Despite a massive correction in tech stocks and the start of the first European war in decades, things still feel oddly normal in our world. While I'm not writing a RIP memo, I do think better safe than sorry.

Let's pray for peace, but here's my advice in the meantime.
/🧵 What we should expect if trends continue:

💸 Fundraising gets harder
📉 Valuations sink lower
🌠 Secondary sales get rarer
😶 More stress
🛑 Harder sales processes
🪑 Regretful losses
🔮 Unknown unknowns – Things could get really weird, really bad, really fast.
/2

At @fcollective we don’t believe that more capital necessarily leads to better startups.

So we looked at a decade of data – all 166 tech IPOs that occurred between 1/1/2010 and 12/31/2019.

The data seems to show that we are right.

More below:

foundercollective.medium.com/dont-overdose-…

/🧵 Many believe that it requires a lot of capital to go public.

Of these 166 startups:

73 raised <$100M.

31 raised <$50M.

10 went public with <$20M in VC.

Veeva, a top 20 startup, raised only $4M.

Atlassian, in the top 10, was bootstrapped.

You need less than you think.

/2

2020 and 2021 have been busy years for Founder Collective – In addition to making new investments, we were fortunate to have 19 exits. While this sample is neither representative nor statistically significant, I think founders could draw a few lessons from it. /🧵

This sample includes public offerings for Coupang, Riskified, ThredUp, and Desktop Metal, a few nine-figure acquisitions, and a cryptocurrency offering. Sadly, there were also several bankruptcies and a few exits in-between.

A few key takeaways:

VCs famously love to say, “Let me know how I can be helpful.”

One key way they can deliver value is helping you raise your next round of funding.

This thread breaks down how you can get the maximum benefit from your earliest backers!

/🧵 ✅ Create a spreadsheet (or Airtable base) of potential investors

First, make a list of all your targets and keep them in a single database. It should track:

Fund
Partner
Do they lead (Y/N)
Notes
Who can make an intro?

/2

“Product Manager” might be the most fluid title in tech.

It can mean anything from a spreadsheet-obsessed APM at Google to a savant who can create new user paradigms from scratch.

But what makes for a good product leader at a *startup?*
/🧵 Product Managers like to think of themselves as “CEOs of the product,” but not all product folks make effective entrepreneurs/leaders.

Here’s what I look for in product folks who want to lead a <10 person startup.

/2

Fundraising is happening at a torrid pace.

Speed dating and shotgun weddings between founders and VCs are happening everywhere and will lead to many unhappy unions.

Since there are no prenups at startups, here are questions you *must* ask before you sign that term sheet!

/🧵 🔭 Will you lead?

Lead investors are the most difficult to find and must be prioritized. Don’t waste time having extensive conversations with any investor until you know the answer to this question.

/2

Encouraging founders to raise less VC feels like telling people to eat spinach when everyone in the startup world is munching on Shake Shack, but it has benefits:

🥇 Better partners
💰 Smaller preference stack
🛣️ More Options
😬 Less stress
💸 Self-control
⏱️ Time to grow

1/🧵 VCs telling founders to consider smaller funding rounds is counterintuitive.

“Don’t VCs want the highest markup?”

“Don't VCs want their portfolio companies to have more money in the bank?”

“Doesn’t it validate his/her investment?”

It’s more complicated …

2/13

We recently hosted a workshop where our portfolio founders had an opportunity to spend time refining their brands with @jbosborne and Marni Kane (instagram.com/marnikane/) from legendary creative firm @redantler. Here are some of the insights we gleaned from the session:

1/🧵 👶 Showcase your flying baby!

“Branding is an exercise in prioritization” was the most common piece of feedback shared with our portfolio. The Red Antler team fashioned a great heuristic to aid in this process – “If your baby can fly, lead with that!”

2/20

🔥COVID didn't start the fire - the tech diaspora was always happening. Miami and Austin are just the latest hotspots. COVID accelerated what I've seen my entire career. 🌆70s-80s = San Jose/Menlo Pk, Rt. 128 (HP/DEC)
90s-00s = Palo Alto (Juniper), BOS (Lycos)
Dot-Com crash = Ghost town except SF Peninsula
(B2B = Back to Banking, B2C = Back to Consulting:)

An external board member – someone who is neither part of the founding team or the VC cap table – can be a great asset. However, founders often wait too late to start the hiring process and value the wrong things.

