Robert Reich

Writing The Markup every week forces clarity. On our portfolio. On private markets. On where frontier tech is really moving. It’s work. AI helps with the volume, but the thinking is ours. If you want to see what we’re watching in real time, here’s this week’s edition.

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From our PearX S25 cohort, meet Pravāh, the AI-native operating system for the electric grid When Mohak Mangal, Dhruv Suri, and Aman Gupta looked at the strain on the U.S. electric grid, they saw a system pushed to its limits. Exploding demand and unpredictable supply have made blackouts increasingly common. This costs the economy more than $150B a year, a number that could 10x in the next five years. Mohak Mangal and team founded Pravāh to help fix it. Their platform helps utilities and grid operators make real-time decisions on load, generation, and congestion, reducing blackout risks, optimizing power procurement, and bringing much-needed stability to the backbone of modern life. We’re proud to support the Pravāh team as they take on one of the toughest and most important infrastructure challenges of our time.

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Fundraising Is a Sales Funnel Takeaway: Treat investors like prospects. Context: Too many founders pitch randomly. Fundraising works when you build structure. Advice: Create a lightweight investor CRM (Airtable, Notion, HubSpot). Track stage: intro, 1st call, due diligence, soft commit. Follow up weekly—investors invest in the founders who stay top of mind. Closing thought: Your investor funnel is just like your customer funnel—build it, track it, close it. At SKIN STUDIOS, we help founders cut through the noise, launch scrappy, and evolve fast. Because in the startup game, speed of learning is your greatest edge. → sitg.studio | dom@sitg.studio | DMs open #foundertips #fundraising #venturecapital #startupadvice #skinstudios

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I’ve spoken to over 2 dozen MDs at PE firms I can confidently say that the arb of figuring out how to implement Vertical AI at portfolio companies is very real right now It will fundamentally change underwriting for those who can do it predictably and unlock generational returns. Most are aware they need to act. Very few have.

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Hate to say it, but if you were using an SBA loan to refinance your MCAs… You were already in trouble. Now? The SBA just cut off that option entirely. No more 7(a) loans to bail you out of predatory cash advances or factoring traps. And honestly? That might be the best thing that could’ve happened to some founders. Because here’s what was really going on: Take out an MCA to survive a revenue dip. Struggle with 40%+ weekly payments. Refinance with SBA to “reset” the clock. Six months later… back into another MCA. It was debt quicksand. And the SBA finally said: “We’re not playing this game anymore.” What does that mean for founders? -If you’re already in MCA debt, SBA loans just got harder to access. -If your cap table includes anyone who isn’t a U.S. citizen or green card holder, you’re out too. -And if you’re still treating capital as a patch instead of a strategy, things are only going to get worse. SBA is still one of the best sources of non-dilutive capital, but the bar just got higher. If you're raising, you need to start thinking a few moves ahead, not just the next wire. At Thunder.vc, we support founders with capital strategy that scales. If that’s you, subscribe to Fundraising Demystified (link in bio) or hit me up.

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What a joy to speak with this brilliant cohort of innovators in the The Global Energy Alliance for People and Planet (GEAPP) ENTICE (Energy Transitions Innovation Challenge) 2.0 program and taking on their sharp questions at the investor bootcamp. 80% of global GHG emission reduction goals for 2050 can be met through energy system decarbonization, efficiency and electrification. This represents a US $100 trillion opportunity according to the IEA.     A stronger, more stable grid is at the heart of building a #resilient #energy future. This year’s program challenges innovators to tackle:  1) Behind-the-meter digital twins: #AI tools to analyse consumption and create appliance-level insights  2) Industrial flexibility at scale: AI solutions using smart meter data to identify flexible assets and operational inefficiencies    Kudos to the entrepreneurs and the GEAPP team for curating and executing such a thoughtful program.     Looking forward to seeing how these #innovations scale #impact.  Synapses Dalberg Media Vaishali (Vish) Mishra Anukul Tripathi (He/Him) Jayant Sinha Saurabh Kumar

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Too many founders still buy into outdated financing myths like waiting on SBA loans that won’t come, refusing to lease equipment, or avoiding debt like it’s toxic. The truth? Smart businesses use capital to move faster. Debt isn’t the enemy. Waiting too long to scale is. Don’t let pride in bootstrapping hold you back when the market’s moving. Financial literacy is as critical as your product. Know your numbers, challenge the myths, and grow with intention. #SmallBizFinance #FoundersMindset #Entrepreneurship

