Tag: EC Column

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Ask Sophie: Which US visas are best for international founders?

Sophie Alcorn Contributor
Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.
More posts by this contributor

Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Ask Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie, 

I am from Georgia but I live in Poland. I created my startup in Delaware a few years ago. To realize it and grow it, I need to move to the U.S.

I have a business plan and a market plan, but no immigration plan. What’s your advice? Which visa should I apply for?

— Global Georgian

Dear Global,

Congratulations on creating a plan and following through to expand your startup in the United States! I am committed to helping founders like you make the world a better place by coming to the U.S. to achieve your dreams. Thanks for reaching out!

Before I dive into your visa options, let me pass along some advice that Daniel Zawarczynski, the Austrian Trade Commissioner to the U.S. and co-director of Open Austria, offered to startup founders during our recent podcast. “Use all the resources you have on the ground and build your local network,” he advised. “Knowledge can be acquired so easily through Google and YouTube videos, but knowing the right people to trust and who trusts you is really the path to success.”

To start building that network of trusted individuals, I suggest consulting with an immigration attorney to help guide you on your immigration journey to the United States based on your business plan, timing, your long-term goals, your education, your qualifications and your unique situation.

Now, let’s lay out your immigration options!

“Transferring” to the U.S.

The L-1A visa for intracompany transferee executives and managers offers a great option for international founders who have been working for their startup abroad for at least one of the past three years and want to open an office in the U.S. If you have been working for a legal entity in Poland that’s related to your startup, your Delaware entity could sponsor you for an L-1A visa to come to the U.S. to open an office here. You will have to provide evidence that you have been on the payroll of your startup for at least a year through pay slips or tax documents.

The L-1A visa application will require you to submit documents such as business plans, growth models and organization charts. You will need to show that you have secured an office in the U.S. and that the U.S. office will support your position within one year of the L-1A visa being approved. Even though more people are working remotely in the U.S., the L-1A requires your company to have a physical office, which is also considered a sign that your company is serious, viable, growing and even hiring. We’ve been successful in getting L-1 visas approved for companies situated in a co-working space, but I would still recommend a stand-alone office within it.

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How to prevent an ‘operational catastrophe’

Julia Ivzhenko Contributor
Julia Ivzhenko is head of operations at Futurra Group, an IT company with Ukrainian roots that develops math service MathMaster.

Developing a fast-scaling business with a supply side in the early stages requires growing with high dynamics and little resources. Operational mistakes while scaling might have an exorbitant price.

We faced it when we decided to break into edtech and launch an education app that aims to provide experts the ability to answer millions of students’ requests in an online chat, almost instantly.

We started with a team of 20 people, which was enough to cover the demand in the early stages. To make the business profitable, the real race started: The marketing team had to scale the number of users, while operations had to follow their pace and grow the supply side.

We scaled demand without considering team resources.

We got up to speed quickly: 120+ experts were solving 3,000+ math tasks daily. We staked on the high pace to survive on the market, so the operations team was scaling the supply side by leaps and bounds.

We concentrated on scaling and didn’t have time to think if the resources of our team were enough to keep going with such speed.

Our marketing scaled rapidly, which was a good thing. Following the need to cover the increased demand from the users’ side in time, my team scaled the supply side 3x in one and a half months and 2x again two months later. Finally, we got 300+ math experts who were able to solve 10,000+ tasks daily. I was proud, thrilled, and freaking out at the same time.

I realized that in the last five months, our supply had worked on demand covering, time of service delivery, and quality of solutions. We concentrated on scaling and didn’t have time to think if the resources of our team were enough to keep going with such speed.

As a leader, I had to stop and look at the bigger picture.

The five-step plan I crafted to prevent the approaching “catastrophe”

1. Noted all the key processes “as they were”

This is a first step that shouldn’t be missed.

It is a common problem when there are no process notations. The work pace might be high, and people must implement tasks and solve issues immediately rather than describe the current process.

I described all the processes for that moment just as they were. It helped me understand the real point where we were at that moment. I figured out which things went out of control and might result in a big issue soon.

