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Feb 29, 2016 · 24m · 20vc

20VC: SoftTech VC's Andy McLoughlin on The Series A Crunch, Maximising Runway and Minimising Burn and For Startups

Andy McLoughlin · 17m spoken Harry Stebbings · 5m spoken
0:00 / 0:00

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In this episode of The 20 Minute VC, host Harry Stebbings interviews Andy McLoughlin, partner at SoftTech VC, to discuss his journey from founding Huddle to venture investing, strategies for navigating the Series A crunch, and practical tactics for managing startup runway and burn rates.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 23.2% of the talking time here. How this is scored →

Harry as informed peer 3.6 Guest teaching 3.4 Guest disagreement 1.2 Harry pushing back 1.2
05100:0010:0020:001:27–4:58 · Harry as informed peer 2/10 Episode Opening and Welcome Harry opens with warm standard biographical questions about Andy's transition from founding Huddle to joining SoftTech VC. Andy shares insights on founders knowing when to step aside as a company grows, keeping the tone entirely friendly and collaborative.5:00–8:50 · Harry as informed peer 4/10 Seed Round Dynamics and the Series A Crunch Harry raises industry observations regarding the Series A crunch and bridge rounds in London. Andy provides a structured breakdown of shifting round definitions from pre-seed to Series A, noting that second seed rounds from non-portfolio investors often indicate fundraising failure.8:51–15:37 · Harry as informed peer 5/10 Managing Runway, Burn Rates, and Funding Dynamics Harry offers his own fundraising rule of thumb regarding six months of runway and questions whether a lack of follow-on funding signals poor support. Andy candidly acknowledges VC leverage over founders running low on cash and explains the hidden risks of party rounds.15:37–19:29 · Harry as informed peer 5/10 Macro Tech Climate, SoftTech Fund V, and Developer Tools Harry demonstrates technical market knowledge by shifting the discussion to developer tools and grassroots adoption models like Slack. Andy expands on how bottom-up developer adoption transitions into enterprise monetization.19:31–23:57 · Harry as informed peer 2/10 Quickfire Round with Andy McLoughlin Harry guides Andy through standard rapid-fire questions covering favorite books, daily tools, and investment criteria. Andy offers engaging anecdotes, including Mark Zuckerberg's humorous quote about Twitter's early days.1:27–4:58 · Guest teaching 2/10 Episode Opening and Welcome Harry opens with warm standard biographical questions about Andy's transition from founding Huddle to joining SoftTech VC. Andy shares insights on founders knowing when to step aside as a company grows, keeping the tone entirely friendly and collaborative.5:00–8:50 · Guest teaching 5/10 Seed Round Dynamics and the Series A Crunch Harry raises industry observations regarding the Series A crunch and bridge rounds in London. Andy provides a structured breakdown of shifting round definitions from pre-seed to Series A, noting that second seed rounds from non-portfolio investors often indicate fundraising failure.8:51–15:37 · Guest teaching 4/10 Managing Runway, Burn Rates, and Funding Dynamics Harry offers his own fundraising rule of thumb regarding six months of runway and questions whether a lack of follow-on funding signals poor support. Andy candidly acknowledges VC leverage over founders running low on cash and explains the hidden risks of party rounds.15:37–19:29 · Guest teaching 4/10 Macro Tech Climate, SoftTech Fund V, and Developer Tools Harry demonstrates technical market knowledge by shifting the discussion to developer tools and grassroots adoption models like Slack. Andy expands on how bottom-up developer adoption transitions into enterprise monetization.19:31–23:57 · Guest teaching 2/10 Quickfire Round with Andy McLoughlin Harry guides Andy through standard rapid-fire questions covering favorite books, daily tools, and investment criteria. Andy offers engaging anecdotes, including Mark Zuckerberg's humorous quote about Twitter's early days.1:27–4:58 · Guest disagreement 1/10 Episode Opening and Welcome Harry opens with warm standard biographical questions about Andy's transition from founding Huddle to joining SoftTech VC. Andy shares insights on founders knowing when to step aside as a company grows, keeping the tone entirely friendly and collaborative.5:00–8:50 · Guest disagreement 1/10 Seed Round Dynamics and the Series A Crunch Harry raises industry observations regarding the Series A crunch and bridge rounds in London. Andy provides a structured breakdown of shifting round definitions from pre-seed to Series A, noting that second seed rounds from non-portfolio investors often indicate fundraising failure.8:51–15:37 · Guest disagreement 2/10 Managing Runway, Burn Rates, and Funding Dynamics Harry offers his own fundraising rule of thumb regarding six months of runway and questions whether a lack of follow-on funding signals poor support. Andy candidly acknowledges VC leverage over founders running low on cash and explains the hidden risks of party rounds.15:37–19:29 · Guest disagreement 1/10 Macro Tech Climate, SoftTech Fund V, and Developer Tools Harry demonstrates technical market knowledge by shifting the discussion to developer tools and grassroots adoption models like Slack. Andy expands on how bottom-up developer adoption transitions into enterprise monetization.19:31–23:57 · Guest disagreement 1/10 Quickfire Round with Andy McLoughlin Harry guides Andy through standard rapid-fire questions covering favorite books, daily tools, and investment criteria. Andy offers engaging anecdotes, including Mark Zuckerberg's humorous quote about Twitter's early days.1:27–4:58 · Harry pushing back 0/10 Episode Opening and Welcome Harry opens with warm standard biographical questions about Andy's transition from founding Huddle to joining SoftTech VC. Andy shares insights on founders knowing when to step aside as a company grows, keeping the tone entirely friendly and collaborative.5:00–8:50 · Harry pushing back 2/10 Seed Round Dynamics and the Series A Crunch Harry raises industry observations regarding the Series A crunch and bridge rounds in London. Andy provides a structured breakdown of shifting round definitions from pre-seed to Series A, noting that second seed rounds from non-portfolio investors often indicate fundraising failure.8:51–15:37 · Harry pushing back 3/10 Managing Runway, Burn Rates, and Funding Dynamics Harry offers his own fundraising rule of thumb regarding six months of runway and questions whether a lack of follow-on funding signals poor support. Andy candidly acknowledges VC leverage over founders running low on cash and explains the hidden risks of party rounds.15:37–19:29 · Harry pushing back 1/10 Macro Tech Climate, SoftTech Fund V, and Developer Tools Harry demonstrates technical market knowledge by shifting the discussion to developer tools and grassroots adoption models like Slack. Andy expands on how bottom-up developer adoption transitions into enterprise monetization.19:31–23:57 · Harry pushing back 0/10 Quickfire Round with Andy McLoughlin Harry guides Andy through standard rapid-fire questions covering favorite books, daily tools, and investment criteria. Andy offers engaging anecdotes, including Mark Zuckerberg's humorous quote about Twitter's early days.

