David Sacks - the burn multiple

David Sacks of PayPal, Twitter and All in game talks about a burn multiple

Two simple ways to measure capital efficiency are the Hype Ratio and Bessemer’s Efficiency Score:

1. Hype Ratio = Capital Raised (or Burned) / ARR
2. Efficiency Score = Net New ARR / Net Burn

David  think Bessemer has the right idea but prefers to flip the numerator and denominator, so the ratio is an annualized version of the Hype Ratio. 

He  calls this the Burn Multiple:

Burn Multiple = Net Burn / Net New ARR

In other words, how much is the startup burning in order to generate each incremental dollar of ARR?

The higher the Burn Multiple, the more the startup is burning to achieve each unit of growth. 

The lower the Burn Multiple, the more efficient the growth is.

For venture-stage startups, these are reasonably good rules of thumb:

For example, Q1 just ended and it’s time for a board meeting. The startup reports that it burned $2M in the quarter while adding $1M to its ARR. That’s a 2x Burn Multiple — reasonable for an early-stage startup. On the other hand, if the company burned $5M in Q1 to add $1M of net new ARR, that’s a terrible Burn Multiple (5x). It should probably cut costs immediately. That company is spending like a later-stage company without delivering later-stage growth.

Too many startups report their growth without contextualizing it as a function of investment. If extraordinary investment (3x burn or more) is required to deliver that growth, it’s an indicator that product-market fit isn’t quite what it appears to be or there’s some other problem in the business

These are some of the things that can affect the burn multiple and your business

For example:

• A gross margin problem — If the company spends too much on COGS in order to deliver the product or service, its burn will increase rapidly as it scales. If there’s not operating leverage in the business, the Burn Multiple will not improve with scale.
• A sales efficiency problem — If CAC is prohibitive or sales productivity is diminishing, burn will increase relative to new ARR, causing the Burn Multiple to worsen even though growth continues.
• A churn problem — Churn will net against the denominator of the Burn Multiple, causing the multiple to increase. A leaky bucket makes it hard to grow efficiently.
• A growth challenge — If growth is stalling, the company may seek to compensate by spending more on marketing, give-aways, discounts, or promotions. That will be picked up in a higher Burn Multiple, as burn rises faster than new sales.
• A founder leadership problem — If the founder lacks the skill or will to control burn, that will show through in the Burn Multiple.

Burn Multiple by Stage

The Burn Multiple should improve as the startup matures. 

For example, a seed stage company might have a Burn Multiple of 3 because it just started selling. After the Series A, it might drop to 2. After the Series B, when the sales team should be operating at scale, the expectations for efficiency increase even more. 

Eventually, for a company to become profitable, burn must reach 0, which implies that the Burn Multiple should also approach 0 over time.

If the Burn Multiple is going in the wrong direction as the startup matures, that’s a indicator that something is wrong, even though headline growth might still be increasing in nominal terms.

What Founders Can Do

1. they should keep salaries and expenses low in the early days — 

2. strengthen the impression of product-market fit for when they go out to raise a venture round.

3. cut costs, the Burn Multiple doesn’t care about sunk costs and always gives founders the chance to improve.

4. It be worth giving up some revenue (e.g. unprofitable growth) if it brings the Burn Multiple down to a much healthier ratio.

It’s not just about growth  but the efficiency of growth .

It’s an indicator that incremental spend is working 

As everyone in the startup ecosystem scrutinizes their runway and makes tough decisions about how to extend it, the Burn Multiple is a useful rule of thumb for founders and investors alike to keep in mind

cash is king and queen - Allen Pathmarajah and Alan Miltz 

https://bsivc.blogspot.com/2023/03/mark-gustowski-talks-about-importance.html

https://sacks.substack.com/p/the-burn-multiple-51a7e43cb200

https://www.wallstreetprep.com/knowledge/burn-multiple/

How to become a centre of influence and build a business plan

 Billy Connolly talking business planning and what people said about Ivan Kaye's talk on "becoming a centre of influence" about how to become a centre of influence 

Canva quietly passing 100 million users

Democratising Art with RedBubble - a dream that Martin Hosking turned to action

20 years ago Martin hosting offered us a chance to invest in an idea to bdemocratize art and photography - connecting artists with a global audience and providing a hassle-free way to monetize that art.

