Sebastian Herzog

💻 For all SaaS startups - this overview of 2,500 SaaS companies gives key findings. Founders, it's time to reflect. Steady growth, driven by a strong focus on client retention and expansion, might just be the new normal for the years ahead. Now, more than ever, it's crucial to prioritize and nurture your relationships 🤝with clients. More details👇🏼

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Business angel statistics: How to come from 500 contacts to 5 deals a year.   Here is what it looks like from my perspective:   500 to 250: Not relevant Like many well-connected angels and VCs, I receive approximately 500 requests to meet through various channels yearly.   I have an Open-Door policy, where I try to meet all startups that fit my primary investment criteria (stage, company type, location, etc.). This results in meeting around one new startup a day for a brief introductory meeting. For example, I am having 13 online meetings today, as it’s one of my Open-Door days.   I politely decline meetings for the remaining contacts, as it would be a waste of their time. I’m not going to invest in a US Series C round of $50M or in a pre-seed round for a German restaurant chain, for example.   250 to 50: Not a good fit Most initial meetings don’t lead to further action, as there isn’t a good fit. This goes both ways and is just part of the process for both parties.   The startup might be looking for a different type of investor (VC?) or may have misunderstood my investment criteria.   I’m a pre-seed investor, which means there isn’t much data available in these early stages. Therefore, I mainly rely on gut feeling about whether the opportunity is exciting and if I believe these are the founders worth betting on.   It’s important to quickly say “not for me” to most opportunities, so nobody’s time is wasted.   50 to 20: Digging into the opportunity Most angels are not experts in the specific fields of the opportunities they evaluate, so even though we may initially be excited, we need to dig in and learn more.   Personally, I do this through two main sources:   1. My personal network. If you’re presenting software for industry X, I will consult someone in my network (ideally potential customers) and use their input to further validate the opportunity. 2. My business angel network. I’ve built an angel network that currently has 20 members. They possess a wealth of industry insight, and in most cases, we have experts in each field. Their opinions and potential co-investments matter greatly. Many opportunities fail in this process. Perhaps the solution isn’t unique, or the assumed problem doesn’t truly exist.   20 to 8: Due diligence Even if the opportunity seems promising from a market/problem/solution perspective, many things can still go wrong. I can’t list them all, but common issues include: Founder due diligence (reference checks) and ownership issues (messed-up cap table, dead equity) 8 to 5: I also lose deals Remember, selection goes both ways. Sometimes, I lose deals to other investors, either because they offer better terms or valuation, or simply because they are more attractive. For example, it’s hard to compete with Sequoia if they want to invest.

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Is there a Chat GPT bubble, even for corporate chat GPT accounts? The prologue: Lars Meyer and I were trying to develop a scale for corporate maturity with the business version of chat GPT. Our results differed widely.* The drama: We tested it with Quark (German high-protein cheese). The results are also very different. In the first picture, the guy did the sacrilege and put croutons on his quark. But otherwise, it's relatively close. The second differs more. *I know it is probabilistic and not deterministic, but the difference in the text generation with the corporate accounts was still striking as they lack the rich context of private accounts #chatgpt #ai #quark

