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The Volition View: How to Compete Against Well-Funded Companies

Good Morning!

Welcome back to The Volition View. As always, we are looking forward to sharing some of the most exciting developments in our ecosystem and are happy that you have joined us! Inside:

  • Deep Dive: How to Compete Against Well-Funded Companies
  • Portfolio Media: Aditude CEO Jared Siegal on Beeler.Cast
  • Market Perspective: Carta’s Late Summer/Early Full Fundraising Update
  • Portfolio News: Arteza, Assent, and Creatio
  • Portfolio Fun: Emma Chamberlain Talks Chamberlain Coffee

Let’s Dive In!



How to Compete Against Well-Funded Companies

Since Volition’s inception in 2010, we have invested in financings ranging from $10M-$100M+. When thinking about how much a company should raise to capture its opportunity, let the metrics and objectives lead to what makes sense for the business. One perspective on why to raise more is to better compete in an industry where others have raised lots of capital. But beware — this often results in overspending and inefficient use of capital. The following are some thoughts for an executive leading a company in an industry that is being flooded with venture dollars. 

Many of our portfolio companies find themselves competing against companies who have completed much larger fundraising rounds. When a competitor announces a large raise, the initial reaction of a CEO is one of panic and paranoia. However, these CEOs should not shy away from well-funded competition. Lean in and embrace it. A sense of urgency and competition can be a great catalyst for your company. We have had many successful outcomes with portfolio companies that competed against others with a much bigger war chest of cash. 

There is a big assumption from portfolio CEOs that companies who raised large rounds will be able to execute effectively and grow into the expectations of these new investors. Too often, companies either fail to live up to the hype or founders are forced to move away from their capital efficient mindset given all the cash that is now on the balance sheet. Suddenly, companies may find themselves with overly high burn rates and are forced into a more binary outcome as they are now too deep into the “go big or go home” mentality. More capital doesn’t necessarily mean you will execute better or that you will generate stronger shareholder returns. Where do founders who raise large rounds fall short, and how can other companies take advantage of this? Executives of overly funded companies in the growth stage will often deploy capital to quickly fill a large pool of open hires as they look to step on the gas and expand their capabilities. The risk with growing headcount too quickly is that you may take a group of “A” players, add “B” and potentially even “C” players. The average team member now becomes a “B” player. People drive results and getting the right people in the right seats is critical to driving value. Be wary of lowering the bar for new hires to meet the hiring budget timeline. Ramping too fast may result in a loss of accountability and ownership across the organization. This coupled with losing millions in the process is not a winning hand. Keep the bar high for all new hires as bigger does not mean better.  

While capital efficiency has always been a core attribute of companies we invest in, the market has shifted from the mindset of growth at all costs to measured growth with better visibility into cash flow generation. We are all for being aggressive and helping founders achieve their aspirations for greatness, but also this should be done with a focus on sales efficiency metrics and customer unit economics. If these key indicators are strong and/or ramping in the right direction, invest aggressively to capture market share. However, if this is not the case after a reasonable investment period, the bigger the loss becomes, the harder it is to turn the corner to become a self-sustaining business. 

There can also be meaningful tailwinds to fuel growth when competing in a well-funded sector. Specifically, heavily backed competition may spend big dollars to evangelize a market and drive more awareness. The saying “a rising tide lifts all boats” can absolutely apply when competing against such well-capitalized players. Position your business for these tailwinds as increased budgets get allocated to your sector and the addressable market experiences rapid growth. Great execution coupled with leveraging the spend of others can not only drive significant top-line growth but can also help you do so in a more controlled expense manner. 

Finally, when considering taking much more capital than your business plan requires, think through whether you are doing so because it is the best decision for the business or is it that you need to accommodate prospective investors given their fund size and target check size. If the answer is more the latter, tread lightly. Being over-capitalized can be just as dangerous as being under-capitalized. Raise what is right for the business and with a partner that can be flexible to your needs. It is this disciplined approach that got you to this point. Therefore, make sure to pursue a risk-reward strategy that maximizes the chances of achieving your dreams. 



Aditude CEO Jared Siegal on Beeler.Cast


Pictured: Jared Siegal, CEO Aditude

Jared Siegal recently joined the Beeler.Cast where he discussed the company’s $15M Series A, why he chose to work with Volition, the issues facing publishers going into ’24, how he thinks about possible acquisitions and so much more. Make sure to check the full conversation out below.

Link: Click Here


Carta’s Late Summer/Early Full Fundraising Update

  • In Priced Seed rounds, median valuations are close to 2021 levels. However, the amount of deals is down meaningfully.
  • The jump in valuation from Priced Seed rounds to Series A was 2.7x.
  • Series C pre-money valuations increase 3.0x from Series B, but it is still a “very constricted market.” 

Source: Peter Walker, Carta


Arteza, Assent, and Creatio


Emma Chamberlain Talks Chamberlain Coffee


Last week, the one and only Emma Chamberlain released a podcast where she took a deep dive into Chamberlain Coffee!

Link: Click Here

Thanks for the read! We would love to hear what you think, so feel free to send us an email  if you would like to chat.

-The Volition Team


The views and opinions expressed herein are solely those of the author and do not reflect the views or opinions of Grove Collaborative or its affiliates. The author does not guarantee the accuracy or completeness of the information provided in this document. You should not treat any opinion expressed herein as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the author’s opinion. All information provided is for informational purposes only, and shall not be relied upon as personal financial advice. Any reference to a specific investment strategy is only to assist in learning, and shall NEVER be relied upon when making future investment decisions. Except where otherwise indicated, the information provided herein is based on matters, opinions and views as they exist as of the date of preparation and not as of any future date, and the author undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional materials.

The author and the author’s affiliates may currently have long or short positions in the securities of certain of the companies mentioned herein, or may have such a position in the future (and therefore may profit from fluctuations in the trading price of the securities). To the extent such persons do have such positions, there is no guarantee that such persons will maintain such positions.

Investments in securities involve the risk of loss. Past performance is not indicative of future results. Neither the author, Volition Capital, Grove Collaborative nor any of their respective affiliates guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed herein.

Neither the author nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. In addition, nothing presented herein shall constitute an offer to sell or the solicitation of any offer to buy any security.

Volition Capital

Roger Hurwitz

Managing Partner

Roger Hurwitz

Managing Partner

“You’re Never Fully Dressed Without a Smile”  –  Annie, The Musical


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