4 essential truths about venture investing

After making pre-seed investments for seven years, I have observed how different the pre-seed stage is from Series A and later-stage investing.

Today, I want to highlight four ideas that are true across different stages of investing.

Venture outcomes are driven by a power law

Power law is an immutable law of the universe. Examples include the distribution of population in cities, price of artwork, and unfortunately, wealth distribution. This law is also known as the Pareto principle, and colloquially known as the 80%-20% rule.

The average manager faces a very real possibility of making no money at all because of how steep the power law curve is.

Venture capital is no exception and the outcomes of every venture portfolio will likely follow a power law distribution. There are two significant things to think about here:

One: Because most startups fail, the distribution is going to have a lot of zeros (or near zeros) in the long tail. The zeros are going to be followed by singles and doubles.

Two: The biggest winners, when they happen, tend to be huge. Unicorns were hard to come by when Aileen Lee penned her now-famous article in 2013. Today, unicorns are no longer as rare and top-tier firms are constructing their portfolio with the goal of funding a decacorn — a company valued at $ 10 billion or higher.

There is nothing mysterious about the power law dynamic in venture. Just like the rich get richer, the biggest companies get bigger.

A startup that reaches $ 10 million in revenue is much more likely to double, double again and then cruise by $ 100 million in revenue versus a startup at the $ 1 million mark now trying to get to $ 10 million.

At scale, everything is different — the resources, the possibilities and access to capital. Of course, even companies that reach very substantial scale may run into obstacles and eventually underperform. But that is not the point.

The point is that the ones that do end up winning and driving all the returns keep doubling and continue getting bigger and bigger.

Hence, the outcomes of the venture portfolio fit a power law curve.

The best managers in the business are distinguished by a few more at the very top of the curve.

The average manager faces a very real possibility of making no money at all because of how steep the power law curve is.

Your fund size is your strategy

There is a piece of feedback that fund of fund managers frequently give to GPs: Your fund size is your strategy.

What they are essentially saying is that a fund’s portfolio construction will depend on how much capital is under management, and vice versa. Why is that?

Let’s take two extreme examples — a manager of a $ 10 million fund and a manager of a $ 1 billion fund. Let’s assume that both managers want to lead rounds. If the first one decided to be a Series A fund, it would be extremely concentrated. It may be able to lead 1-2 rounds, but that’s it. Given the power law nature of outcomes, it would be extremely unlikely for this manager to generate a good return.

Startups – TechCrunch

5 Essential Traits Of Startup Leaders

You not only have to be an innovator but also a leader if you want to succeed in the startup ecosystem. For a startup to exist, you should have a disruptive idea, the right investor, and unique positioning. But more than that, you need to be an exceptional leader to lead the startup and make it stay in the market for long.

Startup leadership is a unique art that not everyone possesses. You can be an entrepreneur, but being a startup leader takes some extraordinary effort. 

Hence, only a fraction of entrepreneurs can convert themselves into good startup leaders.

When you start a startup, you become the steering wheel of your company. You decide the direction and the path your startup chooses. Hence, its vital for you to have good decision-making, management, and leadership skills.

But that’s not all it requires to be a startup leader. Here’s a list of five essential characteristics startup leaders possess.


Focused on Future Goals

Growth in startups is the result of goal setting and implementation. Setting the correct goals, recognising and applying the best course of action are the two most challenging things in startups.

Visionary leaders plan and define their future strategies well in advance.

One such leader is Elon Musk, who always thinks about the future. When many space agencies are still thinking about sending their astronauts to Moon, his mission is to send people to Mars in the next five years.  

Once the goals are set, leaders constantly think about new and innovative ideas to achieve them. They try to find minds that can assist them in reaching these goals. Every day and with every step, they try to get closer to their goals. This way, they reach the goals well before the deadline.

Good startup leaders are ready to make sacrifices in the short-term to attain long-term success. They always find long-term fixes to the issues that arise in the journey of their startup. Shortcuts are never an option in their journey of achieving future goals.



