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Observations from the Most Influential

At the beginning of this year we embarked on a quest to highlight those in the venture communities across the globe, who were influencing change. Being a software company that powers the global venture community, we know and understand the people on the ground doing deals and supporting companies as they grow aren’t necessarily the ones front and center in the press.

So, we reached out to local communities and asked them to nominate the Most Influential investors to showcase the unsung heroes of our industry. What we found surpassed even our expectations. Not only has the response been overwhelmingly positive, but we’ve also been able to get to know a lot more about our fellow investors.

This post highlights some of the things we’ve learned so far, and to let everyone know nominations close on May 1st, so there is still time to nominated your Most Influential investor here.

The Nominees

Our nominees so far have been worldwide with roughly 65% being based in the US, and the rest from around the globe. A special thanks to our team members that put in some early mornings and late nights to adjust for other time zones. After the United States, the United Kingdom came in second for volume of nominees, with the vast majority in and around London. Other notable clusters on the list include India, Germany, and Singapore.

Industries ranged FinTech to FemTech, number of funds from 1-8, and AUM between $20M and $525M. The overwhelming trend that we noticed was value-add. Almost every fund had taken this concept to a whole new level, whether it was marketing for high-end retail brands, or deep corporate connections into the logistics industry. One group maintains a job site to help attract talent for their portfolio companies, while another curates an invitation-only network for founders.

Enough about our observations, we’ll have plenty more to publish in the coming months. Let’s talk about the nominees and what we heard from them.

Industry Trends

We asked each nominee what industry trends will continue to develop over the coming years. What we didn’t expect was the wide variety of answers. Our nominees hail from all over the globe, with a wide variety of focus areas, but the answers varied even among similar geographies and investment profiles.

Automation and AI

While this covered a wide variety of areas, this is the clearest theme so far. One group looks at the sensors required to manage automation, from manufacturing equipment to mining vehicles. Another has several investments spanning the communication of connected devices, and the security around it. AI will help manage all of this information and continue to provide value over a wide variety of industries.

Corporate Partners

We saw a rise in corporate influence across the board. More major companies are launching internal funds to augment R&D and to solve internal problems. In addition, they are building more intentional relationships with VCs to help de-risk their future investments. To paraphrase one nominee, the low hanging fruit is gone, so the companies currently seeking capital require more specialized knowledge and access to resources that are much more difficult to acquire.

Founders as Investors

A sizable portion of the nominees had at least one founder on the team and a number were made up entirely of founders. According to many of them, this provided unique insight into identifying the right leadership teams and in offering much more specific expertise on operating the business. This fits with the deeper level of value-add that we observed as an overall trend.

In Conclusion

Launching the Most Influential List has been a fantastic experience so far and we couldn’t do it without your help, so thank you! We are continuing to accept nominations through May 1st so please send more influencers our way. We will continue to post updates as we narrow down the list, so keep an eye out. Lastly, this is about the community, so we welcome all thoughts and feedback on what we’re doing well and what we can improve.

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Top 10 Performance Metrics Investors Want to Know

Venture360’s platform helps thousands of investors all over the world to track the performance of their portfolios.

The equity in private companies isn’t currently traded on an open market (more on that later), so here are the most common metrics investors on Venture360 are using to track and understand overall company performance.

#1 Cash on Hand

Cash is king and how much is left can mean the difference between life and death for a start-up. Savvy investors want to stay on top of this in order to prepare to make some tough decisions on whether to reinvest, start cutting overhead, or cut losses.

#2 Full Time Employees

This is #2 for 2 reasons. First, how many employees is an indication of how much overhead there is to support, and second it is an indicator of growth. If a company is hiring, that is a great thing!

#3 EBITDA

Earnings before interest, taxes, depreciation and amortization. In other words, how much did the company make before the accountants wave their magic wands? This metric is focused on profitability, which is important for the long term viability of the business.

#4 Investment to Date

Investors want to keep a close watch on how much capital has been raised because it’s directly tied to cash flow. Opening a new round? They want to be the first to know.

#5 Gross Revenue

How much has the company sold? According to CB insights, the top reason for failure is building a product that the market didn’t want (42% of the time). The market votes with their dollars.

#6 Net Burn Rate

Every investor understands a company may be losing money now to make money later. That pile of cash recently invested in the last round is evaporating each month, and quick math will tell you how long before it’s gone, which is known as the “Runway.”

#7 Email Subscribers

Subscribers to an email list are a good litmus test of interest in a product or service, and whether it’s growing or contracting can be a sign of how the market feels. This can also be a vanity metric – one that seems to tell a good story but can either be masking a problem or completely manipulated.

#8 New Customer Acquisitions

This is more important as a trend than as a standalone number. As a company grows, it should get better at acquiring new customers. New features are released, the marketing budget grows, and the sales process gets better. All this hard work should be reflected in an upward trend.

#9 Total Paying Customers

Paying customers are important, they show traction and should also be considered as a trend. Keeping a close eye on this metric helps investors understand if they need to be concerned or if the company has it squarely under control.

#10 Contribution Margin

Contribution Margin is a product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold. Is the company making money on what it is selling? This number should also go up over time with added efficiencies to the business.


Reporting can be time consuming, which takes people away from their core business. But investors need transparency, particularly when things aren’t going well. The best thing that a company and investor can do is to agree with the reporting requirements up front, which sets the expectations going forward. Venture360 helps founders spend less time preparing their metrics and gives investors a simple way to keep track of their companies.

 

 

 

 

 

The new way top companies are raising funding…successfully.