Afterward, all the processes were updated according to the following framework:

Image Credits: Julia Ivzhenko

2. Identified all the bottlenecks

I noted two types of bottlenecks:

First: Subprocesses, which were spontaneously added to key processes while scaling.

I discovered that due to the number of updates, my team members had to do too many additional actions, which were not noted before. Thus, I reviewed everything we did and simplified the general process. We focused only on “must-do” things, which influenced the result the most and put other “nice-to-do” tasks on hold.

Image Credits: Julia Ivzhenko

Second: Managers, who didn’t delegate tasks in time and stuck with an enormous number of tasks.

Unfortunately, I was one of them. I was doing too many things at the same time, and they never came to an end. In my case, it happened primarily because of hiring mistakes, which appeared to be the most expensive ones.

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5 key questions climate tech founders should ask impact investors

Agnes Svensson Contributor
Agnes Svensson is the chief impact officer at Norrsken VC, Europe's leading early-stage impact investor. She has more than 12 years’ experience driving sustainability, diversity, and inclusion initiatives in the private sector (most notably the fintech decacorn Klarna) and at nonprofit organizations.

The world is witnessing an exciting and necessary surge in climate tech startups, with the impact tech sector up by 64% since the end of 2020. And with that increased supply, a new breed of investor has come to the fore: the impact VC.

As an impact specialist working within a VC, I’m committed to supporting founders in achieving their ambitious goals and invoking positive change. To help drive more trackable impact investments, here are five key questions that all founders should consider asking impact investors competing for a space on your cap table.

Are you actually an impact investment fund?

First things first, you need to learn the jargon. The recent implementation of the Sustainable Finance Disclosure Regulation (SFDR) in the EU has brought clarity to fund categorizations. It’s important to discern whether the investor is an Article 6, 8, or 9 fund; understand the difference and know what this means for you, as a founder.

Article 9 funds, like us, are exclusively focused on sustainable investments, with impact as an investment objective. They’re also called “dark green funds.” One level down, we have Article 8 funds, which aim to promote environmental and social characteristics without an exclusive commitment to sustainability. That’s a “light green fund.” Lastly, there’s Article 6, otherwise known as “gray funds.” They make no claims of impact or sustainability, though they might dedicate some aspect of their funds to sustainable investments.

In addition to regulating funds under SFDR, the EU has provided guidance on what economic activities they consider to be environmentally and socially sustainable, and especially impactful. This is what’s called the EU Taxonomy, a classification of business areas that warrants more capital, innovation, and attention, as these will truly move the needle for our planet and humanity.

Choosing between Articles 8 and 9

Most VCs operating today will fall into the Article 6 category, as generalists, so we’ll exclude them outright here. For climate tech founders, opting for specialist impact investors (Article 8 or 9 funds), it’s advisable to stay impact aligned. Currently, it’s around 50-50 in Europe for impact VCs complying with either Article 8 or 9.

When dealing with Article 8 funds, they will likely ask you to show that you align with several environmental or social criteria that they’ve defined as especially important, such as the Principal Adverse Impact (PAI) indicators, which assess negative sustainability impacts of investment decisions or advice. They’ll also show you how to identify and work to mitigate sustainability-related risks.

Article 9 funds do this and more, asking you to walk the talk. They’ll demand more tangible evidence of what environmental or social impact your company is having, and how you can measure this over time. They emphasize the need to avoid causing significant harm and to run the business responsibly, both with internal operations and throughout the value chain.

It sounds like hard work but opting for an Article 9 fund offers several advantages. In many ways, Article 9 funds are often perceived as the “real deal” in the market, providing an impact stamp of approval within the investment syndicate that builds brand credibility in your startup. As your company grows, this status should give you access to pools of more diverse capital that non-impact companies cannot obtain.

Which impact key performance indicators (KPIs) do you prioritize?

Given the nuance of SFDR regulation, it’s important for founders to challenge investors in defining what they call “impact” and how they measure it. This is not a perfect science and is especially challenging when measuring the potential impact of early-stage companies that might be both pre-product and customer.

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It’s been a bumpy 6 months for edtech — are smoother roads ahead?

