1Mby1M Virtual Accelerator Investor Forum: With Raoul Maier of Eudemian Ventures (Part 4)

Sramana Mitra: The valuation numbers you are quoting are Series A and B numbers, right? It’s interesting that you are not experiencing these valuations in post-seed.

Raoul Maier: Are you referring to five or ten years ago when you say Series A and B numbers?

Sramana Mitra: That’s what I am saying. Traditionally, those are the numbers that we have seen. Recently we’ve been seeing these numbers in earlier stages. That’s the trend that we are seeing everywhere. The ecosystem is fragmented tremendously, and the Series sizes have gone up tremendously even in the early phase. 

Raoul Maier: I think you are touching on an interesting point there. One of the main reasons why we chose the post-seed stages as a core to our thesis is because of a few big trends that have happened over the past five to ten years.

One certainly is because of the A round continuously creeping up and moving away further and further. You have seen a massive fragmentation of the seed stage funding market starting with seed ten years ago. Then it broke into pre-seed and now it has reached the post-seed.

Now, you suddenly have a different funding environment. We believe that the post-seed stage is very attractive even if the valuation seems high compared to five or ten years ago. You get mature businesses at that stage with a different risk pattern from pre-seed or seed investment. We think that’s a very attractive space to plan. 

Sramana Mitra: What have you seen in the last three months? What are the changes? What are the dynamics? What are the trends you are seeing in the deal flow? What is happening in your portfolio? Can you summarize the disruption era situation? 

Raoul Maier: From a founder’s perspective who is currently out raising, I see three types of founders in the market today. One is a founder who is COVID-neutral or COVID-benefiting. Those are the founders that raise right now.

The second one would be what I call super founders or stellar founders, who can raise at any time. The third one are the ones who are desperate to raise right now because of the tough pandemic situation. I think those are the types of founders that raise right now.

You want to identify who falls into which bucket because the classic typical types of businesses have avoided raising over the past three months until they get more stability and clarity in the situation. I think that has been a big shift that I have seen over two or three months. 

Sramana Mitra: Have you seen a deal flow where people that have COVID neutral or COVID benefited businesses are coming through?

Raoul Maier: Tinycare is a really good example of that. I think it falls into the bucket because you could argue that Tinycare or childcare is impacted by COVID. It’s unclear whether it’s benefiting from it or not.

It’s not an easy pitch to make but in this case, the founder was so strong that even in such an environment, he could still easily find high quality investors. We supported that because of the quality of the founder.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Raoul Maier of Eudemian Ventures
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