March 19, 2020 Tech Crunch : When the ‘dry powder’ disappears

With record amounts of venture capital raised, a market peak, and now a sudden plunge, the moment feels very much like it did in the spring of 2000 when the high-flying market, rife with young internet companies, abruptly nose-dived, wiping out thousands of startups — and hundreds of venture firms — over the following three years. At least some lessons were learned in the aftermath of that earlier crash. For one thing, says Rupp, in these “unprecedented times, people will show their character. You get a sense of who people are and how they think about the world, and GPs need to be really mindful of that and of how supportive they are in communicating with their portfolio companies.” (read more…)

CATEGORY: capital, resilience, VC

January 20, 2020 Tristan Pollock via Medium : The New VCs: Revenue-Based Versus Shared Earnings

The tides are turning. That is, non-dilutive. No longer are startup founders limited to traditional venture capital that gives only a 1% chance of “success.” Entrepreneurs are in revolt and paying attention to new models of financing that give them refreshed optionality when looking to fund their growth. (read more…)

CATEGORY: alternative financing, resilience

November 24, 2019 Tristan Pollock via Medium: : The Emergence of Revenue-Based Venture Capital

“The advent for start-ups to seek alternative investment from qualified investors is due to both the myopia of VC companies, which they believe fit in their portfolio and highly inflexible terms for founders,” explains Carolina Abenante, the founder of contract management platform NYIAX. This myopia is what has brought about the rise of new venture capital firms that are focused on more than just growing fast in hopes of raking in a big return when the company goes public. (read more…)

CATEGORY: alternative financing, debt, resilience

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

September 10, 2018 SaaS Capital : How Do SaaS Companies Perform in a Recession?

A recession will slow the growth of an “average” SaaS company substantially. In the 2008 recession, the growth rate for arguably the best SaaS companies in the world (by virtue of them being public) fell from 40% to 10%. While the SaaS business model insulates companies from wild swings in revenue and profits, it does not make them immune, and cyclicality will negatively impact those SaaS companies with natural ties to cyclical industries or cyclical business functions. (read more…)

CATEGORY: downturn, resilience, SaaS

July 1, 2018 Harvard Business Review : The Other Diversity Dividend

Over the past several years one of us (Paul Gompers) has examined the decisions of thousands of venture capitalists and tens of thousands of investments, and the evidence is clear: Diversity significantly improves financial performance on measures such as profitable investments at the individual portfolio-company level and overall fund returns. And even though the desire to associate with similar people—a tendency academics call homophily—can bring social benefits to those who exhibit it, including a sense of shared culture and belonging, it can also lead investors and firms to leave a lot of money on the table. (read more…)

CATEGORY: resilience, VC

February 20, 2018 Alessandro Pluchino : Talent vs Luck: the role of randomness in success and failure

The largely dominant meritocratic paradigm of highly competitive Western cultures is rooted on the belief that success is due mainly, if not exclusively, to personal qualities such as talent, intelligence, skills, efforts or risk taking. Sometimes, we are willing to admit that a certain degree of luck could also play a role in achieving significant material success. But, as a matter of fact, it is rather common to underestimate the importance of external forces in individual successful stories. It is very well known that intelligence or talent exhibit a Gaussian distribution among the population, whereas the distribution of wealth - considered a proxy of success - follows typically a power law (Pareto law). (read more…)

CATEGORY: resilience, risk, winner take all

February 5, 2018 Dave Hersh via Medium : Can This Company Be Turned Around?

There are no shortage of companies in need of wholesale transformation, where the strategy or execution didn’t work and they are stuck between capital needs and market realities. (read more…)

CATEGORY: leadership, profitability, resilience

February 3, 2018 Jonathan Lu via Startup Grind : Three profound truths I learned from Silicon Valley Startups

1. There is no correlation between intelligence and bias. 2. Who you raise money from is more important than how much you raise. 3. It’s just as important to be realistic as you are persistent. (read more…)

CATEGORY: leadership, resilience

December 26, 2017 Fred Wilson : The Second Quartile

The best four to five investments per fund will usually produce greater than 80% of the total returns of a fund (the top quartile). This is where you might imagine that we spend all of our time, but the truth is that these investments generally go well and while we certainly do everything we can to help these companies, they often do not demand a lot of our time. When they do require a lot of our time, it tends to be situational. (read more…)

CATEGORY: leadership, resilience, winner take all