Stephen Fleming

Changing your business trajectory.

[Stephen Fleming @StephenFleming]

Term sheets are important, y’all. Read all those obfuscated paragraphs and take the time to understand them.

[Stephen Fleming @Boostphase]

Good review of the state of hard tech VC

[Erik Bruckner @E_Bruxxx]

State of Hard Tech VC

Few things im seeing:

> F*ck ton of capital out there. However, doesn't feel like it unless you're one of the companies everyone wants lol. Headlines make venture look like 2021 again. It isn't. Capital is concentrating into a relatively small group of companies while everyone else is grinding through 50 investor meetings trying to piece together a round. Middle of the market feels brutal.
> Bar for a Series A in hard tech has moved materially higher. Two years ago - a killer technical team, working prototype and huge market gets you there. Increasingly investors want real traction, meaningful contracts, manufacturing figured out and a viable path toward scale. Series A diligence is starting to look a hell of a lot like old Series B diligence. Not a bad thing IMO.
> At the same time, best companies are raising faster than I’ve ever seen. They aren't running six-month fundraising processes - talk to 10–20 investors, create scarcity, get a lead and suddenly everyone who was “still doing work” has 48 hours to decide lol. Fundraising has become incredibly binary.
> Defense tech is no longer contrarian. Full stop. Ten years ago, could barely get a mainstream VC to touch weapons. Now everyone has a defense thesis. Probably great for America, but investors should recognize what happened: the trade went from deeply contrarian to increasingly consensus. Next Anduril probably isn't going to look like Anduril.
> Increasingly convinced capital intensity is not the problem people think it is. Lack of differentiation is. Give me the company that needs $100M to build something extremely difficult over the company that needs $5M to build something 30 other teams can copy. Capital can be raised. Technical moats, manufacturing knowledge, supply chains and customer relationships much harder to manufacture.
> Hard tech founders are getting significantly smarter about the capital stack. Venture equity used to be the hammer for every nail. Now I'm seeing founders think about government grants, customer-funded development, equipment financing, venture debt, project finance and strategic capital alongside equity. This is good.
> Government is quietly becoming one of the biggest growth investors in hard tech. Grants, loans, contracts, guarantees and direct strategic investment are increasingly underwriting infrastructure that traditional VC never could. The best founders are figuring out how to stack governemnt/VC without destroying the cap table.
> Hard tech valuations are starting to get stupid in pockets. SpaceX, Anduril, Palantir and a handful of monster outcomes proved the category can create enormous companies. Great. That doesn't mean every pre-seed defense startup with three engineers, a render and an SBIR should be raising at a $40M cap. Entry price still matters.
> Think we're massively underestimating the opportunity in boring industrial companies. Everyone wants robots, rockets and drones.Increasingly interested in the shit underneath them: motors, bearings, pumps, power electronics, machine tooling, specialty materials, controls, chemicals, components and replacement parts. (said this the other day)
> Biggest opportunity in hard tech may increasingly be outside the venture ecosystem entirely. Fifty funds are chasing the Stanford/SpaceX/Anduril engineer starting an autonomy company. Far fewer are looking at the 38-year-old manufacturing engineer in Ohio who has spent 15 years staring at a $2B industry's biggest bottleneck. Everyone wants proprietary deal flow. Maybe stop looking in the same places.

[Stephen Fleming @Boostphase]

Good advice.

[Ruben @rdominguezibar]

Bill Gurley made public a letter he wrote 15 years ago answering one question: "So you want to be a VC?"

The parts that sting the most:

▫️ A VC job is 80% salesmanship. "You sell your way into deals, you recruit constantly, you help create bus dev deals. It's a sales job."

▫️ He'd never suggest anyone pursue it. "If I were you, I'd do all I could to find a job. The odds are extremely poor that you'll find an entry-level role."

▫️ Break in only if you're 100% sure. "Don't do it while simultaneously interviewing at Morgan Stanley and P&G. Do it on a mission."

▫️ It's a young person's game with immense hustle, and the industry suffers from massive oversupply of funds and money.

His one tactical tip: use a rifle, not a shotgun. Skip the mass email to 200 VCs. Build a story for five specific firms where your expertise gets valued

The most honest advice on breaking into venture usually comes from the people already inside it

Worth reading in full if VC is the dream

[Stephen Fleming @Boostphase]

Good advice.

