Rhim Shah

With the latest advances in models like o3 and tools like Cursor I think that the need for funding will go down for startups. I predict a shift towards smart money vs deep pockets will be the outcome in 2025. 10-50-100m funds all work the same if teams remain small and focused until they reach PMF (Product Market Fit). Which then opens up the flood gates of funding from larger international VCs.

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NDAs are dead. If you are a founder sending an NDA before you share what you are working on, not only is an NDA dead, put your pitch is DOA as well. VCs look at hundreds of deals and by in large don’t sign NDAs. Why? Plain and simple it’s because it puts restrictions on ability to make some investments, seek out and evaluate others, or advising companies already in their portfolio. Why would a VC ever do that if thier job is to evaluate the best and place capital for thier LPs. The answer is never. So… if you feel you need an NDA… you prob don’t need to be pitching VCs in the first place. If you want something in place, try a friendly confidentiality agreement. That basically just says “this info is sensitive, just for us looking at this transaction and if it doesn’t work out you never talked to us, keep the name and info under wraps, cool?”. Easy.

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When we were first fundraising, some VCs asked us “What’s the difference between you guys and Postman?” After a few of these chats, it was clear to me that we were in a “zero billion dollar” market. To be fair, many of our customers at the time were lighthouse developers. They embraced SDKs as the future of APIs and saw developer experience as core to user adoption, not just quality of life. ______ In the last few years, however, many of the largest enterprises have come to us with a very different story. Instead of “we should do this, because it’s the future”, the conversation is entirely driven by an immediate business need. ______ Software engineering execs are actively trying to unblock a key integration with a key customer:  “We’re looking for a mechanism to quickly onboard an API client.” “The integration needs to work across product lines and our customer needs to integrate our API very quickly.” “How do you maintain the documentation?” “If we decide to open source the API, how would that work?” “Is there a codegen or codemod that serves as a migration path from what we’re using today? Because most devs are not going to be happy to do a migration and many of them won’t.” _______ Admittedly “documentation” isn’t the sexiest thing to pitch to a VC, but when we speak to the largest enterprises, it’s very clear what the needs are: - Language specific, idiomatic SDKs that are built from the ground up for each language, not just a generic wrapper. - Customizable code generation that adapts to your ecosystem. Enterprises value custom function calling, error handling, hooks, and integrations with monitoring tools. - A Github native workflow to rapidly release and test the API - Automation that integrates seamlessly with your existing processes for spec changes, code generation, testing and PRs -- with the option for a human-in-the-loop override. For an enterprise solving an immediate business need, you need a partner that understands the ins and outs of different programming languages WHILE being flexible enough to adapt your dev environment. What is it like for you to manage APIs at a large enterprise? What kinds of problems do you face? What else is critical to unblocking business?