Rhys Spence Contributor
Rhys Spence is head of research at Brighteye Ventures, a European edtech-focused fund.
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It has been a bumpy six months for the global startup ecosystem. It has been equal parts exciting and alarming to see the advancement of generative AI conversations with the breadth of applications increasingly understood.

It’s our view that we are coming to the end of the hype cycle, and startups, even those that previously didn’t have any generative AI plans, are beginning to look at immediate uses rather than just the moonshots and associated disruption it can cause, including in schools and workplaces.

Exploring immediate uses will help us make the micro-adjustments over time that ensure disruption is minimized once the longer-term projects begin to materialize. This theme has been well explored by others, so let’s turn to other developments in H1 2023.

We had the fall of Silicon Valley Bank, which caused significant discomfort but had limited meaningful, long-term scarring on the ecosystem, particularly in Europe, given the actions of partners and governments. In the U.K., this respite was provided by HSBC, which stepped in to ensure stability for thousands of startups across the country, but minimal disruption was felt in the European Union, given the bank’s limited presence in the markets.

edtech companies that raised rounds in H1 2023

Edtech companies that raised rounds in H1 2023. Image Credits: Brighteye

Turning now to global edtech, the market has continued to stutter, exemplified by Chegg’s fluctuating valuation, kicked off not by unexpectedly negative results but by merely acknowledging the risks of generative AI to the business.

Let’s take a closer look at what happened in the European edtech ecosystem. Here are our five key takeaways.
My Tutor Source became the first MENA-based edtech startup to raise $100 million, which bodes well for the region’s ecosystem, previously more dependent on U.S. and U.K.-based startups for edtech activity than homegrown companies. The remaining large deals of $80 million – $100 million tended to be companies raising later stage funding, like Degreed and Begin. One European deal made the top 10: Hack the Box’s $55 million Series B (a Brighteye portfolio company).

Using this segue into Europe, the announced $1.7 billion privatization of Norway/U.K.-based Kahoot by a Goldman Sachs–led group presents a bright start to H2 2023, with the compelling cash offer representing a greater than 10x multiple on revenue. The deal spotlights a trend we anticipated in our annual report in January — growing M&A activity as companies begin to favor exits over raising down rounds and risking becoming zombies.

Overall, however, we expect a minor increase in European activity in H2 2023. H1 2023 saw increased funding than the previous period in H2 2022 and many of the companies that raised big rounds in early- to mid-2021 will be coming back to the table to raise more funding.

This should not be seen as signs of health in the ecosystem, however — what will be more telling will be:

  1. The basis on which these companies are raising (to seize opportunities or to stay afloat).
  2. Whether these companies are raising more or less funding than their previous rounds.

Let’s take a closer look at what happened in the European ecosystem. Here are our five key takeaways:

One-third of global edtech deals done in Europe

It’s positive to see the European edtech market holding firmer than other major markets in North America and Asia in terms of deals activity, but activity by funding and deal count is down across the board.

European edtech has a larger portion of a smaller pie:

European edtech has a larger portion of a smaller pie

European edtech has a larger portion of a smaller pie. Image Credits: Brighteye

H1 2023 saw more funding and higher average deal size than H2 2022

Though the pie has gotten smaller, the European ecosystem has had a better H1 2023 than its H2 2022, with more funding and higher average deal size than the prior period. In H2 2022, the European edtech sector secured $0.4 billion, but this marginally increased to $0.5 billion in H1 2023, despite few large deals.

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We tried using OpenAI to generate marketing strategies — and it worked

Nick Zamanov Contributor
Nick Zamanov is director of business development at Cyber Switching, an EV technology pioneer.

Generative AI has rocked the tech world, and every company is now considering if there is a way for them to leverage this technology. Since the introduction of ChatGPT, the tech industry has been buzzing with its potential impact, especially in content-heavy industries like marketing and advertising.

We used OpenAI to improve our SEO ranking on Google, which had positive results across the board. In less than a year, our site’s organic traffic went from nothing to approximately 3,500 visitors a month, the domain rating increased by over 40%, and the backlinks increased by over 500%.

We increased our organic traffic

Our web site’s organic traffic saw a sharp increase after we started using OpenAI in March 2022.

