recent trend for recent IPOs. Suggesting lots of pent-up demand for IPO exits (remember M&A trend was high but not outsized)
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Big premium at Series A for AI vs. non-AI companies Median non-AI valuation $34M vs. Median AI valuation $53.4M VCs getting more discerning about picking winners and losers in AI
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AI is hot more than 1/2 of all money at Pre-seed and Seed in SF is for AI
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Post-money SAFES (vs. pre-money SAFEs) are dominant and default ~87% of all Valuation Caps - of course, cap size is dependent on raise amount. Advice to founders: think about dilution first, rather than valuation, as that's ultimately what matters
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What about exits? 170 acquisitions in Q3, near 6-year record high of 179 in 1Q22
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Now on to DILUTION At SERIES A - standard wisdom that you will sell 20% of your company in a venture round, remains true, but trends down as business matures.
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AI's impact? AI is definitely high. No question. But, take out AI and valuations are still up. Good point to note..
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Here come the valuation benchmarks! Median valuation at SEED was $14.9M Wow!
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Good news for founders: Liquidation preference >1x participating Preferred Cumulative Dividends All investor favorable deal terms remain low as a % of all deals (<6%)
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Time between rounds remained near record highs. Priced Seed to A = 1.95 years Series A to B = 2.62 years Series B to C = 2.22 years (founders should plan for runway, accordingly)
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Overall, a decline in deal count, deal size and valuations in Q3 at Series A Series B and C mostly flat in Q3
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