Nicolas Burtey

YC’s new batch (S25) is live and investors are already swarming 🔥 Harmonic’s data highlights the 20 startups attracting the most attention. The signal is clear: this batch is dominated by AI-native and infrastructure-first companies. ▫️ Pally (YC S25) – Personal relationship management with AI insights ▫️ Avelis Health (YC S25) – AI auditing for medical claims ▫️ Motives (YC S25) – Video-based market and user intelligence ▫️ IronGrid – Insurance-backed warranties for battery storage ▫️ Imprezia – Native ad engine for LLMs and chatbots ▫️ Finto – Automated invoice processing with AI agents ▫️ Kernel – Cloud platform for web automation agents ▫️ Nottelabs (YC S25) – Framework for browser-based AI agents ▫️ BootLoop (YC S25) – AI-driven firmware development and debugging ▫️ Convexia (YC S25) – Automated sourcing of early-stage drug candidates ▫️ Closera (YC S25) – AI marketing workflows for real estate ▫️ AgentMail (YC S25) – Email API purpose-built for AI agents ▫️ Alter (YC S25) – Secure gateway connecting AI tools to enterprise data ▫️ Channel3 (YC S25) – API for AI-powered online shopping ▫️ Albacore Inc. (YC S25) – Autonomous underwater vehicles ▫️ Wedge (YC S25) – Compliance and monitoring for AI in healthcare ▫️ Halluminate (YC S25) – Testing and deployment automation for AI apps ▫️ Cactus (YC S25) – Run AI models directly on devices and wearables YC continues to be the strongest early-stage pipeline in the world. 👉 If you were writing checks today, which of these would you back? Image source: Lenny's Newsletter

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Three kinds of AI startups I’m especially excited to invest in and work with these days: 1. The Surprisingly Valuable Niche Workflow — small enough for OpenAI not to care about; big enough to make $100M per year. Sooo so many opportunities out there, from logistics to finance to healthcare to construction to manufacturing and on and on. 2. The Full-Stack Software Company — founders are realizing they can move up the value chain, to not just sell software to other businesses, but use their own software to provide end solutions to customers. Our own portfolio has inspired us here, from industrial solutions to life science to agrochemical to admin services and more. 3. The Bold Consumer Bet — it’s time for a new generation of consumer mainstays that are AI-native and fit the way people use software today. We don’t often invest in consumer apps, but we have seen great examples of this in language learning, personal finance, fashion, dating, social, messaging, etc. All three are great examples of building at new frontiers of the software-addressable economy, where advances in AI have opened up new opportunities for software founders. A good litmus test for this thesis: “If I had this idea 5 years ago, could I build it?” If the answer is no or maybe, you’re on the frontier. If you’re building something cool in one of these areas — or anywhere else on frontiers of the software-addressable economy — please get in touch with us at character.vc We’d love to learn from you. And we’d love to share how we help founders bridge the gap from possible to PMF in these categories.