[Erik Bruckner @E_Bruxxx]

One thing deep tech / hard tech founders don’t appreciate enough: some of the best capital comes from family offices. Many are founder-operator types, think long-term, move quickly, well networked and generally understand industrial businesses better than VCs. Traditional venture obviously still matters, but for founders building manufacturing, energy, robotics, or other physical systems, family office is some of the most naturally aligned capital in the market. If I were a founder building something real and struggling with traditional VC, I’d be going direct to family office. The appetite for direct exposure is really strong right now.

[Stephen Fleming @Boostphase]

Sarbanes-Oxley was so obviously destructive that neither Sarbanes nor Oxley ran for re-election.

[Handre @Handre]

Sarbanes-Oxley turned going public into a $3 million annual compliance nightmare. IPOs dropped 76% in the decade after 2002 -- from 457 average annual IPOs in the 1990s to just 108 from 2003-2012.

The compliance costs hit small companies hardest (obviously). Goldman Sachs absorbs SOX requirements as a rounding error. Your innovative startup burns through Series B funding just to satisfy auditors who've never built anything.

Established corporations love this arrangement. Why compete with disruptive newcomers when Congress erected a regulatory moat around your market position? Private equity now buys promising companies before they can threaten incumbents through public markets. The supposed "investor protection" created the most concentrated corporate landscape in American history.

[Stephen Fleming @Boostphase]

“The median growth-stage venture-backed company cannot go public at a valuation that returns capital to the late-stage investors.”

True. And this is a real problem.

[Will Manidis @WillManidis]

https://t.co/qNAVuG3xsz

[Stephen Fleming @Boostphase]

Good advice.

[ℏεsam @Hesamation]

everyone must read this piece from Steve Jobs

[Stephen Fleming @Boostphase]

All the important discussions between founders and investors should happen BETWEEN board meetings. The actual board meeting should be (1) a fulfillment of legal requirements, and (2) a chance to have 2nd- and 3rd-tier managers present their work, and give them a chance to shine.

[Todd Saunders @toddsaunders]

Most early stage founders are bad at board meetings. I was one of them!

Not because they lack effort, but because they think the job is to impress instead of to operate.

After 38 board meetings as a CEO, I learned the opposite lesson: the best board meetings feel boring, structured, and almost inevitable. Nothing dramatic happens because all the real work happened before the meeting itself.

These are the 6 things I wish I understood before my first meeting.

Don't make the same mistakes I did!

1/ No surprises. Ever.

Every board member gets a 1:1 call before the meeting, plus an open invitation to talk after reviewing the materials. If something is controversial, the board meeting should never be the first time it is discussed.

The board meeting exists for alignment and decisions, not discovery.

2/ Write monthly updates, especially when things are messy.

Good months write themselves but more importantly, bad months build trust.

Boards do not expect perfection, they expect predictability. Consistent reporting reduces anxiety, removes guesswork, and turns the board into a support system instead of an audit committee.

3/ Run a real agenda and stick to it.

Ours never changed:
> 15 min minutes and formal votes
> 60 min financials and core KPIs, presented by execs, not the CEO
> 15 min break
> 30 min major topic one
> 30 min major topic two
> 30 min for overflow and investor only meeting

Structure creates focus. If you don't have this you are in for a wild ride to nowhere.

4/ Do NOT pitch.

The fastest way to lose trust is to treat your board deck like a fundraising presentation.

When everything is polished and optimistic, board members stop asking how to help and start wondering what is being hidden. Calm, clear, consistent reporting shows control and leads to better decisions faster.

5/ Let your team present.

Boards gain confidence when they see depth beyond the CEO.

It also forces ownership, because people speak differently when they are accountable in front of the board.

6/ Design for clarity, not beauty.

You will not be judged on how pretty your deck is.

You will be judged on how easy it is to understand. Clean structure, consistent formatting, and readable charts reduce cognitive load and make hard conversations productive instead of exhausting.

If there is one unifying idea behind all of this, it is this:

A board meeting is not a performance

It is the mechanism by which uncertainty gets removed from the business.

