PS#050: Deal Newsletters – A Gold Mine of Opportunities
Today, I’m going to take some time to break down one of the most popular VC deal newsletters – Axios Pro Rata.
This is a great newsletter if you want to keep your pulse on the general activity in the venture capital world. It includes…
Market commentary
VC deal announcements
M&A, IPOs, & other liquidity events
Promotions, lateral moves, and new hires
It’s a lot of great information.
With that being said, I’m going to walk through some of the things that I typically look for as an investor as well as how I used this newsletter to spot opportunities when I was an aspiring investor.
Alright, let’s get started.
VC deal announcements.
We’ll start with VC deal announcements.
As I mentioned in the previous issue, deal newsletters can provide a wealth of information. So much so, I’ve used them to build my own databases when I didn’t have access to any of the paid platforms (e.g., Pitchbook, Crunchbase, etc.).
Below, I’ve pulled out one of the recent VC deal sections from the Axios Pro Rata newsletter. In the image, I’ve highlighted some of the key details we discussed.
Over time, if you collect this information, you’ll have a database that will allow you to really show off your venture skill set, including…
Round details (size, stage, etc.)
Total amount of fundraising in specific spaces
Investors (potential co-investors) who are active in the space
Future opportunities (i.e., startups that may raise a Series A in 18 months)
This is really, really valuable information.
Investors will use this information to think through their fund’s investment strategy…
Where should they invest their capital?
Who else is investing there? Should they work with them? Why?
What startups should be prioritized? What have they raised? When will they raise again?
All of this data feeds into making investments and ultimately building a fund.
Collecting this information may be a simple process, but it can set you apart as an aspiring or new investor.
M&A, IPOs, & other liquidity events.
The Axios Pro Rata newsletter also provides some other valuable information around exit events, such as M&A, secondaries, etc.
These events can provide a lot of great information about what an exit actually looks like in this market or specific investment area. You’ll learn a few things…
Who’s buying?
What are they paying?
What’s attractive to acquirers?
In the image above, you’ll notice that we can pull out a few things from this newsletter…
Active PE firms & strategic acquirers
Total capital raised & investors who participated
Potential deal terms (usually included in the articles)
In the top right, you’ll notice I also pointed out IPOs (or Initial Public Offerings).
Now, I want to be clear about something – an IPO (or Initial Public Offering) is NOT an exit event. It’s actually another financing (or investment round). However, post an IPO, when a company’s shares are trading in the public market, investors can sell their positions, which would qualify as an exit event.
The reason I’ve included it in this section is because of the information that is provided. When a company does an IPO, it files an S-1 (or other security registration statement). These statements provide a TON of great information about startups heading towards an exit, including market commentary, financial information, business intelligence, product details & vision, etc. All of this information can help you understand what a successful startup in this space (i.e., one that can exit for a significant amount) looks like in actuality (check out Uber’s S-1 here).
This work will help you paint a clear picture of how a startup in a given space could succeed. As investors, we want to have an idea of how we will eventually get liquidity. Without liquidity and legitimate cash distributions, the “paper gains” just don’t mean anything.
Promotions, lateral moves, & new hires.
If you’re a new or aspiring investor and you’re looking for a new role, these newsletters again provide some great information.
This newsletter provides two super useful bits of information…
Fundraising announcements (for VC firms)
Personnel moves from new & established firms
Take a look at the example below…
When VC firms have raised new funds, they are often also hiring. The new slate of management fees (and typically a larger fund size) gives them an opportunity to expand their team. Even better, if you see ones that are currently fundraising but have not completed the raise, you might be able to get ahead of the hiring process altogether.
Personnel moves can provide similar indications. If a fund is hiring new people, they may be signaling a few things…
Increased activity
Need for additional hires
Building out new investment areas
Again, this may help you get ahead of any types of hiring processes. As an example, if there are new senior investors moving to a firm, they will likely want to bring in some junior resources but haven’t started the hiring process yet. Another example might be that they are building out an entirely new investment space, such as renewable energy, and are building out a new team.
In either case, this information can help you stay ahead of the hiring curve.
As you can see from the issue today, deal newsletters contain a whole lot of valuable information. I highly recommend leveraging them as you build your career in the venture ecosystem.
