Impact of Current Market Conditions on VC Funds; Finding the Right CFO & Fundraising Strategy – Alexander Langholz-Baikousis, Cherry Ventures

About this episode

Alexander Langholz-Baikousis serves as CFO at Cherry Ventures and brings years of experience from accompanying various IPOs. In conversation with Fabian, he shares his insights about operating as a CFO of a venture capital fund, current market changes, and strategic fundraising considerations.

Impact of Market Conditions on Seed-VC Companies

Current market changes have significant implications for seed-VC companies like Cherry Ventures. As CFO, Langholz-Baikousis closely monitors which data and information from portfolio companies are most relevant for evaluating their development.

Particularly interesting are the indicators that show whether companies are well-positioned for current challenges. A central shift concerns the dramatically changed relevance of profitability – an aspect that was often treated as secondary in recent years but is now back in focus.

The Paradigm Shift: Faster Path to Profitability with Less Capital

One of the biggest challenges for startups is achieving profitability faster with less available capital. What initially sounds contradictory requires founders to rethink their business strategy and resource allocation.

Langholz-Baikousis explains how growth valuations from the recent crisis years have changed and why they are no longer as attractive as before. Communicating this reality and helping startups adjust their expectations accordingly is one of the important tasks of a VC CFO.

Portfolio Revaluations and Founder Communication

As a fund, Cherry Ventures also had to revalue their portfolio and adapt to changed market conditions. A sensitive aspect of this is communicating with founders when a company's paper value needs to be adjusted. Transparency and open communication are crucial here to maintain trust.

Challenges of a VC CFO and Market Outlook

The challenges of a CFO at a venture capital firm are diverse, ranging from portfolio analysis to strategic founder advisory. For 2023, Langholz-Baikousis sees specific market developments that bring both opportunities and risks.

IPOs currently play a subordinate role, but what changes are needed for them to become relevant again? This question occupies not only VCs but also entrepreneurs thinking about various financing and exit strategies.

Finding the Right CFO: Timing and Selection Criteria

A central point for founders is the question: When is the right time to hire a CFO? Langholz-Baikousis provides concrete indicators for when companies absolutely need a CFO and how to recognize whether a CFO is a good fit for the startup.

Interim CFOs can be a sensible transitional solution before committing to a full-time position. Selecting the right CFO requires a precise understanding of the company's specific requirements.

Fundraising Strategy in the Current Market

Particularly relevant for founders is the question of how a financing round should be structured from today's perspective. Times have changed, and what worked before needs to be reconsidered today.

Differences between IPOs in Germany and the USA play a role, as does assessing when a company is ready for an IPO or should consider alternative exit strategies.

Conclusion: Adapting to New Realities

The discussions clearly show: the startup and VC world is in transition. Profitability is regaining importance, valuations are becoming more realistic, and requirements for CFOs are rising. For founders, this means rethinking their strategies and establishing professional operations – with the right CFO by their side.