Angels and VCs aren’t the only way to raise capital these days.

In fact, smart companies are exploring ways to engage potential investors who best understand their market and product – THEIR CUSTOMERS!

And you don’t need some online platform charging 5% + of the money YOU raised to make it happen.

WHAT WE DO

?Venture360’s private capital raising platform empowers entrepreneurs with today’s most progressive fund raising techniques.

We know a great way to market to potential investors is through your main website, so we designed a way to simply place a link on your website where potential investors can register to invest in your company.

You control who gets access, and we help manage everything from taking commitments to a fully electronic closing and your cap table.

HOW WE DO IT

Check out LittleHoots and how they use Venture360 to communicate with their customers about investment opportunities:

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We are empowering the companies of tomorrow to raise the money they need today!

Investor Reporting (Part 1) – Top 5 Frustrations of Every Investor

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As investors, we realize the only real power we have in a relationship is before we write the check.  In those blissful months of pitching, due diligence and term sheet negotiations, that entrepreneur is your best friend. They are willing to pick up the phone whenever you call and supply whatever you need – right away.  

Of course, that dance comes to end after the check has been cashed and the entrepreneur has focused their attention on getting customers what they need or securing the next round.  Your check was the carrot and that carrot is long gone.

Here are the top 5 frustrations of every investor:

1) Just Do it!

Problem: It doesn’t really matter what fancy tools and graphs exist for collecting information from your portfolio companies because the real challenge is just getting them to DO IT!

Solution: The best time to lay out your expectations for post-funding reporting is BEFORE you write the check. Detail these expectations in the terms and make sure everyone is on the same page with what metrics are to be reported back and what tools to use, when and how.  This will lay the foundation of a good working relationship.

Check back with us because our big Automatic Portfolio Reporting enhancement is coming soon!

 

2) Can I get a price check on Aisle 2?

Problem: Okay, let’s say you’re lucky enough to get that quarterly report with “updated” financials and a blurb about “rah-rah everything is fine”, “rah-rah don’t look too hard because you might find something”, “rah-rah we still believe Google will buy us.”

Then there is the topic of what is being reported. How do you even know this information is correct? You don’t.

Solution: You didn’t become a private equity investor to play babysitter.  The only way to really scale a portfolio and analyze the information you’re getting is to compare it to publicly available data.  

For example, if your portfolio company is reporting massive user growth but their website’s publicly available analytics say website traffic is down and users are abandoning after a shorter and shorter amount of use time – Houston, there could be a problem.

Utilizing publicly available data to compare to company-reported metrics is the wave of the future. Work smarter, not harder.

Again, check back with us because our big Automatic Portfolio Reporting enhancement is coming very soon!

 

3) Buehler…Buehler…

Problem: Okay, it’s been months or maybe a year plus and you haven’t heard anything from your portfolio company, so you follow-up to find out there has been a change in management, or worse, a “pivot.”

Solution: The fact is that there is no solution to things going badly with an investment, but what would have been nice is to maybe have access to more timely information so that you can make better informed decisions.  Utilizing social tools like Google Alerts to keep up to date on press regarding the companies you invest in is a great way to keep up with things outside of what may or may not come back to you as the investor.

We are addressing this head-on.  Check back with us because our big Automatic Portfolio Reporting enhancement is coming really soon!

 

4) TMI

Problem: Yikes, you are getting weekly email updates that are pages long detailing out the CEO’s breakfast choice as it’s related to his peak mid-morning performance and meditation schedule.

Solution: Fish or cut bait, man.

Bring in only the data you need.  Automatic Portfolio Reporting is almost here!

 

5) Clean-up on aisle 2!

Problem: You rocked your term sheet and clearly outlined reporting expectations, and your portfolio company probably needs another round of funding before too long, so they are supplying you with timely and accurate financial reports.

You’re basically the Master of the Universe.  The Master, who now has to figure out what to do with all this information – whoops.

Solution: Seamless and easy portfolio tracking is a must. Ideally the goal is a place where the company can supply the relevant information and the investor can get access to it.  Then that information can be used to create different data sets that can be compared to other data and build into reports.

 

Such a place already exists with tools that enable this and we continue to make it better every day.

Happy Funding, Everyone. See you on the other side of profitability.

We will tackle this topic from the entrepreneur’s side in our next post.  Stay tuned.

What Does a Fully Electronic Closing Mean to You?

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Remember when you went to the store, wrote a check at the counter, then immediately wrote down that transaction in your checkbook ledger? Of course, you do. You are also probably thankful for that mobile app on your phone telling you exactly how much money is in your bank account, showing you in an instant where it is going, while also allowing you to move money, sell stock and buy bitcoin. My how times have changed. Access, ease and transparency are just part of today’s expected business processes.  Or are they?

Now, think of the last private equity transaction you executed. How were those docs executed? Did you sign them physically or electronically? Where did you store them? Did you wire funds or send a check? How did you record the transaction? How are you keeping track of performance? How much in time and fees did doing one deal actually cost you? If your answers to these questions involved a mostly manual process piecing together lack-luster software solutions with a lot of fees and time – welcome to private equity.  

It is more than a little ironic that those funding the greatest innovations of our future are stuck using processes dating back to the manual checkbook.

Among the many things we want to make easier and faster in private equity, closing a deal was right at the top. EVERYTHING involved in executing that transaction from uploading docs, to transferring funds (quickly and at a fraction of the cost of wires), and finally creating that entity to hold individual investors is all done within Venture360’s platform.

Don’t take our word for it.  Have a look for yourself at Try.Venture360.co