2022 Wrap-Up: Lessons learned, portfolio highlights & more
Founders Factory Startup Bulletin #20
Welcome to the Founders Factory Startup Bulletin—“Created for founders, by founders”.
Each month, we bring you a round-up of startup and investment stories, key learnings from founders, and insights from the Founders Factory team.
Special shout-out to the 3066 new subscribers who joined us in 2022! Be part of our 16,277-strong community of founders, investors, and startup enthusiasts—subscribe here:
This time last year, we wrote about the futility of making predictions about the year ahead. If we had, it’s likely we would have proclaimed the ‘Golden Age of Venture’, predicting huge fundraises, dozens more unicorn-ifications, and numerous long-awaited tech IPOs.
We certainly wouldn’t have expected what 2022 turned out to be—one of the toughest years for tech startups on record. Widespread layoffs, valuation ‘down rounds’, and even the collapse of one of the most sought after companies on the market.
So what did we really learn about being a founder this year? In this special 2022 Wrap-Up Startup Bulletin, we share some of the biggest learnings we’ve received this year from early stage entrepreneurs to unicorn founders, top tier investors, and of course, our expert Operations Team.
Here’s what you can read about in this month’s newsletter:
💡What we learned in 2022…
…about leadership
Transparency is non-negotiable. Pete Flint, founder of Trulia and general partner at NFX, believes in sharing all as a founder. The biggest errors he made as a founder were when he hid true figures from his team, and seeing the huge disappointment in his team when the truth came out. “From that point onward, I was a complete open book. This transparency had a transformative impact on the company.“
Know when to be humble, and when to be stubborn. There’s no objective way of doing things as a founder. Much of the time, you have to listen to advice and respond to feedback. But often, you have to know when to be stubborn and stick to your guns. Shona Chalmers, co-founder of DIY startup Roomix, says it's a key competence to know when to do what.
Visibility can be your superpower. It’s easy to be cynical about founders who overshare on LinkedIn: but for some, having a very public voice can really play to your strengths. Timothy Armoo, co-founder of Fanbytes (who sold to Brainlabs earlier this year), has owned public speaking to give him and his business a competitive advantage
…about building your product
Understand the value of network effects. They’re found in some of the world’s most successful companies, they come in many shapes and forms, and have their own challenges. Get it right, and network effects build a powerful moat around your business. Serial entrepreneur Dan Cobley revealed his tips for building network effects and overcoming their challenges.
Be comfortable with ‘technical debt’. This is a crucial mindset for technical founders/CTOs—”Don’t spend your time poring over every detail: you need to build things quickly, without testing it thoroughly, even if it doesn’t feel particularly sustainable,” says Paul Egan, Founders Factory CTO. You can address those challenges further down the line once you have a product and customers.
Build in the open…Animoca CEO Robby Yung believes there’s value in building openly in front of your customers, releasing your product and content in real time> This is particularly important in Web3 and gaming, where user advocacy is everything.
…or build behind closed doors. Conversely, Shop Circle’s founders saw great value in building in stealth mode—away from external influence of what their competitors were doing, they could focus purely on the product they wanted to build. It also created a buzz in the team in the early days.
…about fundraising
Look for investors who offer you more than money. As a founder-turned-investor, Pete Flint understands both sides of the table, and knows what makes a good partnership. “Being a founder can be lonely, so you want an investor who knows that not everything goes to plan, and is able to provide support and counsel on the decisions to make when you face inevitable challenges.”
Financial models are a compelling tool for fundraising. Many view financial modelling as a bit of a chore, but it’s actually one of the most important things you do as a founder. When speaking to investors, it shows you understand the future of your business—particularly when it comes to reaching profitability (more on that later)
For early stage businesses, fundraising is all about the team. Before you have any traction, you have to highlight indicators of future success to investors. Shop Circle founders Gian & Luca credit the quality of their team for their fundraising success while in stealth mode—”Investors want to put their money behind people that they know can build successful businesses.”
…about growing your business
Path to profitability has never been more important. FF fintech sector director Olly Betts told us that, where once ‘growth at all costs’ might have ruled the roost, founders have to flip to a profitability mindset. This is not just for the financial health of the business: increasingly cautious investors want to see how and when you plan to turn a profit
Nail your unit economics. “Be relentless in understanding and optimising your unit economics, so that any investment in growth you make has a fast and positive payback,” says Henry Lane Fox, Founders Factory CEO.
Don’t forget your existing customers. Founders often get too focused on acquiring new customers, and forget how important it is to nurture your existing customers. Pay attention to creating fantastic experiences for your customers, perfecting your messaging to keep them engaged, and understand how to make their experience better. If you nail this, your customers can become your best advocate, a force you can tap into to grow and even fund your business—as Good Energy founder Juliet Davenport discovered in the early days of her business.
…about the hardest part of being a founder
You carry a huge responsibility. Ultimately, the buck stops with you—the majority of decisions land squarely with the founding team. This can be overwhelming, and requires an adeptness at switching mindsets for different parts of the business. But ultimately it shows two things—one, the value in building with people you trust and enjoy working with, and two, the importance in being passionate about what you are building.
💥 Founders Factory: A year in numbers
43 startups supported this year in our Accelerator—including 14 spun out from our Venture Studio
13 businesses currently under construction in our Venture Studio
$720 million—our current global fundraising total across our portfolio. 2022’s notable raises include Shop Circle ($65m), Perlego ($50m), Storyblok ($47m), and Peptone ($40m)
4 exits in our portfolio—Flourish acquired by Canva, Fanbytes acquired by Brainlabs, Tapkit acquired by Noissue, Blueprint acquired by Klaviyo
4 new corporate partners: Deutsche Telekom and its tech incubator hubraum; Pico, Asia’s leading brand activation group; Woven Science, our partner for psychedelics and mental wellness; and our soon-to-be-announced partner in Italy.
3 new international hubs, expanding into Germany, Italy, Singapore
1 metaverse merger—portfolio company Admix acquired Landvault, merging under the name Landvault to become the biggest builder in the metaverse
📚 Best of the rest: 2022 summaries & 2023 predictions
Best Books of 2022: Technology (Financial Times)
2022 Predictions Review (Scott Galloway)
The Big Technology Awards 2022 (Alex Kantrowitz @ Big Technology)
8 Fintech Predictions for 2023 (Twitter thread)
Big Ideas in Tech for 2023 (a16z)
2023 Predictions from 40 Founders, Investors, and Operators (Digital Native)
This is our last newsletter of the year. We’ll be back after Christmas and New Year with more monthly learnings from founders and our Operations team.
See you next year 👋