The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC Unscripted: Pricing is Crazy, Pre-Emptive Rounds are Normal, Pricing at 200x Revenue Multiple is Common, There is More Cash Than Ever. What Happens Next; Market Analysis with Ryan Denehy, Founder and CEO @ Electric

Nov 4, 2021
Ryan Denehy, Founder and CEO of Electric, shares insights from his journey as a three-time entrepreneur in the venture capital landscape. He discusses the crazy pricing trends and the normalization of pre-emptive funding rounds, addressing concerns over diminished due diligence by investors. Denehy emphasizes the importance of alignment between founders and investors on pricing and cautions against accepting the highest offers blindly. He also highlights the critical connection between sales and product-market fit and advises on strategic timing for raising substantial funds.
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ANECDOTE

Thorough Due Diligence

  • Ryan Denehy's Series A in 2012/13 involved extensive due diligence over two months.
  • This thorough process ensured both sides were aligned, leading to a successful partnership.
ADVICE

Vet Your Investors

  • Founders should balance minimizing fundraising time with choosing the right investors.
  • Thoroughly vet investors to avoid future difficulties, as removing a bad investor is challenging.
ADVICE

Back-Channel References

  • Go beyond provided references when evaluating potential investors.
  • Seek back-channel references, especially from companies that haven't succeeded, for a more realistic view.
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