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Based on the recent data signals from Carta, 2Q24 offers a glimmer of improving stability within the VC ecosystem, underpinned by a drop in down rounds, resilient valuations, and a return to more founder-friendly deal terms - signaling a continuation in gradual recalibration 🎯 👇 Down Rounds 1Q24 saw a staggering 24.2% of rounds being down rounds, a five-year high that painted a grim picture for startups. However, 2Q24 flipped the script with a drop to 17.4%. This shift isn’t just a statistical blip; it reflects a broader recalibration of valuations post-2020-2021’s inflated peaks. With startups now more likely to have raised their last rounds post-bubble, this trend suggests a healthier, more sustainable funding environment moving forward 📉 📊 Valuations Across the board, valuations are showing resilience, particularly at the seed and Series A stages. 2Q24 even saw seed valuations surpassing 1Q22 levels, despite a significant drop in deal volume. The story here is one of quality over quantity—fewer, larger rounds as investors zero in on startups with strong fundamentals 💪 While Series C and D stages haven’t fully bounced back, the trend across all stages points to a gradually rebounding market where valuations are increasingly decoupled from sheer deal volume, hinting at a more strategic and selective investment approach 🌱 🤝 Deal Terms 2Q24 also saw a decline in investor-friendly terms like participating preferred stock and cumulative dividends, which had previously surged during the uncertain times of 2021-2022. This move toward simpler, more founder-friendly deal structures indicates growing investor trust in startup valuations and their long-term prospects 📑 However, liquidation preferences over 1x remain relatively heightened, highlighting a focus on distribution activity amidst a liquidity drought (~33% and 43% of 2017- and 2018-vintage funds having yet to return any money to LPs, respectively) 👀 🌎 Regional Activity Trends The West remains the dominant force in VC activity, but 2Q24 saw its share dip to 59% from 63% in 1Q24. Meanwhile, the Northeast staged a strong comeback, increasing its share from 20% to 25%. This resurgence is led by New York's robust SaaS and FinTech scene, with key players like CoreWeave, Wiz, AlphaSense, Cyera, Ramp, and Semperis driving significant investment. Boston, on the other hand, is seeing a resurgence driven primarily by biotech, with companies like Obsidian Therapeutics, Diagonal Therapeutics, Seaport Therapeutics, and Ajax Therapeutics leading the charge. These shifts underscore a recalibration in regional activity, with the Northeast reclaiming its influence in the VC landscape🗽 #VentureCapital #VC #PrivateMarkets #Technology #Innovation #Investment #Startups

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Plaid Layer is an incredible experience but gives me heartburn -- Not because the product is bad, but because the conversion metric shouldn't be the only one. Plaid has launched Layer, a new service that allows users of finance products to get through KYC by simply entering their phone numbers. This aims to reduce onboarding to 15 seconds and deliver 17.5% higher conversion at onboarding. 1. Users enter their mobile number, and 2. If the Plaid network has data that makes them eligible to onboard, they can "instantly sign up." 3. Plaid performs fraud checks (like looking at the user's device) and 4. Then allows users to confirm what details they want to send. 🧠 As an industry, we desperately need portable KYC. KYC and onboarding are stuck in the analog era, pulling SSNs and asking for selfies. It's an expensive, leaky bucket that can be easily beaten by deep fakes and stolen data from the dark web. Pulling data from trusted sources (like another financial institution) bound to a device or telephone number is potentially more effective and a much better experience. 🧠 This is a fraud product masquerading as an onboarding product, and that's smart. The way to get the best possible fraud vs friction tradeoff is to do as much passive data detection as possible at onboarding. Looking at the user's device, email, and mobile history, with various two-factor authentications like SMS or passkeys, can add a ton of security. Plaid having that in their network and as a part of the onboarding sell is really good packaging. 🧠 Do you know how to get 100% conversion at onboarding? Let all the bad guys in. Look, I love this innovation, I love this product, and I get that Plaid is doing very clever things with data behind the scenes to actually make this potentially better than collecting an SSN and selfie at onboarding. All of that said, there's a reason a lot of sponsor banks are under consent orders for KYC/AML failings. We treated onboarding as a conversion problem, not a good customer conversion problem. Can we, as an industry, measure and benchmark that too? Even anonymously? All of that said - you have to love the execution here. Plaid are damn good at what they do. #fintech #kyc #fraud

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There are two levers an early stage founder can pull to grow their startup: → deliver the same use case for more segments → expand the use cases your product can deliver (either for one segment or multiple segments) Calendly is a rare example of a growth stage startup that has remained remarkably focused on one use primary use case: → scheduling meetings online Over time, they have used their incredible distribution to reach more and more segments and industries that have this specific need. They've become the "Kleenex" of scheduling tools and are the default even as large incumbents add scheduling tools to their much broader product suites. ClickUp has taken almost the exact opposite approach. They have expanded what use cases their product can deliver in effort to be the all-in-one solution for the entire business. The difficulty of pulling off this second strategy (for an early stage startup specifically) should become obvious when you look at the arrows. When taking the second growth strategy, the product and GTM teams are immediately pulled in multiple directions. In the first strategy, the entire business is rowing in the same direction. Each strategy has its pros and cons — and both of these companies are KILLING it. But when figuring out YOUR growth strategy, try to be honest about what your (likely very small) team can handle... and what they can't.

