Pattern 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 […]
Read the postBureaucratic organizations like governments can have almost all of their budgets encumbered year to year in doing what they have already been doing. For established vendors, this momentum and longevity can be a boon in that it leads to long customer relationships. For startups, it can present a problem. How do I break in with […]
Read the postShort Description: Mindset is similar to a public market-style investor in that focus is on the selection of the right investment without emphasis or belief in post-investment portfolio company support. Benefits: Avoids the trap of thinking you are the management of the companies and therefore focuses you on picking good management that can accomplish the […]
Read the postShort Description: A way for a GP to build brand for sourcing and LP fundraising is to have investments in companies that are successful and well known. The logos of these well-known and respected companies can be used in the GPs marketing materials hence the term “buying logos”. Buying logos is distinct from investing early […]
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