An Updated Newsletter from VITALIZE!

Author

Gale Wilkinson
December 06, 2024

Hello 👋 Welcome to the new and improved Re:VITALIZE Newsletter!

You’re receiving this newsletter because you’re a current LP, advisor, angel member, partner, or friend of VITALIZE. Or, you’d previously subscribed to at least one of these:

  • Re:VITALIZE Newsletter for Founders

  • Angel Insights Newsletter for Investors

  • Prospective Limited Partner Updates

  • Future of Work Insights

  • One of our webinars / info-sharing sessions over the years

We’re merging all of VITALIZE’s regular communications into this monthly newsletter which will include our take on the market & investing, updates on our fund and portfolio companies, and our top content picks on work insights, entrepreneurship, and investing. Every quarter, we’ll include our popular slides summarizing work insights that we generate through our 50-person expert network.

Thanks for reading! If you decide this new approach is not for you, no worries at all & feel free to unsubscribe at the bottom of this email. If you’d like to share this newsletter with others, new readers can subscribe here. ✨

Gale’s Thoughts on the Market & Investing

On average, both round sizes and valuations at seed stage continue to grow this quarter. However, I’m seeing quite a range of actual round sizes & valuations in the wild. Some seed deals are $1.5 to $2M rounds with reasonable valuations (<$12M post-money) and decent revenue traction ($250K+). On the other hand, I also see a lot of $4-5M seed raises at $20M post-money, with only $250K, sometimes even less, revenue. What gives?

I think there are two competing trends happening:
1) A lot of VCs seem to have gone away or aren’t investing much, which has led to higher quality deal flow for those of us still deploying.
2) But, there’s also a lot of competition to get into some deals. We’ve been bumped out of two rounds in the last six months, and some of my peers at other funds confirm they’ve experienced the same. It’s not really an issue because there are actually a lot of great investment opportunities right now, with deal quality really accelerating coming out of this summer’s lull.

I could probably segment our hundreds of co-investors into two main buckets. Those who invest in deals with good economics and those who don’t care as much about economics because they believe the founder is so good and the market so ripe that they can still 30x+ their cash.

Which bucket does VITALIZE fall in? I’d say we straddle the line, with a bit more emphasis in the good economics group. I’ve personally invested a handful of small checks into other funds, and I prefer to invest in funds who chase good economics. Why? Because these GPs have a lot of discipline, and I believe fund level discipline correlates with investing in founders who are also disciplined.

Why is discipline among founders important? Because fast and efficient execution coupled with a cash conscious growth strategy are two things I want to see in the investments I do. And I firmly believe disciplined founders are more likely to have these two critical qualities. I do sometimes find what I think are fast executing, very capable (and disciplined) founders who have been and will be careful with cash, despite a valuation that is higher than it should be today. I will still invest in some of those deals because we favor an “at bats” strategy versus a “percentage ownership” strategy at VITALIZE. We want to make 30-35 bets out of our current fund, with the goal of at least three being big winners. I care more about getting into what I think are good deals versus maximizing my percentage ownership in a smaller portion of them.

While some will say an ownership strategy is the only one you should pursue in VC, I will gladly be a contrarian. And in next month’s newsletter, I will share my contrarian view on AI investing and why I actively avoid the inflated valuations in the AI boom. Until next time!

-Gale Wilkinson

Recent VITALIZE Investments

  • Twill (Fund II, Sept 2024) - Hiring platform that accelerates recruitment by leveraging top talent networks to recommend qualified peers and friends for open positions. If your firm is hiring, check out their special pricing of $10K for your first one. Thanks to Miles Lasater for the intro!

  • BuiltRight (Fund II, Oct 2024) - AI-powered website builder & marketing automation for businesses in the home services sector. Their growth out of the gate is next level. Thanks to Jeff Becker for the intro!

A VITALIZE Win!

Placer (Fund I) is now valued at $1.5B and announced its latest product updates.

Work Insights

Due to the revamp of our newsletter strategy, we are a little late publishing our findings on what our expert network of CHROs, CPOs, and HR tech execs is thinking about as of Q3. The next set of summary slides (Q4) will be available in January’s Re:VITALIZE newsletter.

Some articles we like on work insights:

  • 3 Ways To Manage A Divided Workplace Post-Election (Forbes)

  • Building Resilience in Change Management: Insights for CHROs (Gartner)

  • Gen Z's videos complaining about having to work in an office have reached millennial workers, and opinions are divided (Business Insider)

Our Content Picks for Founders

🥇 Fundraising With BINCS Framework

🥈 The Key to B2B

🥉 Product-Market Fit Scale

Our Content Picks on Investing

🥇 Q3 Fundraising Benchmarks

🥈 Pre-seed Funding Reality

🥉 Media-minded VCs

VITALIZE in the News

Written by the team at VITALIZE, a venture capital firm and 350+ member angel community for everyone, investing in U.S.-based B2B software founders innovating in WorkTech. Find us on Twitter, LinkedIn, and YouTube.

This is the 110th edition of the Re:VITALIZE newsletter! ✨