Capital Chronicles #29

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…

Analyzing sales pipeline is vital for forecasting future revenue growth (David Sacks): Nine pipeline metrics matter, categorized into three main areas: Pipeline Generation (Opportunities Created, Pipeline Value Created, Win Rate), Pipeline Conversion (Sales Cycle Length, Cohorted Win Rates, Stage Conversion Rate), and Active Pipeline (Open Pipeline by Close Date, Weighted Pipeline, Pipeline Waterfall). Tracking these metrics will improve the accuracy of revenue forecasts and the effectiveness of sales go-to-market efforts.

Start tracking and analyzing the sales pipeline metrics that matter to better quantify revenue forecasts.

Bonus: Explore the SaaSGrid metrics library paired with the article. It includes detailed definitions and benchmarks for all the essential SaaS metrics.

🧭 On venture investing…

Look beyond traditional business model analysis and consider the "right side of the fan” (a16z): David George, head of a16z Growth fund, shares his heuristics for growth-stage investments: (1) product and distribution uniqueness is critical, often more important than traditional business model analysis; (2) pay attention to the "right side of the fan" - the potential for outsized success and market expansion; (3) understanding long-term market structure is crucial for identifying potential technology market leaders with power-law dynamics.

Improve venture investing frameworks with David George’s full complement of investing heuristics.

📖 Learning resource…

Data science has become a must-have for product development, not an afterthought (Sequoia): as products generate more data than ever, companies must leverage this information to drive decisions and growth. Sequoia's "Data-Informed Product Building" series covers various topics, from measuring product health and analyzing metric changes to understanding engagement and building world-class data science teams. The series is a comprehensive guide for entrepreneurs and investors on product growth and world-class data science.

Learn how to apply data science and conduct useful product analysis.

📊 Market insight…

Conditions are improving, but public and private markets continue to bifurcate (Sapphire Ventures): the latest Sapphire Ventures market memo paints a mixed picture, with public software stocks rebounding in Q3 2024, total quarterly VC funding falling short of $80B for the first time since Q2 2020, and AI-focused companies continuing to attract large funding rounds (6 of the top 10 overall deals in Q3), including the largest seed round in venture history ($1B for Ilya Sutskever’s Safe Superintelligence).

Gain insight into public and private market activity with Sapphire Ventures’ latest market update.

🎲Lucky dip essential reads…

• Why Careful Chartering is the Key to Great Strategy Choice

• 5 Pros, and 5 Cons, to Taking a VC Round at a Very High Valuation

• A Simple Rule For When To Consider Selling Your Startup

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