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Today Product Hunt debuted new "product landscapes" category overview pages. I wrote the page about generative AI infrastructure. I may have left out your favorite model or inference provider. Let me know what tools/services you think should be on this list. Things are changing all the time; we'll have to update this overview frequently. Organizations referenced in the overview, in order of appearance in the text: OpenAI, Anthropic, AI at Meta, Google, Midjourney, Adobe, ElevenLabs, Cartesia, Deepgram, HeyGen, Tavus, Civitai, Together AI, Fireworks AI, fal, Groq, Modal, Cerebrium, Amazon Web Services (AWS).

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Building great product stems from a good process. A HUGE piece of that is your product specs. Steal our early-stage startup spec format below 👇 The goals specs at Unify: 1) Build alignment among engineering/product/design 2) Give context to xfn team members on what we're building and why   5 sections we include in our specs: Section 1: Quick Context Why are we doing this? Most importantly, what's our North Star metric / goal? Short and sweet. Part 2: Tear-downs, research and user interviews How have others solved, or tried to solve the problem? We won't follow their approach, but we should understand how customers will perceive our product vs. what they already know. We include any desktop research and notes from user interviews here as well. Part 3: Functionality What will this product do? We list everything we could build so that we can make trade-offs on what we're prioritizing and what we aren't. Part 4: Rollout How will we get this out to customers? What phasing milestones should we be aware of? Part 5: Risks and Watch-outs What risks may come back to bite us? We document any risks we should consider double-clicking on before anything gets shipped. Hope this is helpful, let me know if you have any questions on how we build product!

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Fundraising is tough - for founders. Fundraising is tougher - for VC’s. Let me explain. Founders need 1 yes for a 15-20 cr fundraise.  We, VCs need 50. All In Capital fund 1 has approximately 50 investors. So we need to pitch to almost 300-400 people. And when you come out of a meeting and a potential investor picks someone else over you - you do get a sense of self doubt. Is someone else doing it better than I am? And when these rejections pile up, they can intensify your self doubt and bring you down. In these cases - I turn to my founders and people who pass on their energy to me. Portfolio or non portfolio - startup founders have this infectious energy to keep going. You have to believe what you are doing is differentiated and will change the world.

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📍 The co-founder of PayPal and Palantir Technologies, and renowned backer of fintech companies such as Stripe, Wise, Coya, Stash, Bitpanda, and dozens of other high-growth companies, Peter Thiel, announced the close of the new fund of Valar Ventures LLC at $300 million—half the size of its last fund. There is a lot of talk about a big slowdown in fintech, but what does the data say? 📍 As per the Female Foundry report published earlier this year, fintech is the second largest category of innovation for female founded companies (15% of total capital that was raised in 2023 by female entrepreneurs, went to fintech startups). I have pulled up some stats on fintech fundraising to provide more context - *data from Dealroom.co 📍 Fundraising:  VC investment into fintech startups reached $42bn in 2023, a 63% drop from the previous year. The US, however has held better than Europe, with a 45% drop in funding in 2023 from a previous year compared to 66% drop in Europe. Fintech funding is now at ~⅓ of its 2021 peak and at its lowest since 2018. Median round size is down at all stages in 2023, but Seed and Series A show more resilience decreasing 12% compared to 31% for Series C+. 📍 Valuations: In 2021, a record high 148 new unicorns were minted. In 2023, only 8. Today there are 378 fintech unicorns and $1B exits in US & Europe. 222 unicorns were created in the 2019-2021 period. 31 of them have lost their unicorn status. It is now estimated that fintech companies founded in 2000 and onwards (both the US and Europe) are now worth $2tn and 66% of the value is still private hands with less than 20% being public. Exits: The last two years saw nearly no public listings. There was only one fintech IPO in 2023, ReAlpha, down from 51 IPOs in 2021 (!) and a SPAC of Better Mortgage. 2023 has been one of the most active year to date for fintech M&A with 241 recorded in fintech. 📍 Sub-sectors: Payments have attracted nearly 3x the funding as any other sub-industry and were the most resilient segment in 2023. Climate fintech funding even though dropped 55%, but is still 2.4x higher than pre-pandemic levels with Crypto and DeFi seeing the biggest decline in funding 72%. 📍 Geography: The US and Europe accounted for 68% of global fintech funding in 2023, up from 40-50% in 2016-2018. US attracted 5x more funding than the next country, the UK. In Europe, London attracted 4x more funding than the second hub, Paris. Madrid and Munich showed the least decline from 2022. 📍 The most active European VC investors in the past 12 months include SFC Capital (10 deals), BPi France (10 deals), Outlier Ventures (9 deals), Kima Ventures (8 deals), Notion Capital (8 deals) and Speedinvest (8 deals). More on this in the latest Female Foundry newsletter: https://lnkd.in/eTwUapqJ #femalefoundry #news #fintech #funding #venturecapital

