Collection of convertible banknotes, fintechs falloff, how to brand the market – TechCrunch

Everyone loves an underdog, which is why investors and technology journalists are so happy to discuss startups that were launched during the great recession of 2008, such as Airbnb, Uber, WhatsApp, Mailchimp, Square and Venmo.

It is possible that your pre-seed, pre-revenue startup can similarly defy gravity, but in July 2022 it will be difficult to find many investors who want to invest in a company without traction.

If your company is too early to be valued, convertible banknotes can be a viable way to secure early financing. Basically, short-term debt that is converted into equity, these notes can be a boon for companies approaching the turning point.

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Julie Gionfriddo, Director of Advisory Services at Fiondella, Milone & LaSaracina LLP, wrote an overview for TC + that weighs the pros and cons of fundraising with convertible banknotes, along with some strategies for getting started.

Getting money early in this way provides some obvious benefits: For example, “they usually do not come with any control or steering seats.”

However, notes can also create risk, such as setting valuations too low, failing to raise enough capital or other poor planning that can give investors more equity than you intended.

Bottom line: If your business is facing an opportunity, converting banknotes can be a way forward, but only if you have a realistic valuation and a plan to reach it.

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Walter Thompson
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Once a key driver for global venture activity, fintech investment is slowing down around the world

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Compared to the first quarter of 2022, fintech financing fell 33% in the last quarter to $ 20.4 billion across 1,225 agreements, according to CB Insights and PitchBook. Year-over-year, fintech startups received 46% less funding than in Q2 2021, but the sector still received almost 20% of all VC dollars.

Mary Ann Azevedo, Natasha Mascarenhas and Alex Wilhelm sought insight into the downturn and looked at US and global activity: What awaits layoffs, marketing spending and consolidation?

“It is not a big surprise that fintech had a big role to play in the venture boom that is now behind us,” they write. “What’s really going on out there?”

Record VC fundraisers are not necessarily good news for first-time fund managers

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In the first six months of 2021, PitchBook reported that US-based venture capital firms raised $ 74.1 billion. This amount rose to $ 121.5 billion in H1 2022, but as more investors wait on the sidelines, where will the money go?

Reporter Rebecca Szkutak looked at the figures and found that the mega funds are responsible for most of the increase. “Nearly two-thirds of the venture capital was raised by just 30 funds,” she found, a potential sign that VCs are strengthening their reserves “ahead of a longer period of decline.”

Mark-to-market to arrive at a realistic valuation and improve your fundraising odds

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If your startup has less than 12 months of runway, here’s more worrying news: Before you can raise extra money, you may need to reduce your valuation.

Ascento Capital founder Ben Boissevain shared a mark-to-market overview with TC + that can help founders reset expectations as they approach the next round, or potentially an acquisition.

“Valuations are ultimately determined by supply and demand in the M&A market,” he writes.

“The higher you expect your startup value to be, the lower the likelihood of the deal going through.”

As fundraising becomes more difficult, entrepreneurs should ask investors for a flat round

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There are worse things a founder can do than accept a lower valuation: For example, dismiss each employee before selling your used office furniture on Craigslist. It would be worse.

Investors understand that entrepreneurs are affected by macroeconomic events, but just like cash, their patience and empathy are limited resources. That’s why Matt Cohen, founder and CEO of Ripple Ventures, says founders should start asking now for flat or down funding rounds.

“Instead of postponing this conversation, I strongly urge startups in this situation to approach their investors now and secure their Serie A2 round to strengthen the balance,” Cohen said.

“It’s better to go to the well once and get what you need to see this volatility.”

You may need more than one pitch tire

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A presentation card is suitable for a live or personal pitch, but founders will not always have a chance to be in the room where it happened, as the song is called.

With that in mind, Haje Jan Kamps shared his personal best practices for making decks that can be used to take advantage of several opportunities:

• Teaser deck.
• Forwarding deck.
• The presentation deck.
• Leave-behind covered.