Redbubble is now a global online marketplace that allows independent artists, designers, and creators to sell their artwork on a wide range of products such as t-shirts, phone cases, stickers, and home decor items 

With a turnover of 109s of mikkkions of dollars

The platform has become a powerful tool for creatives to monetize their art and reach a wider audience.

How does it work ?

One of the biggest advantages of Redbubble is the ease of use for both sellers and buyers. For sellers, it's a simple and free process to upload designs and choose which products to feature them on. The platform takes care of production, shipping, and customer service, making it a hassle-free way to sell art. For buyers, Redbubble offers a wide variety of unique and original designs, making it easy to find something that suits their personal style.

Redbubble offers a flexible revenue-sharing model that allows artists to set their own prices and earn a percentage of each sale. This means that artists can earn a steady income from their art without having to worry about the logistics of production and shipping.

Global Reach

Another key advantage of Redbubble is its global reach. With millions of users from all over the world, artists have the potential to reach a much larger audience than they would through traditional methods of selling art. The platform also offers a range of marketing tools, such as email marketing and social media promotion, to help artists increase their exposure and sales.

Martin’s vision of enabling independent creators to compete with established brands and reach new heights of success has democratized the art market

$5m investment in Mutinex set to become a homerun

Coming to America (L-R): Equity Venture Partners' Allen Zhu and Justin Lipman; Mutinex co-founders Henry Innis and Matt Faruggia. 

"Fundamentally, we have to win in the US market," 

from an EVP lens 

Lipman of EVP believes they could have bagged another home run with B2B saas company Mutinex - but to do this - founder Henry Innes says that 

“We see around 2,000 companies a year,” said Lipman, “and last year we invested in six.” 

Mutinex “ticks all the boxes of what a great B2B software company in the early stage looks like.”

“Investing $5m at a $37m Val in Mutinex is one of the most obvious decisions you’ll ever be presented with in the world of venture - expecting Mutinex to be a $400m business soon!!!”

Why??

It is a 

• Great product 
• Has Great talent 
• Has Great buyin from customers 
• Has a Clear focus and large vision 
• The teams  drive and commitment is simply infectious. 

Special thanks to Charlie Gearside for the tip (via Matt de Boer as usual), Brodie Arnhold and Chris for being so welcoming and the broader leadership team in Dan Gooden, Adam Beaupeurt, Mark Tovbis, Daniel Chu who made the investment decision the no-brainer we’re always chasing.

What Mutinex does

The business focuses on marketing investment analytics and built its GrowthOS software product to provide marketers and cfos with insights to help target their marketing spend.

A new feature allows marketers to measure how brand presence contributes to sales volume and marketing ROI,

• Mutinex is growing fast because finance teams accept the methodology, which attributes marketing and media activity to business impact above baseline sales.
• Global comms holding companies and consulting firms will license the platform similar to CX and martech cloud platforms like Adobe and Salesforce

Customers include 

Mutinex lists Intuit Australia, Youi Insurance, ING, Bendigo Bank, ME Bank, Asahi Oceania and Samsung Australia as customers.

Lipman 

“To be honest, if you continue to delight customers, continue to serve them well, liquidity exit opportunities take care of themselves.”

Henry Innes 

“the size of this market of companies that are actively going to need this type of software – there's at least 2,000, 3000 enterprises [globally]. They're all spending millions of dollars currently with consultants ... we will help these companies help make informed decisions on their marketing spend and build up to a $100 million ARR [annual recurring revenue] B2B software business”

There is an Opportunity to leverage consulting firms as alliance partners and resellers and they can license our product then upsell services to support and build out enablement.  

