In one word, 2023 has turned out to be a year of “transitions”. Transitions to a new business environment with higher interest rates, reductions in valuations, declines in funding, lower revenue growth rates, lower exits, a world-changing AI wave, and maybe avoiding a global recession. The good news is that with new-found stability comes the ability to forecast. Customers of all sizes continue to invest in tech for the foreseeable future, while private and public markets are finding new footing. This sets up for a re-invigorated outlook, so let’s get ready for new growth opportunities in 2024 and beyond! At 3TS we want to take a moment to say Thank You for all the hard work from our portfolio companies, fund investors, co-investors and others that made it possible to continue to make so much forward progress through the challenges of 2023.
Merry Christmas and here’s to a fantastic, healthy New Year in 2024!
The 3TS Team
3TS KEY LEARNINGS
3 Key Learnings
Every year we look back and identify 3 highlight areas that reflect some of the exciting 3TS activities and learnings over the past twelve months.
3 new investments
5 follow-on investments
3 of the Best Learnings
Navigating a New Paradigm for Growth and Funding
Managing through turbulent times: in turbulent times, its best to focus, laser focus. Expect 75% growth to become 50%, 50% to become 30% and so on. Extend runway before growth actually slows. Double down on delighting current customers. Tighten marketing and sales to focus only on ideal new prospects. Move away from selling into discretionary verticals. There won’t be a great recovery in valuations: fundraising multiples are now back in their normal 5-7x long-term 18 year trend. In this phase, it will take twice as much revenue scale and twice as long to raise capital. Adjust plans to this new reality. There’s also room for balanced optimism: breakthrough innovations deliver massive ROI and sell through despite slower demand environments. The curve of tech adoption and digitization is still in early phases. Outlook for software spend increasing 9.3% globally 2023-2025, means there’s a ton of growth opportunity.
Exit Valuations: Where Are We and What Can We Expect
While we don’t have a crystal ball, understanding valuation cycles and the long-term trends, is half the battle. The exit valuation picture over the past 12-18 months isn’t pretty, but seems to have bottomed. 6-8x revenue multiple range for exit valuations is the best indicator going forward. However, speed of revenue growth really, really matters. Companies below 20% revenue growth might reach 2-4x exit multiples. Those growing over 30% still tend to reach 10-11x exit multiples. Seems revenue growth stabilized over the past quarters, so what can you expect as you look to 2024? Top quartile of companies are able to grow 60-70% annually and median companies are growing 25-30% annually.
Getting Ready for the Mid-Year Review
Annual plans are important, but we know things change. A mid-year review right after Q2 ends is one of the best-practices to strategically adjust course mid-way. Add it to your 2024 Board agenda. Blow the dust off the original plan and give it a fresh read. Indemnify everyone, set egos aside, and conduct an objective first-half variance analysis. Resist doing more of the same and establish a second-half game plan with adjusted key objectives and resource re-alignment to new realities. Given the first-half actuals and a game plan, get proactive and start thinking about the next fiscal year’s key targets.
3TS PORTFOLIO & NETWORK NEWS
Boksi, the Influencer Marketing Leader, Raises €7m Led by 3TS
Thrilled to announce that 3TS led Boksi’s follow-on round. Boksi is poised to scale quickly across Europe, including executing a key acquisition in Germany
3TS Co-Leads Jentis’ New €11m Series A to Make Universal Data Capture a Reality
We are excited to partner with Jentis, and new co-investor BrightPixel, to help the company scale andrevolutionize consumer data capture, quality and privacy.
Homecare/ShiftMed Reaches #151, among Top 30% in Deloitte’s 500 Fastest Growing US Companies
Well deserved recognition for the Homecare/ShiftMed team, after growing >900% in three years. We are grateful to continue to help and be part of the Company’s journey.
Safesize has been named ‘Startup of the Year’ during the prestigious Startupper Awards 2023
After rising a new €14m round in Q2 2023, SafeSize certainly stood out at the Startupper Awards, which recognizes some of the best tech companies every year.
MEET THE TEAM
Simon Becica – Fund Operations Manager
Welcome to Simon Becica, who joined the 3TS team as one of the most recent additions. He is passionate about new technologies, enjoys family life, mountaineering and etching. A frequent presenter on sustainable investments, cleantech and private equity, he is an entrepreneur interested in ideas that make a tangible difference.
To 3TS, he brings his knowledge and experience as a private equity professional for the past 11 years. He founded, directed, and managed PE funds engaged in growth capital, infrastructure, and sustainability at IPM Group. He invested in and led portfolio companies through their initial expansion and development in the CEE region. During his prior career at Slovak Development Fund and ENEL Group, he worked on the execution and management of multiple CEE M&A deals, private transactions, and investment projects with a total value exceeding €2b. He focused on investments in energy, media, infrastructure, mining, and technology. At 3TS, Simon is involved in fund operations, investor relations, fundraising, reporting, accounting, audit, and other related topics.
Simon studied Finance and Strategic Management at Copenhagen Business School and J. Mack Robinson College of Business, from which he holds a MSc in Economics and Business Administration. He is a CFA Charterholder and is enrolled in an Executive MBA program at IESE Business School.
Simon’s Favourite Quote: “ Floss A Little, Invest Up In A Mutual Fund” – Trevor George SmithLast book read: “The Dark Forest” by Liu Cixin
GOOD READS & GREAT IDEAS
Keys to Nailing and Scaling Go-To-Market, by Dave Kellogg
Bottomline: (1) build multiple sales engines (5 or 6), (2) be proactive about sales & marketing org-chart evolution, (3) model-driven scaling, and metrics-driven execution. Great summary to use to finalize growth plans and prepare to enter 2024.
What Should Be In Your Pitch Deck?, David Sym-Smith
Whether you’re raising capital in the near term or not, you will be soon enough. It’s worth reviewing your pitch deck today. This summary is a good tool to make sure you included the right stuff & excluded what’s not important. There’s only one first-impression.
15 Ways to Help Your Sales Team in 2024, by SaaStr
Supporting your sales team in new ways always pays off. Whether its adding dedicated sales-ops, specializing the sales team, doing more customer marketing, or focusing demand-gen, these actions are bound to increase results, or at least make it easier to sell.
The Best PR Advice You’ve Never Heard, by First-Round
PR is actually a form of lead-gen. First, leverage this set of best-practices to get your story & message right. PR is less about brand or making news. In an SEO driven world, use PR as part of the marketing mix to attract more prospects, then channel partners, and later potential acquirers.
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