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I had a deal worth $2M go to $0
- (out of a fund that's $500M so a small trade BUT STILL!)
- The sneaky side of VC no one shares.
Founders can be legends or ahem, not.
My totally un-PC breakdown of red flags I look for (& watch for in myself - all human):
- (out of a fund that's $500M so a small trade BUT STILL!)
- The sneaky side of VC no one shares.
Founders can be legends or ahem, not.
My totally un-PC breakdown of red flags I look for (& watch for in myself - all human):
#1 Carrera marble = cashflow negative
Things were going
on a port co.
Flew to LA to see if we could restructure & save.
Pulling up, I start to worry. Startup w/ $2M ARR had an office FB would envy.
Fing custom cappuccino makers (ruh roh).
Things were going
on a port co.Flew to LA to see if we could restructure & save.
Pulling up, I start to worry. Startup w/ $2M ARR had an office FB would envy.
Fing custom cappuccino makers (ruh roh).
Walking on the echoing marble I realized:
The nicer the digs, the less the margin.
Lesson: keep your strappings like your cap stack, simple.
The nicer the digs, the less the margin.
Lesson: keep your strappings like your cap stack, simple.
#2 Watch out for Narcissus
I walk into the founder's office. The walls are covered in photos.
As I lean closer I realize, they aere all of him.
One is a self-portrait.. oil painted *le cringe.
I walk into the founder's office. The walls are covered in photos.
As I lean closer I realize, they aere all of him.
One is a self-portrait.. oil painted *le cringe.
Framed fame = future shame.
Lesson: keep your cover stories to yourself (I mean who even posts those?
)
Lesson: keep your cover stories to yourself (I mean who even posts those?
)
#3 Self Proclaimed Visionaries
Oh lord, if you have that on your linkedin profile we prob won't be buds.
As we're poring over #'s to see how to stop the bloodbath,
I ask Q's about burn, cash on hand etc.
Founder has NO idea of the #s,
Oh lord, if you have that on your linkedin profile we prob won't be buds.
As we're poring over #'s to see how to stop the bloodbath,
I ask Q's about burn, cash on hand etc.
Founder has NO idea of the #s,
Finally, he says exasperated, "I'm the visionary, our CFO handles the #'s."
I slowly lower my face into my hands.
I slowly lower my face into my hands.
This company was a loss. No surprises here I'm sure.
That happens. In most VC funds it's 60-80%.
I pride ourselves on having it be less than 5%.
But sometimes, losses have to be cut.
That happens. In most VC funds it's 60-80%.
I pride ourselves on having it be less than 5%.
But sometimes, losses have to be cut.
Going forward I like my founders:
- bottom line obsessed
- cost centric
- uncaring about personal press
- and ya know.. into numbers as opposed to visions
What red flags have you found in investing in deals, founders? Or even investors - we're certainly a ridiculous lot.
- bottom line obsessed
- cost centric
- uncaring about personal press
- and ya know.. into numbers as opposed to visions
What red flags have you found in investing in deals, founders? Or even investors - we're certainly a ridiculous lot.
What do you want to know about investing in founders and startups?
After investing in 80+ companies I've seen a thing or 12.
After investing in 80+ companies I've seen a thing or 12.
