I send out a monthly mailer of deals that I'm investing in that I'm looking for co-investors for. Because I'm investing so early, a lot of times these companies are not only pre-revenue, but they might also be pre-product. I also invest in a really wide range of opportunities, so many of them don't look like you're typical venture deals.
Tinkergarten is one such company. At the end of 2015, I backed a husband and wife team expecting their third kid to build a network of outdoor kids classes--not an Uber for kids classes, Classpass for kids classes or Airbnb for kids classes. Actual kids classes: finding teachers, vetting them, training them, creating content--all of the unscalable things you'd never want your tech startup doing. They barely had any tech and I think they had maybe three teachers at the time I backed them. I couldn't even get the round Continue reading "Turns Out I Wasn’t Crazy: Tinkergarten Raises $5.4 million"
No one likes it. Founders don't start companies so they can spend half their time asking people for money and VCs don't love the dance either.
However, it's a necessary animal, so the least everyone can do is act professionally, and most of all value each other's time. That's what I'm most frustrated by--the lack of respect for other people's time. Too often, both sides walk away from fundraising processes feeling like a lot of it wasn't time efficiently spend--even when it does lead to a round.
So here are a few things both sides should do to make the whole thing go a lot smoother.
- Be upfront about the possibility of you investing now versus whether this is a "get to know you" kind of thing. It's fine if you want to learn about blockchain or you never do pre-product and maybe the Continue reading "Some Rules for Fundraising"
In reading the NYT piece
about the negative experiences of female founders raising, one quote stuck out to me:
"They put up with the comments, Ms. Renock said, because they “couldn’t imagine a world in which that $500,000 wasn’t on the table anymore.”
If you've ever had to fundraise, you can understand this. It's an extremely vulnerable time where you're getting a lot of rejection. When you finally get someone willing to fund what by now seems like a crazy idea, especially after all the criticism you've gotten during the process, you get in a mode of pushing for a close. You're willing to overlook just about anything because you really need this money. Rent is due. Credit cards are maxed. You don't want to lose this fish while it's on the hook.
That's why so many of these founders went down rabbit holes that, in hindsight, maybe Continue reading "There’s Always Other Money"
This is the worst question a VC can ask.
It presupposes that the only good deals are the ones they can't get into--which is an odd way to think about the world. I suppose the only club deal they would want to get into is the one that doesn't want them as a member.
There are lots of examples of huge deals that could have been had by anyone early on--Airbnb, Casper, Uber, etc.
And there are even more examples of oversubscribed companies that flopped.
In the seed round, there seems to be little to no correlation between the "hotness" of a deal and its eventual success--and even less so with the returns. Hot deals get bid up. Prices go up, and returns go down. The more you pay, the less you make. It's simple math.
Yet, so many investors--those who tout their networks and ability to see Continue reading "Why hasn’t anyone else funded this?"
"In May 1940, Franklin D. Roosevelt called for the production of 185,000 aeroplanes, 120,000 tanks, 55,000 anti-aircraft guns and 18 million tons of merchant shipping in two years. Adolf Hitler was told by his advisors that this was American propaganda; in 1939, annual aircraft production for the US military was less than 3,000 planes. By the end of the war US factories had produced 300,000 planes, and by 1944 had produced two-thirds of the Allied military equipment used in the war."
Never before and not since then had any country mobilized itself, and so dramatically reshaped its economic focus, around a singular focus. The ability of the US economy to churn out the mechanisms of war at such a scale in such short order changed the tide of history.
Today, we face different kinds of threats--and while we hear of stories about bombs and guns--the real wars Continue reading "A Call to Brains: Can We Mobilize Education Like Manufacturing in WWII?"
I didn't grow up in a neighborhood where gunshots were a thing--and I know I am incredibly lucky for that. That's why when I pulled up to the corner of Atlantic and Fourth by the Barclay's Center yesterday at a couple of minutes after 2pm, the sound of gunfire was pretty startling, and it's not something I can easily shake.
Pop! Pop! Pop! Pop-pop-pop! Pop!
I knew what it was right away.
A car or motorcycle backfires once. Construction noises are mechanical and repetitive. Fireworks go off with a kind of chaotic randomness that you only get when timing is dictated by the burning of a fuse.
These pops had intent, and moreover, desperation. You hear it in the cadence. Those three quick squeezes in broad daylight on what is perhaps the busiest intersection in Brooklyn can only come from someone who has long stopped Continue reading "You Can Hear the Desperation When They Pull the Trigger: Gun Control or Empathy"
One aspect of venture capital that rarely gets talked about is competition to get into a deal.
What happens when a founder has that rare wealth of riches when they're choosing who they're going to allow onto their cap table? The tables turn and the one being pitched to becomes the one pitching.
The moment when you find out that you're not guaranteed a slot is my least favorite as a VC. I've seen different investors react to it differently. Some are really competitive. They want to "win" a deal--by beating out others.
Personally, I don't like being left out of the chance to work with really great people on big problems worth solving. I love this job so much and like seeing other people succeed that I have serious FOMO not to hear those stories firsthand and be able to make those hiring intros, pitch a Continue reading "The Rainy Day Fund of Reputation"