speaking balance: gold is Harry, purple is the guest (3 minute bins)

0:00 · Harry 59.8% · guest 40.2%0:00 · Harry 59.8% · guest 40.2%3:00 · Harry 11.9% · guest 88.1%3:00 · Harry 11.9% · guest 88.1%6:00 · Harry 17.8% · guest 82.2%6:00 · Harry 17.8% · guest 82.2%9:00 · Harry 10.9% · guest 89.1%9:00 · Harry 10.9% · guest 89.1%12:00 · Harry 21.4% · guest 78.6%12:00 · Harry 21.4% · guest 78.6%15:00 · Harry 12.7% · guest 87.3%15:00 · Harry 12.7% · guest 87.3%18:00 · Harry 13.3% · guest 86.7%18:00 · Harry 13.3% · guest 86.7%21:00 · Harry 14.3% · guest 85.7%21:00 · Harry 14.3% · guest 85.7%24:00 · Harry 99.3% · guest 0.7%24:00 · Harry 99.3% · guest 0.7%
Sharpest disagreement ▶ 10:36 Candid Callout on VC Leverage

Andy offers a blunt, self-critical assessment of his own industry, stating that VCs are ultimately trying to make money and will exploit leverage over desperate founders.

 Hardest push from Harry ▶ 12:00 Challenging Follow-on Signaling

Harry pushes Andy on the signaling risks of seed follow-on rounds, asking directly whether a non-participation decision indicates a VC's lack of faith in the business.

 Biggest teaching moment ▶ 5:05 Evolution of Seed and Series A Round Sizes

Andy clearly outlines the modern multi-tiered seed environment, explaining how pre-seed, seed, and Series A capital requirements have shifted dramatically upwards.