Our site’s organic traffic saw a sharp increase after we started using OpenAI in March 2022. Image Credits: Cyber Switching

Our domain rating saw an increase of over 40%

Our domain rating saw over a 40 percent increase

Our domain rating saw an increase of over 40%. Image Credits: Cyber Switching

Given the SEO ranking improvement, our domain rating saw an increase of over 40%.

And we boosted backlinks by more than 500%

We used OpenAI to boost backlinks by more than 500%.

We used OpenAI to boost backlinks by more than 500%. Image Credits: Cyber Switching

All screenshots are from June 23, 2023.

Through keyword-optimized blog posts generated by ChatGPT, we were able to really hone in on target keywords that rank high for many of the target phrases, like “best 48 amp ev charger.” It also allowed us to join the conversation with many other blogs by increasing our keywords from 300 to over 7,000, which led our website clicks to jump from 100 per month to 4,000.

Here are a few ways any business can utilize generative AI technology to optimize their marketing strategy.

Train the AI system to find optimal keywords

Before asking ChatGPT to generate an entire strategy document from scratch, you need to begin with the basics. Start by identifying your goals and let that inform your process. Ask ChatGPT for the most common keywords related to your industry, then drill down farther from there by asking for alternate phrases and options.

We started with the question:

  • What are the most common SEO keywords related to the EV charging industry?

It provided a list of 20 phrases such as “electric vehicle charger,” “EV charging station,” “level 2 charger,” and “home EV chargers.” The AI is not perfect: ChatGPT recommended keywords associated with home EV chargers when our SEO needs to focus on commercial EV chargers.

Once you settle on the relevant keywords, ask ChatGPT to organize the list into commercial, transactional, and informational words. These categories will be crucial for the smart prompts used later on to create targeted content for various areas of your website.

You’ll also need to do the same keyword search in order to build OpenAI’s knowledge of your company. Give the AI tool additional information, like the boilerplate from your last press release, the “About” section on your website, your company’s social media profiles, or any other assets you already have.

There is no need to reinvent the wheel, so use content you’ve already worked on to help generate better keywords, recommendations, and ultimately, your marketing strategy.

As we fed the AI system more information, the results formulated improved and the recommendations got better. Remember that AI is about training the data, so as you progress, the answers shared will become more and more accurate. The more data you provide the AI tool, the better it will understand your company and industry.

Use targeted categories to create marketing content

After using AI to highlight target keywords within your website as well as your industry, you can develop an SEO strategy guaranteed to help you secure a top spot in search results.

One of ChatGPT’s best use cases is for content generation like blog ideas, titles, and website copywriting. Make sure to do this in the same ChatGPT thread you started with, as this is where you have trained the AI system. Here is a prompt you can use to get this going:

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Ask Sophie: How realistic are my chances of hiring H-1B candidates at my startup?

Sophie Alcorn Contributor
Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.
More posts by this contributor

Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

TechCrunch+ members receive access to weekly “Ask Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

With more than 750,000 H-1B registrations this year, is it realistic for my early-stage startup to consider hiring candidates who are seeking them?

— Skeptical Startup

Dear Skeptical,

I know, I know: The numbers are intense.

I understand your skepticism given that the odds of companies getting their H-1B visa candidates selected in the annual lottery process have been on the decline as demand among employers for H-1B visas continues to rise. Despite some well-publicized layoffs, many employers continue to hire, plus the CHIPS Act of 2022 and the Infrastructure Investment and Jobs Act of 2021 are spurring more job creation.

For this year’s H-1B lottery, the U.S. Citizenship and Immigration Services (USCIS) received a whopping 758,994 eligible registrations, and for the first time, more than half — nearly 408,900 — were H-1B candidates who had more than one employer that registered them in the lottery. (How does the annual lottery work? Check out my podcast for an overview.)

Again this year, with no second lottery on the horizon, these are important questions to ask.

Still, I believe it’s still worth it to register employees in the annual H-1B lottery as part of a multiprong strategy to attract and retain international talent in the United States, as the six-year, dual-intent status is so valuable to companies and the team members who hold it.

