Category: venture

Startups and Macro Risk

I find it difficult to think of another time with as much macro risk as the present at least since the financial crisis and likely much longer than that. There is a shooting war in Europe with no clear endgame. China might make a move on Taiwan at any moment. We have an ongoing pandemic that could still produce a dangerous variant. US democratic institutions appear incapable of mounting a coherent response to pretty much anything and are under attack from within.

The broader stock market has held up surprisingly well in light of this. Yet many public tech stocks have already pulled back substantially. Bluechip names like Cloudflare and Shopify are down 50% off their all time highs. This is a reflection both of anticipated higher interest rates and lower growth. Still I would not be surprised if we wound up with a much bigger and broader correction, if any of these macro risks are realized.

Is this something a startup founder/CEO should be paying attention to? In order to answer this question it is useful to look at the interaction between private and public markets.

Private market valuations tend to lag public market valuations. This is fantastic for venture investors when you invest in a sector where public market valuations are just starting to expand because you can still get into deals at reasonable prices. This is when the best venture returns are achieved. That’s why being early (but not too early) to a new sector is so (Read more...)

Evaluating FP&A Tools? Here is a quick breakdown of the landscape

This post is by Eddie A from Thomvest Ventures - Medium

Excel has been the primary tool in the Financial Planning and Analysis (FP&A) stack since the early 1990s. To have such a dominant role for over 30 years is impressive, but we are starting to see early stage companies transition to FP&A tech earlier in the maturation process. When evaluating the landscape of tools that are available for startups, we note that there are roughly 3 buckets of solutions:

1. Solutions for large / complex enterprises from SAP, Oracle and IBM

2. Solutions for medium-large companies (varying in complexity) from Anaplan, Planful and Adaptive Planning (Workday)

3. Solutions for mid-market and SMB level companies (low complexity) provided by a plethora of companies

When speaking to industry leaders in the space, we discovered that half of the customers looking to sign up for FP&A tech are shifting away from Excel (vs another solution). When companies transition from Excel to an FP&A SaaS solution, they are looking to solve some key pain points such as versioning issues, system integrations, analysis speed and more. The current tools in the space have been helpful, however we are seeing a new set of startups (such as Mosaic & Jirav) attempt to perfect some of the remaining pain points that are not fully addressed by the incumbents.

For companies that want to transition to an FP&A tool, here are a few key issues to keep in mind when narrowing down the list of potential solutions:

  • Tool Complexity: Almost every finance professional is an Excel wizard, so it’s (Read more...)