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Distribution First, Monetization Later   Some of the most fascinating tech cos start with deceptively simple playbook: get distribution first, figure out monetization later. It sounds obvious, but it’s one of the hardest journeys. As they ride on the back of a sharp entry wedge - product that spreads like wildfire, with low CACs, but with limited ability to charge users Think of content plays - Whatsapp, TikTok, Pocket/Kuku or Fintechs -PhonePe, CRED (CC bills), Groww (direct MFs). They cracked an urgent painkiller use case but the trade-off was low ARPU.   Consumers voted with time / freq of use, not with wallets. So the real battle begins not in Act 1, but in Act 2 - converting eyeballs into $$.   The Act 2 Battle Act 2 is when the narrative shifts. Valuations, which in private markets can be driven by story/ user love, eventually have to converge with public market metrics - revenue, profits. Suddenly Q is: what will these users actually pay for? This is where the best founders earn their stripes: - CRED expanding to instant line of credit - packaged not as “loans” but as lifestyle liquidity, with single-bank partnership + <5 min approval (vs Paisabazaar catalog model) - Groww layering F&O on top of MFs - catering to India’s gambling instinct with a mobile-first, clean UX. - ShareChat/Eloelo driving creator gifting/ PK battles through live rooms via micropayments. - TikTok extending into TikTok Shop, micro-drama series These have produced some of the largest outcomes. Implicit bet is that owning demand is more valuable than owning supply early on. For every success, there is a death valley: cos that couldn’t crack monetization.   Few realizations stand out: 1) Cross-sell isn’t easy. It only works if the adjacency feels obvious. Avg cross sell adoption for any player lies in 10-15% range. CRED doing lending makes sense. Doing travel/ commerce? Less obvious. 2) Each new revenue line is a mini start-up. CRED’s PL or Groww’s F&O were not “features,” they were 0 to 1 journeys of their own. Distribution helps, but it doesn’t guarantee right-to-win 3) High freq use case is non-negotiable. It means higher shots at goal to cross sell. It also has to be quality of engagement, e.g., 2 sec UPI payment is too short to provide visibility to lending/ insurance offerings 4) Quality of data becomes moat. Consumertechs often rely on cross walk - offering what user is most likely to watch; in fintech, it's prop data that can help banks/ AMC match-make accurately 5) Act 1 wedges are “low friction” (bill payments, messaging, short videos) → habit-forming but shallow. Act 2 wedges require high trust + complexity (credit, investing, commerce). Often requires DNA shift 6) Fundraising is oxygen (often initial moat). Most players live on story-driven capital until monetization arrives. Virality ensures low CAC, but cash burn remains essential   History suggests that Act 1 is about love, Act 2 is about money. Only founders who master both build enduring outcomes.

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Founders: Don’t Give Away 40% at Pre-Seed! As a pre-seed investor, I’m telling you this: giving up 40% this early is not survival: it’s selling your future. Here are smarter ways to survive and build momentum: 1. Start small, win narrow. Prove PMF in an ultra-niche before chasing big markets. 2. Bootstrap with revenue. Even small MRR forces validation and discipline. 3. Run lean experiments. No-code MVPs, landing pages, small pilots: all cheaper proof than burning through a million-dollar round. With AI, the cost drops even further. Building an MVP, testing a marketing campaign, running experiments. 4. Raise only what you need. Hit milestones, then raise again at a higher valuation. 5. Use convertibles wisely. SAFEs/notes buy time, but too many create cap table headaches later. 6. Set caps and discounts carefully. They decide your future dilution, model them: take help if needed 7. Be disciplined with ESOPs. Keep pools lean and tied to real hiring needs. 8. Guard against unfriendly clauses. Super pro-ratas, liquidation preferences, ratchets: push back early. 9. Track your cap table religiously. A clean, updated cap table is your strongest negotiation tool. Fundraising isn’t survival. Momentum is.   And momentum comes from revenue, customer love, and smart equity management: not from giving away 30-40% of your upside before you’ve even begun.

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Web3 raised $9.6B last quarter—2nd highest ever—but only 306 deals closed. Translation: ✅ Fewer bets ✅ Bigger rounds ✅ Higher bar Average seed round (ROSA) is $6.6M. That means your Series A needs to be $12M–$20M+. If you’re trying to raise $500K, $1M, even $2M… you’re invisible. No VC believes you’ll scale with crumbs. What to do instead: 1. Aim higher. Big rounds + big vision. 2. Nail your story & deck to justify serious capital. 3. Build the network & credibility to earn that belief. 4. Token route? Accept you need millions for PR, KOLs, and marketing just to even launch. VCs don’t want “maybe” projects. They want infra, compute, and founders who act like category leaders. Stop thinking small. You have no shot otherwise. Thanks Outlier Ventures for the report. 💬 Comment “raise” and I’ll DM you my fundraising prep checklist.