That remains true even if the USCIS implements a proposal to increase the H-1B lottery registration fee to $215, up from the recent $10 fee. Although it’s a large increase, the additional $205 per registration likely won’t be a limiting factor for even early-stage startups considering the process.

The chances of having an H-1B candidate picked in the lottery has dropped dramatically, particularly since 2020, when the USCIS implemented its online H-1B lottery registration system. Before 2020, companies that wanted to enter an employee or prospective employee in the H-1B lottery had to submit a completed H-1B application.

This time-intensive, costly, and risky process often meant that participating in the H-1B lottery was unrealistic for most startups. Additionally, companies had to be ready to front the full filing fees at the time of the lottery, not knowing how many people would be selected and how many checks would be cashed. Now it’s easy to register candidates, and companies have discretion about whether to proceed with the full petition after knowing whether somebody was selected.

Raising the annual cap of 85,000 H-1B visas (65,000 for those with bachelor’s degrees and 20,000 for those with master’s or higher degrees) requires congressional approval and remains highly unlikely. However, the USCIS could look at alternative administrative changes, such as limiting each H-1B candidate to one entry in the H-1B lottery regardless if that individual has multiple job offers, in order to provide a more level playing field.

This year’s H-1B lottery

While getting job offers from multiple companies that register an H-1B candidate in the lottery is not against the law, the USCIS indicated it would closely scrutinize H-1B beneficiaries, companies, and applications for potential abuses and fraud.

After this year’s lottery, the USCIS stated:

The large number of eligible registrations for beneficiaries with multiple eligible registrations — much larger than in previous years — has raised serious concerns that some may have tried to gain an unfair advantage by working together to submit multiple registrations on behalf of the same beneficiary. This may have unfairly increased their chances of selection.

If any of your early-stage employees are on F-1 Optional Practical Training (OPT) or STEM OPT, the two-year extension for students who graduated in a STEM field, make sure to enter them in the H-1B lottery every March until they are selected before they graduate and while they are maintaining OPT and STEM OPT status. You can look at other visa alternatives as well.

Visas for citizens of specific countries

You have other options if your startup’s employees or prospective employees aren’t selected in the H-1B lottery. There are a handful of work visas aimed at individuals from certain countries. If any of your employees or prospective employees are from Australia, Canada, Chile, Mexico, or Singapore, these are great options to consider:

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What are public market investors looking for in IPOs?

Jeremy Abelson Contributor
Jeremy Abelson is the founder and lead portfolio manager of Irving Investors.
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What do public market investors want to see when investing in IPOs?

We put together a group of 50 of the highest-profile software IPOs (excluding outliers like Zoom during COVID) dating back to 2012. We also studied — but did not include — direct-to-consumer, internet, and fast-casual, and are happy to provide that data upon request.

The group presented here is a very strong representation of the last decade of tech IPOs. We looked for themes, trends and averages that would tell us what worked and sketch a profile of the software companies that have made it in the past.

To do so, we examined execution, performance, size, scale, margins, Rule of 40 and deal size (notional and %), which uncovered a lot of interesting conclusive data.

If a company is willing to accept the valuation the public markets ascribe, the timing is ripe. Jeremy Abelson

Key takeaway: Execution vs. estimates

The most significant finding was the impact of a company’s execution versus their estimate, also known as their “beat and raise cadence.”

Our data show a staggering correlation between stock outperformance and the magnitude of a “performance beat” vs. a company’s guidance at time of its IPO. To display this, we broke the group of companies down into three distinct performance groups:

  • Group 1: Wunderkind
    • Never missed estimates (GAAP Rev, GM%, OM%) and beat peer averages of each metric each quarter.
  • Group 2: Rock solid
    • Simply never missed a quarter vs. estimates (GAAP Rev, GM%, OM%)
  • Group 3: Less than perfect
    • Missed on a minimum of one metric, one quarter

As you see in the chart below, the impact is significant. Group 1 outperformed Group 3 by a factor of ~7x (a median of 382% vs. 53%) over the space of 2.5 years. (Please see red box for median and average.)

