Begin Capital

Large corporations killed more startups than we think – and I’m not talking about acquisitions. The usual suspects for what makes a startup go bust are factors like market timing, co-founder issues, or lack of funding. But there's one killer we rarely mention – large enterprises. And how do they kill startups? By flirting with them too early. I've seen it again and again. A large enterprise starts "engaging" with a startup that isn't ready for enterprise sales yet. They explore, they hold meetings, they talk about pilots, requirements, and integrations, and it all drags on for months or more. From the enterprise side, it's just research. They can afford to take their time and explore their options. But from the startup side, it can be deadly. Founders get excited. "We're already talking to Barclays," they say. "We've got a pilot coming with a Fortune 500." It looks great on a slide. It sounds even better to investors. But the truth is, these deals rarely close. Most likely, these firms are just exploring. Without bad intentions, but also without a feeling of urgency. Kind of like swiping on Tinder. Unfortunately, I've seen many startups build their entire roadmap around that one promised million-dollar contract. They bet the company on it – tailor product roadmap, allocate resources, postpone fundraising. And when the enterprise keeps "playing" for another year or two without committing, the startup runs out of time, and out of cash. If you're a founder, ask yourself: do you have two years of runway to keep the lights on while they decide? If not, focus differently. You can start by demonstrating traction with smaller clients who can move faster. That will help you raise your next round even if the big deal never lands. And second: diversification, diversification, diversification. Don't worry about talking to five enterprises at once. They won't all close – and they surely won’t close all at the same time. If you're lucky, one will.

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Winning every deal? Spoiler alert, you’re actually losing. The other day, a partner from another fund told me with a good deal of pride that in the past two years, they won every single deal they wanted to participate in. Their deck even had a slide bragging: 100% of the founders we offered money to chose us. Sounds great on paper, right? But in reality, this is pretty bad news. If you’re winning every deal, it probably means two things: - Your pipeline is weak. All good deals are competitive. - You’re overpaying. LPs might love your deployment speed, but they’ll hate the returns. I’ll be honest. Our win rate is also quite high. Joël insists it’s because we’re just that great! And while he may have a glimmer of truth there, self-awareness and accountability are all part of our value prop, so we’ve started tracking two extra metrics: 1) Founder rejections. For emerging managers, this number should be higher than the wins. It means your pipeline is healthy, and that you’re chasing the right kind of deals, not just the easy ones. 2) Series B follow-ups. What percentage of companies that later raised from the world’s top 30 funds did we speak to at pre-seed or seed? If that number is under 25% in our focus areas, we’re not doing our job. In other words, it’s perfectly fine to lose a deal to a tier-1 fund that invests big. It’s not fine to find out about that deal from TechCrunch. At the end of the day, every emerging VC should ask one simple question: Why do they want money from us? Is it because we’ve known them for years, helped early, and genuinely understand the market, or because a hundred other funds already said no? Hidden gems are great additions to a portfolio. But if your entire portfolio is made of “hidden gems,” sorry to say, but you’re not a genius, you’re in denial. 

September might seem early to discuss year-end results, but why wait if we have so much to share? For me, this post is also an opportunity to say “thank you” to the amazing founders who were bold and reckless enough to share their journey with Begin Capital. I can’t say it’s been easy, or that everything happened in line with pitch deck promises, but what a ride so far! Here’s the highlights reel from our past year: 1. Fundraise Up raised a $70M round led by Summit Partners. Peter, Yurii, and Anton have always been an inspiration to us, proving that with hard work, dedication, and love for your product, you can build a huge and highly successful business in any industry. Even in the charity space. 2. Codesphere raised over $30M from Creandum and HOF Capital. We always knew that Elias was a tech genius. But it’s been so cool to see more and more massive enterprise customers realise that as well, and even better to watch them line up to move their compute to Codesphere! 3. Native Teams gets the prize of the fastest-growing company in our portfolio. Quoting exact words from Jack: “It seems that Q3 is going bonanza". And this CEO update is better than any detailed board deck. First one to hit unicorn status? :-) 4. Runware closed a $13M round led by Insight Partners. Flaviu has raised the bar for “hard work” to an unattainable level. With him, “being on 24/7” is not just a generic expression, but the absolute truth of the matter. And this is the only way to win in the AI race, where the status quo changes daily.  5. Dwelly has taken the European tech ecosystem by storm, boldly creating a new asset class of AI-enabled rollups. In just two years, Ilia and Dan proved that software still has a lot to eat in this world. And Dwelly will surely take out a huuuge bite :-) 6. All3 may have just joined the Begin family, but has already become the star of any portfolio discussion. The team convinced us to invest with just three sentences: “We’ve developed robots that can build houses. ALL3 will be a trillion-dollar company. You cannot ride our robots.” (special points to whoever guesses the Begin partner who inspired the third line). And after many years with Rodion and Slava, here’s what I know – few other people would do the impossible to make the future a reality. We still have a couple of months left in 2025, and I can’t wait to see what Q4 brings. As always, a huge shout-out to fellow pirates Alex, Joël and Saagar for being such a crucial part of the adventure. Here’s to an even wilder finish to the year. P.S. We are looking for a new rock star to join our squad! Please apply at [email protected]. 

The VC-Founder Feedback Paradox 90% of venture rejections aren’t really about the market or the stage the company is at. They’re about the founder. Unfortunately, 99% of investors will never say it out loud. We’re not perfect at this either, but we’ve been making a real effort to be more direct, even if it hasn’t always worked out as anticipated. Here’s a fresh example. For context, one thing we watch closely is velocity: how quickly founders move without compromising a high level of quality. Not long ago, we passed on a deal, and we told the team exactly why. We said, “Your product is strong and the market is solid, but with your current pace, we’d be bad partners. We introduced you to a client, and you took three days to reply. We tried to meet over the weekend to move this deal forward, but you were having a siesta. Your competitors will crush you at that speed.” The founder was quite offended and later started trash-talking us. I find this to be quite the paradox. In theory, quick, honest feedback should help everyone. Founders gain as much from knowing why a VC decided not to move forward as VCs do from knowing why a founder chose another investor. But instead, here’s what normally happens: - If there is no fit, a VC will usually understand that within the first fifteen minutes of a call. However, nine times out of ten they will proceed to ask scripted questions anyway, without even listening to the answers.  - Even when the odds stand at 90%  “no,” they still request the data room, the model, and the cap table.  - Once this is received, an analyst, always eager to impress, sends tens more low-value questions, e.g., Can we do a cohort analysis to better understand your churn in month six?  -The founder spends another three or four hours before the fund goes silent for weeks and finally sends a polite rejection after this limbo. When the founder asks why, they hear the same stock phrases: -“We don’t invest pre-revenue.” (Haha, couldn’t you have said this in the first 15 minutes?) -“The market isn’t right.” (And you didn’t know that before you decided to schedule the call?)  -Or, the dreadful, “come back at Series A.” (This one hits especially hard when in a week you see the fund announcing another pre-seed deal in the same industry.) Everyone in venture capital has lived this, because most investors will never say the simple truth. The problem isn’t the market. The problem is you. And it’s a shame they don’t, because life would be a lot easier for everyone otherwise.