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3 years in, here’s what it’s like working in a Silicon Valley company disrupting Venture Capital 👇 I’m coming up on my 3rd anniversary at Decile Group, the company behind: • The world’s largest VC accelerator, VC Lab • The go-to software for emerging managers, Decile Hub • One of the most important fund formation innovations, Start Fund • The leading LLM for launching, running, and investing in VC, Decile Base • The highest-NPS-rated fund formation and back office, Decile Partners • One of the few Fund of Funds backing new managers, Decile Capital Founded just 4.5 years ago, the company has achieved an extraordinary amount in an incredibly short time. Here’s my take on how this was achieved, and lessons applicable to any high-performance team.   1️⃣ Debate the what, not the how We spend most of our time deciding what to do and very little time on how to do it. Once a decision is made, the execution details are made quickly and independently by the one(s) who own the task. 2️⃣ Don’t overthink If you drift too deep into hypotheticals or operational rabbit holes, someone will stop you. Most of the time, extended analysis slows you down more than it helps. 3️⃣ Follow-up is a red flag If something is assigned to you, it’s yours, and it should already be in motion. If people have to chase you for updates, you’re slowing the system down. 4️⃣ Communicate clearly, or lose the room No walls of text in Slack. No monologues in meetings. If you can’t explain your point concisely, it won’t get traction. 5️⃣ Obsess over metrics We track, report, and review key metrics daily. Every week, we measure progress against our goals. All operational discussions start with data. 6️⃣ High expectations + high kindness It’s a demanding environment, but everyone in the team is humble, supportive, and collaborative. High performance and kindness can coexist. 7️⃣ Leadership that sets the pace The founders Adeo Ressi and Mike S. are world-class visionaries and executors, constantly obsessing over how to reduce the barriers to entry into VC and give new entrants an unfair advantage. They infuse the entire team with their ideas, excitement, and passion for changing the game. 8️⃣ A community that matches the speed Programs are performance-based. The managers we work with are top performers. They push us, and we push them. Barry Eggers, founder of Lightspeed Ventures, once told one of our cohorts: “Be the person who tells LPs you’re going to do something, go do the thing, and then tell the LP you’ve done the thing.” It’s become a mantra for us, driving rapid idea-to-launch cycles. This culture, born in Silicon Valley, now expands across the globe through the community, all moving with the same pace, clarity, and bias for action. This energy fuels our work daily and reminds us we’re part of something... ...much, much bigger.

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What's going on in the venture capital market? While we see very large, highly valued rounds for AI companies, many founders struggle to secure funding at all. 😳 I see 4 founder profiles in the market: 1️⃣ Serial founders or scale-up executives → They raise big rounds (+20m valuations) led by Tier1 VCs. 2️⃣ Founders with traction (100-200k ARR) → They usually find a pre-seed lead after multiple VC talks and then fill rounds quickly on average valuations. Only works for VC Cases. 3️⃣ Founders with little traction but competitive markets → They struggle with endless VC conversations that often lead nowhere. Better off raising angel rounds or bootstrapping. 4️⃣ Software founders bootstrapping → They build MVPs, start selling, and skip early rounds altogether—or wait for better momentum. What are pre-seed investors looking for in 2025? 👉 Proprietary data sources 👉 Strong domain knowledge (vertical SaaS is a win!) 👉 Real customer traction 👉 Deep-tech with a clear edge Fundraising strategy matters more than ever. Here’s what works: • Cluster VCs - don’t pitch your dream fund first. • Use early NOs as free feedback to improve your story. • One term sheet creates momentum - then the round fills up fast. What has been your experience raising in this market❓ #fundraising #venturecapital #investments 📸 Fabian Klima