Note: This chart only contains 36 names as we removed any without three years of data (e.g., 2021 IPOs) as well as any direct listings.

% of outperformance vs. IGV since IPO

% of outperformance vs. IGV since IPO. Image Credits: Irving Investors

The data should be relevant to management teams that are currently thinking about setting underwriter estimates, which trickles down to IPO pricing and projected fair value of a company/stock.

The raw data

This chart includes the 50 relevant software IPOs we studied and how each company performed for three years versus projections given at time of their IPO across four very important metrics (our favorite being Rule of 40).

The important place to focus is on the quantum. The average beat on the top line is 35% in year three!

To be blunt, it is not uncommon for us to see private companies habitually “miss” versus projections. Companies learn quickly that the private markets forgive misses while public investors heavily punish misses, especially in first quarters post-issuance (and rewards beats).

For reference: FY+0 correlates to the year before a company’s IPO which is the last year of all actual quarterly results, FY+1 is the IPO year and also first year with any underwriter estimates and FY+2 is the year following the IPO and the first full year of quarterly estimates.

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5 marketing slides to bring to your next board meeting

Michelle Swan Contributor
Michelle Swan is a partner at Tercera and is responsible for marketing and content, the advisor and portfolio experience, and guiding portfolio companies on go-to-market and brand strategies.

Most board directors intuitively understand that marketing is an important part of any company’s growth engine. It not only feeds the near-term sales engine, it also tees up future performance.

Done right, marketing is an accelerator for any business. Yet, I’ve noticed a growing trend in board meetings to relegate marketing to a single metric — pipeline.

While it’s true that marketing plays an important role in generating new leads, a strategic marketing function can play a much bigger role in a company’s near term and future performance. In addition to demand generation, it also shapes market positioning, elevates awareness and brand reputation among existing customers, partners, press, analysts, employees, investors and potential acquirers.

As a company grows, it creates leverage and consistency across global teams, sales, recruiting, customer success, delivery and nearly every other function.

Why are we selling marketing short?

I believe the biggest reason is because marketing is a mystery for many board members. According to research from Spencer Stuart, fewer than 3% of publicly-traded Fortune 1000 boards include an active marketing leader.

The percentage is probably even lower for Series A companies whose boards tend to be composed of founders and investors, most of whom come from a finance, product or operational background and have little marketing experience (a big miss in my perspective, but that’s a topic for another post).

When talking to data-driven board members, stick with what can be measured: marketing’s contribution to the near-term pipeline.

Second, is the need for every business leader to become more data-driven. Events and digital demand-gen activities like paid social campaigns and webinars tend to be easier to track and tie back to near-term revenue when compared to brand, content and corporate marketing.

Things like brand campaigns, PR, analyst relations and even internal communications are both difficult and expensive to measure with regard to return on investment. Most companies know these aspects of marketing are important, but proving ROI on them takes data, systems and time that many younger companies simply don’t have.

Which is why business leaders talking to data-driven board members stick with what can be measured – marketing’s contribution to the near-term pipeline. However, that only tells half the story, and honestly, it does marketing (and the value of your board) a disservice.

Reshaping the board update

A board’s job in a growth company is not just governance, but to guide and help support future performance. That means your board needs to know that marketing is performing well over the next few quarters and is thinking ahead to future years.

When you put together your next board update for marketing, think about five slides that cover the five P’s:

  • What are marketing’s priorities?
  • How are you performing against those priorities?
  • What is the health of the pipeline?
  • Is the company and its offerings positioned for future growth?
  • What’s planned for the next quarter or year?

Clarify the priorities

A sample quarterly marketing review with highlights and lowlights.

A sample quarterly marketing review with highlights and lowlights. Image Credits: Michelle Swan

Start with the areas of the business that marketing is driving or supporting. This can be expressed as quarterly objectives, annual OKRs, or strategic initiatives that map back to the larger business objectives.

For example, if recruiting and retention is a strategic imperative for the business, talk about how you’re helping to refine and drive awareness of the employer brand. If customer retention and expansion is a priority, it might be important to talk about how you’re empowering cross-selling within teams or promoting thought leadership in a certain new area. If your team’s budget and time are going to that priority, let the board know and tell them why.

