Category Archives: Venture Capital

HAS VENTURE CAPITAL STRAYED FROM ITS ROOTS?

‘Venture capital’ has become a household concept. There is a proliferation of funds, valued at almost US$300 billion globally. It has turned into an asset class of its own – generating interest from traditional sources of finance like pension funds and family offices but also the retail investor who wants a slice of the entrepreneurial action. We see the rise of the professional entrepreneur, a career path that seems as normal as banking or engineering. Venture capital, just by the size of the funds under management today, has become a ‘financial art’ of sorts. It has not only become institutionalised, one could say that it has indeed become commoditised. Consider the portfolio approach to investments, where one bets on the probability that some will pay off while others won’t. The “1 in 10” thought process also means that venture capitalists today have to be brutal about cutting off the losers and backing the winners, doubling down on those that may stand that 10x chance of winning the odds. Has the time come for us to rethink VC in today’s world? Business, if treated as a force for good, can only create a system that generates returns in an ethical, balanced way.  Read More >>

YC JUST PUBLISHED A 70-PAGE SERIES A GUIDE SO FOUNDERS DON’T TANK THEIR OWN PROSPECTS

The morning of February 26, 2020, Y Combinator is publishing a 70-page Series A guide based on its work with 190 YC companies over the last couple of years. It’s part of an initiative launched in 2018 to help these alums understand how Series A rounds work — and how to make them work to their advantage. The idea is that Series A rounds were understood on the investor side — that they are looking for ARR, plus profit, then comes funding. It’s entirely possible to raise a great story and no metrics, versus great metrics and no story. There’s a lot of preparation required; they advise against companies going out to market because of a false signal. They also explain how to work through a diligence request by an investor. It’s really important that founders ask instead about what the VC is trying to learn from the diligence request, then call those customers so they are ready. If YC can help companies build bigger companies and level the playing field, that’s just overall good for the rate of innovation in the world.  Read More >>

THE A16Z MARKETPLACE 100

Over the past few decades, marketplaces like eBay, Airbnb, Uber and Lyft, Alibaba, and Instacart, have become some of the most impactful companies in the world economy. Collectively, millions of individuals and small businesses make a living operating on these platforms, where hundreds of billions of dollars of goods and services trade hands each year. The Marketplace 100 is a ranking of the largest and fastest-growing consumer-facing marketplace startups and private companies. One key takeaway from this is that a handful of companies dominate. The fastest growing categories exemplify why marketplaces can be so powerful for consumers and suppliers: they create new channels in markets with pent-up demand, unlocking new transaction behaviors. The fastest-growing startups reveal emergent consumer categories. Some categories are competitive and fragmented, while others have a clear winner. Scaling the mountain is much harder than one would think.  Read More >>

5 Tips for Pitching Your Startup to Investors

Venture capitalists sit through hundreds of pitches a year. Entrepreneurs can make the most out of the opportunity by having their pitch stand out and have enough information to be taken seriously. If executed properly, entrepreneurs can obtain enough capital to jump-start their businesses. By cutting to the chase, investors can lean-in and gain interest right away. Having a specific potential market will increase the venture capitalists’ confidence in the company. Endorsements from fellow team-members in the company is endearing, and something investors like to hear. Automating demonstrations can prevent awkward glitches that can arise. The secret to funding is to have a buffer: ask for double the amount needed.  Read More >>

Deciding How Much Equity to Give your Key Employees

The new trend within tech start-ups is giving offering potential talent equity shares.  Giving worthy job candidates a share of equity could be the difference of them picking your company over someone else’s.  This also motivates workers, and decreases employee turnover. Equity encourages employees to stay long-term, because they are motivated by the idea of the company enters the public stock-market, or if it is sold in the future.  Equity acts as a foreign currency, and the amount depends on timing, need, and expertise. It is also very good for attracting potential advisors to the company. Advisors can triple the value of a company, so the equity would eventually pay for itself.  Read More >>

Angular Ventures wants to “re-imagine” early-seed venture capital in Europe and Israel

Angular Ventures a VC firm founded by former DFJ Esprit partner Gil Dibner targets startup firms in Europe and Israel to provide early-stage funding for deep tech startups. They worked in stealth mode building their portfolio from the past 2 years and have invested in 12 companies ranging from $250,000 to $1.5 million and they aim at making 5-7 new investments every year. Dibner who is the sole partner for Angular Ventures wants to build a sector-focused firm and plans to get rid of the geographical boundaries that hinder early-stage funding, they have made investments of $41million both in Europe and Israel ensuring a US presence in order to support portfolio startups globally. Read More>>

the reason why Hypersonic pitch day is so exciting.

The pitch was held at Doolittle Institute in Niceville, Florida on November 7th,2019. Over 9 startups pitched their products on Hypersonic Flight such as Mach 5 plus capabilities, These included small propulsion units to composite materials that are capable of withstanding very high temperatures and speed. The reason the pitch is so exciting is not just the same day contract of $750,000 that will be awarded to the winner of the pitch by the Airforce but also the opportunity presented by Airforce to the company to partner on the current up-gradation project of their warfighters such as  F-35 with Hypersonic grade weapons. The pitch day winner will support the two major Air Force boost-glide hypersonic prototype efforts now underway: the Hypersonic Conventional Strike Weapon and the Air-Launched Rapid Response Weapon (AARW). Read More>>

Bias is abundant in the world of venture capitalists.

Recent studies based on data acquired from the USA suggests that VC’s are biased towards founders of same ethnicity irrespective of their financial behaviour, the male-dominated VC sector and the lingering gender gap further justifies the tendency of VC’s towards homophily. However, this does not mean we eliminate rationality completely because when the study was further extended to understand the 622 deals within India’s rapidly maturing VC industry. It was understood that the VC’s did not completely base their decision on the social attributes such as region, caste or language rather on the future cash flows from the deal. using measures such as the internal rate of return (IRR) as a metric the researchers could identify the number of successful deals out of the ones that were being studied. Read More>>

How gender segregation affects the Entrepreneurial capital market

Lori Greiner, a millionaire businesswoman on Shark Tank advise the woman entrepreneurs to consider themselves as a person in business equal to anyone else. However, the market for entrepreneurial financing is not really gender-neutral hence woman-run startups struggle to secure funding in the initial stages compared to their male counterparts. The questions asked during the sales pitch and the language used to describe an entrepreneur shows the discrimination involved, further venture capitalists tend to associate more with similar others especially of the same gender thus confirming the gender stereotype. The downside of this gender segregation is that it will lead to the creation of Pink Silos reserved for female-run startups and investors and thus separating them from the rest. Read More>>

Why startups with Gender-inclusive founding teams are profitable?

The Kauffman Fellows Research Center (KFRC) analyzed US venture-backed startup data from 2001 and it was observed that teams that had at least one lady in the founding team of startup had better chances of getting bigger capital investments.  This claim is further supported by the fact that the woman founded companies have increased from 4% to 21.6% in the last two decades, although the progress is painfully slow the trend seems to show steady growth. Thus startups should capitalize on this advantage while choosing their founding partners.  Read More>>