When you run it that way, trust compounds, decisions speed up, and the board becomes leverage instead of pressure.

[Stephen Fleming @Boostphase]

@jefielding If you’re a pre-seed to series A founder, YOU need to be doing sales. Don’t try to foist it off on someone else. It’s a prime learning opportunity for you!

[Stephen Fleming @StephenFleming]

I used to phrase it as:

Startup CEOs can’t share their troubles with their employees because they’ll quit.

They can’t share with their investors because they’ll get fired.

And they can’t share with their spouse because she will say “You never should have quit that job at the phone company!”

[Stephen Fleming @StephenFleming]

On the East Coast, if you make $10 million out of a deal, you disappear to your lake house with a Porsche and a pair of SUVs, and you’re never heard from again.

In Silicon Valley, if you make $10 million out of a deal, you’re still paying off your second mortgage and your first wife. You might take six months off, but then it’s back to the grind.

[first check $500k-1M pre-seed @ajhodls]

talking to portfolio founder today about a $30M acquisition offer for his company, roughly 15x ARR. growth has been steady but not outstanding.

he asked “won’t you be upset that we didn’t go for $1B?”

my reply was that $15M (he owns about 50%) is a considerable sum for anyone, especially at this stage of life. i told him he’s giving himself almost infinite attempts at taking a big swing down the road, either self funded or with my partnership.

in venture you play the long game but you never want to be in a position where you’re operating with your back against the wall

there are entrepreneurs who have executed flawlessly in desperate situations but they are few and far between

sometimes you need to take care of yourself first, build a foundation of wealth that provides agency and optionality - then go for the big swing.

[Stephen Fleming @Boostphase]

Preference stacks can be really demoralizing for both founders and employees.

[Hubert Thieblot @hthieblot]

When you see massive fundraising announcements, remember that FanDuel sold for $450M, and the founders/employees made $0.

How?
Investors had a liquidation preference that entitled them to the first $559M of proceeds.

The more you raise, the bigger the preferences.

[Stephen Fleming @Boostphase]

My portfolio companies have received all of these.

[Hubert Thieblot @hthieblot]

@ founders

What did you get?

[Stephen Fleming @Boostphase]

Getting harder and harder for VCs to make money this way.

[Peter Walker @PeterJ_Walker]

Periodic reminder that selling 30% of your company in a seed round is out of whack with today's market.

Unless you're building nuclear reactors and there is just one VC interested, 30% dilution is too high.

[Stephen Fleming @Boostphase]

Good lessons here.

[Alex Vacca @itsalexvacca]

Before AWS existed, one company ran the servers for Twitter, LinkedIn, and Facebook's entire app ecosystem.

They owned Node.js, invented containers 8 years before Docker, and Peter Thiel even backed them.

Then something happened...

[Stephen Fleming @Boostphase]

Useful list.

[Nicole DeTommaso 🪄 @nic_detommaso]

Finding funds that 𝑡𝑟𝑢𝑙𝑦 invest in pre-seed is hard.

Here's a list of some I know do A LOT of pre-seed (add to comments):

Hustle Fund
Everywhere Ventures
Pear VC
Wonder Ventures
Precursor Ventures
Wischoff Ventures
Nido Ventures
Plug and Play Tech Center
Gaingels
https://t.co/oEDbGfd6s6
Dorm Room Fund
MBA Ventures
Unshackled Ventures
Torch Capital
Rally Cap
Cortado Ventures
LvlUp Ventures
Ganas Ventures
Symphonic Capital
Alpaca VC
Deciens Capital
Afore Capital
The Council
GoAhead Ventures
Barrel Ventures
Enzo Ventures
Redbud VC
Next Wave NYC
f7 Ventures
Recall Capital
Launch Factory
Kiplin Capital
Better Tomorrow Ventures
Incisive Ventures
Boost VC

What are others?

---
For founders who are fundraising, I did a deep dive on what's actually inside an early stage memo.

This could help you nail fundraising: https://t.co/botMnALpLo

♻️ Repost to help a founder in your network!

[Stephen Fleming @Boostphase]

These are massive changes.

[Karl Mehta @karlmehta]

Major Breakthroughs in Startup Tax Law.