Show your performance

Sample marketing KPIs

Create a scorecard against marketing priorities that you can update and share at future meetings. Image Credits: Michelle Swan

Boards look for trends and progress, so create a scorecard against these priorities that you can update and share at future meetings.

If you’re doing something new every month, that’s a red flag. Make it easy to consume by giving areas a red, yellow, green rating based on data, milestones reached, or customer feedback. Make sure you “own the red” as Latane Conant, author and CMO of 6sense, likes to say. Acknowledging where there are gaps not only helps build credibility, it also gives you an opportunity to ask for the board’s help.

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All money is not created equal: What raising venture debt looks like

David Spreng Contributor
David Spreng is a seasoned venture and growth debt lender with 30 years of experience, the founder and CEO of Runway Growth Capital, and the author of All Money Is Not Created Equal.

The first step in the process of raising venture debt is a quick, introductory filtering phone call between you and the potential lender that’s an equal amount selling and listening – on both sides.

Think of it like a first date. Should that go well, it should then be followed up quickly with both parties signing an NDA. (VCs don’t like to sign NDAs, but venture debt lenders don’t have a problem with it.)

At this point, we would start our initial due diligence. We typically ask a company for six things:

An investor presentation

If you are looking for investment money, you probably have recently raised equity. The investor deck you would have used for that works for venture debt as well. (There are numerous examples online.)

The 409A

The annual valuation of the equity value of the company, designed to protect employees who are granted stock options so that they can’t later be slapped with a tax for getting “cheap stock.” Usually those valuations come in at a level that makes getting equity attractive to employees. Don’t worry if the value assigned by the 409A valuation firm is lower than what you believe is fair. We know how these valuations work and don’t become fixated on their valuation.

The 409A will include different ways of analyzing the value of the company, the same things we look at: discounted future cash flow; comparables to public companies; comparables to recent M&A. It will also give a really good history of all the funding the company’s ever gotten, and it always includes a five-year projection.

A detailed capitalization table and funding history

This will include everybody who owns any piece of the company, a history of fundraising and a history of any bank financing or external debt used.

Historical financials

Ideally, we will receive five years of historical financial statements. We would love it if they were audited, but it’s not necessary.

Projected financials

For us to do our work, we want a fully linked, three-statement financial model. The three statements are: balance sheet, income statement, and statement of cash flow. If there are delays or issues in the process, it’s usually because of a delay in getting linked three-statement projections, which allows us to do “what-if” analyses (such as: “If things go worse than planned, when do things break? How much does this startup need to reduce their variable expenses to remain viable and able to service our debt?”).

Everything I’ve outlined should take an estimated 4-5 weeks from our first phone call. That puts it at Week 6 for a signed term sheet.

Often we’re lending to companies that sell to big enterprises, so instead of having a million customers they’ve got a hundred, and we’ll want to understand how they sell, how predictable their sales forecasts are, and how comfortable they are with the coming years. All of that helps us judge how much we believe in their financial projections.

A list of the largest customers, present and past

Detailed customer information allows us to identify customer concentration or churn. Those can be quick disqualifiers, and we don’t want to waste a lot of anyone’s time if that’s the case.

If a potential borrower’s customer base is too concentrated (fewer than 15 total customers or more than 50% of revenues from just a few customers), that’s too risky for us. Or if the startup has a lot of churn – meaning that their existing customers decided they’re not going to renew or stay with them – that’s another red flag/likely disqualifier. There is nuance around this, too. If your product has evolved significantly and in what we would consider a positive, logical direction, then churn could make sense.

With all this information, we can do a desktop analysis that typically takes two weeks. We could do it more quickly if absolutely necessary, but we like to give ourselves two weeks. If the desktop analysis is positive, we would issue a term sheet.

Doing it our way allows us to customize a thoughtful structure and set of terms that are fair for us and appropriate for the borrower. For example, tailoring the loan for the borrower could be around when you actually need the money. Maybe you need it right away, or perhaps it’s a little further down the road.

