A Note From the Redbud VC Team

It’s been a busy month for the Redbud VC team. We wrote our 2nd check for 2024, and there’s definitely more coming — so Pitch Us or email! Capital calls are up for VCs across stages, a sure sign that more capital is ready to be deployed (and we’re not the only ones). Missouri Startup Weekend is officially sold out, and we’re looking forward to welcoming top-tier investors, operators, and mentors to Columbia, MO, for the weekend. — Who’s next in building a billion-dollar company like past winners Zapier (‘11) and EquipmentShare (‘14)? We are in the works of planning an awesome event for construction and real estate founders, investors, and experts in NYC on June 13th (email us for deets). There have been some monumental leaps in AI this month, with Musk and Altman arguing, top VCs taking sides, and competing CEOs stepping down. In other news, startup job growth is taking a front seat in Missouri, IPO speculation is brewing, and the Techstars drama continues. Enjoy the curation below⤵️ 

Missouri Startup Weekend is SOLD OUT!

Don’t worry! You can still grab a ticket to watch pitches 🙂 

Missouri Startup Weekend is a weekend-long event that brings together aspiring entrepreneurs, developers, designers, and operators to build a startup in one weekend. The winner of Missouri Startup Weekend receives up to $15k in cash (non-dilutive), office space, legal formation, PR, brand strategy, and a chance to work with Redbud VC, plus a potential investment of up to $150k.

🎟 Get Tickets to watch pitches on Friday and Saturday → Here  

FYI, Brent Beshore is 2/2 as a judge, having multi-billion dollar companies win Missouri Startup Weekend. He’s back ten years later for round 3. Will he do it again?

Redbud VC invests monetary ($50k-$150k) and social capital in early-stage tech founders. We bring monthly Redbud VC, tech, and economics updates. - We've filtered thousands of sources for our 14k+ readers, so you don't have to. Enjoy🥂

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😎 Join our talent network | 🛩️ Flyover Tech community

As a VC, it’s a tough life to secretly be more important than everyone. If only Grandma knew what a full ratchet. Let alone the secret home in the Caymans I bought after taking a loan against future management fees. Happy Easter 🐰🥚 

🔥 Burning question of the month 🔥

📈 Macro Trend Report

• CEO SHAKEUPS | No surprises as CEO Dave Calhoun stepped down from Boeing alongside the board chair and head of commercial airplanes. Boeing has had a rough start to 2024, starting with a door plug flying off the plane in the middle of an Alaska Airlines flight, followed by landing gear falling in the air and loose switches on the pilot seats. Safety and quality issues have plagued Boing for the past five years after two fatal crashes of the 737 Max in 2018 and 2019 that killed 346 people. Stability AI founder and chief executive Emad Mostaque stepped down this month after tweeting that “can’t beat “centralized AI” with more “centralized AI,” referring to the ownership structure of other AI powerhouses. Stability has been losing lots of key talent and has failed to raise additional capital at a $4B evaluation this year. Stephen Scherr has also announced his departure from Hertz after a big bet on purchasing 100k Teslas last year, which has left the company with costly depreciation expensive repairs, and a low demand for EVs. 

• AI | Shots are fired in the fight between Elon and Open AI. According to Reuters, Elon sued Open AI at the beginning of the month, alleging a breach of contract, saying Altman and co-founder Greg Brockman originally approached him to make an open-source, non-profit company. Still, the startup established in 2015 is now focused on making money. OpenAI came out with receipts in a new legal filing and blog post responding to the lawsuit, calling Musk’s claims “incoherent,” claims “frivolous,” “extraordinary,” and “fiction.” Top VC investors are also taking sides. Vinod Khosla voiced support for OpenAI and criticized Elon Musk's lawsuit against the company, sparking a Twitter feud with fellow VC Marc Andreessen, who accused Khosla of advocating to ban open source. The argument quickly escalated as they debated the existential risks of AI, with Khosla invoking the Manhattan Project and Andreessen suggesting the nationalization of Open AI.

• VENTURE CAPITAL | VC funds on Carta called more capital to put to work in January 2024 than at any point since mid-2022 (we are so back 😉). Early-stage funds saw a busy end of 2023 that has continued into 2024 as the 3-month average in the capital crossed back over the $1B mark. SaaS companies have continued to be a strong verticle for early-stage VCs. Expected returns for early-stage SaaS companies were 5.5% higher than the average of 10 VC tech verticals. Today's early-stage SaaS companies are anticipated to achieve an exit rate of 78.2%, surpassing the 2nd ranked cybersecurity by over 13 percentage points.