Investors

• EVP
• Bloomsbury Information Capital
•  iSelect and Endota Day spa chair Brodie Arnhold, 
• former WPP COO Chris Savage 
• former PwC and current Sayers Partner 
• 3AW radio host Russel Howcroft 

20 of the 24 original seed backers are investing again, nine of which increased their position. 

https://www.bandt.com.au/martech-startup-mutinex-announces-5-million-seed-extension-round/

The background - from Pirates to corporates 

https://www.mrweb.com/drno/news34109.htm

The company's flagship platform, WarChest, helps to analyse marketers' past decisions and then predict the value of future choicesthe company raised $2.4m in a seed round of funding, and in August it appointed former Mediabrands / Starcom exec John Sintras as President, US and Multinational, to lead expansion into the US. The firm now has some 26 full time staff members, and says it expects to reach 40-50 within the next year. 

The US expansion might partly explain the rename - there is already a web site personalization specialist based in San Francisco with the name Mutiny - but co-founder Henry Innis told www.mumbrella.com.au there is more to it than this: 'Another way to articulate it is, Mutinex signals that know we're evolving beyond just the rebellious spirit and kind of maturing a bit as well. You don't necessarily want a band of pirates managing billions of dollars of money'. Similarly, WarChest will now be known as GrowthOS, 'to better position the product in terms of the value it is delivering to customers'. 

Innis has taken the title of CEO while his co-founder Matt Farrugia becomes Chief Operating Officer, clarifying the quite separate roles the two are now playing. 

Beaupeurt, formerly MD of Digital at independent creative, CX and connections agency HERO, joins as Chief Commercial Officer, with sales, finance, marketing and success functions all reporting in to him. The founder in 2014 of a strategic marketing and communications agency called B.B.E., acquired by HERO in 2020, he worked earlier at ad agencies Ogilvy and AKQA. 

Innis, who has worked with Beaupeurt in two previous roles, says the firm has focused on hiring leaders who in turn can attract, build and scale talented teams, and describes Beaupeurt as 'somebody who deeply understands that perspective that the ability to hire well is probably as important as any other element'. 

Li joins from Rokt as Senior Data Scientist, Kosheliev from Data Robot as Senior Customer Data Scientist and Bertolus from Bupa as Head of Growth Marketing. The company says it will announce further hires in the coming months in customer success, engineering, product and user experience. 

Web site: www.mutiny.group . 

Climate Tech on the March

Climate Salad’s Industry Report highlighted climate tech as an economic powerhouse, a job generation machine and awesome sector for the planet! 

If you're a climate tech company, get your juicy data into the report - https://lnkd.in/g2QaF_iM

https://lnkd.in/gXJAxkdw

#climatetech #report #data

Are you open to be part of a government funded Cybersecurity Course?

Click here to vote  

Opportunity to do a fully funded Cybersecurity course - NSW initiative

Click here to register 

Cybersecurity has seen an increasing demand for skilled workers in every industry that uses computers, networks and the Internet. Cybersecurity experts work on measures to protect the data from theft, damage or ransomware when locked. The data can cover sensitive information, personally identifiable data (PII), health information, banking or other financial details, Intellectual property and government or industry information.

If you are working in a small or large business, personal and professional cyber security is now considered a must-have skill. A proposed SEC rule will require companies to disclose their cybersecurity governance capabilities, including the board’s oversight of cyber risk, a description of management’s role in assessing and managing cyber risks, the relevant expertise of such management, and management’s role in implementing the company’s cybersecurity policies, procedures, and strategies. Meeting the new regulatory requirements can be better achieved by aligning how operational leaders discuss cybersecurity with their boards.

Specifically, where pertinent to board oversight, registrants will be required to disclose:

• whether the entire board, a specific board member, or a board committee is responsible for the oversight of cyber risks,
• the processes by which the board is informed about cyber risks, and the frequency of its discussions on this topic,
• whether and how the board or specified board committee considers cyber risks as part of its business strategy, risk management, and financial oversight.

 

Statement of Attainment Cyber Security Awareness Skill Set BSBSS00094

This skill set addresses the skills and knowledge to assist an organisation improve cyber threat awareness and protect against cyber risk across a broad range of industries. This skill set applies to those working in a broad range of industries who as part of their job role engage in cyber security threat assessments and protection against cyber security risk. These units of competency from BSB Business Services Training Packages meet industry requirements for those required to assist in raising cyber security awareness with organisations.

BSBXCS301 Protect own personal online profile from cyber security threats

BSBXCS302 Identify and report online security threats.

