Not long left in 2022 now as we bring you the penultimate Moonfire Monthly Newsletter of the year. It's our pleasure to be able to bring you all the latest news and exciting developments from within the Moonfire community, and this month we're jumping into an exciting investment story.

All Gravy close $3.2m round

We’re thrilled to announce that flexible employment fintech All Gravy has just closed a €3.2m round, led by us. All Gravy was founded in Copenhagen in 2020 by Jonatan Rasmussen and Kristian Lundager to combat high staff turnover in retail and hospitality by creating a tool that gives employees more choice, instant wages and incentives.

The work they’re doing is vital in the face of a rapidly changing employment landscape and we’re delighted to have been able to lead this seed round alongside Founders, UpFin and Nordic Web Ventures.

We were also joined by numerous experienced Angels including Bradley Horowitz (Global VP Product, Google), Phil Chambers (CEO, Peakon), Terese Hougaard (Partner, Atomico), Dan Winn (CTO, Deliveroo), Caroline Hjelm (Head of Marketing, Voi) and Dorte Bregnhøj (Global VP & Head of Talent, Bain & Co).

The All Gravy team is on a mission to help hospitality businesses amidst a growing labour shortage with better, more employee-centric payroll solutions. Flexible workers are an ever-increasing part of the economy with 90 million hourly-paid people in Europe. As they juggle multiple jobs with their own personal lives and ambitions, they need all the help they can get to administer their financial wellness and financial freedom. On the other hand, hospitality businesses need a simple way to reduce staff turnover, incentivise new employees, and support them during these uncertain times. Especially when 75% of employees leave hospitality every year and the bulk of tenures range from 6-9 months.

All Gravy is rising to both these challenges. Its people operating system provides a mix of qualitative and quantitative insights. This allows HR or ops teams to focus on strategic decisions over firefighting. For employees, it includes an integrated financial wellness app which increases motivation, flexibility and retention. It helps them to understand their earnings, plan savings and even get paid as soon as the shift ends, free of charge.

Jonatan, Kristian and the All Gravy team have already signed up over 150 restaurants to date and counts Mcdonald’s amongst its client list and the work they’re doing is already showing incredible results. When employees have access to All Gravy, users see +20% more shifts taken, and 15% better retention. The app has over 70% adoption and has a 3-month retention rate of over 90%.

This latest investment will aid expansion to the UK, support further products and accelerate growth in Denmark and Sweden. We’re so excited to be supporting All Gravy and their mission and can’t wait to see what they can achieve.

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The Art of Exit

Often times founders become engrossed in the art of fundraising, but the truly toughest challenge to most is, in fact, the art of the exit.

Companies are bought not sold. But that doesn't mean you should sit around waiting for gifts to happen. Against the current challenging backdrop, when exits get tougher, founders, now more than ever, need to think ahead about where they want to take their business. Financing options are not going to be as abundant, and adding exits into your options pathway makes a lot of sense.

The first thing to recognise is that, in the US, just under 90% of exits happen at Series B or below, with around 90% of the valuations being $500m or below.

In fact, around half of exits are between $100-$500m, with 30% valued at $25m or below. During the 2020 and 2021 hype market, these numbers were slightly lower, with 15% of exits being above $500m. But, in essence, these numbers have not changed for over a decade.

Are all these founders selling out too early, or can we derive some wisdom from these exits? Here’s why a founder, when looking to hit their next milestone, might skip the next round in favour of alternatives.

1. The first reason is simply that the best available route to scale is consolidation – partnering with another player in the market to create size and better market dynamics, with improved margins and lower costs. Mergers have generated incredible value in tech, allowing founders to build a shared vision rather than fighting their competitors head-to-head. This is particularly true for marketplaces including examples like the combination of Zillow and Trulia, and the various mergers that happened in the food delivery and mobility space. Not all are headline mergers but they drove a lot of value. It remains one of the most underrated ways of creating scale and new value in tech.
2. Second, partnering with a company that is two or three times as big, in addition to being public, gives you greater scale and access to larger public markets for financing. Facebook’s acquisition of WhatsApp and Instagram and Google’s acquisition of Android are great examples of that.
3. And third, for those companies usually valued at above $500m going for an IPO allows you to expand beyond private capital, tapping into the public markets to continue growth. That’s the optionality that being a public company provides: you have the potential for a much broader set of capital if managed correctly.

