Tim 🚙 H.

Great year for FirstMile Ventures' core geographies as exits start to heat up. We're starting to see the "snowball effect" take shape. We're in the process of backing a team who cut their teeth at one of Denver's best private companies and are ready to do their own thing. "The Denver metro is one of two non-coastal cities, along with Dallas, to land in the top 10 for expansion stage exits." "What we're watching: As the venture capital market matures it can have a snowball effect, Tune explains, and lead to more capital and mature entrepreneurs who are ready to invest in startups."

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Imagine this: ABC Capital, the top PE firm in the industry who usually writes $30-100m checks, loves what you’re doing and wants to lead your seed round with a $3m check 18 months later, you need $5m more and they tell you it’s “not what we do” This happens more often than you’d think… So what do you do if a big firm wants to “make an exception and go earlier than usual”? We call these “toehold positions” This might seem like a champagne problem, but it’s a problem nonetheless and one we see very often First, why might you say yes? 1. Signal: it will make the rest of your fundraising round easier, because other investors want to co-invest alongside big brand name firms 2. Value Add: bigger firms can typically be more helpful, because they have more resources to support their portfolio 3. Future Financing: bigger firms have more capital to deploy, meaning that future rounds will be easier to pull together All of these sound great in theory, but let’s talk about what could go wrong — usually this plays out if the firm DOES NOT follow on 1. Signal: while the round that they invest in will likely be hot/oversubscribed once they commit, the signal if they choose not to follow on will be VERY bad. Why? In the case above, everybody knows ABC Capital could easily write another $5m into the Company, and assume if they were excited they would. In reality, anything less than $30m is still non-core for ABC Other firms think ABC must know something. Why bet against a tier 1 firm who has more information than you do? 2. Value Add: In many cases, small positions into small companies get lost in the shuffle of big firms. In theory, ABC has the resources to help, but in practice you might not be the internal priority Oftentimes big firms will help just as much (if not more) when they’re trying to win a deal vs support a subscale position 3. Future Financing: Keep in mind that toehold positions are a one-way option — ABC has not committed to following on, but you might have unknowingly committed to them. Why? If their competitors know that ABC is invested, they might not even try to beat them out in the next round They’ll often decide that ABC has better information and a lower cost base, so it’s not worth burning their team’s time Could mean that a deal that was meant to de-risk future financing could actually reduce negotiating leverage against your biggest investor To be clear: these transactions can be SUPER positive and great for the company. They can create inflection points of funding and stack the deck in their favor But we have seen this go very wrong Big firms choosing not to follow on has made fundraising close to impossible for many firms in the past 24 months In tech just look at the case studies of Tiger / D-1 / Coatue The takeaway: if you’re considering allowing a toehold position, go in eyes wide open and don’t underestimate the value of partnering with a firm where you are square in their sweet spot

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This week Mikal Ventures brings you a 4-week breakdown of the non-US capital market with an emphasis on the Mikal verticals. Over the 4-week period ending May 29, a total of 1,545 new companies were added, with 101,688 companies included in the non-US Health Tech, Med Tech, Fin Tech, AI Tech, and Ed Tech verticals. The non-US AI Tech saw the greatest percentage growth in new companies for the period, weighing in at a notable 27%, nearly two times the overall vertical average of 15%. The non-US Heath Tech vertical led the group in transactions. Non-US Med Tech vertical lead in both SEC Filings and news articles. Mikal Ventures publishes these stats on a rolling 4-week basis to provide a perspective on how the verticals and new startups move through time. We hope you find them informative and thought-provoking. VC Investors are always adjusting their "Play Book" with a variety of options for investing. Mikal Ventures is one of those alternatives, offering curated solutions to real world problems. Reach out if you have questions on how we can be of assistance and bookmark https://mikalventures.com/ for additional insights and information.

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At SIERRA Ventures, we invest in Seed/A companies and tend to refer deals that are too early for us to our Pre-Seed and accelerator network. I pulled this for a friend and thought I would share. Let me know what I missed or if any information needs to be corrected. I would also love to hear about the founders' experiences with these accelerators. Y Combinator (YC) Funding Provided: $500,000 Equity Taken: 7% Additional Notes: YC provides $125,000 for 7% equity, and an additional $375,000 in an uncapped SAFE with a Most Favored Nation (MFN) clause. Techstars Funding Provided: $120,000 Equity Taken: 6-9% Additional Notes: Techstars provides $20,000 in funding in exchange for 6% equity and offers an optional $100,000 convertible note. PearX by Pear VC Funding Provided: $250k-$2m Equity Taken: 10% Additional Notes: PearX is a startup program by Pear VC. I have personal experience with Pear, and Mar Hershenson and Pejman Nozad  are top-notch humans (and investors). Forum Ventures Funding Provided: $100,000 Equity Taken: 7% Additional Notes: Forum Ventures focuses on B2B SaaS startups and offers mentorship and networking opportunities. 500 Global (formerly 500 Startups) Funding Provided: $150,000 Equity Taken: 6% LAUNCH Accelerator Funding Provided: $100,000 Equity Taken: 6% Additional Notes: Founded by the self-proclaimed World's Greatest Moderator, Jason Calacanis ;) The ideal stage for our Accelerator is pre-Series A with some traction AngelPad Funding Provided: $120,000 Equity Taken: 7% Additional Notes: AngelPad is known for its hands-on approach, with a strong focus on product-market fit. Program based in NYC and San Francisco. Strictly VC called them the “Anti-Y Combinator“ MassChallenge Funding Provided: Up to $500,000 (equity-free) Equity Taken: 0% Additional Notes: MassChallenge offers equity-free funding and focuses on supporting early-stage startups through mentorship and networking. Plug and Play Tech Center Funding Provided: Varies (usually $25,000-$500,000) Equity Taken: 1-5% Additional Notes: Plug and Play offers sector-specific accelerators and a large corporate partner network. SOSV Funding Provided: $250,000 to $500,000 Equity Taken: 7-10% Additional Notes: SOSV is a global venture capital firm that operates several accelerator programs, including HAX (hardware), IndieBio (biotech), Chinaccelerator (cross-border internet), and MOX (mobile). Berkeley SkyDeck Funding Provided: Up to $200,000 Equity Taken: 5% Additional Notes: Berkeley SkyDeck is a startup accelerator affiliated with UC Berkeley. It offers up to $200,000 in funding, mentorship from a network of UC Berkeley alumni and faculty, and access to a global investor network. Antler Funding Provided: up to $500k Equity Taken: $200k for 8%, $300k follow on What did I miss?

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I believe two of the big winners over the next 10 years in the SMB category will be PE who are rolling up the businesses and GenAI powered software that makes running these businesses significantly more turnkey and/or profitable. Thanks for having me on Jay Kapoor. If you want spicy takes fast forward to 25 min mark. If you want to get deep in market analysis buckle in for the whole thing. https://lnkd.in/d8M7Jyrx

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