How a VC Fund May Shut Down Early

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Venture Capital funds typically run on ten-year cycles.

There are some conditions in which the VC fund may shut down early.

Here’s a list of reasons:

Key persons -- the Limited Partners invested in a fund that has a certain number of key persons.

If the number falls off, then the fund may suspend activities until a replacement is found.

The fund managers are found to be liable for fraud or gross negligence.

In this case, the fund may shut down and return the funds to the Limited Partners.

In other cases, the fund may replace the managers and continue on.

Limited Partners want to shut down the fund -- the market may have changed, or the investment thesis may no longer be viable.

In this case, the Limited Partners could demand their funds returned.

Alternatively, the Limited Partners could vote to fund a new investment thesis.

The VC fund managers may be found to have a conflict of interest.

The Limited Partners could demand the return of their uninvested capital.

Consider these points in running or investing in a VC fund.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

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Lifecycle of the VC Fund

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Venture Capital funds typically run on ten-year cycles.

At a high level, the VC fund takes in capital from the Limited Partners and deploys the first half of the funds in years 1 to 3.

The follow-on rounds are deployed in years 4 to 5.

The fund collects returns in years 6 to 10.

There may be early failures, in which case the allocated funds for the follow-on round are still available.

The funds not yet deployed or allocated are called ‘dry powder’.

This is the amount of funds available to deploy for new companies.

Investments made during the latter half of the fund are made in later-stage companies, which can achieve an exit faster.

Some portfolio companies fail to exit during the ten-year window.

The team must decide whether to delay the exit to gain a larger return or sell the company to remove it from the books.

During the latter half of the life cycle, the VC team helps the companies grow and then achieve an exit.

This is where the VC’s network comes in.

A good fit for a VC is a company in which they can help find additional team members as well as follow-on funding.

Consider the life cycle of the VC fund and how it impacts the time spent by the VC team.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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On this episode of Investor Connect, we welcomed Mike Green and Nicholas, the co-founders behind Grid Matrix, a cutting-edge infrastructure intelligence company turning city sensors into powerful tools for real-time decision-making. Mike walked us through how Grid Matrix is using AI and computer vision to help large-scale operators—like airports, ports, and municipalities—optimize operations by turning existing infrastructure, such as legacy cameras, into smart, scalable data networks. No new hardware needed. With $550K in 2024 revenue and nine paying customers including the Port Authority of New York and New Jersey and Dallas-Fort Worth Airport, the company is already proving traction and real-world value.

Mike highlighted how Grid Matrix is tackling a trillion-dollar civil engineering market, offering governments and infrastructure managers the ability to answer questions they couldn't before: curbside management, emissions tracking, pedestrian safety, cargo visibility, and more. Instead of installing costly new systems, their platform plugs into what’s already there—turning passive sensors into active intelligence. Their "crawl, walk, run" model starts with pilot deployments and quickly scales as trust and data value build, and their 100% customer retention rate is a powerful signal of product stickiness and strong fit in a space known for long sales cycles.

Backed by 8VC and with a priced round at a $9.2M pre-money valuation, Grid Matrix has already closed $2.2M and is filling the final $1M of this raise. With government interest in smart infrastructure growing and a pipeline of projects and RFPs accelerating, Grid Matrix is well-positioned for expansion. Learn more about the company and the raise at https://www.gridmatrix.com, and to explore funding opportunities with 10 Capital, visit https://www.tencapital.group.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
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How To Answer “What’s Your Timeline?”

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Investors often ask startups raising funding, “What’s your timeline?”

They want to know if the process is so far along that it’s too late for them to join.

They have limited resources and can’t afford to chase a deal that will close before they can complete it.

Investors are also looking for an indication of interest from other investors.

The founder's answer to the question must address these concerns.

Here’s an example response:

We have meetings lined up for the next three weeks.

We’re seeing investors go into diligence.

We have more investors showing interest.

So we hope to wrap up in the next six to eight weeks.

This shows the prospective investor that there’s interest in the deal.

The team has a process for finding investors, pitching them, and closing the investment.

Six to eight weeks is an ideal time for closing, as it gives the investor enough time to run diligence.

More than eight weeks means the investor can procrastinate.

Less than six weeks, and the investor may not have enough time to run their own process.

Show prospective investors that others are interested in the deal and there’s still time to get in.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

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For Investors check out: https://tencapital.group/investor-landing/
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How To Optimize for Efficiency

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In startup fundraising, capital efficiency is a key criteria for investors.

They look to see how efficiently the startup uses capital.

This most often shows up in revenue per employee, cash burn rates, and use of funds.

To achieve higher capital efficiency, focus on setting up systems within the business.

Systems always achieve a higher productivity rate.

Design the work to create a flow process.

Some startups design the work to be resource-efficient.

In this case, each resource, such as a team member, is at full capacity.

The better process is to design the system to provide flow efficiency.

That means the system is optimized for the flow of work rather than the use of each team member.

Determine the core work that must be done and design the team to work in an efficient flow.

Consider the flow of operations in your startup and set up the system so the work gets done in the most efficient manner.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
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Choosing an AI Model for Your Startup

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Artificial intelligence, or AI, is becoming a standard part of every startup's business.

It can be used to improve the startup's operations.

And it can also be used to enhance the startup’s product line.

The startup must choose an AI model that fits their needs.

There are large AI models and there are small AI models.

Large models are provided by deep-pocketed companies with a considerable investment of resources into it.

Large models work well for those who don’t want to build their own.

This avoids having to hire a team of people to build out the model.

Small models are developed in-house and work well for those who want to build their own.

Small models give the startup more control over their data and can be tuned to their requirements.

Those in vertical niches find small models ideal for their application.

For business operations, most startups adopt a large model as they look primarily for operational efficiency.

For product lines, some will choose the small model as it fits better their product and customer application.

Consider how you will use small and large AI models in your startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
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The Burn Multiple

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The burn rate is a key metric for high-growth startups.

This is the amount of cash being spent over and above the cash revenue taken in.

The Burn Multiple is the amount of cash being burned divided by the net revenue.

This metric indicates how fast the money is being spent compared to the growth rate.

For startups that are in high-growth mode, this metric ranges from 1 to 5X.

The lower the multiple, the more efficient the business.

In diligencing a startup, calculate the Burn Multiple to check the capital efficiency.

Most healthy startups run in the 1x to 2x range.

Anything below 1x is outstanding.

Anything above 2x is in the questionable zone.

Anything above 3x is in the danger zone.

The Burn Multiple by itself doesn’t give the full story.

But it does indicate the capital efficiency of the business or the lack thereof.

Calculate the Burn Multiple for your business.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
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The Benefit of Investing in Tranches

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Tranching the investment means breaking it down into tranches or rounds.

Tranche comes from the French word meaning slice.

Investors find it advantageous to break their investment into rounds.

In the angel world, many investors break their allocation to a startup into two rounds.

The first round goes in at the beginning of the investor engagement.

If all goes well, then the investor puts in the second round.

If things don’t go well, then most likely they skip the second round of investment.

This reduces the investor's risk in the deal.

It can also optimize the investor's return.

The startup goes through ups and downs.

During the down cycles, investors with dry powder can find more favorable terms.

It’s a good idea to save some of the allocation for an opportunity that provides better terms for the investor.

As an investor, consider how to tranche your investment into the startup to balance risk and reward.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

_______________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

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