Justin Canetti

Kettleborough VC has been active for ~6 years, invested in ~30 companies, gone through ~80 funding rounds, witnessed ~12 exits including ~4 instances of partial principal erosion, seen ~4 seed to $100M journeys, tracking ~29% XIRR across the portfolio. A couple of IPOs from the portfolio surely seem very much in line ahead.

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I recently saw this metric from Carta’s 1Q24 VC Fund Report, which is very concerning. DPI... is nowhere to be found in earlier vintages that probably should start showing DPI. Funding early-stage projects is great, but ultimately, these venture dollars need to exit their investments and pay back their limited partners. That’s where the metric Distributed to Paid-In Capital (DPI) comes in. While managing a fund, we get interim measures during the life of the fund (e.g. IRR, MOIC), but ultimately, “you can’t eat IRR.” If you want to build a lasting venture capital organization, you need to start showing DPI for your fund. Keep in mind that this is traditional VC data from Carta, and is not strictly crypto venture. Crypto venture tends to get liquidity earlier (tokens) and things tend to go parabolic sooner (faster, more unicorns) - but I’d wager that the data here is somewhat similar for Crypto VCs… Not as much DPI as there should be from these earlier vintages. Read the full article, as well as a recap of all the crypto fundraising rounds for August, here: https://lnkd.in/g3eVJ-iF

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It’s clear that venture debt can be a tough fit for early-stage startups, which often struggle with creditworthiness and financial stability. Saddling a young company with debt can add unnecessary strain, especially when the risks are already high. The frustration with inexperienced VCs giving poor advice is also understandable; with so many new investors entering the field, not all of them provide the seasoned guidance that startups need. It’s crucial for founders to do their own homework and seek out knowledgeable mentors to navigate these financial decisions wisely. Ultimately, while venture debt has its place, it’s generally more suited for later-stage companies where it can support value-enhancing initiatives rather than adding risk to fragile early-stage ventures. #VentureDebt #StartupFunding #EarlyStageChallenges #InvestorAdvice #FoundersJourney #VCExperience #FinancialWisdom #VC #Business #Entrepreneurship

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Should you raise VC money❓ A question for the ages, answered by Dylan Collins on the pod this week. No one is better placed to answer this than the man who sold three companies and is now an active investor. 💡 Dylan breaks down: - Why VC money isn’t for everyone - The hidden costs of taking investment - And how to know if you’re truly ready to scale 🚀 Listen or watch now YouTube: https://bit.ly/3COsRU1 Spotify: https://spoti.fi/4fPu6Rv Apple: https://apple.co/4gaVuJo

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What if you want more details about funding rounds (e.g. for comparisons)? See the original source of funding news on shipshape.vc We aggregate data from the web to save you time, and we've just released a feature that lets you read the original news story. #capitalraising #startups #fundraising #founders #venturecapital #investors #vc #vcfunding #technology #startup #tech

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About to go live... Startup Studio portfolio VC fund. $8.5 mil. with room to oversubscribe. All deals warehoused and ready to allocate. Built in equity on day 1. Low 1 time management fee. $35k minimum investment. 506c so accredited investors only. GP's are personally invested. Multi tiered exit strategy in place. Liquidity options available at year 2. *** This presentation of Sidecar Portfolio Fund (the “Company”) is for information only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe for any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.***

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The conversation we had with Guy Podjarny (founder of Snyk, $7.5bn valuation) was one of the most insightful we've had on the podcast. He comes across as wise, commercial, creative, focussed. That's why Snyk was able to go from $0-7.5bn in about 5yrs. Great entrepreneurs aren't given enough credit for creativity. They might not be artists, but their minds work in ways that find new solutions from previously unconnected bits of information - it's applied creativity aka innovation. Great product entrepreneurs are master innovators, and Guy is one of them. I've put some of Guy's takes below but worth listening to the episode. Entrepreneurship is about creation and impact, thinking about problems from a new perspective and making a difference. Having a big vision is important, but it's crucial to break it down into small steps and focus on the next achievable goal. Putting your product out there early and optimising for learning is more valuable than waiting for a perfect product. Hiring the right people and continuously evolving the company culture are key to success. Communication skills and the ability to distill complex ideas into simple terms are essential for founders. Chapters 01:24 Defining Entrepreneurship and the Vision of Snyk 08:04 Product Management and Early Days of Snyk 15:28 Fundraising Strategies and Building Company Culture 21:47 Open Source, Blockchain, and Security 22:17 Fundraising Tips and Managing a Cap Table 28:00 Building Company Culture and Hiring Great Talent 36:25 Reflecting on Mistakes and Lessons Learned 45:45 The Future of Snyk and Dinner Party Guests

