In the video game Katamari Damacy, players control an avatar that rolls a sticky ball that catches everything it touches. The goal is to make a sphere big enough to become a star or moon.
Ecommerce aggregators work in much the same way by buying smaller brands and then optimizing their production and sales channels to increase market share.
This was effective in a pre-vaccine era when consumers stopped visiting stores, but is the brand rollup model still viable?
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“Low consumer confidence, high brand equity and a freeze on investment capital are creating a perfect storm,” said David Wright, co-founder and CEO of Pattern, an e-commerce accelerator. “Unless aggregators change the way they work, their future is bleak at best and nonexistent at worst.”
Scaling an online business until it’s big enough to flip sounds great, but Wright (who clearly has a vested interest) says small brands should partner with companies that can help them navigate the market, not destroy them in their entirety. gulp.
“It’s similar to the 2008 financial crisis, when bad financial products were lumped together to diversify risks and make them look better than they really were,” he writes.
“We all know how that ended.”
Thanks for reading – have a nice weekend.
Walter Thompson
Editorial Manager, ukbusinessupdates.com+
@yourprotagonist
Pitch Deck Teardown: Five Flute’s $1.2 Million Pre-Seed Deck
Image Credits: Five Flute (Opens in a new window)
Follow-up funding is harder to come by, but seed stage founders who have a strong idea and good presentation skills can still close rounds.
Namely: Five Flute, an issue tracking platform for hardware product managers, recently raised a $1.2 million SAFE bill to ramp up its marketing and hire more technical talent.
The founders of Five Flute shared their slightly edited pitch deck with us. In addition to the standard slides for TAM and GTM strategies, their presentation convincingly describes the problems to be solved and why they think they are ready for success:
“We have personally felt this pain.”
Dear Sophie: Which immigration options are best for a decentralized team in the US?
Image Credits: Bryce Durbin/ukbusinessupdates.com
Dear Sophie,
We just raised a $20 million Series A and need to hire more engineers to fully develop our product.
In addition, we want to bring our foreign PEO contractors to the United States to join us more locally and in the time zone.
We’re excited to be decentralized – which immigration options are best for us?
— Delighted Entrepreneur
Study your down-funnel metrics to optimize for growth
Image Credits: erhui1979 (Opens in a new window) / Getty Images
Early-stage start-ups put a lot of time and energy into marketing and acquisition: these levers drive new customers to the top of your sales funnel to drive growth. And investors love growth.
But in August 2022, they love revenue even more, which is why Jonathan Martinez says companies should turn their attention to down-funnel metrics.
“Different messages per user cohort is your biggest lever for driving users down the funnel,” writes Martinez in his latest ukbusinessupdates.com+ post.
“It is imperative to divide users into their respective buckets as this provides the opportunity for unique targeting and messaging.”
How to implement a power reduction: Planning, execution and follow-up
Image Credits: Pulp Photography (Opens in a new window) / Getty Images (Image has been modified)
It’s hard to argue with the saying “measure twice and cut once”, especially when it comes to firing employees.
Few managers have overseen a power reduction. That’s why Nigel Morris, co-founder and managing partner of QED Investors, shared a five-page document with the CEOs of his portfolio company to guide them.
“We’ve split the process into three parts: planning, execution, and follow-up,” he writes in a ukbusinessupdates.com+ post summarizing the advice he gives the founders he works with.
“The inevitable reality is that while you have to execute the RIFs in an organized manner based on strong business rationales, there is always an overarching need to get the message across with empathy and respect.”
7 investors discuss why edtech startups need to go back to basics to survive
Image Credits: Boris Zhitkov (Opens in a new window) / Getty Images
Pre-pandemic, edtech wasn’t a particularly frothy sector: In 2019, these startups received about $7 billion in VC funding, according to Crunchbase.
Last year, that figure rose to $20 billion after efforts to contain the spread of COVID-19 impacted students of all ages.
To learn more about how edtech is doing during the current downturn, Natasha Mascarenhas spoke to seven VCs about the advice they offer portfolio companies, where edtech is transitioning into other sectors, and how they prefer to be pitched:
- Ashley Bittner and Kate Ballinger, Firework Ventures
- Jan Lynn-Matern, Founder and Partner, Emerge Education
- Malvika Bhagwat and Kriti Bansal, Owl Ventures
- Jomayra Herrera, partner, Reach Capital
- Rebecca Kaden, General Partner, Union Square Ventures
“I’d say the last few years have been more of an anomaly and we’re going back to a more sustainable pace,” said Reach Capital partner Jomayra Herrera.
