TechCrunch+ roundup: Deep due diligence, early Q1 2023 VC results, flight lessons for angels

Becoming an angel investor isn’t easy — and that’s on purpose.

Those who claim the title must satisfy a few requirements with regard to income and licensing. If not, just about anyone could schedule Zoom calls with founders to talk about making their dreams come true.

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Business schools teach the basics, but Mysty Rusk, who’s reviewed around 4,500 deals over the last 20 years, says the most important lessons she learned were the result of mistakes she made along the way.

“There may be no way to foresee a global crisis, a stealth competitor, or other risks that are completely outside the startup’s control,” writes Rusk, “but some obstacles are avoidable with the right knowledge.”

Thanks for reading!

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Investors want best-of-the-best ESG data. Here’s how to give it to them.

The potential of environmental, social, and governance (ESG) investing is still largely untapped: A PwC study released last year estimated that ESG assets under management will increase by 84% between 2021 and 2026 to reach $33.9 trillion.

“There simply aren’t enough entrepreneurs providing adequately ESG-aligned investing opportunities,” according to T. Alexander Puutio, an adjunct professor at NYU Stern.

In this comprehensive article, Puutio provides an overview of ESG disclosure frameworks, including action items for startups that hope to be acquired or go public.

For deep due diligence, minimize disruption to maximize success

Putting together a legitimate data room for due diligence is no small undertaking: stakeholders from multiple departments need to contribute reams of documents and keep them regularly updated.

“If you’re not careful, you can come up against delays, or worse, investors pulling out at the last minute,” according to Denis Shafranik, co-founder of early-stage venture firm Concentric.

“That means your focus shouldn’t only be on passing successfully, but also minimizing the disruption to your team and your business growth.”

Drawing from his experience helping portfolio companies, Shafranik offers suggestions for managing the scope of work, soliciting investor feedback and controlling the narrative.

Upheaval in venture banking can help us get back to basics: Efficient growth

The ongoing downturn afflicting public and private startups could also be described as a market correction.

“The reality is that most founders and venture funds don’t know what the market price is on startup valuations at the moment,” writes Sach Chitins, co-founder of Jump Capital.

For many early-stage startups, sustainable growth may be more important than fundraising right now, since so many VCs are adjusting their risk tolerance by deciding simply not to invest.

“Resetting expectations to match market realities helps set the tone for operating within the market environment,” says Chitins. “It’s time we get back to basics and build more efficient businesses.”

Are solo GPs screwed?

There’s been a lot of chatter lately about founders who haven’t reached product-market fit and are under pressure to return money to investors. But what about the general partners who are sending money back to their LPs?

Now that “the venture math has changed,” Natasha Mascarenhas spoke to solo GPs who’ve wired back funds to their limited partners, or in one case, urged them to cancel their subscriptions.

“I can’t imagine an institutional LP is going to be as open-minded to investing in a single person doing lots of investing on their own without a team or partnership model,” said Gumroad CEO Sahil Lavingia.

Q1 VC results tread water, but that’s cold comfort for SaaS unicorns

As Q1 2023 draws to a close, Alex Wilhelm reviewed early data from PitchBook to get a feel for key VC trend metrics like deal count and total capital invested.

“The picture forming from Q1 2023 venture data is one of measured decline compared to the end of 2022,” he found.

“And March brought with it something akin to a boomlet in domestic venture activity, which could become an even brighter spot if the last bits of first-quarter data further bolster the month’s totals.”