Using the Sector Context
Most VC-backed companies are building products that benefit other players within or adjacent to their sub-sector. Understanding the sectoral context can be super useful in structuring venture rounds.
Consider a founder that is building task management software in the broader B2B Software > Productivity space. For this founder, it can be super useful to be aware of financing rounds for companies automating managerial responsibilities with AI, or improving delegation workflows. And therein lies the value of acute awareness of financing rounds in a given sector.
Financings in Relevant Sectors:
In most sectors, knowing the financings happening on a daily/weekly basis can be super useful. Such financings are an indication of where the broader industry is headed. The below steps show some obvious use cases for being aware of key rounds in relevant sectors:
Understand the Industry Direction
Venture rounds are an indication of the direction in which investors and successful founders see the future unfolding. Being aware of the ongoing financings in relevant sectors can help refine your thinking on how your Company fits into the broader macro environment.
Persuasion with Venture Investors
Several accomplished authors have previously written about investor herd dynamics. Quoting and referencing financing rounds that provide provide evidence to support your thesis can be an excellent way to persuade investors.
Ultimately, founders need to be deeply knowledgeable about the broader industry within which they operate. And this requires a close pulse check on recent financings in relevant sectors.