Investing in early-stage businesses.
Software as a Service
Business to Business
Direct to Consumer
Capitalization Table (who owns what of a company)
Companies worth over $1B
Employee stock option pool (how much have we allocated of the company to give to employees?)
Changing direction of the business strategy
Document guiding how the company’s round and investor relationship will be
GMV, MRR, ARR
Gross Merchandise Value, Monthly Recurring Revenue, Annual Recurring Revenue
Customer Acquisition Cost, Lifetime Value
1.Investinginto startups or early stage companies
2.Riskyas f**k (most startups fail)
3.Commercializedin Silicon Valley (Apple, Cisco, Atari) (Sequoia, Kleiner Perkins)
4.Minorityownership positions in companies (>25% typically) per round
5.Rangesacross early to late stage investing (companies worth $1M to $1B+)
More important than what you know, it’s who you know.
Building relationships with founders before you invest in them is crucial.
Venture investments are like a marriage – you’re in it for the long run so you better know who you’re getting involved with!!!
Try to provide value to others before you ever expect anything in return.
The most important advice: be nice to everyone, and be open minded.
1.Youcould be a Tesla (which is totally fine)
•Nice business, family style, consistent cash flows
•May get turned down on market size or lack of IP from VC’s most likely
•Small market, good product, okay team
2.Or,you could be a f**king Rocketship
•Venture scale business, potential to become a huge company
•Huge market + perfect market timing + customers willing to spend
•Solid must-have product, growth through network effects, huge following
•Amazing team, and can execute well
1.Angel Groups (MIT Alumni Angels, GTAN)
2.Micro VC Funds (Weekend Fund, Work Life Ventures)
3.Traditional VC Funds (Andreesen Horowitz, Sequoia)
4.Late Stage / Growth Funds (Softbank Vision Fund)
5.Corporate Venture Funds (Salesforce Ventures)
How VCs determine check size
Check Size Example 1
Let’s say the average VC exit is $100 million.
If you own 1 percent of the company at the time of exit, that may be a great multiple on investment but the $1 million in proceeds won’t move the dial on a $50 million fund.
If you own 15 percent, however, it does move the dial on a $50 million fund because you are returning $15M from the original investment.
Each investment must have the ability to “return the fund”, known as an RTFE (return the fund exit)