Beyond the Power Law: Why VCs Need to Prioritise Exits - Introducing 23mile
Sometime last week, a friend asked me what the strategy is to grow the new business I was talking about and without thinking twice, I said it was "people". That mindset wasn't enough to prepare me for what happened over the past 24 hours. By sheer luck, I am making this announcement a day after my very April Fool's joke about selling Caena went viral. Although some of my contacts were pissed, the majority took it in their stride. The overwhelming sentiment can be summarised by this comment from Carol Constant
look at the all comments here and on WhatsApp: Everyone believed you made this sale. Why? Because it’s totally feasible. What a boost of confidence! Everyone believes in you. Congratulations 🙌 Now to finish the deed💲.
It's the perfect start I could only dream of as I embark on the next phase of my journey by cofounding 23mile Capital. 23mile is a turnaround fund for venture backed startups who need capital and support to transit from hyper-growth to profitability. It is built upon my diverse experience over the past 21 years as a leverage finance banker, tech startup founder, and consultant to PE and VC firms.
Yet, this launch is coming over 18 months after I started talking about exits, zombie startups and the need for a change in the typical power law focus of venture capital. Concentrating efforts on a few standout investments and allowing the rest to wither and die off.
I’ve written several articles about some of the emerging themes in venture:
Zombies – startups which raised tons of venture capital but now are stuck. Their metrics are far short of what is now expected of startups at their stage, meaning they are unlikely to ever raise another round.
Lack of exits: the IPO and M&A markets are way down from previous years. A downstream effect of startups having raised at inflated valuations and at onerous terms.
Ghost VCs – Funds which ‘YOLOed’ LP funds into startups at inflated valuations between 2019 and 2021 and now can’t raise future Funds because they haven’t made any distributions.
But I had doubts which I considered very valid reasons to play things safe. The two biggest where:
Who am I to pursue an innovative approach in a very closed, hard-to-crack industry?
Why would I take on so much risk while still smarting from my experience with the startup?
“A ship in harbour is safe, but that is not what ships are built for" - John A. Shedd”
But one thought overrode the doubts – if it ends up in a few years that I was right about the direction the venture industry is headed, would I be happy at my role today? Basically identifying the issues and waiting for others to do what needs to be done.
No! I wouldn’t be happy at all
So here’s me jumping right into it. There are solutions to the current challenges facing VC-backed companies and their investors and I’m putting my hand up to be at the forefront of delivering those solutions.
23mile is unique because it is a blend of M&A advisory, capital and restructuring support for startups. We will also pursue a true partnership, creating outcomes that ensures all parties - LPs, VCs, Founders and our investors - can win or at least achieve better results than without our involvement.
For full transparency, I will continue to work on Caena, though the bulk of my efforts will be geared towards growing 23mile. I am still passionate about financial literacy for entrepreneurs and I am lucky enough to have a few enterprise partnerships to continue to pursue that mission. The tech platform will evolve towards achieving some sort of exit that at least returns capital that went into building it out.
In short, the April Fool's joke wasn't some random thought, it's the type of outcome I've been thinking about non stop for the past few months. For Caena and for the clients we are working with at 23miles. I can't wait to put the template to use in announcing exits for our clients over the next few months.
See our announcement here for more details
It promises to be an exciting journey, if you'd like to get involved in any way, please get in touch. Also feel free to shoot any questions, I still have a lot myself but will try my best to answer.
Cheers to new beginnings!
And in what I see as another perfect alignment, I started 23mile on the first day of Spring. Seeing cherries bloom last week further warmed my heart so I'll end with with this beautiful image.
Battersea Park, London
and this:
"No winter lasts forever; no spring skips its turn." — Hal Borland
