What founders can escape venture's no-man's land? (w. Anu Hariharan update)
Nov 29, 2023
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Former YC Continuity lead and co-founder of Avra, Anu Hariharan, discusses growth and cash conservation strategies for startups. They also explore the future of venture as an asset class, the importance of product-market fit and capital, and the changing dynamics of the venture and startup community.
CEOs of post-series A startups need support and mentoring to navigate the challenges of scaling their companies and building teams.
Successful founders prioritize speed, adaptability, and continuous learning to navigate challenges, adapt to market conditions, and achieve growth and success.
Deep dives
The Importance of Scaling Support for CEOs
Anu Hariharan discusses the importance of providing support and resources to CEOs of post-series A startups who are scaling their companies and building teams. She explains that many tech CEOs have never done the CEO job before and need guidance and mentorship from more experienced CEOs to navigate the challenges of scaling. By creating programs and initiatives that facilitate learning and knowledge-sharing among CEOs, startups can accelerate their growth and scale their companies more effectively.
Characteristics of Great Founders
Anu Hariharan highlights three characteristics that define great founders: speed, both in shipping product and learning from the market, the ability to react to changing environments and make long-term bets, and a continuous posture of learning and improvement. She explains that successful founders exhibit an ability to move quickly, constantly ship new products, absorb new information, and make necessary changes to their businesses. These characteristics enable them to navigate challenges, adapt to market conditions, and ultimately achieve growth and success.
Navigating Cash Preservation and Profitability vs Growth
Anu Hariharan advises founders to consider their stage of growth and prioritize cash preservation, profitability, and growth accordingly. She discusses different segments of startups, ranging from the pre-Series A stage to the post-$5 billion valuation stage. For early-stage startups, she recommends a focus on accelerating go-to-market efforts and securing funding to fuel growth. For mid-stage startups, she suggests a balance between cash preservation and growth, potentially raising funds at a discounted valuation to accelerate go-to-market initiatives. For larger, more mature startups, she emphasizes the importance of achieving positive free cash flow and demonstrating a pathway to profitability while investing in growth.
Challenges and Opportunities in Venture Capital
Anu Hariharan discusses the current landscape of venture capital and highlights the challenges and opportunities that lie ahead. She notes that while some funds may experience great returns in the next 10 years, others may struggle due to increased competition and oversupply of capital. She emphasizes the importance of differentiation and specialization in fund strategies, focusing on specific niches and having a strong product-market fit. She also suggests that fundamentals and stock picking will become increasingly important, as the market shifts towards a focus on profitability and returns.
Anu Hariharan, who previously led YC Continuity, has partnered with two of her former colleagues and former Brex executive Lucas Fox to launch a new fund, Avra. The fund aims to raise about $350 million and operate a program that some are referring to as a “YC for growth.” In light of the news, we’re throwing it back to a conversation we had with Anu earlier this year:
Alex spoke to Anu back in August, after she tweeted about how "great" founders were successfully guiding their companies towards cash flow positivity. Since that very interesting post, both Instacart (a former Y Combinator company) and Klaviyo have filed to go public. And both have super strong cash flows.
Our chat could not have come at a better time. We dug into how early- and late-stage startups should approach growth and cash conservation (in her view), the future of venture as an asset class, and how healthy the unicorn herd really is. We had a blast recording this one! Enjoy!
Credits: Equity is produced by Theresa Loconsolo with editing by Kell. Bryce Durbin is our Illustrator. We'd also like to thank the audience development team and Henry Pickavet, who manages TechCrunch audio products.