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YC released its 'request for startups' last week, and a lot of the areas are not what you might expect... Here’s where they’re seeing the most opportunity to build (and why) over the next few years: - Government software - Public safety technology - Manufacture in the USA - Stablecoins 2.0 - LLMs for chip design - Fintech 2.0 - New space companies - AI-aided engineering tools - One million jobs 2.0 Which YC 'request for startups' are you most-bullish on?

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Startup decks vs Business plans. It's accepted that a startup needs a deck. Dax Dasilva of Lightspeed Commerce made an important point on 20VC. Writing a business plan - including financial projections - is an important step. It requires discipline. It provides a rigorous framework for thinking deeply about the problem you're trying to solve. Harry Stebbings countered that he doesn't even want to see a deck since it's all dreams. We spent a lot of time and energy on our business plan with the expectation that we would show it to no one ever. The business plan was part of our roadmap for the company. We researched customers - including having 50+ conversations. We wanted to understand them: their background, their interests, their presence on social media. We also wanted to understand how they were evaluated by leadership and how integrated they were with the business of the company they were protecting. We researched pricing both with potential customers and other products in our industry to find out if OpEx or CapEx was a better fit. How did they buy today? How would they like to buy? We did market research to understand the verticals and map the right entry point - we were wrong but that doesn't reduce the value of the research. We looked at competitors in depth to understand what they were seeing that we weren't. Dax is right. This is an invaluable document that should be updated every year - the company is changing, the market is changing, there's more feedback about price and ICP. It's not for sharing with the outside world. It's a map for driving forward. Decks won't get you investment - VCs invest in people. We make decks but we know they don't tell our story. The deck is a calling card. Dax and Harry are both right. https://lnkd.in/e25M82xY

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#Tech-VC Newsletter Update: First Half of October 2024 🌟 Full blog post here - https://lnkd.in/ePgdyeF9 TL;DR version - 📊 VC Performance & Market Trends - Q3 saw stagnant round prices and a surge in flat/down rounds, hinting at a challenging landscape. - Global venture funding dipped to levels last seen in 2016/17, impacting deal activity. - AI welcomed 24 new unicorns in Q3'24, showcasing resilience amidst the funding slowdown. - Encouragingly, investor friendliness is on the rise, with a balanced US VC capital demand-supply ratio. 🚀 Sector Highlights - AI, despite funding dips, continues to attract substantial early-stage investments. - European fintechs faced a funding decline, while climate tech, healthtech, and deeptech thrived. - Maven's $125M raise for women's healthcare underscores the sector's promising momentum. 💰 Mega-Deals - OpenAI's monumental $6.6B raise at a $157B valuation cements its status as a top global startup. - Noteworthy funding rounds for Poolside, Form Energy, Kailera Therapeutics, and more highlight sector strength. 🔍 Challenges & Opportunities - 'Zombie VCs' decline signals VC industry consolidation and shifting dynamics. - In Europe, capital supply-demand challenges persist, impacting founder confidence in fundraising. 🔮 Upcoming Deals & IPOs - Keep an eye on Sierra and ElevenLabs for significant funding rounds. - Cerebras Systems delays IPO plans amid a probe into a minority investment. 💼 Key Funds Raised - Summit Partners' $9.5B growth equity fund closure and LGT Capital's $7B for secondary deals mark notable fund movements. - Podcaster Harry Stebbings' impressive $400M 3rd fund raise adds excitement to the investment landscape! #VentureCapital #TechNews #Startups #Funding #AI

