In this conversation, venture capital experts Kevin Baxpehler, Diego Braguglia, Harald Nieder, and Mike Hobmeier dive into the growth-stage funding landscape. They explore how startups can determine the right time to seek VC funding and what factors attract investors without proven track records. The panel discusses Switzerland's strengths in healthcare innovation and the importance of strong team dynamics. Additionally, they provide insights on equity distribution and the need for strategic involvement post-investment to foster long-term success.
Founders should prioritize the potential exit value of their company, guiding long-term strategies over short-term valuations and equity percentages.
In growth stage funding, investors focus on a startup's execution capabilities and established market performance rather than just the founder's vision.
Deep dives
Valuation vs. Potential Value at Exit
Founders should focus on the potential value of their company at the time of exit rather than current valuation. This perspective encourages a backward calculation approach, aligning strategies with long-term growth rather than short-term metrics. An example discussed highlights Moderna's IPO decision, where the CEO prioritized a significant liquidation preference over mere share percentage, emphasizing that ownership can be misleading without understanding the cap table's complexities. This mindset fosters a healthier outlook on equity distribution and incentivization among stakeholders.
Importance of Team and Execution in Growth Stage
In the growth stage, the composition of the team remains crucial, but the focus shifts towards execution capabilities and established market leadership. Investors seek companies that can demonstrate their ability to execute effectively, which often relies on historical performance and client feedback. The panelists emphasized that while early-stage investments largely hinge on the founders’ vision, growth investments require a thorough analysis of operational metrics and benchmarks. This shift signifies that successful scaling requires more than just a great idea; it necessitates a competent team and robust operational frameworks.
Navigating Growth Funding Challenges
Startups aiming for growth funding should anticipate a range of 20 to 30 million, with expectations of losing around 25% equity in these rounds. Founders need to strategically assess their needs and potential dilution while ensuring they have sufficient skin in the game. As highlighted, growth funding is not merely about raising money but involves preparing for subsequent operational challenges and often demands solid performance indicators. The conversation suggests that proactive visibility and a strong track record can attract investors, signaling the importance of building a valuable business that aligns with investor interests.
About Kevin Baxpehler, Diego Braguglia, Harald Nieder & Mike Hobmeier:
Kevin Baxpehler is the managing partner at Remagine Ventures, a venture capital fund focused on media related technology investments in Israeli startups. Diego Braguglia is the managing partner at VI Partners AG, a Swiss venture capital firm focused on healthcare and technology ventures. Harald Nieder is a general partner at Redalpine Venture Partners AG, a sector-agnostic Swiss venture capital firm. Mike Hobmeier is the CIO at Verve Ventures, a network and technology-driven venture capital firm headquartered in Switzerland.
During their chat with Silvan, these four VCs discussed how startups can know if they’re ready to raise VC money, what motivates investors to bet on companies before they have a proven track record, as well as the sectors for which Switzerland is famous, and where Swiss innovation truly comes from.