Series A Investments Are Dead – Claude Ritter, Cavalry Ventures

About this episode

Claude Ritter is a serial entrepreneur and partner at Cavalry Ventures. Having built two successful companies with Lieferheld and Book A Tiger, he now says: "I wouldn't invest in any of my companies from back then". His assessment of the current market situation is clear: The Series A market is dead as we knew it.

The Brutal Reality of the Series A Market

Ritter perceives the current market as extremely challenging. Many founders are unprepared for the changed situation and underestimate the difficulties in raising funding. What used to be relatively easy – securing a Series A round – has now become a fight for survival.

Those who aren't prepared for the current market situation face nasty surprises. Companies that haven't adjusted their financial planning suddenly find themselves facing existential problems. The era of "easy money" is definitively over.

Financial Planning: The Key to Survival

Convincing financial planning is more important today than ever before. Ritter emphasizes that founders must plan realistically – both in terms of time and finances. Financial planning should consider various scenarios and factor in a longer timeframe for fundraising.

Founders must understand that good execution of their plans takes time. Anyone starting Series A preparation today should plan for at least 12-18 months until the money is actually in the bank.

Who Still Gets Series A Funding?

Only a few startups now make it through the eye of the needle that is Series A financing. Ritter explains which companies still have chances in the current market environment: primarily those that can already demonstrate strong metrics and have a clear, profitable business model.

Follow-on financing mainly goes to portfolio companies of existing investors – and even that's no longer guaranteed.

The Valuation Trap

A major mistake many founders make is fixating on valuation. Ritter warns against holding onto high valuations at any cost. "Maintaining valuation at all costs" can become dangerous and force companies into structured rounds.

Structured rounds usually mean worse terms for founders and existing investors. They're a sign that the company is in trouble.

Venture Capital and Idea Development

Ritter's perspective on the relationship between venture capital and idea development is interesting. The question of whether the idea comes first and money follows, or whether available capital drives ideas, is complex. In the current market situation, it's clear: without a truly convincing idea and strong execution, there's no more money.

Timing Is Everything

Ritter also reflects on failed ideas and better timing. Many concepts that came too early in the past would have better chances today. This shows how important the right timing is in the startup ecosystem.

Cavalry Ventures' New Fund

With the new fund at Cavalry Ventures, strategies and focus are also changing. Ritter provides insights into the considerations and adjustments that come with the new capital.

Final Words for Founders

Ritter's message to founders is clear: prepare for a tougher market. Plan realistically, focus on real metrics instead of valuations, and understand that only the best companies will survive. Those who start companies for the wrong reasons – just because of supposedly easy money – will fail.

The time for experiments is over. Now execution, clear business models, and sustainable unit economics count. The Series A market is dead as we knew it – but for the right companies with the right founders, there are still paths to success.