The rise and demise of checkout startup Fast shows Venture Capitalists are (often bad) gamblers.

Fast, a US based startup which provides checkout software have reportedly appointed Morgan Stanley to frantically find a buyer after failing to raise a new round of funding.

Fast raised >$120 million from investors including payments giant Stripe and tier one venture capital firm Index ventures, they have a headcount of ~500 and it’s been reported that they have >$10m monthly burn and after three years have only achieved and ARR of $600,000.

That does make you wonder what those 500 people actually do, but as I’ve seen over the years in many startups, commercial people are often an after thought and totally under appreciated in the importance they play.

There needs to be strategy, leadership, measurement and motivation for a startup to make revenue, it’s the lifeblood of growth. However, maybe raising so much money, too quickly makes some lose the sense of urgency and get comfortable, which is not the attitude for startups, it’s a race against time and everyone needs to be in sync, and rowing.

Fast founder Domm Holland’s Twitter game’s strong and he’s often sharing advice and best practice to the many startup founders that follow him.

100m people with an idea
1m people with a landing page
100k startups with an mvp
25k startups with customers/users
10k startups with revenue

sure its ‘possible’ to raise money with just an idea, but the further you get the less competition you have

— domm (@domm) January 12, 2021

Sage advice to be one of the 10k startups which make revenue, but I guess not so sage if that means only being able to turn $120m into $50k MRR after 3 years. I would pay good money to see a monthly investor update, or sit as an observer in one of their board meetings, because I’ve seen founders handed their asses by investors over “only” having $20m revenue.

Anyway, I don’t like to kick people whilst they’re down, so whilst I understand the amazement we all share at the revelations from Fast, added to the almost David Brent-esque persona of Domm meaning it’s major meme material, I don’t want to dwell on it, their story is a feature in the product of venture capital.

In reality Fast is yet another addition in a long, long line of startups which completely contradict the thesis which venture capital investors use to turn away many potentially amazing and very qualified entrepreneurs every single day.

By all accounts, Fast appear to shortly be joining the likes of WeWork, Theranos et all in being inducted into the FUBAR hall of fame…. but maybe Domm can avoid joining the rapid fall from grace of the giant ego’s on parade in those examples, to double down on fundraising advice, he clearly is amazing at it, so why not write a best seller, create a netflix special or audition for Shark Tank!

Another observation for me, is that Fast (on paper) had a pretty decent team, such as their cofounder and COO Allison Barr Allen, who was an ex Uber employee. Perhaps this goes to show the simplistic, lemming-esque mentality of getting FOMO and blindly backing anything with a pulse from a sexy outlier like Uber, AirBnB et all actually isn’t always sound rationale, who knew!

I think I speak for all underdog and overlooked founders/operators by saying that unless VC’s start to have some consistency in process, anything they say regarding their desire to level the playing field of capital deployment is nothing more than fluffy PR. The token moves they make are clearly a box ticking exercise to gain show ponies they can use on demand.

Don’t get me wrong, I totally get that VC’s are under immense pressure to find outliers, so they can successfully raise new funds. Their job is far from easy, but there’s clearly blue ocean and a strong business case to back different people once in a while, doing so may just improve their typical 1/10 hit ratio, I strongly believe it would. Overlooked founders are cool with passes, but when the rationale we’re given is constantly contradicted with investments in other founders who obviously also don’t tick the boxes we’re passed on, it just rubs salt in our wounds, we aren’t angry, just frustrated at lip service, and we don’t want charity, just parity.

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Even some ex Unicorn alumni aren’t having such as easy a time raising a fraction of the amounts that companies like Fast do, including myself at times, for example this week a Venture Capital fund passed on my startup because they “didn’t think that my experience from Just Eat would be transferable to the new industry”

I’m a friend of the VC fund, they’re nice, super smart and genuinely lovely people, so I respect them and accept they passed, they did provide some helpful feedback, but I know they’re going to absolutely kick themselves in a few weeks and definitely in the coming years, when I send them a framed copy of the pass email. Cooks/Stoves ;). They are unquestionably great at what they do, I fully rate them, but I know they they could be even better.

I do question their point with me on experience though, did Domm or Alison from Fast have experience in fast checkout technology? Not as far as I’m aware.

Meanwhile,

– I had zero experience in takeaway (other than eating it) before helping to build Just Eat from 2008 to a $2.44Bn IPO.