Start to prepare 12-24 months ahead of a sale

When you begin evaluating your future exit event, there is a lot to prepare. These are all things you should be pursuing in the ordinary course of business. As always, the team comes first and understanding how they will react to a sale is essential. At the end of the day, they are a critical asset and you need them onboard and incentivized whether or not they will become part of the acquisition. You also need to identify where your weaknesses are and shore them up by strengthening the team, tech, business model or strategy to ensure you come across as strong as possible.

There is also a lot to get organised. You need to ensure you have all your contracts, corporate records, capitalisation tables, IP rights, and data privacy in order plus provide multiple years of audited accounts. Avoid the stress of patching over weaknesses at the last minute by creating good record-keeping habits from get-go. Finally, you need to decide on whether you need different advisors from financial advisors to tax accountants or other speciality consultants. All of this takes a lot of time, energy and money. Starting to prepare all of this 12-24 months ahead of a sale could be invaluable and gives you options when potentially you need it the most.

Founders forget that selling a business is a strategy in itself and can take a lot of time. Thinking ahead and turning a sale as one of the options can provide you with a unique opportunity to take your business to a whole new level entirely.

Positioning and Community Development

In November, we welcomed Pack McCormick of Not Boring to speak with our LPs and founders. The most important lesson Packy wanted to impart was how to tell a compelling story if you want your business to grow. Here were some of the key takeaways from that talk:

1. Simply, if you have two identical rival companies, the one with the better story will always win. The most successful founders own their narratives, which creates a unique leverage. In the modern age of communication, getting your story out there has never been easier. Be original and authentic.
2. Make people want to care. Is your product going to change lives? It doesn't have to change the world entirely, just the people you're making the product for. Ensure they understand that it will make their lives easier.
3. Call your shot! People don't notice what's wrong, usually only what's right. Use your expertise to give an honest prediction on what you believe the future looks like. If you're wrong, who cares, if you're right, you've won over everyone's trust.
4. Treat your audience like they're all Einstein's. People aren't stupid, nor do they like to be talked down to. Your earliest users will care more about the nitty gritty details than you’d expect.
5. Celebrate your customers. You're not applauding your own product, you're applauding the superpowered behemoths your product turns your customers into. The customer is your hero.
6. Make it personal. This is easy: let the customer know why this product and business is important to you.

What a fantastic session, and we're already looking forward to our next one, this Friday, 25th November, where we will be welcoming Henry Erskine Crum to discuss "Product Development and Prioritisation".

Odd Lots Podcast: "Understanding the Collapse of Sam Bankman-Fried's Crypto Empire"

The collapse of the Sam Bankman-Fried empire is gigantic, sprawling and fast-moving. While details are still coming out, it already ranks among the most prominent corporate disasters of all time and has left the entire crypto community reeling.

To better understand the role that FTX played in the industry and how the exchange started to unravel, Bloomberg speaks with Evgeny Gaevoy, the founder and CEO of the crypto market-making firm Wintermute, and independent researcher James Block, author of the Dirty Bubble Media newsletter, and one of the first observers to blow the whistle on the FTX disaster.

It's a fantastic podcast that unravels a fascinating story, and cautionary tale.

"The Changing World Order" by Ray Dalio

A few years ago, Ray Dalio noticed a confluence of political and economic conditions he hadn’t encountered before. They included huge debts and zero or near-zero interest rates that led to massive printing of money in the world’s three major reserve currencies.

The last time that this confluence occurred was between 1930 and 1945. This realisation sent Dalio on a search for the repeating patterns and cause/effect relationships underlying all major changes in wealth and power over the last 500 years.

In this remarkable and timely addition to his Principles series, Dalio brings readers along for his study of the major empires, putting into perspective the 'Big Cycle' that has driven the successes and failures of all the world’s major countries throughout history.

We highly recommend this one over the Holiday break.

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All the best,

Mattias and the Moonfire team

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