  • HR 2799 | The House passed HR2799, the Expanding Access to Capital Act, and if the bill passes in the Senate, it could have major effects on the VC funding landscape. The two biggest effects of the bill are expanding the definition of accredited investors and revising the limits of a “qualified venture capital fund” from $10M and 250 LPs up to $150M and 600 LPs. If the bill passes, emerging managers deciding between the standard 99 LP limitation for private funds and the formerly restrictive "qualified VC" exemption get the best of all worlds - 15x higher AUM cap and effectively unlimited number of LP slots. 🥳

  • FEMALE FOUNDERS & GPs | 2023 saw a big increase in female founders and check writers. Female founders and co-founders collectively garnered 27.8% of deal value last year, reaching a record high of 22.8% even when excluding OpenAI's $10.0 billion raise. Despite the overall decline in venture market activity, female founders saw a decrease of 25.0% in deal volume. Meanwhile, at the GP level, the proportion of female check writers at leading VC firms experienced a slight uptick to 17.4%.

  • SECONDARIES & FUNDS | The number of funds raised in 2023 declined ~50% YoY and was the lowest since 2014. Reflecting this decline is a 66% increase YoY in the AUM raised by secondary funds. The $78B raised by secondary funds is the second highest in history.

💰 Micro Trends

• IPO | As Reddit rang the opening bell this month, an IPO 10+ Years in the making has finally been completed. Reddit shares jumped 48% in their debut on Thursday in the first IPO for a major social media company since Pinterest in 2019. A week after their IPO, shares plunged almost 25% in two days — this follows the historical “Pop and Drop” by high-profile tech IPOs. Volatility is always expected for the first earnings report, but only time will tell how successful Reddit will be in the long run. The buzz already has people speculating which companies aren’t far behind Reddit. Pitchbook detailed their top 20 VC-backed IPO candidates, with big names like Stripe, Klarna, Noom, and ZocDoc all making the list.

• FAMILY OFFICE EXPLOSIONS | Family offices have long been the go-to for ultra-high-net-worth families looking to deploy capital discreetly, but the landscape is changing. The number of family offices has tripled since 2019, and how FOs are deploying their capital have also radically changed. According to a recent report by Preqin, the global tally of family offices surpassed 4,500 last year. The sheer scale of these offices is staggering, with experts estimating their combined AUM to exceed $6T. The explosive growth of family offices has sparked a competitive frenzy among private equity firms, hedge funds, and VCs vying to attract investments from family office players. Unfortunately, not everyone is happy 😳. More than half of the family offices that Preqin surveyed said they have been disappointed with their venture capital returns, while a third have been disappointed with private equity.

• BRAINS & SPACE | It’s been a big month for Elon Musk as headlines from Neurolink, Space X, and Tesla have dominated the news. SpaceX's Starship mega-rocket, the world's largest and most powerful rocket, reached orbital speed for the first time Thursday in a historic third test flight from South Texas. Neurolink went live on X to show their first patient, Noland Arbaugh, a quadriplegic, playing online chess with only his brainwaves and the Neurolink. The company also opened up its patient registry network for clinical trial recruitment. Tesla delivered a cyber truck to a cancer patient who asked for a rush delivery, and the thread went viral. 🚀 🚙 🪐 🧠

• TECHSTARS | Last month, the news broke that Techstars will be closing a majority of their programs across the country to focus on working with startups within major tech hubs. This month, news broke that Techstar's partnership with JP Morgan is also on the rocks. According to a Tech Crunch article shared this month, Techstars CEO Maëlle Gavet revealed during a Zoom meeting that the $80M Advancing Cities Fund, raised through J.P. Morgan's Private Bank Platform, was not progressing well due to multiple incidents and tensions. Despite Techstars investing two-thirds of the fund and Gavet praising J.P. Morgan as an active partner, the bank hasn't confirmed renewal for an Advancing Cities 2 Fund, and the contract is up for renewal in December. 😵‍💫

📰 Middle America Headline of the Month

There’s a startup hiring boom happening in Missouri 📈

In 2022, Missouri startups created over 40,000 jobs, almost as much as the peak in 2021. From 2018 to 2022, these startups generated 185,000 jobs, making up 81% of all new jobs in the state.

💰 Flyover Deals

Lots of bigger Series A & B rounds are closing just before the end of Q1! 💪

• Check out the 257 flyover deals for over $2.1B in funding we tracked here

• Chicago-based Vibe closed a $22.5M Series A to simplify advertising for streaming

• GoRout completed a $2.6M Seed Round Led by Traction Capital

• Data analytics company Ocient closed a $49.4M Series B extension 

• Cloverleaf.me finished thier Series A with an additional $7.3M in capital. They raised $9M in Series A capital in late 2023.