BSBXCS303 Securely manage personally identifiable information and workplace information

BSBXCS402 Promote workplace cyber security awareness and best practices

Audience

• Individuals who use social media and email
• Organisations concerned with cyber security
• Government organisations concerned with privacy, fraud and cyber attacks

Enrolment

Please enrol on the link provided Cyber Security Awareness Skill Set

Fee

This is part of the NSW Fee Free Initiative by the NSW Department of Education and is fully funded for BSI Learning Institute

Guy Hudson and Climate Startup Loam bag $105m

Tech billionaire Mike Cannon-Brookes has joined venture capital outfits including the CSIRO-backed Main Sequence, Lowercarbon Capital and Wollemi Capital in ploughing $105m into one of the nation’s fastest-growing start-ups, Loam, which is launching its carbon removal technology in the Australian market.

After years of research and product development, Loam is this week debuting its microbial technology, which chief executive Guy Hudson says will enable farmers to capture carbon from the atmosphere and store it stably in soil, allowing them to both generate revenue and tackle climate change.

The start-up has received backing from Mr Cannon-Brookes’ family office Grok Ventures, in a blockbuster Series B round co-led by Lowercarbon Capital and Wollemi Capital with participation from Horizons Ventures, Acre Venture partners, Main Sequence, the Clean Energy Finance and others, bringing Loam’s total funding to $150m.

The start-up’s previous backers include TIME Ventures, a venture capital firm led by billionaire Salesforce CEO Marc Benioff and Canadian billionaire Tobias Lütke, the founder of e-commerce company Shopify.

The company, which was founded in Orange NSW in 2019, did not disclose its valuation, but the raising is one of the largest for an Australian start-up in 2023 to date. It now has dozens of staff working across four laboratories in Australia and the US.

“The role of beneficial fungi in agriculture has been hugely underexplored. We’re only just starting to understand how important these organisms are in the ecosystem,” Mr Hudson said.

“By applying Loam seed treatment, farmers can accelerate a path towards healthier, more productive soils by building soil carbon more quickly, which benefits resiliency and productivity. It also provides the opportunity for farmers to diversify revenues into natural capital markets and carbon markets.

“Microbial science has an enormous role to play in addressing climate change.”

Read more:

https://lnkd.in/dGaQ2Xr8

Edtech SAASGURU raises a seed round of $4m in Nov 22after raising $1.3m a year ago

SAASGURU - an edtech providing  cloud skills and certification - Founded a year ago with seed funds of $1.3m ,- have raised  a seed round of $4 million from Square Peg , Blacknova and Antler  -  to further build out the company’s technology stack.

The team have done it before! 

Amit Choudhary (CEO) and Atif Saad (CTO) sold their previous venture Saasfocus to US IT firm Cognizant (NASDAQ: CTSH) in 2018.

What is Saasguru 

Founded in mid-2021, Saasguru is an e-learning platform where more than 40,000 users from 20 different countries are upskilled by  studying cloud systems From  20 different cloud consulting companies and mentors and a personalised TikTok style micro-learning platform.

Through Saasguru, the co-founders are looking to train the next generation of workers that will 

require cloud computing skills in their careers. 

In his previous salesforce consultancy  SaaSFocus, Choudhury would hire new recruits and train them to become skilled and billable consultants. This has become the “secret sauce” of SAASGURU”

What SAASGURU does 

• provide certifications on AWS and Salesforce 
• an initial benchmarking exam, 
• tools that adapt to the individual’s learning style and knowledge gaps, 
• a gamified platform showing how they stack up against their peers and offering challenges.
• A network of more than 100 experienced ‘gurus’ share snippets of advice via short TikTok-style videos.
• Once the learner’s dashboard is green, they’re ready to take their certification exam. 

For those that have used the platform for as little as two weeks, pass rates are currently at about 90%!

The Market 

According to Amazon Web Services (AWS), the need for cloud computing skills in the Asia Pacific (APAC) region alone will triple by 2025, requiring about 109 million individuals with those skills from a base of 37 million as of 2020. 

Since 2021, the company has added a variety of learning programs to its platform covering Salesforce, ServiceNow, AWS, GCP and Azure. 

