#009 What a VC Wants - A Conversation with Blackbird's Phoebe Harrop

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Ever wondered what an investment committee is looking for? How do you manage a healthy investee/investor relationship post-raise? Watch the full interview and find out.

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In this week’s longform article, we’ve pulled together a venture-ready checklist for all types and stages of startups. Whether you are deeptech, SaaS, seed or Series A, you will find at least one gem that might propel you closer to being venture-backed. Here’s some of Phoebe’s insights:

• Demonstrate that you can build success from scratch - As a VC, pre-seed and seed stage investing involves looking at the people in front of you and deciding, “can they build something out of nothing?” VCs gather up qualitative evidence to evaluate how well each startup team, technology, and market opportunity fits that criteria. Phoebe says the best companies in the world are founder-led. “I want to understand why this person is dedicated to building something out of nothing. What is the problem that they've landed on, which they're so obsessed with, that they will do the unreasonable thing, which is to start a company off their own bat and get on the rollercoaster that is startups, in order to solve.”
• Master your story - especially if you’re a deeptech - “On the deep tech side, you could go five or seven years with no revenue and you have to get there and continue to meet the technical milestones, you have to raise sometimes hundreds of millions of dollars. And so the bar on storytelling to employees, and to investors, is so high.” If you are feeling insecure about your storytelling mastery, then get a coach, work with a communications strategist, or take inspiration from other deeptech founders who keep getting funding despite being pre-revenue after many years into their journey.
• Healthy investor relations are about doing the work - Strong relationships take time and must be reciprocal. Phoebe says, if you're not getting good input from your investors, even though you're giving them a lot to work with, then change who your advisors are, change your board composition, get some different perspectives on there. 

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grow

Trends we’re noticing: Focus on efficiency

Many SaaS companies are trying to reduce their CAC right now.

Brian Balfour’s essay “Channel Model Fit for User Acquisition’ is a fantastic lens to apply, helping assess which channels are right for you.

He introduces the ARPU-CAC spectrum, which emphasises the importance of selecting channels based on ARPU (Average Annual Revenue per User) and CAC (Customer Acquisition Costs) in order to grow sustainably.

Take a B2C product, like Facebook, Whatsapp or Yelp. They have low ARPU, and therefore have a better fit with low CAC channels like Virality and UGC.

Further to the right of the spectrum, B2B SaaS companies like Hubspot or Zendesk have a higher ARPU, and therefore can leverage higher CAC channels like content marketing or inbound sales.

Importantly, you need to balance how much you can charge users, with how much it costs to acquire them. In turn, your channels need to be appropriate for these.

The takeaway is to consider your pricing, product, model, channels and everything else as interrelated. Changes in pricing, or model (eg free trial to freemium) affect what channels are the most appropriate.

Get Out of the ARPU-CAC Danger Zone with Channel Model Fit — Brian Balfour

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Tech Spotlight: Vessev

Kiwi-company Vessev is making history with the world’s first premium electric vessel for tourism. The VS—9 features high-efficiency hydrofoil technology that allows it to glide above the waves, providing an experience akin to flying on water.

The first successful sea trial was conducted in May, marking a monumental achievement for Vessev. The vessel demonstrated exceptional stability and efficiency, reducing energy consumption by up to 95% compared to traditional boats

The electric hydrofoiling vessel is a game-changer for the tourism industry. Operating using state-of-the-art electric propulsion systems powered by advanced batteries, it ensures a smooth, quiet, and environmentally friendly ride and it’s also much cheaper to operate.

Check out what they’re doing here: Vessev — Together, we can propel a more liveable world

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