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“Hey DC — I’m raising a pre-seed at a $50M cap. Interested???” I ought to ignore the cold outreach like everyone else, but I can't help myself from replying, “Not at a $50M valuation!” “But we did a discounted cash flow analysis and calculated the valuation at $50,874,392.66.” DCF is the perfect answer to the question: tell me you know nothing about startups without telling me how you’re going to fail. But how should this founder determine the valuation of his startup? There’s a lot of methods to value startups. DCF. Berkus Method. Discount off next round. Cost to duplicate. Scorecard. Comparable transactions. Blah blah blah. None of them work. Valuation is not a calculation. It’s a negotiation. The only method that works is what I'll call the Palter Valuation Process. It's a process rather than a formula, with the following simple steps: 1. Determine your stage. Honestly. Based on customer traction rather than wishful thinking. Is this raise a friends & family & network (no traction yet), pre-seed (initial sales), seed ($100K+ ARR), or Series A ($4M+ ARR)? 2. Find typical valuations for your stage, sector, and geography. Look at both the median and ranges. Use the incredibly helpful data from Carta (thank you Peter Walker and Carta) plus whatever you can find from Pitchbook, Crunchbase, investment banks, and VCs that follow your sector. 3. Adjust within the ranges based on your traction and risk factors. 4. Check with a few trusted advisors who invest regularly at your stage to see if they think your proposed valuation will be attractive to investors in their network. 5. Begin pitching to potential lead investors. Negotiate the valuation and other investment terms. 6. See if the valuation attracts follow-on investors to fill the round. If not, renegotiate with the lead investor and other investors to set the final valuation. Keep in mind that valuation is just one piece the investment puzzle. Liquidation preference frequently determines how much (if anything) founders and employees get in an exit and is arguably more important than valuation. Investment vehicle (preferred shares, common shares, SAFE, convertible note) make a big difference to investors and will affect the valuation we find attractive. Full details on the Palter Valuation Process in the following article: http://bit.ly/3UAIwMw

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🚀 Meet PACT, simplifying SBA-backed acquisitions with investors. Think YC’s SAFE, but built for Main Street M&A. 📘 What is PACT and why we built it PACT (Partnership Acquisition Commonsense Terms) is a free, balanced starting point for the agreements used in SBA-backed acquisitions with outside investors. For too long, SBA-backed acquisitions with outside investors have been the wild west: every deal is different, inefficient, and confusing, especially for first-time searchers raising capital. PACT gives everyone a common baseline so reviews are faster, expectations are clear, and operators can focus on acquiring the business. 🧩 SAFE for ETA Y Combinator’s SAFE gave startups a shared template that made early investing easier to execute. PACT brings that same idea to ETA. It teaches the key concepts in plain English, aligns searchers and investors on the economics, and sets a fair place to start. Our goal is for PACT to become the default baseline for investor-backed small business acquisitions using SBA loans. 🤝 Who contributed 🏛️ Legal input from top SMB M&A attorneys: Joseph Spina (Cullen and Dykman LLP), Mark Dittrich (Groundswell Advisors, LLP), and Eric Hsu (Clear Focus Law, PLLC) provided feedback on drafts. 💼 Early investor adopters: Jordan F. (Shareholder Ventures), Grant Hensel (Entrepreneurial Capital), Jason Ehrlich (Fruition Capital), Sean Smith (Search Fund Ventures), Adam Kaplan (ETA Funding Partners), Jacob Hall (Kando Capital), Tony Cappaert (Workbench Capital) and Adam Markley (PROX Search Capital) have adopted PACT on new deals. 🎓 Community support: Chelsea Wood and Walker Deibel at the Acquisition Lab and Buy Then Build have committed to start educating the community on how investor deals work using PACT. 👉 What to do next 🔍 Searchers: download the docs and ask your lawyer to start from PACT. ⚖️ SMB M&A Law firms: review the templates and send feedback so the next version is better. 💸 SMB investors: adopt PACT as your starting point and share redlines from real deals. This is a community-led standard, and we will keep versioning PACT as feedback comes in from all sides. 📝 Thanks: Special thanks to Joseph Spina for leading the legal drafting with me and helping shape a true middle ground. 🔗 Download PACT and see the key terms: ETAPACT.com (link in the comments) Let’s make investor-backed acquisitions clearer, faster, and fairer for everyone. 🚨 DISCLAIMER: PACT is not legal advice. Searchers must engage experienced SMB M&A counsel to review and tailor these documents to their deal.

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