Saasguru says it plans to use the investment to expand into more high-demand cloud certifications.

Business Insider talks to Choudhury 

“We want to play a leading role in solving the global cloud skills crisis and supercharge cloud skilling and certification,”

“Edtech has become an e-commerce like experience for users. All users are getting is an overload of content with aggressive subscription models.”

“Saasguru is disrupting that with a personalised learning experience, supported by our gurus and leading to a very tangible outcome of skills, certifications and jobs.”

“While we are a for profit, and a for-impact company,”

“We provide pro bono cloud skilling and certification for people from a situation of disadvantage to change their life with future-ready skills.”

“Over the next five years we want to become the most loved and trusted platform for anyone looking at starting or growing a career in the cloud industry.”

“Securing the backing from Square Peg will be invaluable in providing support and contacts, and lends a certain credibility to the business.”

Business Insider speaks  to Square Peg 

Square Peg Capital principal Lucy Tan also acknowledged the role Saasguru might play in satisfying demand for skilled cloud computing workers.

“There is a massive cloud skills shortage in the industry that is slowing down digital transformation initiatives undertaken by businesses,” Tan said.

“Universities are not well equipped to solve this skills shortage as the skills update so quickly. This means post-university upskilling is critical for continued business growth and Saasguru provides a personalised learning pathway for cloud professionals to embark on, helping them get skilled and certified in cloud technologies.

“This can make a meaningful impact on people’s lives from either landing them in a new career or getting salary increases. We’re excited to continue to work with Amit, Atif, and the team on their journey to help close the skills gap in the cloud computing industry and empower millions of workers to take on new careers.”

Between remote working and learning, and a tech skills crisis, people in this space seems to be in the right place at the right time .

NEXTTECH Learning are excited by the opportunity 

Cassandra Parton CEO of Nexttech, Australia’s premier Tech Learning business agrees - Lack of talent is the “number one challenge for the IT industry,” and providing a steady stream of talent to a market - hungry for relevant expertise is the wholly grail , and we are priviliged to be in this space.

Welcome to the Nexttech Revolution 

Source https://www.businessnewsaustralia.com/articles/edtech-saasguru-scores--4m-in-seed-round-led-by-square-peg.html

EVP raises $100m VC to invest in B2B series A

Today EVP announce the successful close of EVP Fund IV at over $100m. 

EVP focus exclusively on B2B software, and aim to partner early with the region’s next generation of global software leaders. 

Investments include 

-  digital freight forwarder Explorate, 

- workforce management software company Deputy,

 - logistics tech start-up Shippit and 

- customer service start-up Pendula.

- accounting software disruptor Hnry (which recently raised $35 million)

EVP have been  investing steadily at an average of 8.4 times annual recurring revenue compared to 20-30 times of other VCs 

About EVP 

EVP focuses on the Series A stage, and  reserves 50 per cent of its funds for follow-on investments.

The new $100m fund will support investments into 15 companies and takes its total capital to $270 million in funds under management.

Message from Howard Leibman 

(A hint of why EVP  is so successful )

“Thank you as always to our investors for your ongoing support. Thank you to our incredible team. And thank you to our growing family of exceptional founders (and their teams!) whose continued success underpins all that we do. “

Source https://www.afr.com/technology/sydney-vc-ignores-tech-tremors-with-100m-raise-20230210-p5cjoh thanks Yolanda Redrup 

Do VCs believe in 5 year projections of pre-seed startups?

Henry raises $35m on the back of exceptional customer service to smes - making life easy

Hnry 

- Founded in 2017  by Claire and James Fuller - with Karan Anand being the CEO

 - Winner 🥇 of  2022 fintech of the year and  

-  has raised $35m of growth capital from EVP,  Left Lane Capital, AirTree, Icehouse Ventures and Athletic Ventures. 

What it does

Hnry- offers a full digital accounting service - for  contractors, freelancers, and sole traders that handles… well, everything. - They automatically pay and lodge taxes, provide a service for admin management, and become your accountant. In short – they  get it done, so sole traders never have to think about tax again.

