Episode 105 – Pat Muoio

Pat Muoio is a partner at Sinewave Ventures where she assess the technical value and viability of emerging technologies and make investment recommendations in the federal marketplace. Prior to joining Sinewave, she worked in cybersecurity and cryptography both in the private sector and at the Department of Defense. She has a PhD in Philosophy from Yale University.

What do we talk about in this episode?

Pat shares her journey from getting a PhD in Philosophy and a planned academic career, into cryptography at DOD, to cybersecurity and into her current career in Venture Capital (VC).

  1. The world of start up investments (VC 101). Seed, Series A and Series B funding, Angel investments and more.
  2. Advice for being successful at getting funding. The importance of the pitch and framing it to what’s important to the group you are pitching it to.
  3. Women founders are more successful than male founders, but it’s still much more difficult for women to get funded than men.
  4. Pat’s experiences in VC and in the tech space.
  5. How VC firms are funded.

Music used in the podcast: Higher Up, Silverman Sound Studio

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Seed funding is the first official equity funding stage. It typically represents the first official money that a business venture or enterprise raises. Some companies never extend beyond seed funding into Series A rounds or beyond. You can think of the “seed” funding as part of an analogy for planting a tree. This early financial support is ideally the “seed” which will help to grow the business. Given enough revenue and a successful business strategy, as well as the perseverance and dedication of investors, the company will hopefully eventually grow into a “tree.” (https://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp)

The first round after the seed stage is Series A funding. In this round, it’s important to have a plan for developing a business model that will generate long-term profit. Typically, Series A rounds raise approximately $2 million to $15 million. In 2021, the median Series A funding was $10 million. (https://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp)

Series B rounds are all about taking businesses to the next level, past the development stage. Investors help startups get there by expanding market reach. Companies that have gone through seed and Series A funding rounds have already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale. Series B funding is used to grow the company so that it can meet these levels of demand. (https://www.investopedia.com/articles/personal-finance/102015/series-b-c-funding-what-it-all-means-and-how-it-works.asp)

An angel investor is an individual who provides capital for a business or businesses, including startups, usually in exchange for convertible debt or ownership equity. (Wikipedia)

A business incubator is a workspace created to offer startups and new ventures access to the resources they need, all under one roof.In addition to a desk or office, incubators often provide resident companies with access to expert advisors, mentors, administrative support, office equipment, training, and/or potential investors. (https://www.shopify.com/blog/what-is-business-incubator)

Startup accelerators, also known as seed accelerators, are fixed-term, cohort-based programs, that include mentorship and educational components and culminate in a public pitch event or demo day. (Wikipedia)

In business, a hockey stick chart is used to show significant growth in revenues, EBITDA, and EBITDA margins.

About 60% of companies that reach pre-series A funding fail to make it to Series A, so the success rate is only 30%-40%. About 65% of the Series A startups get series B, while 35% of the companies that get series A fail. (https://spdload.com/blog/startup-success-rate/#:~:text=About%2065%25%20of%20the%20Series,Noissue.)

Sophia Amoruso, of Girlboss and Nasty Gal, launches Trust Fund for founders. (https://techcrunch.com/2023/01/19/sophia-amoruso-enters-venture-with-her-trust-fund-nasty-gal-girlboss/)

Cryptanalysis refers to the process of analyzing information systems in order to understand hidden aspects of the systems. Cryptanalysis is used to breach cryptographic security systems and gain access to the contents of encrypted messages, even if the cryptographic key is unknown. (Wikipedia)

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