• Illinois-based DigsFact closed $1M in Pre-Seed to change the way property claims are estimated.

• Smart Response closed a $1.55M Pre-Seed 

• HLRBO, the Airbnb for hunting land, finished a $1M Seed Round led by Great North Ventures

• Minneapolis-based Refr Sports raised a $500k Pre-Seed Round 

• Milu Health raised a $4.6M Seed Round led by a16z

• Kids overstock clothing platform Kidsy raised a $1M Pre-Seed Round

• Chicago-based WarpStream Labs completed a $20M Series A led by Greylock and Amplify Partners

• Battleface wrapped up a $35M Series B led by Hudson Capital

• Coterie oversubscribed thier $27M Round to help SMBs simplify the small business insurance
  

🐄 Middle America vs. National Macro Trends

• Unemployment in Missouri rose slightly this month to 3.3%, but still well below the steady national average of 3.9% and marginally above the spiked Midwestern average of 4.1% ✅

• The Midwest Consumer Price Index was at 2.9% this month, significantly below the national rate of 3.8% ✅ 

  

🧠 This Month's Recommendations

📚 What We’re Reading

• “How to do founder reference checks,” from The Signature Block Newsletter, is a must-read for both founders and investors.

• What's your favorite pivot? Five VCs and accelerators share their favorite portfolio company pivots.

• The “Network Effects Manual” by NFX, yes, this article is a little old, but we find ourselves rereading it often 📚

🎧 What We’re Listening To

• Benchmark’s Mitch Lasky and Blake Robbins on The Art of Business in Gaming 🎮 [2 hr 15 min]

• Building confidence in yourself and your ideas on the Y Combinator Podcast [21 min]

• Anna Berger, CEO and co-founder of Trayd, talk about why she’s betting big on construction payroll and payments on the Play Brydge Club Podcast [39 min] 🏗

• Picking founders & remaining disciplined, listen to Peter Wagner reflect on his 27 years of venture investing with Harry Stebbings [1 hour 3 min]

• Sequioa’s Crucible Moments EP8: Nvidia, an overnight success 30 years in the making [38 min]

📆 What We’re Doing

• Missouri Startup Weekend is finally here!

  • We’re sold out of participant tickets and are ready to hear all the ideas at the opening pitches this Friday! ⚡️

• Heading out to Chapel Hill to judge the Global Finals of VCIC! Excited to meet the final companies and student teams. 🌎

• We’ll be in Kansas City for InvestMidwst April 17-18!

• We’re helping deploy $1.2M in 12 startups through judging the Render Capital Competition! Winners will be announced Kentucky Derby Weekend 🐎

• Our tickets are secured for Camp Hustle and the Beyond Silicon Valley Summit 🚀 

• Also, we are hyped for Capital Camp, which is right around the corner on May 21-23 🏕️ 

• Stayed tuned for more details on the exclusive proptech/contech event we are planning in NYC 👀 — email us for details

🪝 Middle America & Beyond Picks of the Month

🚀 Redbud Portfolio Company Highlights

Portfolio company Mattoboard has been hard at work, constantly shipping new features, foraging elite brand partnerships (Behr, Jung, etc.), and creating dynamic content for their over 117k social followers. 🎨

Read CEO and co-founder Guy Adam Allion’s perspective on the death of the drawing board and why material sample boards are next 😳⤵

🛠️ Resources

Insights from Alexis Ohanian, Co-Founder of Reddit and 776 VC

• 💭 VCs ask a lot of questions, esp. in the early stages. Here are some favorite questions from Haley at Hustle Fund.

• Check out the launch of Zapier Central - no more feeding AI instructions

• 4 questions used to identify high-potential 20-year-olds 

• Take a look at the list of the creme of the crop accelerators ✨

• STOP chasing VC funding without a plan

• a16z’s enterprise AI report just dropped - take a look at the 8 most insightful slides

• LTV: CAC and other SaaS ratios that are strong indicators of growth

• Founders - Here are links to 20 free investor lists & databases, all curated in one spot

• A quick review on what VC’s are evaluating at the pre-seed and seed

• Always be shipping 📦 the importance of a technical co-founder and how that impacts iteration and winning in a crowded landscape

• First-time founders → check out this list of essential pre-seed funding resources, info, and need-to-knows 💰

• How to do cold outreach…the right way

• 100 Incredible Resources For Tech Entrepreneurs And Startups 💫

• DocSend data on 100k+ pitch decks and the must-have slides!

• Resource page for founders we made here 📒

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The information provided in this newsletter is intended for general understanding and educational purposes only, not as a guide to investment decisions. The authors, publishers, and distributors of this newsletter are not licensed financial advisors and are not providing financial advice or investment advisory services.s