Capital raising in uncertain markets

Matt Ober is a general partner at Social Leverage. Matt was most recently the chief data scientist at Third Point, where he built the data analytics and technology platform used to enhance the firm’s investment capabilities in equity, structured credit, venture capital and cryptocurrency.

We saw a big raise of $152 million by Altruist to continue to build a custodian to compete with Charles Schwab. This was a big announcement in the wealthtech space as Altruist continues to raise money to build a custodian to take on the incumbents.

Across the Social Leverage portfolio, we are seeing many of our seed companies successfully raising follow-on money — from Ribbon.ai to a few of our fintechs that plan to announce in the coming weeks, to more broadly across our portfolio. Alpaca, one of our companies that just completed their Series C, is continuing to see rapid growth. For the growing companies with consistent KPIs, a good story, and a good vision, there is capital.

As we begin to deploy our Fund V, we have made our first investment in SlashExperts.com.

One thing I am seeing is many founders quoting Carta numbers in its recent State of Private Markets report. Why are you raising at XYZ valuation? Because that’s the average round size and valuation on Carta. That type of thinking drives me crazy. Don’t get me wrong, I love the reports on Carta, but Carta numbers are to be taken with a grain of salt. They include companies from every geography within the U.S., in every category, and it is the worst reason for justifying the valuation you are after.

The best way to go about raising is letting the market and demand determine the valuation and focusing on getting the right investors — the investors that can be helpful, understand your business, and are the people you want to work with for the next 10+ years.

Raising money is tough. Building a company is tough. Finding the right partners and investors should be your top focus when raising capital. Focus less on valuation and more on who you want to have in your corner when things get tough. Who can open doors, and who has the track record of success?

Can I send you a deck?

I’ve also noticed a shift in how founders are reaching out to investors.

Something has changed in the last few months. Seven months ago is when I really started noticing this and wrote about it on LinkedIn. Maybe it’s because you have to get around being labeled as spam by Gmail and Outlook, but founders are now blasting cold emails with “Can I send you a deck?”

Gone are the days when Social Leverage would get dozens of DocSend links or attachments in every cold email pitch. Now every email comes with a question: Are you interested in learning more? Can I send you a deck? Can we book 15 minutes for me to walk you through our product?

Part of me thinks that with all the new email and AI tools, blasting every single VC actively writing checks — and then sitting back, waiting and hoping for the “Send me the deck,” “Hit me,” or “Yes, I am interested” — is just too easy not to do. It’s obviously working for people; otherwise, we wouldn’t see this new behavior.

I still think the warm intro, or even a well-written, personalized email or LinkedIn message, has a higher success rate for founders trying to get meetings to raise money. But I am sure the savvy founders are doing a lot of A/B testing. As a regular Beehiiv user, I know the power of A/B testing and the key to having a great subject line to get those open rates, click-through, and response metrics up!