5 failure points between $5M and $100M in ARR

Friday, January 06, 2023

Welcome to TechCrunch+ Friday

Image Credits: Javier Zayas Photography / Getty Images

It’s impossible to plan for everything that can go wrong while building a startup.

A definitive guide would have to include chapters like, “So you’ve hired the wrong person,” or, “Five ways to tell if an investor is lying to you.”

Mentors and advisors come in handy, but startups move at breakneck speed. Investors say they want to add value, but for founders under pressure, it’s hard to know exactly when to ask for help.

Before Tracy Young was co-founder and CEO of TigerEye, she held the same roles at construction productivity software startup PlanGrid.

Even though she led the company to $100 million in ARR before its acquisition by Autodesk, she has had “years to dissect the mistakes I made with my first startup," she writes in TC+.

Young looks back at "five key failure points" that are common potholes on every founder's path, and shares tactical advice for addressing internal conflict, losing product-market fit, and other stumbles.

“If these reflections help even one founder make one less mistake, I would consider this effort worthwhile.”

On Thursday, January 19 at 10 a.m. PT/1 p.m. ET, Tracy Young will join me in a Twitter Space to talk about how she dealt with these and other common founder challenges. Bring your questions and join the chat!

One last note: TC+ roundup is TechCrunch’s fastest-growing newsletter! Thanks very much for reading and subscribing!

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

3 questions founders should be asking investors in Q1 2023 image

Image Credits: Yago Studio / Getty Images

Money is power, and VCs know it.

It’s one of the reasons why so many founders perform inadequate due diligence on their investors, says Talia Rafaeli, a partner with early-stage European VC fund Kompas.

Instead of going into a pitch meeting hoping to eke out favorable terms, Rafaeli advises entrepreneurs to interrogate investors with direct questions about liquidity, exit expectations and how investors will add value over time.

“A tough economic climate doesn't mean the power dynamic automatically tips in favor of those with the cash,” she says.

“The best working relationships are those built on an equitable footing with honesty and clarity.”

Will record levels of dry powder trigger a delayed explosion of startup investment?

Image Credits: Tim Robberts / Getty Images

There’s a subtext to the waves of layoffs and Craigslist ads for discounted office furniture: tech investors have amassed approximately $290 billion in dry powder.

“Despite the downturn, strong cash supply and tailwinds for spending on digitization are leading some market participants to believe we're in a strong investment cycle,” according to Raphael Mukomilow and Pierre Bourdon at Picus Capital.

After they tracked uninvested capital by year going back to 2006, the pair found that “a crisis within the investment landscape has often been followed by years of systematic outperformance of returns, and history has a way of repeating itself.”

Whoops! Is generative AI already becoming a bubble? image

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Generative AI is making a splash with apps like Lensa AI, DALL-E and ChatGPT, but does that make it a strong investment?

Several VCs who responded to a recent TechCrunch+ survey “said the tech's growth has reminded them too much of crypto,” writes Rebecca Szkutak.

“Everyone is piling on faster than they should be.”

When will IPOs return? The past may hold some clues image

Image Credits: Rezus / Getty Images

Natalia Holgado Sanchez, head of capital markets at Secfi, studied the impact of five downturns since 2002 to see how well privately-held startups held up, "and, most importantly, how long it took the IPO market to reopen."

For each period, Sanchez looked at the inciting events, the similarities and differences between this downturn and past crises, and how startups were impacted.

"Based on historical data, the IPO market has opened up after 18 to 24 months, on average," she found. "Given that we're now about 9 months since our window closed, we could see movement by June 2023."

Image Credits: Joanna Buniak / Sophie Alcorn

Dear Sophie,

I am RESOLVED: This is the year I finally live my dream and create my startup! I currently have an H-1B for my full-time engineering role at another company.

How can I transfer my visa to my startup? How do we structure the startup for immigration success?

— Restless & Resolved

Teach yourself growth marketing: How to set up a landing page image

Image Credits: Lightstar59 / Getty Images

In the first article of a five-part series on growth marketing fundamentals, Jonathan Martinez explains how to create an essential part of every company’s sales funnel: a landing page.

This overview includes basic steps for writing a clear headline, offering visitors social proof that builds credibility, and crafting calls to action that drive results.

Next week, Martinez, who helped scale startups like Uber, Postmates and Chime, will share his tips for launching a paid acquisition channel.