Discover and read the best of Twitter Threads about #CollectiveWisdom
Most recents (8)
Imagine your startup had a billion dollars in the bank today. How fast would you spend it?
Default is time-based. Founders hire, commission projects, and spend on acquisition channels with the goal of surpassing the previous round’s valuation in 18-24 months.
1/11
Default is time-based. Founders hire, commission projects, and spend on acquisition channels with the goal of surpassing the previous round’s valuation in 18-24 months.
1/11
The problem is that the "Capital First" method doesn't leave room for error.
Capital alone shouldn't lead startups to accelerate.
Confidence is the only currency that should drive acceleration.
2/11
Capital alone shouldn't lead startups to accelerate.
Confidence is the only currency that should drive acceleration.
2/11
Think of running a startup like driving in low-visibility conditions. GPS gives you a global view, the dash helps level set, but you can only see glimpses of road markings, and people around you are driving erratically.
In what world does it make sense to floor the gas?!
3/11
In what world does it make sense to floor the gas?!
3/11
“I don’t see who would acquire this startup.”
I’ve heard this excuse from VCs explaining a decision to pass on investing in an atypical market. It’s usually a diplomatic way to express a deeper concern about a business, and it’s often a mistake. Here’s why:
/1
I’ve heard this excuse from VCs explaining a decision to pass on investing in an atypical market. It’s usually a diplomatic way to express a deeper concern about a business, and it’s often a mistake. Here’s why:
/1
We heard this all the time when pitching our startup, Brontes, in the dental industry. Turns out we and all of our competitors had meaningful exits. Brontes itself had 5 bids to buy the company in an industry that most VCs believed was devoid of buyers.
/2
/2
If a startup creates a product & builds a business around it, it’s extremely likely that someone will want the asset. During our 1st decade at FC, we’ve seen portfolio co’s acquired by:
🛒 Supermarkets
🚘 Automakers
🏦 Banks
🏭 Industrial Manufacturers
👨🌾 Agribusinesses
/3
🛒 Supermarkets
🚘 Automakers
🏦 Banks
🏭 Industrial Manufacturers
👨🌾 Agribusinesses
/3
It’s often said that the founder/VC relationship is harder to get out of than a marriage. Put that way, it’s shocking how few data points inform investment decisions.
That means it’s *really* important that you get them mostly right.
Some thoughts on how to do that:
/1
That means it’s *really* important that you get them mostly right.
Some thoughts on how to do that:
/1
Here is a sample of the interactions/time spent between the founder/VC in a seed round (note that it’s often much less):
45:00 - 1st meeting
60:00 - 2nd meeting
30:00 - Video chat
60:00 - Partner meeting
90:00 - Misc. Phone/email
90:00 - Diligence
90:00 - Negotiation
/2
45:00 - 1st meeting
60:00 - 2nd meeting
30:00 - Video chat
60:00 - Partner meeting
90:00 - Misc. Phone/email
90:00 - Diligence
90:00 - Negotiation
/2
It’s very likely that you and your investor will spend less than the equivalent of a single workday together, in an effort to gauge fit for a relationship that could last a decade or more.
/3
/3
I’ve had the good fortune to be an investor for almost 15 years and have backed 100s of startups. Only one company in all that time deliberately defrauded its VCs. Catastrophes like Theranos (not an investor) are shocking in part because outright fraud is mercifully rare.
/1
/1
However, one benefit of the startup ecosystem - that there are many paths to success and the field of acceptable practices is wider than most kinds of business - is also a weakness. The line between “rule” and “best practice” sometimes blurs under stressful conditions.
/2
/2
It’s all too easy, with the best intentions, to start down a slippery slope. For example, an entrepreneur might off-handedly mention that they’ve “signed” a certain key customer when in reality, they only have a MoU.
/3
/3
Even for strong startups, fundraising is a marathon that requires near constant attention for 8-12 weeks. The process is punishing, and riskier than you might imagine. You need to prep for it as seriously as you would a race.
/1
/1
Prepare for rejection. A lot of it. A promising startup will get 17 or 18 “no’s” for every “yes.” These brush-offs often have less to do with the startup in question than idiosyncratic context or concerns for each VC. Still, it stings. Don’t get demoralized.
/2
/2
To make matters worse, the stress level will ratchet up every week as inevitable “passes” pile up. Many deals are closed sub-optimally simply because the founder is ground down by the process, slightly panicked, and wants to be done with it. You can avoid this fate!
/3
/3
I recently tweeted that when pitching:
“Launch right into the biggest statement you can make about your company's impact in the future.”
A few more thoughts on pitching the big idea:
1/13
“Launch right into the biggest statement you can make about your company's impact in the future.”
A few more thoughts on pitching the big idea:
1/13
Three masons on a job site were asked about what they were doing.
Each answered differently:
🧱 One said “I'm laying brick”
🏗️ The next “I'm putting up a wall”
⛪️ The last “I'm building a cathedral”
This parable about perspective is instructive to startups.
Because:
2/13
Each answered differently:
🧱 One said “I'm laying brick”
🏗️ The next “I'm putting up a wall”
⛪️ The last “I'm building a cathedral”
This parable about perspective is instructive to startups.
Because:
2/13
The telling of your story will have a massive impact on whether you can inspire people. It will influence everything from the valuation you command to the caliber of talent you can recruit.
3/13
3/13
One argument I hear in favor of big $$$ fundraising is that it will help in recruiting. It’s a logical enough belief but mistaken. It assumes there’s a linear relationship between the amount of funding raised and caliber of recruits. 1/16
It’s absolutely true that the top 10 startups at any point in time can have their pick of talent. I doubt many execs or star engineers would turn down a chance to talk about a key role at Stripe, Airbnb, etc. However, only a handful of companies have this luxury. 2/16
One way to think about fundraising is that it provides a series of keys that unlock access to different talent pools and amount is non-linear value: 3/16
Just a reminder, it is your job as a founder to pursue M&A opportunities when the time is right. It shouldn’t be a taboo topic w founders/investors. By a pure numbers POV, you’re going to sell your company at some point. 1/14
2/14
Laying the groundwork can have a massive impact on the multiple you receive. It can be the difference between a panicked fire-sale acquihire when you’re out of cash, or a respectable multiple that makes you and your team rich. Here’s a six-step playbook.
Laying the groundwork can have a massive impact on the multiple you receive. It can be the difference between a panicked fire-sale acquihire when you’re out of cash, or a respectable multiple that makes you and your team rich. Here’s a six-step playbook.
3/14
Step 1: Network your way to the appropriate people at potential acquirers. Like VCs, these folks are paid to take meetings. Try to build a solid rapport. Bankers do WAY better when founders have a pre-existing relationship with buyers.
Step 1: Network your way to the appropriate people at potential acquirers. Like VCs, these folks are paid to take meetings. Try to build a solid rapport. Bankers do WAY better when founders have a pre-existing relationship with buyers.