Here’s how to do it right:

1/15 📏 Build alignment – over years

Don’t rush this process. Build rapport over time. Start building these relationships now. Your VCs have a list of loyal candidates at the ready – If they drive the process, it’s unlikely the new BOD member will be truly independent.

2/15

Entrepreneurs are often so fixated on “getting to yes” with a VC – and will go to great lengths to answer any question posed to do so – that they forget to ask the VC any questions.

Here are 12 questions that founders should ask potential investors more frequently:

1/19 🧵 ↗️ Do you lead?

You want to start your process by finding a lead investor. If a given fund doesn’t lead deals, keep talking to them, but prioritize finding a partner who will. Many processes die because founders can’t find a lead funder.

2/19

The “socially distant party round” has become the hot financing vehicle of 2020!! Managing a cap table with...

🚀 Accelerators
😇 Angels
💵 Pre-seed/Seed/Seed extension(s) VCs
1⃣ “Solo capitalists”

...can be a challenge.

Some thoughts on how to maximize ROI:
1/20 Small investors are no longer tourists – instead, they’re a meaningful part of the ecosystem.

Most VCs like me want help – it takes a village!

The trick is knowing what to ask for, from whom, and how.

2/20

Over the past month, I've been doing a lot of thinking/chatting about remote work ...

From software companies to manufacturers, VCs to educators, organizations large and small are engaging in a massive natural experiment in the science of remote work.

Some thoughts:
1/20 1/19

🤯 Working from home creates new stresses: Some folks have told me they feel more tired at the end of the day despite not having a commute. The endless hours sitting in the same position in front of a small screen likely has something to do with it!

2/20

Covid-19 is top of mind for most people in the startup community this week. Thankfully, full-blown panic hasn’t set in, but founders should prepare so they’re not caught flat-footed.

Here are some things we're talking to our founders about:
1/13 First off, take steps to prepare personally, and encourage your co-workers to do so as well. This @SciAm post by @zeynep is one of the best, level-headed overviews I’ve seen:

blogs.scientificamerican.com/observations/p…

Once that's sorted, here are some more startup-focused thoughts:
2/13

🥈It's OK being #2 🥈

🎉 Good News: You’ve just founded a startup with a unique take on the market. Sales are humming and you raised a seed from a top firm!

☠️ Bad News: You’ve got three direct competitors that each raised 3X as much and are getting better PR.

What do you do? 😱 First, don’t panic. The overstuffed VC market has led this scenario to play out at least a dozen times over the last few years. A competitor raising a bunch of money and even taking an early lead in the market doesn’t mean the end of your startup. If you play it right...
2/12

Over the last month I’ve had the odd experience of talking to a few founders who have built profitable businesses with double digit millions in revenue and they were… bummed out. It surprised me that profit (when coupled with slowing growth) could be seen as a crisis. 1/15 On one level, I understand where these founders are coming from. Once a startup goes from “hyper growth future unicorn” to solid, profitable business...
🏔️ Recruiting becomes harder and different
😊 VCs no longer fawn over you
🤔 Founders may start to doubt themselves 2/15

I recently tweeted about the importance of financial models in evaluating seed stage pitches (

https://twitter.com/micahjay1/status/1138142479331483653

), I want to share a few notes about how and why they’re so helpful and illuminating. 1/19 💳 Capital Needs: Some businesses are just more capital efficient. While this is obvious in many cases, it’s not always so. Founders often have a sense for how much cash they’ll need to really prove things out and scale. At @fcollective we like capital efficiency. 2/19

You won’t often find a carpenter without a hammer, or a chef sans knife, but a shocking number of founders fail to keep their most important tool — a deck — in top form. My advice is to always have your overview deck handy & updated.
1/10 A crisp narrative will increase your valuation, improve your odds of closing a client, and help recruit more easily. Talking points matter. But it’s hard to put a fine point on your pitch without practice. You'll find you use these talking points more than you think.

2/10

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.