 Harry holds his own ▶ 18:38 Analyzing Developer Tool Distribution Dynamics

Harry demonstrates strong market expertise by steering into developer tools and contrasting bottom-up viral distribution like Slack with traditional top-down sales.
the scores for every segment, with the reasoning behind each
ChapterTopicHarry as informed peerGuest teachingGuest disagreementHarry pushing backWhy
Episode Opening and Welcome 2210 Harry opens with warm standard biographical questions about Andy's transition from founding Huddle to joining SoftTech VC. Andy shares insights on founders knowing when to step aside as a company grows, keeping the tone entirely friendly and collaborative.
Seed Round Dynamics and the Series A Crunch 4512 Harry raises industry observations regarding the Series A crunch and bridge rounds in London. Andy provides a structured breakdown of shifting round definitions from pre-seed to Series A, noting that second seed rounds from non-portfolio investors often indicate fundraising failure.
Managing Runway, Burn Rates, and Funding Dynamics 5423 Harry offers his own fundraising rule of thumb regarding six months of runway and questions whether a lack of follow-on funding signals poor support. Andy candidly acknowledges VC leverage over founders running low on cash and explains the hidden risks of party rounds.
Macro Tech Climate, SoftTech Fund V, and Developer Tools 5411 Harry demonstrates technical market knowledge by shifting the discussion to developer tools and grassroots adoption models like Slack. Andy expands on how bottom-up developer adoption transitions into enterprise monetization.
Quickfire Round with Andy McLoughlin 2210 Harry guides Andy through standard rapid-fire questions covering favorite books, daily tools, and investment criteria. Andy offers engaging anecdotes, including Mark Zuckerberg's humorous quote about Twitter's early days.

Statements from this episode (9)

Insight
Startups Passing 150 Employees No Longer Need Hustler Founders
“When a company gets past a 150 people and, you know, start getting up towards, you know, 200, they don't really need the kind of hustler Founder there anymore. They need people who are going to adhere to processes and, you know, get stuff done and not trotting…”
Andy McLoughlin Feb 29, 2016 ▶ 3:51
Assertion Supported
Seed Rounds Reached $1.5M to $3.5M by 2016
“Seed rounds have really, really gotten a lot bigger in the in the last three or four years, to the point now where you have a pre-seed Round. So you might have a friends and family round of, you know, 25 to 50,000 dollars to get you off the ground. You then do…”
Andy McLoughlin Feb 29, 2016 ▶ 5:06
Disclosure
SoftTech VC Avoids Outside Seed Plus Rounds as Red Flags
“What we don't generally do, though, is look at C C primes, or C pluses, or second Cs, or C twos, or C Bs, from companies that aren't already in the portfolio. Cause generally that smacks of a company that went out to raise a series A and failed.”
Andy McLoughlin Feb 29, 2016 ▶ 8:21
Insight
VCs Will Use Leverage Over Startups Whenever Possible
“Well, exactly, because, you know, the thing that you have to remember is that VCs are, at the end of the day, in the business of trying to make money, and if they have leverage over a company, they will probably use it.”
Andy McLoughlin Feb 29, 2016 ▶ 10:36
Prediction Not checkable as stated
Party Rounds Will Show Major Downside in Coming Months
“And I think, you know, the, one of the big issues that we're going to see in in the market over the next few months is this, the downside of the party round.”
Andy McLoughlin Feb 29, 2016 ▶ 11:02
Opinion
Seed VCs Skipping Series A Follow-On Signals Severe Trouble
“Yeah, I mean, if we were, if there was a startup going out from one of our, going out for their Series A, and we didn't participate, that would look really bad.”
Andy McLoughlin Feb 29, 2016 ▶ 12:18
Prediction Held up
SoftTech VC Will Deploy 50% of Fund V Into B2B SaaS
“About half of the fund will be deployed into BtoB and SaaS, which is great for me, because that's kind of my area of specialty.”
Andy McLoughlin Feb 29, 2016 ▶ 17:03
Insight
Enterprise Software Requires Top-Down Sales for Real Revenue
“Grassroots is great because it can just spread like wildfire inside an organization. It can move from org to org very virally, but I think, you know, to make real revenue, you kind of need to you need to be kind of selling top down.”
Andy McLoughlin Feb 29, 2016 ▶ 19:03
Disclosure
SoftTech VC Evaluates 3,000 Companies Annually and Invests in 15
“I mean, we will see, in an average year, anywhere between two and a half and 3000 companies, and we'll invest in 15. So, you know, you do the math, about 99.5% of the businesses that we see, we won't invest in.”
Andy McLoughlin Feb 29, 2016 ▶ 20:48
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