Making admin easy - improving the lives of so many independent earners across ANZ.- charging 1pc of salary up to $1500 per annum 

Hnry has  quickly grown into one of Australasia's largest specialist accountancies; with a team of 60 (and growing)

What a feeling

Building  an onboarding process that helped grow from a few onboarders a week to 100s!!

From a trickle of messages to 100s 

What a feeling says Justin Lipman Venture Partner of EVP ventures 

#neverthinkabouttaxagain #startups #venturecapital 

19 COMPANIES receive $44m SUPPORTED by CRC-P GRANTS supporting innovators

Minister for Industry and Science Ed Husic today announced $44 million in grants for Australian companies to support 19 collaborative projects researchers and innovators .

Some of the recipients 

Dovetail Electric Aviation in Sydney will use its $3 million grant to develop, test and certify the conversion of turbine-powered planes into fully electrically powered aircraft (pictured).

The company says it will use the electric aircraft for short flights - will be a game-changer.

Connecting industry , universities , government and end-users to learn collaborate and innovate is crucial to delivering real outcomes, creating well-paid, secure jobs and backing industries to support the growth of our economy

Vaxxas Pty Ltd - developing a patch to provide a COVID-19 spike protein vaccine rapidly progressing into Phase II clinical studies. Can be self administered! 

Whiteley Corporation Pty Ltd - creating  anti-biofilm wound treatments, novel wound monitoring, including vascular identification, and dyes which target bacterial biofilms and destroys bacteria 

Other recipients include:

• Apollo Medical Imaging Technologies Pty Ltd
• Argenica Therapeutics Pty Ltd
• Austech Telecomminications Pty Ltd
• Ferronova Pty Ltd
• Forcite Helmet Systems Pty Ltd
• Graphenex Pty Ltd
• HomeGuardian.AI Pty Ltd
• I.A.H. Sales Pty Limited
• Iugotec Pty Ltd
• MPC Group Pty Ltd
• Samsara Recycling Pty Limited
• Sebstainable Pty Ltd
• Sementis Limited
• Sustainable Construction Systems Pty Ltd
• And VivaZome Therapeutics Pty Ltd.

About the CRC Programme 

Since 1991, the CRC Program has committed $5.6 billion of grant funding to support the establishment of 236 CRCs and 208 of the shorter-term CRC Projects.

On top of this, programme partners are contributing another $16.9 billion of cash and in kind.

The CRC-P Round 14 opens today.

Round 14 will support projects with a focus on circular economy principles, as well as the National Reconstruction Fund priority areas.

So how do ideas get commercialise in the startup world

How do you get to the money and the VC and 

How do you reduce the risk of early-stage startup failure? 

A key ingredient says Steve Blank - is having a mentor - who have been there and done that -  which can often be found in 

Incubators , accelerators, venture studios and Vc firms  .

They have been a key part of the puzzle  helping teams find product/market fit and raise initial capital. 

The typical journey 1) come up with an idea, 2) form a team, 3) start testing minimal viable products, 4) raise seed funding, 5) then obtain venture capital.

So how do accelerators operate?

They offer a cohort of startups a six to 12-week bootcamp culminating in a “demo day” and pitch session to venture capitalists and angel investors. In exchange for attending an accelerator, startups give up 5% to 10% of their company’s equity.

Examples Y-Combinator, Techstars, and 500 Startups are open to all types of startups in any market, while others like SOSV, IndieBio, HAX, Orbit, dLab are more specialized.

What is an incubator

They offer a little money - and support - could be a mentor , infrastructure and connections -  in exchange for equity 

What is a Venture Studio ? 

An idea factory for employees and stakeholders in an organisation searching for product/market fit and a repeatable and scalable business model.

They incubate their own ideas or ideas from their partners. The studio’s internal team builds the minimal viable product, then validates an idea by finding product/market fit and early customers. If the idea passes a series of “Go/No Go” decisions based on milestones for customer discovery and validation, the studio recruits entrepreneurial founders to run and scale those startups. 

Examples of companies that have emerged from venture studios, include Overture, Twilio, bitly, aircalla, and Moderna

For more information of how a Venture studio works - Steve Blanks article is great 

https://www.linkedin.com/pulse/venture-studio-right-you-steve-blank