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Several of my portfolio companies just closed rounds in this tough market. Not because they got lucky. Because they understood how fundraising actually works. Here's the fundraising playbook nobody tells you: The Fatal Numbers: • Seed stage: ~10% get promoted to partner meeting • Of those: ~10% get a term sheet • Your odds per pitch: 1% To get one term sheet, you need 100 conversations. Maybe more if you're outside the typical pattern. Most founders pitch 10 investors and wonder why they can't raise. The ones who close? They pitch 100. But here's what kills most founders: They treat every investor equally. The 3rd Meeting Test: If you're on meeting #3 and they're still "sizing the market" - it's dead. They're being polite. Move on. VCs rarely will say "no." I watched a founder waste 3 months on an investor who kept asking for "just one more data point." Meanwhile, another fund that was excited from day one was ready to wire. The Truth About Data Rooms: No investor finds conviction in a spreadsheet. Data rooms are for confirming what they already believe. Not for convincing skeptics. One of my founders shared this: "The investors who funded us barely looked at the data room. The ones who spent weeks in it all passed." The Winning Playbook: Week 1: Cast wide. 50+ intros queued. Week 2-3: First meetings. Quick yes/no filter. Week 4-6: Double down on believers only. Week 7-8: Drive to term sheets. Track everything: • Response rates • Meeting conversion • Speed of follow-up • Quality of questions Fast no > slow maybe. The Position of Strength: My companies that raised successfully all had one thing in common: They didn't need the money yet. They raised with 6-12 months runway, not 2-3. They had leverage. They could walk away. Desperation is visible in every pitch. Confidence comes from options. The Simple Framework: Think of fundraising like dating. Wide funnel, quick qualification, then depth with the right matches. The investor who's excited after meeting one? That's your champion. The one who needs 5 meetings to "get comfortable"? They're just not that into you. My advice to every founder: Start with 100 names. Expect 10 first meetings. Fight for 1-2 term sheets. Those aren't depressing odds. That's reality. Plan accordingly. Of course, it also helps having your existing investors champion you! #Fundraising #Startups #VentureCapital #FounderAdvice #SeedFunding

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Hey European VCs, stop sharing the latest A16Z deep tech think piece. Start writing checks instead. Too many people try to be thought leaders of a European industrial revolution. Too few actually back it with capital. It's time to unlearn the last 15 years because deep tech startups don't look like the typical B2B SaaS. 1. Founders aren’t most likely WHU grads with polished decks; they’re highly passionate researchers and scientists. 2. These things take time. Don’t even think about quick revenues. 3. These aren’t GTM challenges. It's about solving hard technology problems. Venture used to be about funding deep tech. In the past, the big VC wins came from science and engineering breakthroughs. Only in the internet/SaaS wave did it shift to more lightweight, fast-to-market plays. Europe doesn’t need more essays. It needs more checks.

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If you are an early-stage startup founder looking to raise money from VCs, then this guide on how VCs decide to take a first meeting would be super useful. This guide includes: 1. Team – How does a VC know your team is excellent? 2. Company – Describe what your company does in one sentence 3. Market – What is the market opportunity and why will it be big? 4. Business model – How do you make money? Who pays? What are the margins? 5. Geography – Where is the team based? 6. Number of Employees – How big is your team? 7. Timing – Why is now the right timing for your company? 8. Traction – What are the traction metrics that show what you have achieved so far? 9. Fundraising – How much do you want to raise? 10. Fundraising History – Who have you raised from, how much, and when? 11. Fit – What about this particular investor (or firm) makes you interested in meeting with them? 12. Referrer – Who introduced you to the VC? For a complete list and more details on each factor, take a look at the guide below. Credit: NFX ~~~~~ ♻️ Found this helpful? Repost it so your network can learn from it, too. And follow me, Fazlur Shah, for more content like this. #startups #entrepreneurship #venturecapital #investing

