Good evening everyone! I know this is not the usual Fishing in Venture schedule. I have been working hard on migrating the content to new waters. I have officially launched my new website - linked HERE. You still will be able to receive them via email, I’ll just need to shuffle a few things over.

Fishing in Venture 🎣

2024 Fundraising Environment Data

I received this graph in my inbox this week. Unfortunately, I don’t bring fantastic news (nor did I a few weeks ago in my 2023 M&A market update). 

So, what does this graph mean? Well it’s not the hardest to understand, but as you can see the peak year for startups and raising capital was in 2021 (a historic year for VCs & startups) and since then has been plummeting. When we started 2024, I told people that I was expecting a slower rebound, but a rebound nonetheless. Yet, the data shows us that Q1 fell flat on its face. This graph shows that startups (using Carta) managed to raise about $13.6 billion in primary rounds this quarter, which is pretty much on par with the previous quarter. At first glance, it's neither good nor bad - but lacking growth.

Initially I thought with the sentiment that the Fed was showing we’d see some more activity. But, as most of us know, the Fed is deciding to hold rates. Making investment dollars harder to come by. It’s still hard to tell what this year holds for startups and VCs, but I’m an optimist.

Fish of the Week 🐟

This week I want to talk about an actual fish. My favorite, the brook trout. Often referred to as "brookies" by those who know them well. The brook trout (Salvelinus fontinalis), although technically a charr, is often considered the most trout-like among its kin.They’re historically significant as America's first destination fish. The brook trout is the state fish of multiple states, including New York, Pennsylvania, and Virginia. I grew up searching for brook trout and boy is it a trip. Brook trout are stunning, showing off marbled, wavy lines on their backs and sides, and iconic red spots encircled by blue halos.

History of Brook Trout

The original range of the brook trout encompasses much of the northeastern corner of North America, including the streams of the high Appalachians as far south as Georgia, and extending west to the Hudson Bay and Great Lakes Basins. Biologists identify two genetically distinct strains of brook trout—a northern and southern strain—with the boundary being the New River drainage in southwestern Virginia. The southern strain, often called “speckled trout,” is less diverse, making populations more fragile. The only native trout species east of the Rockies, the brook trout was an important quarry for the original European settlers. Starting in about 1850, the species’ range extended west through stocking. Other countries followed suit, and brook trout were introduced throughout Europe, in Argentina, and as far as New Zealand.

I learned that a fellow named John William Cook has the world-record brook trout—caught in July 1916 on Ontario’s Nipigon River. The brook trout was 31.5 inches long and weighed a whopping 14.5 pounds.

Catching a glimpse or even better, hooking one, is so unique. You can find them in clean, cold water in the middle of nowhere. You usually have to hike to a remote spot in the mountains and be able to accurately cast in a small stream. They’re not just about looks though; fishing them is a delight because of their feisty nature. Spotting one can be very difficult as they camouflage extremely well and spooking them is very easy. The brook trout's presence signals a healthy, thriving ecosystem, which is crucial for keeping our natural waters vibrant.

If you’d like to dive deeper, I learned a lot from Phil Monahan at Orvis

Ebbs & Flows 🌊

This week I was reading about the term backcasting. In fly fishing, backcasting is the act of casting the line backward before making the forward cast. This technique is essential for building momentum and controlling the placement of the line and fly on the water. The backcast involves swinging the fishing rod over your shoulder until the line is fully extended behind you, setting the stage for the forward cast to present the fly. It takes a lot of practice and mainly focus. It’s not a science but an art. So, how does this apply to startups?

In the startup world, backcasting starts from the future and works backward, ideal for startups aiming to make significant impacts rather than incremental improvements. By envisioning a future state—say becoming a leader in sustainable technology—startups can strategically plan each step required to achieve this vision, distinguishing it from traditional forecasting, which projects forward based on current trends. To connect us back to fly fishing. You first have to find where the fish are (where you see opportunity), find the spot (future state goal) where your fly needs to be presented in order for the fish to consider your fly as their next meal.

This approach helps startups break free from traditional constraints (although not all are negative), allowing for founders to focus on what needs to be true for the future to occur rather than being bound by their present. Startups can identify critical milestones and potential obstacles early, enabling them to be in a better position to pivot in order to stay aligned with their long-term goals.

Backcasting isn’t just an idea or process you implement, it's a proactive exercise. Encouraging founders and early adopters to shape their future proactively rather than reactively. This mindset can be particularly empowering for teams, driving them to pursue ambitious goals with a clear roadmap and checkpoints along the way.

In fly fishing you don’t know if you’re going to catch that fish. You may present the fly where you want to but still miss the hookup. Backcasting is not meant to predict the future but about helping you create it. It’s a tool that enables founders to envision and work towards a future that is not an extension of the present but a deliberate and thoughtful construction of what they aspire to achieve. This method helps ensure that startups are not merely drifting towards the future but are actively steering towards a vision.

My friend Russell Kroeger wrote about backcasting and a founder's journey here. Thanks to him, I was able to dive into backcasting!

Thank you for your support!

Dawson J. Racek