Back to Basics
Gil Dibner

Last week was about back to basics in two ways. First, I published a two-part blog post addressed to the current generation of VCs, many of whom — like me — are struggling to navigate today’s current market environment. Part 1 talks about three different ways in which VCs are reacting to the climate: scaling up, indexing, or going back to basics with an artisanal “high-conviction, high-concentration” approach. Part 2 focused on this third, artisanal, response and offering some advice to VCs on how to keep their sanity as they navigate this manic market. In that piece, I argue for the importance of a people-first approach to early-stage startup investing. I also argue that capital doesn’t matter — and less is often more. “We live in an era that is flush with capital. Angular’s entire $80M “seed fund” is smaller than some “seed” rounds. It would be easy to conclude that rounds are larger because they need to be larger. This is partially true, of course. There is an increasingly expensive war for talent and a big war chest can sometimes help fight off well-funded competition. But that is only half the picture. Having been a first-check investor for 15 years, my conclusion is that capital doesn’t matter. There will always be a competitor with deeper pockets. There will always be an investor ready to write a bigger check than you gave a term sheet for. There will always be a “better” VP Sales or a “10x” ML engineer who will demand a higher salary. But success is rarely if ever determined by these factors. I’ve seen massively funded companies fail spectacularly, and I’ve seen massively under-funded companies outperform, hire amazing mission-driven talent, and win customers against their bigger rivals. I’d even argue that staying lean — particularly early on — is a massive strategic advantage because it builds a more resilient DNA and attracts the right people. In the end, venture capital is not really about the capital — it’s about the venture. Angular is big enough now to lead any early-stage round we want to lead — but nothing meaningful about an early-stage company is measured in dollars.”

The second way in which last week was a “back to basics” week for me was that I travelled to Copenhagen to learn about one of the most exciting eco-systems in Europe, meet new people face-to-face, and build relationships that I hope will grow in importance with time. Over three days in Copenhagen last week, I didn’t do any zoom meetings at all. Instead, I met people for dinners, for coffees, and for beers. I spoke at an in-person event in a crowded room, and I hosted an intimate round table discussion for six founders — a conversation that I think could only have taken place in person. It was only after about two hours of spirited conversation over dinner that the real contours of the Danish tech eco-system began to emerge in all of their fascinating details: the opportunity, the uniqueness, the challenges. (Special thanks to Digital Hub Denmark for organizing all of this! Thank you, Zenia!) I can’t wait to go back to Copenhagen to meet my new friends again and make some new ones. Zoom is a great multiplier, but it was great to be back in physical rooms with real people — and last week was a great reminder of how important the in-person aspect of our work is — especially at the early stages.

Finally, I want to thank Emil Efrem — co-founder of Neo4j — for joining Anne and I for an absolutely enlightening episode of Angular Insights. We discussed open source, pricing, and how Neo4j navigated to the pricing model they have now. Emil was incredibly open, and I think this is a priceless episode for any founder thinking about pricing, open source, or category creation. Thanks, Emil!

EVENTS

Nov 10 / Product-Led Partnerships
Andrew Edelman, Head of Strategic & Platform Partnerships, Zapier

Dec 8 / Fireside Chat with Leigh Moore, VP of Marketing at Snyk
Leigh Moore, VP of Marketing, Snyk

FROM THE BLOG

Three Methods of Venture Capital:
A guide to navigating a manic market as a venture capitalist (part 1).

Back to Basics — My VC Manifesto:
A guide to navigating a manic market as a venture capitalist (part 2).

How the “No Code” Design Paradigm is Revolutionizing Enterprise Software:
Companies like Figma, Airtable, Notion, and Zapier are doing much more than vanilla PLG.

Building Angular Ventures:
Announcing an $80M first-check Fund II for deep tech founders across Europe & Israel.