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We had Tom Charman (Co-founder at Blok) on Ventures, Fresh out of stealth having raised $7.5m He explains why their star-studded team is building Blok "A lot of companies aren't particularly good at predicting how their customers are going to behave, but more importantly, they're not necessarily targeting the right customer." "Most companies will optimise for short-term benefit as opposed to long-term gain - what's actually happening is in the long term they're shooting themselves in the foot." "Nine in ten experiments are failing, it's taking too long to run experiments, teams don't know which experiments to run." "If we're going to move towards a world where it's multimodal interfaces with lots of different UI, knowing what to generate for who and when is going to become significantly more difficult." You can watch the full conversation by searching "Tom Charman, Co-founder @ blok: How We're Predicting User Behaviour Before Writing Code"

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In SaaS, reaching $100M ARR once took seven years. In AI, some companies are getting there in just 18 months. But speed ≠ strength. Bessemer Venture Partners’ studied 20 high-growth, durable AI startups, including breakouts Perplexity, Abridge, and Cursor and they explained two very different archetypes:   𝗦𝘂𝗽𝗲𝗿𝗻𝗼𝘃𝗮𝘀 — sprinting to ~$100M ARR in just 18 months, often with thin wrappers around foundation models, ~25% gross margins, and fragile retention. 𝗦𝗵𝗼𝗼𝘁𝗶𝗻𝗴 𝗦𝘁𝗮𝗿𝘀 — reaching ~$100M ARR in ~4 years, but with stronger ~60% margins, healthier retention, and customer love that compounds.   Both are extraordinary compared to the SaaS benchmarks we grew up on. But only one pattern compounds into staying power.   And this distinction matters far beyond AI. In semiconductors, in biotech, in space, we’ve seen the same pattern. The companies that rise too fast on novelty often burn out. The ones that endure embed into workflows, become infrastructure, and build trust around resilience.   This tells us: → Hypergrowth is possible in any frontier wave. → Endurance depends on integration, defensibility, and context. → The real moats come from compounding — memory in AI, regulatory credibility in biotech, industrial integration in advanced manufacturing.   For founders and investors, the question isn’t just “How fast can it grow?”   It’s: “Will this growth compound into defensibility?”   Because in every wave of breakthrough innovation, the Supernovas prove markets can ignite. But it’s the Shooting Stars that redefine industries.   #Venturecapital #AI #Deeptech #Startups   Follow us at APEX Ventures and subscribe to our newsletter for exclusive content on groundbreaking Deep Tech startups: 🔗 https://t2m.io/EV2qHQuo

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Funding Friday 🤑 – how much to raise? One of the most strategic trade-offs a founder might think about is how much capital to raise for his/her company. If you raise too little, your runway is too short to show a significant value jump and you risk being unable to raise a next round: you could end up ‘between shore and ship’ as we say in Dutch (‘to fall between two stools’ is the English saying apparently). You can also raise too much. The direct effect is dilution: founders will own less of their company. The more you raise, the higher the dilution. In addition: the higher the valuation, the higher the expectation. If you haven’t found product market fit yet, I’m most often in favour of raising what you need instead of what you can spend. But let’s discuss the indirect or long-term effect of raising too much capital. VCs will likely get preferred shares with liquidation preferences. In short this means that if there will be an exit, they will get their money first OR they can convert to common shares if that gives them a higher return. Liquidation preferences serve as downside risk protection for investors. If a company does well, but not great, and a strategic buyer will acquire it, the founders might end up with no or little cash. That’s because they are at the bottom of the liquidation stack. Every new investors wants a spot on top on the stack, pushing down founders and early-stage investors. I notice many founders care about dilution, and think about keeping dilution as low as low as possible a lot, for example by raising at a as high valuation as possible. And of course this makes sense. But at the same time, I think it’s equally important to think about how much capital to raise. This means that you should not only think about how much money you need to execute your plan for the next ~18 months, but also what the effect of this is on your (future) liquidation stack. Every euro you will raise, you’ll have to earn it back in exit proceeds before you will profit from an exit as a founder! Do you want more insights in how to fundraise? Consider reading the Startup Funding Book that Sjoerd Mol and I wrote! (for availability: see comments)

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