2023: Aftermath of the shockwaves?
How did a year of trouble affect our portfolio?
🖖 Welcome to Closing The Gap by JVH Ventures. After founding multiple companies, investing directly in 50+ startups and 10+ funds, we realized that a common understanding between founders, angels, and VCs is often missing.
We want to close this gap and combine perspectives from all sides.
Our goal is to look behind closed curtains and tell the honest truth.
Follow along to gain insights from all directions!
As the year almost comes to an end, it’s time for us to draw a bottom line and take a look at how the portfolio developed.
By the end of the year, we have 38 active portfolio companies, including new 9 investments in 2023.
While we almost entirely do early-stage deals, the portfolio matured towards mid and late stage companies over the course of 7 years of investments. Until today, half of the portfolio companies had valuations above €10mn. Actually late stage companies with valuations above €25mn, already make up 34%. All portfolio companies combined feature an enterprise value of more than €4.5bn.
Our sweet spot remains to be on software and hence almost half of the portfolio consists of SaaS companies, with Health (20%) and Education (8%) coming in second and third respectively.
Also, our distribution by geography emphasizes our focus on Germany, with more than 3/4 of all companies residing here. While we also invested heterogeneously in other European countries, the USA features 10% of all startups.
Last time we looked into how deal making developed over the course of 2023. This time, we take a look into our portfolio companies and how it went for them.
Difficult times indeed
After years of global health, political, and economic crises, including rising interest rates, the outlook for the startup community wasn’t very positive at the beginning of the year. And as expected, the funding climate for VCs cooled down. Many investors acted with more caution and hesitated to do deals for quite some time. VCs for themselves also started to face increasing difficulties to raise their own funds, as other investment classes got more attractive with higher interest rates again.
Many of our portfolio companies saw the consequences of the arising crisis early enough in 2022 and adapted their plans accordingly. They focussed on achieving profitability or at least longer runways, in order to be less depended on VC money. While cost-cutting involved many difficult and hard decisions, especially of letting people go, it also meant sacrificing growth and speed.
However, these portfolio companies were also tackling problems with a new form of creativity, which brought them additional freedom in their decision-making, beyond fundraising metrics. Lucky for us, most companies in dire situations achieved some form of independence and are either default alive or close to this state. With a now more or less healthy status, we have the best of hope for them to continue their growth (and fundraising) journey in 2024 from a position of strengths.
Unfortunately, we do have to mention that two companies failed this year. However, both failures can not be attributed to the crisis itself, which rather worked as a catalyst here. They failed to achieve product-market-fit and/or operated in markets that were not attractive enough for follow-on investments of VCs.
Or maybe not too bad after all?
On the other hand, we are lucky that many of our portfolio companies excelled during these difficult times. 1/4 of our portfolio companies successfully raised a round in 2023 (excluding new investments that we did during the year).
In total, these companies raised follow-on rounds of more than €50 millions combined, in these difficult times. And we observed a pattern similar to what we saw in our own early-stage rounds: Great ventures still get funding easily, and these rounds get even more competitive.
What most of these startups had in common, was either a clear growth opportunity, beyond finding a successful product-market-fit. Or having a vision that perfectly aligned with some VC’s core thesis. All the big funding rounds within our portfolio featured founders who are experienced and great at fundraising from our point of view.
So there definitely is some appetite in the VC market to allocate money, but good opportunities seem to be rare or VCs became increasingly more picky about their investments.
We even had some exit this year, with Evermood successfully selling their company to a strategic investor. Additionally, we recorded a merger with VillaCircle, joining forces with MYNE.
Our bottom line and outlook for 2024
We are incredibly thankful to work with so many inspiring entrepreneurs and be a small part of their journey in building new ventures. Beyond supporting our portfolio founders, we are glad that we got to know so many exciting people all around the ecosystem.
The investor journey is also an entrepreneurial one for us. In 2023, we tried a lot of new things and tested our way forward.
We launched a content campaign with the goal to bring the ecosystem closer together (yep, you are reading it right now). We started to take deal sharing seriously and initiated our deal sharing newsletter. In addition, we worked a lot on our internal processes. We developed tools like our Return Calculator, Portfolio Simulator and iterated along our selection process.
Investing feels just like founding in a way, as it’s not just about the money, but about building a successful (investment) company on its own.
We are already looking forward to next year and are keen to step up our own game once again. Therefore, we have many new, exciting initiatives planned for 2024 and can’t wait to see how they work out.
Thank you for reading! If you liked, feel free to share it with someone else who could profit from it - angels, founders, VCs, anyone :)
PS: We are always happy to answer your questions or take on topics you want to hear about to close the gap! Just let us know.