Capital Chronicles #31

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.

As subscriber #TBD, read on for the latest…

🛠️ On venture building…

Adapt GTM strategies to focus on sharp messaging, efficiency, and a blend of AI and human interaction (Emergence Capital): the evolving landscape for SaaS companies is highlighting the need for a refined GTM strategy. Key points include: the necessity for sharp messaging focused on ROI, the drive for efficiency in operations, the integration of AI while preserving the human element, the convergence of product-led and sales-led growth strategies, and the importance of building mission-driven teams with competitive compensation.

Heed Emergence Capital’s five GTM rules for enterprise software survival in today’s competitive environment.

🧭 On venture investing…

Evaluate not just current TAM but also the growth trajectory and ability to expand a market (Mostly Metrics): TAM determines a company's revenue potential using the Price x Quantity (P x Q) framework, focusing on understanding both the pricing strategy and market size. Delineating between TAM, SAM and SOM determines realistic market share capture, while a market’s maturity curve dictates a company’s growth trajectory. Companies like ServiceNow and Datadog exemplify how product expansion can significantly grow TAM over time.

Take the masterclass from Lightspeed Venture Partners’ Sebastian Duesterhoeft, the ‘Michael Jordan of TAM’.

📖 Learning resource…

Annual planning should be tailored to your company's unique needs and market dynamics (First Round Review): for companies to succeed in annual planning, they must customize their approach to fit their unique culture, market, and operational maturity, avoiding generic frameworks and focusing on strategic vision, constraints, and realistic goal setting. Moreover, executives should encourage a shared understanding of success metrics and anticipate market dynamics, ensuring alignment between long-term vision and near-term priorities.

Learn how four top execs from Notion, Stripe, Vanta, Linear, Linktree build effective and realistic strategic plans.

📊 Market insight…

From cloud to AI: it pays to be a market leader (Meritech Capital): SaaS companies have faced challenges, with multiples below historical norms and growth rates not yet recovering. Yet venture funding is stabilising, with AI driving increases in post-ZIRP financing across all stages and new unicorn creation. Most incumbents, startups and investors see AI as an acceleration of cloud software. This is especially true for perceived market leaders, with $100M+ rounds going from 26% of total VC funding in 2023 to 41% in 2024, a 61% increase.

Track the latest public and private software market trends with Meritech’s 2024 market update.

🎲Lucky dip essential reads…

• Why you really need a VP of Sales, not a CRO

• The proper role of the Board Observer

• A collection of 100+ VC GenAI market maps

Share this edition and get access to…

• Full database: 300+ frameworks, market insights and learning resources powering Two by Two. Filterable and growing daily! (1 referral)

• Investment toolkit: tools, templates, and how-to guides to help you evaluate and analyse venture investments. (3 referrals)

Before you go…

• Hit reply and let me know what you liked (or didn’t) about this edition.

• Access the full Two by Two Playbook (subscribers only).

Have a great week!

Josh