SAFE founder survey provides insight into startup fundraising
A recent survey by Y Combinator provides interesting insights into how founders are using SAFE notes to raise funds for their startups. SAFE (Simple Agreement for Future Equity) has become an increasingly popular way for early stage startups to raise funds quickly without setting a valuation.
The survey found that the median amount raised through a SAFE was $350,000. However, 25% of founders had raised over $1 million with their SAFE note. This shows that SAFEs are being used for larger fundraising rounds, not just small pre-seed amounts. Over 50% of founders had raised multiple SAFE rounds, demonstrating how it can be used through various stages of fundraising before a priced equity round.
Some key advantages highlighted of using SAFEs were the speed and ease of fundraising, ability to delay setting a valuation, and aligning incentives with investors. Top disadvantages mentioned were lack of investor protections compared to convertible notes and less clarity on investor exit rights. Overall, the survey provides helpful data on how this fundraising instrument is being utilized in the startup ecosystem.
Replacing a CEO – options and considerations
Replacing a CEO is often a difficult decision for a startup board to make, but sometimes a necessary one. According to investors and executive coaches, there are several options on the table when transitioning out a CEO:
Promoting an internal candidate – This can help maintain continuity but only works if there is an experienced and capable successor already on the leadership team.
Hiring an interim CEO – Bringing on an interim leader allows the company time to find a permanent replacement and provide stability in the short-term.
Recruiting an outsider – Looking externally opens up more options but the new CEO will take time getting up to speed.
Letting the CEO resign – Having the CEO claim the decision to leave can be face-saving but ensures an abrupt transition.
It’s critical that the board communicates transparently with employees, investors and the outgoing CEO when making leadership changes. The process also requires understanding what qualities are needed in the new CEO based on the company’s current stage and goals for the future.
How cyber insurance policies account for ransomware threats
As ransomware attacks increase, many businesses are turning to cyber insurance policies to help manage the financial risks. But how do these policies work in covering ransomware payments and related costs? According to insurance experts, there are a few key factors to be aware of:
Negotiated ransom coverage – Most policies will cover ransom payments up to a negotiated limit, often $5 million or more for larger organizations. Insurers will be involved in negotiation/payment processes.
Extortion expenses – Additional coverage is usually included for investigation costs, legal fees, and credit monitoring services following an attack.
Exclusions – Policies do not cover ransoms related to sanctioned entities or that fund illegal activities. Fines and penalties are also excluded.
Premium increases – Due to the rise in attacks, premiums have gone up significantly forcing companies to take on more cybersecurity measures.
Shared limits – Ransomware payments may tap into the overall limit shared across different cyber policy sections.
As attacks get more sophisticated, insurers are responding with adjustments to policies, pricing and risk mitigation requirements. Understanding policy provisions is essential for assessing cyber exposure.
Balancing founder control and board oversight
For startups raising venture capital, there is often a tension between how much control founders should retain vs. the oversight board members want in exchange for their investment. According to VC partners, there are a few ways to effectively balance these dynamics:
- Staggered board seats – The founders don’t give up their board majority control immediately after raising VC funding. Seats are added gradually as milestones are hit.
- Founder voting power – Founders can negotiate to retain extra voting power for their shares, maintaining ultimate control over board decisions.
- Independent director – Agreeing on one truly independent board member can provide objective guidance and satisfy investor needs for some oversight.
- Board observer rights – Allowing investors to appoint a non-voting board observer is another way to give them visibility without ceding control.
- Mutual understanding – Ultimately it comes down to having alignment and trust between founders and investors on vision and accountability.
Well-crafted agreements upfront can enable founders to maintain the authority to steer their company while giving investors the oversight rights they require to represent their interests.
Building an agile marketing strategy amid economic uncertainty
With rising recession fears, how should startup marketers adapt their strategies while still being aggressive? Experts recommend several agile frameworks to boost flexibility:
- Lean marketing – Focus resources on hypothesis-driven experiments vs broad campaigns, doubling down on what generates results.
- Objectives and key results (OKRs) – Set regular OKRs to align marketing with wider business goals and track measurable outcomes.
- Dynamic budget allocation – Maintain a holistic budget but shift spending across channels and campaigns based on real-time data.
- Account-based marketing – Target outreach hyper-focused on high-value accounts showing positive signals.
- Flexible team structures – Build a blended marketing team combining internal specialized roles with outsourced support.
- Surveys and testing – Use surveys, interviews and iterative tests to gauge audience response to messaging and positioning.
With the right frameworks, startup marketing teams can respond nimbly to evolving market conditions while driving growth.