Trump just signed the biggest tax overhaul for entrepreneurs in decades into law.

The QSBS expansion includes THREE game-changing benefits most investors don't know about yet.

You won't believe what you're about to hear.

A Thread 🧵

[Stephen Fleming @Boostphase]

There’s a big hole in the VC market right now.

[Hubert Thieblot @hthieblot]

Just talked to an AI founder who was ghosted by funds for his Series A; he went from 0 to $4 M ARR in 2 years. he is shocked.

They told him he wasn’t growing fast enough (these funds had AI companies that went from 0 to $50+ M in 18 months).

This is the benchmark now. This is why Seed to Series A is death for many companies, and it’s getting worse.

They’d rather pile all the money at big valuations into companies/products that have shown they can get scale.

Many funds now have companies that got to $2–5 M ARR and then saw revenue growth die.

Wild times. You either growth VERY quickly or your die rn.

[Stephen Fleming @Boostphase]

This anecdote is from a different world, but this is pretty much my attitude towards startup business plans.

[John Ʌ Konrad V @johnkonrad]

On ships, we have to prepare a detailed voyage plan. Once, a young officer wrote a half-decent one, then spent 30 minutes printing it on fancy paper and arranging it in one of those glossy presentation binders. He left it on my desk with a nice note.

I walked past my office that day with grease on my hands from working on a valve. Normally, I head straight to the slop sink for some Gojo, but this time I call the officer into my office and slowly pull out each sheet of paper.

Every greasy fingerprint clearly disturbed him. Then, like a middle school English teacher, I bled all over it in red ink.

He was visibly in psychological pain.

We repeated this ritual three times with more fingerprints and red ink.

A few days later, I’m walking past the galley and hear a rant. The officer is venting to another officer, clearly frustrated:

“I pulled old voyage plans from the file cabinet and mine is twice as detailed as any of them—but that F’n SOB won’t accept it. F*** him.”

So I head up to my office and call him on the radio.

“Tick tock. Your voyage plan is overdue. Let’s see it,” I said.

“It’s on my USB. Let me go print it.”

“Fine. But no plastic covers. Paper and a metal paperclip, that’s all.”

Clearly pained, he disappears for another 30 minutes. When it comes back, it’s like an origami masterpiece. He had cut and folded tab marks, highlighted sections in different colors. Pure art.

I was really impressed but being a “F’n SOB” I couldn’t tell him that.

“Leave it on my desk and go.”

I secretly scanned and printed every page, slapped his original cover sheet on the copies, then called him back in.

“Great job. Now let’s file it.”

The kid’s face lit up like Christmas morning. He ceremoniously walked up to the bridge holding it out in front of him like the gospel on Easter Sunday.

He opened the filing cabinet and handed it to me.

I took it, walked to the side of the ship, and tossed it overboard.

Walking back past him, I said, “Thank you. Great job.”

He was crushed.

Fast forward a few weeks. We’re approaching a tricky navigation point and have to deviate from the plan. Everyone is exhausted and running out of ideas. Nobody can remember a critical detail about the approach.

I call the kid up to the bridge.

He explains exactly what to do, in perfect detail, then snidely remarks, “If you hadn’t thrown my voyage plan overboard, they’d know what to do.”

I told him to listen carefully.

“This deviation wasn’t on your plan, The process of doing detailed revisions and nailing every detail is why you remember. The plan itself is useless. Any idiot can follow instructions from buoy to buoy. But when things go off-script, you need to understand and that only comes from doing the work.”

Then reached into a filing cabinet and handed a seaman one of those fancy binders, filled with beautifully folded tab marks, highlighted sections, and origami precision.

Inside was the junior officer’s original plan, except the coversheet now read:

VOYAGE PLAN BY OFFICER SMITH
THE BEST VOYAGE PLAN THIS SHIP HAS EVER SEEN AND THE TEMPLATE FOR FUTURE PLANS

And beneath that:

“Plans are useless, but planning is indispensable.”
—Dwight D. Eisenhower

P.S. skip the origami and fancy covers. It’s the attention to detail inside that counts.

⸻

Then I signed it with one greasy fingerprint,

I don’t think he forgot the lesson.

Detailed planning is the key to adaptability.