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not perfect... but here's what we'll be releasing shortly.... On shipshape.vc you'll be able to see when a fund has themselves raised (via public reporting). That's in addition to existing features of news about recent deployments, and whether the fund has led a round in the last 2 years. We've not yet settled on the wording for the key (suggestions welcome). We want to describe: 1. When a VC fund has invested in a company's funding round 2. When a VC fund has themselves raised a fund All within UI constraints! #capitalraising #startups #fundraising #founders #venturecapital #investors #vc #vcfunding #technology #startup #tech 

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I posted last week about the shift in sentiment from LP's regarding secondaries. It used to be that GP's were told to hold their winners forever but more recently a lot of LP's are recommending pre-seed & seed stage VC's get good at navigating secondary transactions as early as Series B rounds. Obviously a lot of factors go into these decisions such as where you are in the life of the fund, how the rest of the portfolio is performing and the performance of the underlying company in question. But in this new reality, entry price and ownership relative to fund size really matter in order to still generate top decile funds by selling into later stage rounds; and that tends to be at odds with many seed fund strategies I see out there today. According to Carta, the average seed round valuation is $15M and I see some seed funds doing seed deals at $20M - $30M valuations. Many seed funds between $40M - $75M in size (avg of $50M) write seed checks at $15M valuations and probably invest $1.5M into each company to get 10%. The portfolio construction in this scenario is probably 20-25 companies given the check size. Assuming 50% dilution (probably low), you need a company to get to a $1B valuation to return your fund and you have less shots on goal to do that at a time where I think the probability of hitting a winner at seed for any single seed fund is going to go down per my post last week. It also means the opportunities to sell secondaries in later rounds in order to drive meaningful DPI is harder because it likely won't get to that sort of valuation until Series C or later; and you probably don't want to consider selling until the position is worth even more than your entire fund. Alternatively, if you write a $1M check into a deal at a $8M valuation out of a $50M fund, you are getting 12.5% ownership and probably investing in more like 30-35 companies given the initial check size. Higher ownership and more shots on goal. Assuming 50% dilution again, you get there with a $800M valuation. At even lower valuations, $1B outcomes would return multiples on the fund and it really opens up the options when it comes to selling in secondaries in order to manufacture liquidity. Given the current dynamics in the market, I wonder if more funds will start to focus on sub $10M valuation rounds.

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You know what really grinds my gears? Liquidation preferences over 1x. I'd strongly caution any early-stage founder to NOT accept an investment with liquidation preference multiples above a 1x. Taking something higher than 1x not only skews alignment and interests in the founder/investor partnership, it also sets a bad precedent for subsequent rounds of funding going forward. As a founder, you'll be caught in a vicious cycle and over time likely lose all YOUR personal upside in YOUR business...so what is your motivation to create a great business? I fully understand and appreciate it's a more challenging fundraising market currently, but falling into the liquidation preference trap is really setting you up for painful decisions and outcomes in the future. Post inspired by this recent data I saw via Carta

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Is VC really dead, as people would like us to believe? I think it's (rightly) transforming and setting up roots. Before writing VC's obituary, let’s look at the data. It's quite enticing to be a pessimist proclaiming all is gloom and doomed but it fundamentally misreads how venture capital evolves. All previous 'dying' periods birthed some of the world's most iconic companies, examples like LinkedIn from 2000's crash, Airbnb and Uber from 2008's winter. The 50% dip in overall funding in 2023 isn't death; it's a cleansing of 20-21's tourist VCs who jumped in mistaking momentum for value, lured by the uptrend. Resets are always a good thing for value creation and skill to come to the party. The top quartile firms are still raising oversubscribed funds. Why? Because real VC was never just about capital deployment. Just as mobile and cloud computing emerged from previous downturns, the AI revolution is catalyzing VC to evolve into something more nuanced, more specialized, and ultimately more enduring. The fat is being trimmed, but the muscle is getting stronger. Building enduring companies requires smart capital, strong network effects, and operational expertise, which AI is nowhere close to disrupting. Funds in India itself, deployed over $6.5 Bn+ in 2024 Q2 and Q3. Recently spoke to a VC stalwart who in addition to being long on India also mentioned on how India is ripe and brimming with the world’s finest talent — talent that needs capital to fuel its ambitions. India’s startup ecosystem is in its early years. This is the time when it needs nurturing, and VCs have an important role in that I believe VC is just strengthening its roots to become more thoughtful, value-added - driven by empathy, shared purpose and long-term alignment. Far from dead; alive and excited for what's to come!! Karthik Prabhakar Rohit M A

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At PeerCapital we love throwing data on perceived fallacies! Couldn't agree more with Ankur on how VC in India is indeed evolving into "something more nuanced, more specialised, and ultimately more enduring". In the context of the amount raised by VC firms in India in 2024, 'new funds' accounted for 37% of total VC capital, compared with 15% last year. The growth signals a need in the ecosystem for fresh perspectives, refined approaches, and the ability to take well-calibrated risks to back early-stage founders. Excited for our ongoing founder conversations and what's to come in 2025! #earlystagevc #earlystagefounders #vc

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The scenario... You're raising a new VC fund and you know people that have investor platforms with, they say, tens of thousands investors all opted in, liquid and looking for new fund opportunities. You shoot over the fund info, docs and deal room. They list it on their platform and email the list. 4 weeks go by and crickets. The odds of that happening is crazy! Even a list of 100 people would get at least 1 inquiry. People fall for these things all the time and it doesn't matter if you're a fund, a startup, a real estate developer... most of these platforms are a joke and they'll just say that your fund, business or deal is somehow "outside of their norm" which is why it's not getting any traction. Do your research, ask for referrals from people who were successful and never pay without doing your due diligence!

