Adapted from a TweetStorm. An “index of Fortune 500 companies in which the founder is still deeply involved performed 3.1 times better than the rest over the past 15 years” from Bain & Company Do founder CEOs outperform because they have: – Owner’s mindset – Unique, spiky feature, or capability that gives a business special […]
Read the postDescription Overview: A VC may choose to pay a higher price for shares in a company to win the deal. Also, the company may be running an auction for shares and price may be the determining factor in winning. Consensus vs Successful 2×2: When many VCs expect a company to be successful, it will drive […]
Read the postAs a founder turned investor, I’ve immersed myself in the startup world for ~20 years. I have spoken with 100s of founders and investors and seen many sides of the ecosystem. As a founder, I’ve been the beneficiary of VC investment and seen it work. I spend much of my time focused on the benefits […]
Read the postPattern Matching Description Pattern Matching is when an investor uses patterns or experience from the past in order to make decisions about the current investment. You can think of it as reasoning by analogy or using the benefit of experience to recognize similar situations. It can be used for attributes of the business like seeking […]
Read the postDescription A scout fund or network is when an established VC fund delegates most or all decisions on identifying and selecting investments to a loosely affiliated party. Often the scout is investing 1 to 10% of the amount the main fund would normally invest. The scout is sometimes a founder or other professional in the […]
Read the postDescription While not common, there are some investors who use a system of asking outside experts for input or effectively to make the decision for them. Sometimes this takes place as a committee meeting where the judges or selection panel discusses a series of applications or proposals. Other times this may be a survey where […]
Read the postDescription A public decision rule is a stated threshold or set criteria when an investor will invest. Often the decision rule will include some flavor of Follow Only. For example, participants in a particular program or school who raise $X from other investors will be eligible for $Y investment from this fund. Benefits Create Distance […]
Read the postDescription A strategy of only considering for investment companies that have already secured a lead investor or significant other investors/capital. This decision-making pattern can be mixed with others like Strong investment committee, Consensus (or Veto) or Conviction Does the Deal. Often this is an approach used by investors new to a stage, strategy or […]
Read the postSo, you want to be a startup founder. But how do you find an idea worth doing? Despite what startup formation myths say, many founders decided they wanted to be founders and then went in search of a product or problem. It is a much more common pattern than you normally see in the media. […]
Read the postDescription: Revenue-based financing (RPF) is a financing arrangement where a company takes in cash now and pays back over years a percentage of monthly or quarterly top-line revenue (say 1 to 9 percent) until a fixed amount is paid back (usually a fixed multiple of the original cash provided say 2 to 3 times). It […]
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