EUROPE & ISRAEL FUNDING NEWS

Spain/Data Security. Devo Technology raised $250M for its data logging and security analytics platform.
Israel/Fulfillment. Fabric raised $200M to help those other retailers — big and small — compete more squarely against that muscle specifically in fulfillment with robotics technology, “micro-fulfillment” centers and last-mile operations.
Israel/Industrial. Augury raised $180M for its leading IOT and AI-driven Machine Health solutions.
France/DNA Printing. DNA Script raised $165M for its Biotechnology company focused on Enzymatic DNA Synthesis (EDS) and DNA printing on demand.
UK/Surveys. Attest raised $60M for its cloud-based, no-code, big-data solution to surveys.
Germany/No Code BI. Y42 raised $31M for its end-to-end data platform that can replace the various tools they are using today to integrate, transform, orchestrate and visualize their data.
Germany/Industrial. SimScale raised $29M for its web-based 3D simulation platform for engineering.
Switzerland/Financial SaaS. Yokoy raised $26M for its AI-powered spend management platform.
UK/Gaming Adtech. Admix raised $25M to bring ads to games, e-sports, virtual reality and augmented reality.
Lithuania/Payments. Kevin raised $10M for its payment infrastructure for online, mobile, and physical sales.

WORTH READING

ENTERPRISE/TECH NEWS

Co2 into Starch. A Chinese research team has discovered a way to convert co2 into starch. “From carbon dioxide to starch — no plants required: Researchers have developed a novel, cell-free method of synthesizing starch from CO2 and hydrogen using a combination of chemical catalysts and a carefully selected set of enzymes in a cell-free approach.”

Web3 vs Web2. Fred Wilson of Union Square Ventures, one of the most prolific investors in the Web2 era, lamented on Web3 vs Web2: “We are seeing a different go-to-market action in web3… Come for the assets, stay for the experience.”

AI Solving PDEs. Researchers at Caltech have introduced a new deep-learning technique for solving partial differential equations that is dramatically more accurate than deep-learning methods developed previously. AI has cracked a key mathematical puzzle for understanding our world. Partial differential equations can describe everything from planetary motion to plate tectonics, but they’re notoriously hard to solve.

How to Attract High Earning Talent to a Country 101. Tomaž Štolfa highlighted Portugal’s incredibly simple and straightforward immigration policy. Clear tax rules, 0% on crypto, dividends and foreign income and easy to use (Rebase) platform to apply.

HOW TO STARTUP

Invest in Relationships, Not Transactions. Michael Eisenberg, co-founder and Partner at Aleph, on why founders should want VCs (and vice versa) who treat investments as relationships, not as transactions.

Burn Wisely. Founder and CEO of Box, Aaron Levie: “If you’re raising capital, raise when it’s cheap, but operate like it’s expensive.”

A Founder’s Journey. The Observer Effects latest on Mike Cannon Brookes, the founder and CEO of Atlassian, covers Atlassian’s history and the many lessons along the way including co-founder relationships, running a distributed team, what a great meeting looks like, time management and trying to instil culture.

Recruiting Outside your Network. A Stripe recruiter explains how to recruit new employees after you’ve exhausted your personal network. “That pool of people is likely very small and they may not have the many, many competencies required to run a business. This guide will help you find great new team members beyond that first set of people.”

HOW TO VENTURE

Sequoia Fund. Sequoia created a stir this week as it announced that it has moved to create one big, open-ended fund, with Sequoia partner Roelof Botha claiming the 10-year fund cycle of VC is obsolete. Check out The Information’s Sam Lessin’s take on their move in the context of how VC is fundamentally changing.

Justin de Guzman had an interesting take: “Basically, if VCs can double down and borrow against their gains (and not take a tax hit on distribution) instead of/in addition to raising from LPs, we’re going to have way more $$$ going into venture.”

Ho Nam, co-founder and MD of Altos Ventures, had a differing view in that “the vast majority of VC funds don’t have tens of billions of profits tied up in public stocks (and they never have), so what Sequoia does here is not that relevant to the rest of the VC industry.”

What I Tell All New VCs About Their First Funds. Hunter Walk, co-founder and Partner of Homebrew, on advice for those approaching starting their first fund.

1. “Fund people/ideas ahead of consensus — that is, find founders and markets that aren’t currently being chased by the mainstream and get to conviction ahead of the pack.

2. Be more helpful than the folks on cap tables today who overpromise and underdeliver — every cap table I’m on has some percentage of allocation that provided zero value after the investment. If you can be more valuable than that, I’d love to bring you on to the cap table of the next seed round we lead.”

PORTFOLIO NEWS

Vault Platform’s “Trust Gap” report found that 3 in 4 office workers in US, UK have seen or experienced workplace misconduct.

CruxOCM’s CEO, Vicki Knott, will be leading a session on ‘The Control Room of the Future’ at this year’s ‘Operational Excellence in Oil & Gas, Houston’ Oil & Gas IQ.

Snyk agreed to acquire CloudSkiff, creators of driftctl.