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The Role Forward

The State of Venture Funding in 2023 with OMERS Ventures

In this episode of The Role Forward, Eugene Lee and Marissa Moore from OMERS Ventures join Joe Michalowski and Joe Garafalo to discuss the state of venture funding in 2023 and how to navigate it as a startup leader.

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Episode Summary

In this episode of The Role Forward, Joe Michalowski hosts a deep dive into the world of venture funding and financial modeling. The guests — Joe Garafalo, Marissa Moore, and Eugene Lee — share their insights and experiences.

The conversation revolves around the importance of good financial modeling practices, the current state of venture funding, and the future outlook. Marissa Moore emphasizes the significance of hard skills like financial analysis and modeling. The guests also discuss the importance of understanding the customer base, assessing risks, and the role of metrics in investor conversations.

The episode concludes with advice for companies planning to raise funds in the future. The key takeaways include the need for building relationships with investors, the importance of adaptability, and the value of clearly understanding future expectations. This episode is a must-listen for anyone interested in venture funding and financial modeling.

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Featured Guests

Marissa Moore

Investor, OMERS Ventures

Marissa joined OMERS Ventures’ Bay Area investment team in 2022 and specializes in vertical SaaS and health tech. Previously, she was a Managing Analyst on CB Insights’ healthcare intelligence team, where she produced data-driven research on the digital health startup landscape, with special expertise in telehealth and medtech. Before CB Insights, she worked as a public equity research analyst at Melius Research covering large-cap industrial machinery and cannabis, and before that, worked in institutional equity sales at Barclays.

Eugene Lee

Partner, OMERS Ventures

Eugene has 15+ years of start-up operating experience across sales, marketing, product and business operations and across stages of companies – from seed to public company and everything in between. Prior to joining OMERS Ventures, Eugene was a VP of Business Operations at Copper, Google’s #1 recommended CRM. Prior to that, he created and led the business operations team at Pinterest. Eugene also led all business functions as an early employee at Pixate (sold to Google), a SaaS Platform for mobile interaction design, and High Gear Media (sold to Internet Brands), a media company focused on autos. He began his operating career at Yahoo!. He has also been an M&A banker with ThinkEquity Partners and Deutsche Bank. He holds an MBA from the University of Michigan and a BS in Psychology from Vanderbilt University.

Key Themes from the Episode
  • In the ever-changing landscape of startups, adaptability is key. The guests discuss the importance of learning from tough journeys and adapting accordingly. They emphasize that investors are interested in how startups change and adapt over time. This insight highlights the significance of resilience and the ability to pivot in response to challenges.
  • Understanding your customer base and assessing risks is crucial in investor conversations today. A data-driven presentation about the potential risks and opportunities in the customer portfolio could make or break an investor pitch.
  • Founders should focus on building deep relationships with investors, aligning on future expectations, and presenting a compelling story about the company's roadmap and potential.

Episode Highlights from the OMERS Ventures Team

17:00 — Deep Dive into Metrics

This part of the discussion focuses on the importance of metrics in the fundraising process. Joe Garafalo discusses how they delved into every metric during the diligence process. He emphasizes that headline growth numbers aren’t enough in today’s environment. The growth needs to be efficient, scalable, and paired with the burn multiple.

“Pretty much every metric. I think there’s all the table stake stuff, right? Like CAC, ARR, LTV, growth. But, I think, this time around like growth was obviously still important, but was the growth efficient, right? You needed the burn multiple to be paired with that growth for it to be scalable and for it to make sense in today’s world — given the cost of capital.”

42:00 — The Process of Adaptation

In this part, Eugene Lee talks about the process of adaptation in startups. He emphasizes that investors are interested in how startups learn from their journey and adapt accordingly.

“It’s been a tough journey, but I think, more importantly, what did you learn from that? What did you change? How did you adapt? And again, to Marissa’s point, it doesn’t have to be in the first conversation ’cause you’re trying to get to the second conversation.”

19:00 — The Importance of Relationship Building

This part of the discussion highlights the importance of relationship building in the fundraising process. The guests discuss how they wanted to build a relationship with the team and get alignment around the future expectations.

“We really wanted to build a relationship with the team and just as much as we’re, you know, drilling you guys on questions, I mean, you guys were peppering us with questions and hopefully, ultimately, we landed. And I think we’re there, like you guys know how we think and we know how you guys think about, you know, solving these problems.”

38:00 — Looking Ahead to the Future of Venture Funding

In this part, Marissa Moore discusses the future of venture funding. She predicts that the current state of venture funding will continue for a bit longer and gives advice for companies planning to raise funds in the future.

“I think we’re still gonna be in this present state for a little bit longer. I haven’t seen enough signals to say that we’re really on the cusp of that inflecting in a material way. I think for us, like as investors, I think we’re gonna see a bit more. Deal volume at the A, the B in the second half of the year.”

Full Transcript