An Uplifting Win

I was very pleased to see that “This is Us” was nominated for 11 Emmy’s and that Sterling Brown won the award for Best Actor in a drama series.

This is Us was my favorite show in the last year and I’ve been encouraging my friends to watch it for a while. I enjoyed it more than House of Cards, GoT, Westworld, Big Little Lies, and whole host of other great shows. And believe me, I love myself a good thriller or dystopian fiction.

It was strangely unique in a very odd way – mainly because it was so different by being so uplifting. Kudos to the writers and actors for pulling it off in a way that was entertaining and not nearly as corny as it could have been. But it made me kind of wonder what it says about modern culture that a show can be counter-cultural by Continue reading "An Uplifting Win"

Seeds and Pre-Seeds: History is Repeating Itself

As the atomization of seed has become more mature, it is increasingly clear that history is repeating itself.

What I mean is that the things that played when seed VC became institutionalized is beginning to happen in the pre-seed market. And the words I am hearing from seed investors are nearly identical to the things I heard from series A and B investors 7-10 years ago.

For example:

  • “Adverse selection”.  Some seed investors think that companies that raise pre-seeds are often flawed. There must be some adverse selection if they are raising small amounts of capital at those prices. Conversely, there is a belief that there is no way a fund can invest in good companies at low prices and at such an early stage. That’s exactly what lifecycle funds said 7-10 years ago.
  • “More traction”.  Increasingly, you hear seed investors that want to see more traction prior to a Continue reading "Seeds and Pre-Seeds: History is Repeating Itself"

Seeds and Pre-Seeds: History is Repeating Itself

As the atomization of seed has become more mature, it is increasingly clear that history is repeating itself.

What I mean is that the things that played when seed VC became institutionalized is beginning to happen in the pre-seed market. And the words I am hearing from seed investors are nearly identical to the things I heard from series A and B investors 7-10 years ago.

For example:

  • “Adverse selection”.  Some seed investors think that companies that raise pre-seeds are often flawed. There must be some adverse selection if they are raising small amounts of capital at those prices. Conversely, there is a belief that there is no way a fund can invest in good companies at low prices and at such an early stage. That’s exactly what lifecycle funds said 7-10 years ago.
  • “More traction”.  Increasingly, you hear seed investors that want to see more traction prior to a Continue reading "Seeds and Pre-Seeds: History is Repeating Itself"

Splitting vs. Expanding the Pie: Thoughts on the New Early-Stage VCs in Boston

Recently, I’ve been spending a fair bit of time with a number of the new early-stage investors in Boston. There are a lot of new folks in the space. Just last week, Axios announced that Stephen Marcus is raising a fund called Riot Ventures and Term Sheet announced that Nilanjana Bhowmik from Longworth will be joining Converge. In addition to these firms, others that have launched relatively recently include:
  • Hyperplane
  • First Star Ventures (FKA Procyon)
  • The Engine
  • E14 Fund
  • Underscore.VC
  • Pillar
  • Glasswing Ventures
  • Tectonic Ventures
As more early-stage investors emerge in Boston, some folks have asked me whether I feel any discomfort around the many new “competitors” on the scene. While this is a rational question, I think it assumes a bit of a “split the pie” vs. “expand the pie” mentality — and I’m a firm believer in expanding the pie. Seven years ago, NextView came onto the Continue reading "Splitting vs. Expanding the Pie: Thoughts on the New Early-Stage VCs in Boston"

What Are Your Valuation Expectations?

One question I know investors sometimes ask founders is “what are your valuation expectations for this round?” It’s a tricky question to answer because you kind of can’t win either way.

If you say something that is around market, you are somewhat negotiating against yourself.  Why anchor yourself low when the market drives the price and you might be able to position yourself for a better deal?

If you say something too high, it may scare some investors away prematurely. All investors will pass at some price, but it’s more likely that an investor will stretch on price once they are emotionally bought-in on an investment vs. up front in the beginning.  Throwing out a price that is too high too early can also signal that you have unrealistic expectations.

If you don’t answer the question you risk seeming evasive or unable to answer questions directly.

What I’d probably Continue reading "What Are Your Valuation Expectations?"

What We Talk About When We Talk About Companies

A big chunk of our time as VC is spent on internal discussions about companies we are looking at.   We believe strongly that when making investment decisions, it’s important to score opportunities quantitatively but make decisions based on conviction. What this means is that we take quite a few votes and measurements from each team member when we evaluate a potential investment. We take two formal votes about the overall opportunity, and also score prospective companies on a few different qualitative dimensions. However, the final decision is not based on an algorithm, but by the conviction of the team member that is advocating for the investment. Given this, why do we bother with tracking and analyzing this data? There are three reasons. First, it allows us to be explicit and clear with each other about how we see an opportunity. Second, it allows us to spot our tendencies and biases over Continue reading "What We Talk About When We Talk About Companies"

Boxes vs. Conveyor Belts

Commerce businesses are notoriously difficult for a number of reasons.  Multiples in this category are usually pretty low, due to low margins, capital intensity, and competitive rivalry.  Also, Amazon has made it such that consumers are accustomed to fast, free shipping, great service, free returns, and other things that are super costly to deliver on (and certainly tough to deliver on better than Amazon).  Some companies may be able to escape this sort of valuation pressure for some time, but most companies end up coming down to earth eventually. And sometimes, coming down to earth happens in dramatic fashion, as was the case with companies like Fab, One Kings Lane, Nastygal, and maybe some others out there right now. When thinking about commerce businesses, I find it helpful to ask the following question. Is this company sending boxes of stuff, or are they sending a conveyer belt? Box companies struggle Continue reading "Boxes vs. Conveyor Belts"