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Market size slide often misses the mark due to a standardized approach by pitch coaching. This template mandates the inclusion of TAM, SAM, and SOM in three bubbles. You can find such templates all over the internet. 👀 Everywhere I found that entrepreneur claims “Our global TAM is $X B, but we are going to start in a certain part where our SAM is $Y B. And we project that our SOM is $Z B” It’s clear why entrepreneurs try to pump up their market size. They’ve been told that VC only interested in unicorns, and so they assume that the best way to become a unicorn is to go for the largest market. The thinking is that it's easier to get 2% of a very large market than it is to get 20% of a smaller market. So, they search for market data that allow them to claim that their TAM is $56B, or $256B, or even better, $2.5T. When this slide appears, most investors chuckle. Investors generally don’t give any credence to the market size. We may still ask founders how big their target market is, but the point is to see 'how founders think about segmentation, not to rate the startup based on how big they think.' 💡 Savvy investors prefer startups go after a market that doesn't yet exist. Better to create the market than try to unseat established competitors. Rather than claiming that you can disrupt a existing market, what’s more relevant and compelling is how you answer questions such as: 👇 1. Who are your target customers? 2. How will you reach them? 3. How many can you reach? 4. How will you convert them? 5. How many can you convert? 6. How will you onboard them? 7. How much will that cost? 8. What is a customer worth? 9. How many customers will you acquire this year,Next year,The year after? Most investors want to see market opportunity, not market size. They need to see that you understand more about your approach of reaching & onboard customers. Founders should build a bottom-up model that demonstrates how you will build a big, profitable, customer by customer business. Don’t suggest that your focus is on acquiring market share in a large market. 🙆‍♀️ We’ve heard several pitch on wearable technologies for dogs. They claim - there are 90M dogs in the US alone — at $9.95 a month subscription, that’s a $10B market! But truth is It doesn’t matter if there are only 20M or 200M dogs. What matters is how many dog owners the entrepreneur can convince, one by one, to sign up for this service. Define your target precisely, like "urban professionals, 25-35, earning $80,000 , active Instagram users, and dog owners." Entrepreneur should stop pitching the typical market-size slide. Instead, they should show investors that they understand the market opportunity customer by customer.💡 Check out my free newsletter for more insights: https://lnkd.in/dKZQKHg2 . #startups #funding #fundraising #founders #investors #VC #angelinvestors #founder #fund #money #runway #marketsize #market #entrepreneurship #entrepreneur #customers

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Definitely more interested in building “Mittelstands” first over “unicorns”.

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🎉 Congratulations to my friend and thought leader, Peter Wollmann (together with Lukas Stricker & Doris Pemler) , on the release of his book, Reading an Unknown Organization 📚! This book is a must-read for CEOs, leaders, and consultants who navigate organizations through today’s volatile, uncertain, complex, and ambiguous (VUCA) world. I had the honor of being one of the interviewees, sharing insights I developed while preparing for my presidency at NuFund Venture Group in 2023, as well as my approach to "reading" early-stage companies for investment decisions. The discussions and frameworks in this book, especially the Three Pillar Model—Sustainable Purpose, Travelling Organization, and Connectivity—are invaluable for any leader seeking actionable guidance to succeed in challenging environments. Why This Book is Important 📖: 1️⃣ Sustainable Purpose 🌱: A clear purpose anchors an organization, especially during transformation. 2️⃣ Travelling Organization 🧭: Embracing change and constant learning prepares teams to thrive amidst uncertainty. 3️⃣ Connectivity 🔗: Creating deep connections within and beyond the organization ensures adaptability and resilience. One of my favorite insights from the book (and just read for a few minutes): “Navigating an unknown organization requires more than the application of familiar methods. It’s a process of building a deep connection with the organization’s unique identity—balancing curiosity with respect for its existing rhythms, and intuition with data-driven insights. Real transformation begins with this dual commitment: to learn from the organization as it is, and to guide it toward what it can become.” Peter’s approach goes beyond theory, emphasizing Organizational Intelligence to help leaders read and adapt to “Unknown Organizations” with agility and insight. It’s a framework for those tasked with making impactful decisions in complex environments. I’ve seen firsthand how these insights drive positive change—thank you, Peter, for including me in this journey! And a special thanks to our mutual friend Alberto Casagrande for making the introduction. 🕰️ As Charlie "Tremendous" Jones once (almost) said, “In 10 years, we are the same person except for the places we go, the people we meet, and the books we read.” I added the part about places because, as an immigrant, I know firsthand how the places we live and journey through shape us just as profoundly as books and people. Take a step today—discover what Peter’s latest work can bring to your leadership journey. 📖 Check out the book below:  https://lnkd.in/gm_xafCi

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