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fintechjunkie

@fintechjunkie

Dec 2, 2023

2020 + 2021: Most “valuations relative to traction” were crazy

2022 + 2023: Bridge rounds helped startups grow into their valuations

Now + 2024: Most “valuations relative to traction” will be reasonable

But some startups can raise at high multiples due to momentum:🧵👇

Every talented Investor eventually comes to the realization that Momentum is one of the most powerful forces in the growth (and therefore valuation) of a Startup.

Momentum is a very simple Physics concept that ports nicely over to the business world.

The Physics formula for momentum is: P=MV (Momentum = Mass X Velocity) but the easier way to think about it conceptually is “mass in motion”.

In business terms, it matters how large a company is (mass) and how fast it’s growing (motion).

Read 15 tweets

fintechjunkie

@fintechjunkie

Nov 15, 2023

AI is undeniably going to change the world but 99% of AI companies will fizzle and die.

I have real, actionable advice about how to build durable AI companies but understanding my perspective requires a primer on how I think about AI.

Trust me, you’ll like it: 🧵👇

Artificial Intelligence (AI) has become the focus of the investing community and business world over the past 12-24 months but it isn’t a new discipline. Dating back to the 1950s, AI is focused on creating machines capable of mimicking human intelligence.

There are many forms of AI, but the sub-categories of Generative AI and Large Language Models have captured the world’s imagination because they feel “human” and “magical”.

Together, they form the basis for AI learning machines that are starting to produce human-like outputs.

Read 33 tweets

fintechjunkie

@fintechjunkie

Nov 2, 2023

Startup employees are under immense stress right now. They've been told to do more with less and that bad things will happen if commitments are missed.

Stress can't be eliminated but great Leaders take steps that can help:🧵👇

Edit the corporate agenda

A common characteristic of ambitious Leaders is that they set bold agendas and expect their teams to deliver against stratospheric goals.

The energy and feeling of accomplishment that comes with steep forward progress can be addictive.

But world class Leaders know that it's better to focus the collective resources of an organization against fewer things than to challenge their team to deliver everything that’s theoretically possible.

Delivering 100% of 70% is better than delivering 50% of 100%.

Read 16 tweets

fintechjunkie

@fintechjunkie

Oct 25, 2023

You’re probably familiar with SAFE notes if you’re an early stage Founder or Investor.

But did you know that later stage Investors and Founders are also using SAFE notes?

And have you figured out that later stage SAFEs can create real downstream problems for a startup? 🧵👇

Background

A SAFE note is a “Simple Agreement for Future Equity” and it was created by Y Combinator in 2013. It was designed to reduce the cost and complexity of the legal paperwork associated with equity deals for very young companies.

Another important goal was to create a standard for the industry so Founders didn’t get surprised or swindled by terms they didn’t understand.

Read 13 tweets

fintechjunkie

@fintechjunkie

Oct 16, 2023

Board meetings can be incredibly awkward when the CEO and one or more of the company’s Board members don’t see eye to eye.

When I see this happening, I frequently play the role of “peacekeeper” and start by reminding both parties of a well-known parable:

A man in a hot air balloon is lost. He sees a man on the ground and reduces height to speak to him.

"Excuse me, can you tell me where I am?"

"You’re in a hot air balloon thirty feet above this field," comes the reply.

"You must a Board member," says the balloonist. "I am," says the man, "How did you know?" "Well," says the balloonist, "Everything you told me is technically correct, but it doesn’t help me at all."

Read 11 tweets

fintechjunkie

@fintechjunkie

Sep 26, 2023

The startup ecosystem is finally seeing good companies come to market again.

But after a year of focusing on costs and runway, some startups aren’t exciting anymore.

Many startups that try to raise will hear: “We want more proof!”

Here’s what you need to know about proof:🧵👇

Investors aren’t always good at sharing honest feedback with Founders. It’s easier to pass with generic decline reasons than to outline “what would need to be true” for a “no” to become a “yes”.

And the #1 decline reason Founders hear is “we want more proof”.

What Founders want is a metrics driven definition of “proof” but it’s not what they get. Instead, they hear “more proof please” and have to figure it out themselves.

But what Founders need to internalize is that “proof” is contextual and multi-dimensional.

Read 14 tweets

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