Other variations could mean structuring the deal so the interest rate declines as the company gets stronger, or having a longer interest- only period, where the debt isn’t amortizing, because you wouldn’t be in a position to start to amortize until a certain event occurs.

I would estimate that everything I’ve outlined above should take about four to five weeks from our first phone call. That means you’d probably have a term sheet by Week 5.

Going to the board

Up until now you’d probably only have the CEO and CFO involved. Once you get a term sheet, you’d want to present the deal to the board.

Some companies will have their board involved from the beginning of the process. I’ve known of deals that got derailed because a board member didn’t want to do a deal with a specific lender. It could be a personal (and one-sided) beef; it could be that a board member knows something specific about the lender. This has never happened to us, which is why I suggest at least letting your board know what lenders you’re talking to early in the process.

How quickly things move from the board presentation step depends on the borrower. They’ll likely be looking over term sheets from different lenders. I would guess 10% of the time we’re the only lender involved. The other 90% of the time there are multiple lenders pitching to provide growth capital. The company may also be considering using some or all equity to meet their needs.

If there are three or four term sheets to work through and compare, you will probably take about a week to get through those. While a deal itself may be relatively straightforward, that doesn’t mean that every deal will be the same. Not only do lenders differ regarding the stage at which they will lend money, but some will also specialize by industry. Terms will, of course, vary from lender to lender.

All money is not created equal: What raising venture debt looks like by Walter Thompson originally published on TechCrunch

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Want your sales team to be more productive? Take a closer look at your ‘watermelons’

Robert Wahbe Contributor
Robert Wahbe is the co-founder and CEO of Highspot, a sales enablement platform.
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In today’s era of data abundance, leaders have plenty of metrics to choose from to benchmark progress against their strategic initiatives. Yet even with all this data, far too many leaders focus on aggregate data, overlooking the metrics that matter most.

When you synthesize data at a high level, you risk creating metrics I call “watermelons:” numbers that are green at a glance, but under the surface are red. Watermelons hide underlying execution issues happening across your sales team – and if left on the vine for too long, can rot your business from the inside out.

Watermelons hide underlying execution issues – and if left on the vine for too long, they can rot your business from the inside out.

Leaders that rely on averages and aggregates are doing their business a disservice by neglecting to dig deep enough to understand the status of their business goals and areas for improvement.

For instance, in a recent earnings call, Cloudflare disclosed that they had “identified more than 100 people on our sales team who have consistently missed expectations. Simply put, a significant percentage of our sales force has been repeatedly underperforming based on measurable performance targets and critical KPIs.”

How did 100 people miss the mark for so long? Leaders weren’t digging deep enough into the data. It’s important to identify the root cause of these sellers’ misses and fix it from the ground up.

Here’s what it means to look for watermelons, how to identify them, and the framework that provides better insights and actions to improve your bottom line.

Finding watermelons using people-centric analysis

When looking at important performance metrics, many leaders take too limited a view of their data. Activity and outcome metrics are commonly sliced and diced by various dimensions such as industry, segment, geography, product line, customer cohort, and buying persona, so leaders can answer questions like, “What is the win rate for manufacturing in the mid-market in Europe?” This is great, but almost every company misses one of the most important dimensions: people.

Failing to look at your metrics by people obscures inconsistent performance across the team, which kills overall productivity. Say your average win rate is 34% – what may seem like a wonderfully healthy metric could be a complete watermelon. Frankly, for most companies, what’s probably happening is the win rate of the top-performing quartile is above high, while the majority of your team’s win rate is low.

You won’t discover this reality unless you look at the people dimension, examining the distribution of each person’s performance against the metric. This may look something like:

Examine the distribution of each person’s performance against your average win rate..

Examine the distribution of each person’s performance against your average win rate. Image Credits: Highspot

Looking at distributions can be a bit complicated, so here is a way to simplify the analysis. You use participation rate as a proxy for distribution, for every single cohort that you want.

Building off the previous example, you can look at your win rate for manufacturing in mid-market in Europe, and then analyze your reps’ performance in those deals to determine the Participation Rate against the win rate metric.

Want your sales team to be more productive? Take a closer look at your ‘watermelons’ by Walter Thompson originally published on TechCrunch