– I had zero experience in discount, loyalty and affinity platforms (other than using staff discount) before helping to build and internationalise TheEntertainer from 2013 to >$100m acquisition.

– I had zero experience in B2B SaaS for ground transportation (in the travel industry) before helping to build talixo from 2018 to Series B, expanding to 1000+ cities, partnering with biggest names in travel and outperforming much better funded competitors!

I’ve had involvement (in various capacities) with other $Mmm tech startups and unicorns, many of which are in industries I had zero/very little experience in.

This folder changed a lot of lives! @JustEatUK #Unicorn? pic.twitter.com/cInfY55owm

— Henry Joseph-Grant (@speirin) April 2, 2022

Of course, relevant experience is important, but smart people learn, gain insight, credibility and reputation quickly. I’ve done that since 1997 whilst still at School, taking a role and becoming the top performer in a company (Double Glazing telesales, again an industry I had zero experience in apart from looking out of windows).

I understand my new industry firsthand, to the point I’ve experienced most of it’s biggest problems myself. I’ve also spent the past year researching and testing. I know it inside out.
My experience making industries easier, even the food industry is actually highly relevant, because my new industry should be just as easy, even more so actually.

Passes are part of the game, so it is what it is, but VC’s can write all their thought pieces on Medium, but the fact is, they’re gambling. Obviously, at the later stages, there’s data to leverage and I appreciate it’s not as easy at preseed/seed without as many data points, but…

Smart/experienced, relentless team + Huge TAM = Much better odds.

9 out of 10 startups do not have successful outcomes, so one would think anything they could do to maximise the odds would be worth a try, I mean their current sway towards an archetype founder of white male, MBA with a couple of big name Investment Banking or Consultancy logos clearly could be improved on and let’s face all funds have backed companies in spaces that a few years later those capital intensive companies look stupid, e.g bicycles, scooters spring to mind and I’m sure there will be a few to join that hall of fame in the current sexy space q-delivery with one or two dominating and millions of venture $ being pissed against the wall with the rest.

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In my opinion the issue is that the people investing often come from the same worlds as those they deploy capital to, be it education, corporate alumni or socioeconomic background.

I predict that we will see a Venture Capital slow down in the next few years, arriving at an S Curve point like we did in 2008. It’s during these slow down’s that VC’s actually start to be more realistic and look for genuinely solid fundamentals, it’s also when the best companies emerge. LP’s will start putting pressure on VC’s to do so and in my opinion if they don’t, new funds with nascent fund managers will really start to turn the tables, by seeing the opportunity in backing nascent founders, who are genuinely innovating in nascent spaces. I will be one of those founders.

I *will* execute what’s planned with my new thing, not only solving global problems, but doing so with low capital intensity, without exploiting anyone, destroying or cannibalising the industry and creating REAL innovation, but it will become a global category defining success, easily returning an early stage VC’s entire fund. I’ve assembled a world class team and we will 100% repay the faith that has been shown in us from our investors who’ve agreed to invest.

I truly believe the space I’m in wont be dictated purely by who raises most, for example, there is one company which has raised $43m and still don’t have P/M fit and another that’s raised >$20m and the latter by all accounts are in deep trouble, neither founder had experience of the industry… but drumroll…. one was ex-WeWork and the other has a couple of Masters degrees. Which kind of backs up my point in this whole piece. It’s not a level playing field.

I totally respect those founders, they’re my colleagues in growing the space and they’ve executed well in several ways, but I don’t believe they’re in it for the reasons which I am.
My reasons are different, very authentic and trust me it puts the fight into my sense of mission. I would walk through fire to build my vision, because I know the positive impact it will have.

I’ve never had a better idea, a stronger plan, more fire in my belly and belief in my heart than I have with this. The “no’s” we had, will become “knows” and regrets, ironically just like a VC told me recently that he kicks himself for losing out on Just Eat deal during his Balderton Capital days, because he realised – too late, and Index Ventures won the Series A, which didn’t work out too badly for them.

I guess the lesson is – you’ve just got to be “fast”. 😉

Game on! #Onwards

Startups are like boxing. ?

Founders are fighters….

Some fighters get an easy path, get invested in early, are steered away from any risk and they gain fame and opportunity from a padded out record.

But eventually they have to go up against the truth and get found out…

— Henry Joseph-Grant (@speirin) April 3, 2022

This content was originally published here.