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Why Simple Systems Win At Sideko we've learned something counter-intuitive: the more ambitious your project, the simpler your building blocks need to be. We didn't start with this insight. Like most startups, we began by trying to quickly build something impressive. But gradually we noticed that our most reliable systems shared three characteristics. They were built from simple parts. These parts were stateless. And they communicated synchronously. Over time we've found that: simple, stateless, and synchronous - leads to code generation systems that are easy to build, easy to understand, and easy to fix when they break. With this in mind, I'm excited to announce our new SDK Management configuration system at Sideko. SDKs exist in a world of state. APIs are versioned, each SDK language is versioned separately. SDKs can also be really big libraries, which would normally require asynchronous patterns to produce. So how did we apply our principals in this domain? It took a lot of intense engineering: - A git-inspired filesystem abstraction named Cockroach - A syntax tree collection abstraction that we call The Forest - A configuration mapping system to generate both highly customized and out-of-the box SDKs from within the same codepath. We are excited to roll this out to our enterprise customers. Docs: https://lnkd.in/ex8rdYJ9 Article: https://lnkd.in/eZySB5Cd

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Dext has been sold to IRIS Software for £500m 🤯 It’s a great day for the investors, but how will this impact its 700K customers? Dext is a product that I love. But, behind the scenes, the pricing is a mess. I’ve reviewed the pricing plans of thousands of software vendors while building Hudled and Rechargly. I’ve never encountered a company with so many customers on legacy pricing deals. From what I hear, Dext is working hard to phase these plans out. However, accountants and bookkeepers are holding on for as long as possible. With the acquisition imminent, what should firms expect? The likely scenario is the usual playbook: cost-cutting measures and price increases. This could mean a more aggressive strategy to transition customers to newer, higher-priced plans. For firms absorbing the cost of Dext for their clients, this raises an important question... Does it still make sense to bundle accounting and software fees into a single invoice? Given how frequently vendors are changing their prices, my feeling is no. Let’s see how it plays out. If you’re using Dext, what do you hope to see next? #dext #accounting #bookkeeping

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It had been far too long since I last caught up with Andrew Lau, CEO & Co-Founder of Jellyfish, to get the latest on the company. We also discuss the results from their State of Engineering Management Report. In this video, we chat about: * Details about Jellyfish * Customer examples & use cases * Finding from their State of Engineering Management Report * The culture at Jellyfish * Why Jellyfish should be on your radar for your career

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Investor Expectations for Pre-Seed Tech Founders often complain that it's unfair to ask a team at the pre-seed stage to have a tech advantage, as they've had no time to build. But there are some signals that the earliest stage investors are looking for: 1. Team Strength. Does your team have the skillset to build something difficult that doesn't currently exist? Have they done that before? 2. Big Vision. Can you explain how your product will change the world over the long term, is that also a large and difficult technology problem? This vision may change over time, but having this mindset from the beginning is important. 3. Early Indications. Have you made good progress with the limited time you've had: do you have an impressive demo, is there a trusted 3rd party verifying your progress, do you have some early results showing how much better you might be? #vc #fundraising

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✨ Breaking: Swish Ventures Announces New Fund.- Swish Ventures Managed by Omri Casspi, Swish Ventures is a $60 million seed fund focusing on cybersecurity, cloud infrastructure, and AI. Looking to invest in fast-growing tech companies. Includes notable investors like Sequoia. Launch Date: December 2, 2024. https://lnkd.in/d9rWJdd6 Please share to let other #Founders know For the ❤️ of Startups #Fusion42 #Startups #Venturecapital

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