From Memes to Value-add: What Matters "Beyond Money" and How to Find It

Madeline Lawrence
Associate
Peak
@madelinelawren
From Memes to Value-add:
What Matters 'Beyond Money' and How to
Find It

These are unprecedented times - literally.

Welcoming a new ‘normal’ in the capital markets
93% of seed funds in Europe reported increased intensity last year (vs 57% between 2019-2020)
Consider: international entrants, new players, growing funds
Leading to:
• Valuation inflation
• Cheque size inflation
• Pre-emptive, earlier rounds
• Capital moving at its fastest pace, ever

Fast money. Big tickets.

Huge funds.

Let’s find out.
How competitive is it, really?

Stealth mode

Stealth mode
Activated

First Step: Test the waters. Lure in the VCs.

Testing the VC waters.
Welcome to:
My 72 hours as a
Stealth founder

And it worked
…a little too well.

And it worked
…a little too well.
*

What’s the point?
Ok Madeline,

Of course, we can’t ignore the last few months…

Money, Money,
Money.
But still:

How do you decide?
With investors knocking on
your door or lurking on the corner.

• An overarching
personal &
professional goal.
• Founder Guides to
Venture Capital
Guides to help
founders navigate
this black-box
industry

From Memes to Value-add: What Matters "Beyond Money" and How to Find It

But a logo & ticket size only tells you so much.

To founders (…and to each other), we’re still largely “all the same”
We’re backing category leaders, ‘game changers’, innovators, visionaries.
We’re catalysts, partners for the long-haul. Shifting paradigms.
…….disruption…
But a logo & ticket size only tells you so much.

Capital is (becoming)
commoditized.

Capital is (becoming)
commoditized.
(& we’re freaking the f*ck out)

We know this.
(& we’re still freaking the f*ck out)

We VC's are scrambling to differentiate.

Some tactics
investors are rolling
out to stay
‘competitive’ and
unique in 2022
We VC's are scrambling to differentiate.
Source: State of European Tech, Atomico, 2021

Even the best of us have to stay relevant.

And founders are getting picky.

What investors think
‘win deals’ vs what
founders look for.
And founders are getting picky.

Founders value
investors who
share their
vision.
…investors don’t
care.
But we’re not quite seeing eye-to-eye.

VCs are pushing
‘value-added
services and
capabilities’
…a topic that
96% of founders
don’t value.
But we’re not quite seeing eye-to-eye.

• Speed
• Portfolio success
• Portfolio synergy
• “Value-adding” services
• Expertise
• Brand and marketing
• Chemistry & personal relationship…
Let’s skip what you already know.
And dare to go deeper.

This is an
opaque industry.
With steep power &
information asymmetry

You have to know
what to ask
In order to see beyond money (and marketing),

and have the courage
to ask it.
In order to see beyond money (and marketing),

• What: We get money from someone / somewhere (government, corporates,
institutions, family offices, individuals). Investors almost never fully disclose
their LPs (and likely never will).
• Why: This can impact power dynamics, decision making, risk tolerance,
culture, and more. Information rights + mixed incentives = can lead to
conflicts of interest. Money has morals.
1) LP Structure: Who is your boss?

• What: We get money from someone / somewhere (government,
corporates, institutions, family offices, individuals). Investors almost never
fully disclose their LPs (and likely never will).
• Why: This can impact power dynamics, decision making, risk tolerance,
culture, and more. Information rights + mixed incentives = can lead to
conflicts of interest. Money has morals.
• How: Who are your LPs? What is their role? How diverse are they? What is the
fund structure? Are there any conflicting investments? What level of
information do you provide them? Be critical and get to the real story.
1) LP Structure: Who is your boss?

1) LP Structure: is it so hard to imagine?

• What: You may know general 2/20 VC structure, but what does it
really look like in practice?
• Why: Venture Capital is a long-haul partnership. Incentive alignment
is essential to steering the company ahead. Knowing who you’re
working with and their buy-in is…logical (just like investors asking for
your your cap-table & SHA).
2) Incentive structure: What’s in it for you?

• What: You may know general 2/20 VC structure, but what does it
really look like in practice?
• Why: Venture Capital is a long-haul partnership. Incentive alignment
is essential to steering the company ahead. Knowing who you’re
working with and their buy-in is…logical (just like investors asking for
your your cap-table & SHA).
• How/Ask: Dare to flip the scrip around. What is your ‘skin in the game’ /
Did you personally invest in the fund? What is your ‘piece of the pie’ / Do
you participate in the carry? What is your vesting period?
2) Incentive structure: What’s in it for you?

3.
What’s your business
model?

• What: We’re making money into more money. Our model is driven by
outliers (‘high risk / high return’). We have a limited amount of time &
money to realize returns.
• Why: Funds have their own assumptions informing portfolio &
investment strategy. This decides resource allocation, sensitivity to
valuation / ownership targets, timeline to exit, dependency on other
investors, and more.
3) Incentive structure: What’s your business model?

• What: We’re making money into more money. Our model is driven by
outliers (‘high risk / high return’). We have a limited amount of time &
money to realize returns.
• Why: Funds have their own assumptions informing portfolio &
investment strategy. This decides resource allocation, sensitivity to
valuation / ownership targets, timeline to exit, dependency on other
investors, and more.
• How/Ask: How many investments have you done / will you do from this fund?
What is the life cycle of the fund? What is your risk & return profile? What are
your key assumptions (eg # write offs)? What drove your past performance? …
What is your past performance?
3) Incentive structure: What’s your business model?

• What: You know personal chemistry, but what about the wider team
dynamic & structure?
3) Fund culture: “it’s all about the team”

• What: You know personal chemistry, but what about the wider team
dynamic & structure?
• How: Examine hierarchy and bureaucracy. Look at employee turnover and
wellbeing. Examine the team member profiles - especially the new hires. Ask
‘how do you celebrate’? What are your OKRs? What is your most important
metric (and ask again, ‘what is it really?’). What’s your hiring roadmap?
• Tips: You can tell a lot by a team page (Crisp white shirts? Ordered by seniority? Golf
handicap as a fun fact?) and don't forget the shoes!
3) Fund culture: “it’s all about the team”

This is an imbalanced and opaque industry…
1. It’s hard to tell investors apart and even harder to
understand them.
2. VCs are scrambling to differentiate and create a
competitive offering in an increasingly commoditized
space: money.
3. To see beyond money, dare to ask critical questions
about ownership, compensation, incentives, priorities, and
culture.
My Top Takeaways

4. …and don’t forget about their shoes ;)
My Top Takeaways

Join us for the The Diversity,
Inclusion & Equality Brunch
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From Memes to Value-add: What Matters "Beyond Money" and How to Find It

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