August 3, 2020 The Hill : Revaluing venture capital

One of the strategies to address this issue has been to create “carve outs” or small allocations from big funds to invest in diverse fund manager and entrepreneurs. Institutions like Goldman Sachs have done just that. There are a few challenges with this model. First, most institutions have criteria that does not allow them to invest in first-time fund managers. In a world where only 14 percent of investment managers are female, with a significantly smaller number having run a fund before, how can we possibly widen the pool? Layered on top of this challenge is the financial burden it takes to get a fund up and running. Many managers have to forgo salary for at least a year while they are fundraising (and those are the lucky ones who even raise a fund). Very few women and minorities have this kind of capital cushion. In addition, fund managers have to commit 1 percent of the total fund size. So, if I raise a $50 million fund, I have to put in $500,000 of my own money. Potential investors base their diligence on how much “skin in the game” the managers have committed. I don’t have that kind of money, and I know many others in my position don’t either. These are meaningful technical issues that can and need to be addressed. But those technical issues are not the biggest hurdle. Women and minorities think differently; they run companies differently; they communicate differently, and they see opportunity in different places. In short, you can’t just put a woman or minority in the position and expect her to act like the traditional male investor or entrepreneur. To change the diversity of the industry we must be willing to embrace divergent cultural styles, different ways of communicating, and new ways of assessing market opportunities. (read more…)

CATEGORY: capital, leadership, VC

June 25, 2020 Fred Wilson : Board Diversity

Ten years ago the tech/startup/venture industries started to make gender balance a priority in management teams, boards, and the venture capital industry. While we are not where we need to be, we have made good progress. We can do the same with diversity across the board. We can use the same approaches and the same persistent approach to the issue. (read more…)

CATEGORY: leadership, VC

April 9, 2020 James Currier, NFX : The Psychology of Founders Who Win in Downturns

In times of ambiguity and dislocation, fear can take over. Even exceptional employees get disoriented and confused. They may become paralyzed. Founders can best prevent this from happening by shifting their mindset back to the mission that got them started on this journey in the first place. They should find themselves back at the office (or the home office) recommitting to their mission — even if there is only one week of money left in the bank. Because it’s what they want to be doing no matter what, regardless of the money. Lead with that spirit, and the team and board will follow. (read more…)

CATEGORY: downturn, leadership, resilience

March 1, 2020 Alex Lazarow via HBR : Beyond Silicon Valley

Start-ups operating amid conditions of relative scarcity, where capital and talent are hard to come by and economic shocks are more likely to occur, face unique pressures. Yet many have become superstars in their own right. Their formula involves a more balanced approach to growth, a focus on solutions to real problems, and investment in their workforce for the long term. These “frontier innovators” hold important lessons for companies of all sizes and in all locations—including Silicon Valley itself. (read more…)

CATEGORY: bootstrap, leadership, profitability

December 6, 2019 Entrepreneurship Theory and Practice : ADHD-Related Neurodiversity and the Entrepreneurial Mindset

Our results suggest neurodiversity from ADHD is meaningfully related to aspects of an entrepreneurial mindset. Our results suggest entrepreneurs with ADHD employ a more intuitive cognitive style and demonstrate higher levels of entrepreneurial alertness and RICH, while no significant differences in metacognition were found. (read more…)

CATEGORY: leadership, risk

December 3, 2019 Aaron Dinin via Medium : Venture Capitalists Don’t Invest in Magic. Neither Should You.

Instead, the kinds of growth companies should be studying, charting, and analyzing is intentional, controlled growth. That means growth driven from things like replicable marketing campaigns, sales funnel optimizations, and improving your company’s customer success process. Simply put, when you can attribute a sale to a specific and intentional action your team has taken, and when you can consistently repeat the action to achieve similar results, that’s when it’s reliable, predictable, investable growth. Everything else is just magic: fun to watch, but not something you can invest in. (read more…)

CATEGORY: growth, leadership, product-market fit, VC

October 1, 2019 Jimena Guijarro : Venture Capital and Design

The key to building strong teams and culture is giving everyone a common cause to fight for. With design at the center of culture, every decision is aligned with the user needs. When this is true individual egos disappear. There are no bad ideas, just ideas that either do or do not align with user needs. The latter can make or break the team, especially in the early stages and through periods of fast growth. Building a user-centric system creates accountability and provides clarity amid startup ambiguity. The result is a functional team, a system that captures value from talent, and top customer experience. According to the Design in Tech Report, 89% of companies in 2018 said the customer experience is their competitive advantage. (read more…)

CATEGORY: leadership, product-market fit

September 16, 2019 Bigfoot Capital : The Pros and Cons of Not Selling Equity

If you’re selling equity, it better be a really good opportunity where folks just want in and can live with ceding control. If you’re not, retaining control and operating flexibility is much easier. And you’ll likely spend a lot less time explaining why you’re doing what you’re doing. (read more…)

CATEGORY: alternative financing, debt, leadership

February 7, 2019 Sahil Lavingia via Medium : Reflecting on My Failure to Build a Billion-Dollar Company

But we were venture-funded, which was like playing a game of double-or-nothing. It’s euphoric when things are going your way–and suffocating when they’re not. And we weren’t doubling fast enough to raise the $15M+ Series B (the second major round of funding) we looked for to grow the team. (read more…)

CATEGORY: leadership, VC, winner take all

October 16, 2018 Brendan Burns via Forbes : A Faster Path To Success: Alternatives To The Traditional Startup/VC Route

I have been an early-stage tech guy my whole career since graduating from Columbia Business School during height of the dotcom boom. At heart, I am little bit of a contrarian and very much a value investor. For that reason, I was looking for a shortcut when starting my last company—I think I found one, and it’s one you can use, too. (read more…)

CATEGORY: bootstrap, leadership, profitability, resilience