Capital Chronicles #11

Hello there! Welcome to Capital Chronicles, saving you hours every week with ~2-3 minute summarised insights from the best venture builders, investors and capital allocators out there. This week: NFX gives you 10 places to find PMF, Meritech Capital evaluates when to IPO, a comprehensive vertical SaaS resource by the Tidemark team and ICONIQ analyse top engineering organizations in 2024.

As subscriber #TBD, each web link below takes you to:

• A link to the original article (read time: varies)

• Summary / insights / implications per article (read time: 2-3 minutes)

Now, read on for the latest…

🛠️ On venture building…

10 Places to Find Product-Market Fit, written by Gigi from NFX. Gigi offers ten specific areas for entrepreneurs to discover and validate product-market fit.

• Why you should read it: advice on finding product market fit can be quite conceptual in nature. This articles attempts to go one step further and offer a more concrete set of circumstances that lead to a product resonating with its target customer. You can use the list to help spark an idea to test or better understand what to look for.

🧭 On venture investing…

When to IPO in the Age of Uncertainty, by the Meritech Capital team. A discussion on the current state of the IPO market providing insights and benchmarks for private companies looking at the public markets in 2024.

• Why you should read it: there has been a lot of public debate recently on the ‘size’ technology companies need to reach to go public. Meritech decided to run the numbers and found that the narrative around needing $1B of ARR (or close to it) is not true. Rather, it’s about business quality (no surprises there). The rest of the article wraps an excellent framework around the true size, performance, and set of qualitative factors of successful IPOs based on empirical public market data.

📖 Learning resource…

The Vertical SaaS Knowledge Project, developed by the Tidemark team. A comprehensive resource that explores the intricacies of vertical software businesses across market dynamics, business models, growth strategies, and investment considerations.

• Why you should read it: vertical software is having its time in the sun now that most technology pundits believe LLMs are the key to unlocking ‘sneaky big markets’ (see also here for another great take). The Tidemark team has been investing in vertical software before it was cool and has gone to great lengths to develop a playbook for building (and investing in) winning vertical software companies.

📊 Market insight…

ICONIQ brings you the State of Engineering, an analysis of the state of modern-day engineering organizations in 2024. The report focuses on R&D spend, developer experience, DevOps maturity, the impact of AI, and predictions about the future of engineering.

• Why you should read it: there are so few pieces written on the R&D function of an organisation, and the ICONIQ team has gone really deep on analysing the state of engineering, surveying 300 engineering executives and employees working at emerging software companies. The insights from the report are great to keep in your back pocket for understanding what good looks like in today’s market.

🎲Lucky dip essential reads…

• One System of Record to Rule Them All

• Six imperatives for AI-first companies

• Pipeline Cures All

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Have a great week!

Josh