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Back-to-back 1:1 pitches from founders filled my schedule. Here’s a piece of advice from someone who’s been in the trenches for over 20 years, scaled businesses to over $100M, and has seen a plethora of pitches: Founders, please rehearse your pitch until it's second nature. In my experience, 90% of the 30-minute meetings were spent trying to decipher what the business actually does. Founders, this isn't just about securing investment; it's about refining your vision and articulating it with passion and precision. The good news? It’s surprisingly easy to stand out with a clear, concise, and compelling pitch. And remember, the journey is just as important as the destination. Enjoy the process!

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The results are in. Emerging managers and especially sub-$25MM funds are out-performing their larger counterparts, even in a sub-optimal market. TVPI metrics for 2017 vintage was 3.8x versus 2.7x for a $100MM+ fund. Even a 2022 vintage is seeing a 1.1x vs a 1x TVPI. I'm personally working with a top-quartile sub $50MM fund that has delivered a 1.6x TVPI from a 2020 vintage with gains of over 100% for it's LPs (and no it's not pre-seed). Another solo-GP has averaged 60x MOIC. Smaller funds are more nimble, have more skin in the game and are quicker to react. Whilst it's predominantly smaller bets at an earlier stage (i.e. more risk), it also means a larger, more diversified portfolio where it only takes 1 to 2 wins to return all the capital to LPs = earlier upside. Add to that a much more favorable cost-structure, it's a relative no-brainer. A bit like startups, this segment is in it's infancy, so I expect we'll see much more data in coming years. (P.S- as I'm seeing some fantastic new operators come to the market, and we still have so much to learn, share and exchange about emerging managers, make sure to sign-up to upcoming newsletter! I'll be sharing much more in-depth insights, fund launches and interviews with GPs and LPs to create a vibrant and meaningful community- link in comments).

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Hey Founders! Not all sales go as planned, in fact many go off track, even after the signed LOI and with parties on both sides aligned. Dealing with hiccups 😬 is as much a part of the process as getting in sync on price, terms, and timeline to closing. So, when a "busted process" happens, or terminated LOI leads to a need to re-engage other buyers, what's the right play? In our experience it happens more with independent PE firms and #searchfunds, but it happens with big firms and strategic buyers too. Give us a few minutes and we'll give you some ideas to get things back on track. Might make or save you $Millions! Maybe more!!

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If you're launching a fund- GP commit is a topic that you have had to address with prospective LPs and internally. There's been quite a debate recently on X regarding the true cost of launching a fund- specifically relating to GP commit. A 1% commitment for a sub-$10M fund will be approx $100K and 2% for a $25M fund will be $500K. That's not small change, so GPs are getting more and more creative with what is offered in-lieu of cash. Without commit from a GP, there is little chance for alignment and it shows skin in the game and belief in your investment thesis and capability to perform. Expectations from LP's have increased over the last couple of years from the traditional 1-2% to 3-4% cash and in-kind. Increasingly, I am seeing the following cashless contributions: 🧲Deal warehousing 🧲Waiving of management fees 🧲Reduction of management fees 🧲Fee recycling 🧲Performance-based structures The success and benefit of each depends frankly on your track-record, fund size, investment strategy, AUM and what type of LP is on the table (i.e. large brand name anchor). In my latest deep-dive, I go over the benefits and drawbacks of each, and how it impacts motivation, relationship-building, future fundraising, operational and investment capacity as well as performance. If you're an LP- which of this in-kind contributions do you think is most effective?

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Dan Primack had some pointed criticism for #VC yesterday in his Axios Pro Rata newsletter (a daily must read IMO 😤). In short, the model doesn't work if it can't produce exits for LPs. Don't blame public markets (which are at all-time highs) for the lack of liquidity either. 📈 💸 Instead, this is a "liquidity drought of your making" where "...swinging for the fences on every pitch, rather than taking the single or double that's available" is the only way out when you invest at "sky high valuations." 😰 "A whopping 37% of "unicorns" are being held for at least nine years by VC funds, including 13% that are past the 12-year mark." 😳 ⌛ Is he right? Is VC at a dire inflection point? Or is Primack prematurely hitting the panic button? 🚨 https://lnkd.in/dts92pXr

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