Ability to Take Calculated Risks

There is a fine line between reckless decision-making and calculated risks. A good startup leader always evaluates and measures his decision before implementing them. But at the same time, they are always ready to experiment and come up with new ideas. They are never afraid of failure while taking risks.

Michael Stelzner, CEO and founder of a US-based media company, Social Media Examiner, once wrote that the preparedness to experiment with innovative ideas is vital to business growth. According to him, if you never try out, you’ll never gain. He also talks about how taking risks and failures are stepping stones to success.

Still, while taking risks, their consequences and dangers are evaluated. Great leaders judge whether the rewards from the risks are worth it or not before taking them. They never do something just because their competitors are doing it. They assess whether it is beneficial for their startup or not.


Continuous Learner

Great leaders always have a lifelong thirst for learning. Research of Harvard Business Review shows that leaders in continuous learning mode build stronger leadership skills than their peers. They keep on expanding their knowledge to innovate and become better every day. 

In 2017, the CEO of Zomato, Deepinder Goyal, told Economics times that his mentor and founder of Info Edge, Sanjeev Bikchandani, has given him the hunger to learn from his mistakes. He also expressed that no one can be 100% right all the time, and therefore everyone has to learn constantly from their mistakes.

Reading books & magazines, hearing podcasts, studying new market strategies, and reviewing new technologies are habits of leaders that make them constant learners. These habits help leaders to think innovative ideas and stay ahead of others.


Adaptable to Changing Environment

The startup is always a disruptive idea providing a solution that is new for society. Thus, the business environment is more volatile for startups compared to a regular business. Especially in new technology-based startups, advances and changes are quick and common. Therefore, leaders are vigilant to predict these advances and changes well before they take place. 

Mark Zuckerberg has an interesting way of producing ideas and innovation to deal with changing scenarios in the field of social media. He stages “hack-a-thons”, in which programmers, developers, and hackers try to create and suggest innovative ideas for Facebook.

A smart startup leader always has a visionary and open mind. They are open to accepting all types of ideas and thoughts to adjust quickly to the changing environment.

Selflessness

Generally, successful startup leaders are those who are always selfless. Before thinking about themselves, these leaders think about their vision, company, employees and customers. Selfless leaders share their knowledge, skill, and experience with other team members and focus on the startup’s overall development and growth. These leaders exhibit the quality of enabling and helping others in the organisation. 

Mary Barra, the CEO of General Motors, once quoted, 

“if we win the hearts and minds of employees, we are going to have better business success.”

Successful leaders like Mary Barra understand and share the feeling of both team members and customers. Concentrating on the growth of others is the trademark of such leaders. They allow others to take the front seat and shine.



Bottom-Line?

The golden rule of startup leadership is never to copy leaders of other startups. You have your way of doing things. Focus on honing your skills and find a path you can venture to.

However, never turn your back on what other people are doing to lead their startups, as you may find new ideas in doing so.

Finally, no one can exhibit all the characteristics of a good leader. But trying to imbibe as many traits as possible will only help to become a better leader.

Go On, Tell Us What You Think!

Did we miss something? Come on! Tell us what you think about our article on startup leaders’ traits in the comments section.

Feedough

The Brief: Gender + climate call, venture capital in India and Nigeria, state of Opportunity Zones, essential bills, dairy waste, wooden windmills – ImpactAlpha

The Brief: Gender + climate call, venture capital in India and Nigeria, state of Opportunity Zones, essential bills, dairy waste, wooden windmills  ImpactAlpha
“nigeria startups when:7d” – Google News

[Insightec in PR Newswire] Brazilian Health Regulatory Agency Approves MR-Guided Focused Ultrasound To Treat Essential Tremor And Tremor-Dominant Parkinson’s Disease

HAIFA, Israel and MIAMI, Feb. 10, 2021 /PRNewswire/ — Insightec®, a global healthcare company focused on creating the next generation of patient care, announced it received market approval by The National Medical Products Administration (NMPA), the Chinese agency for regulating drugs and medical devices (formerly the China Food and Drug Administration, or CFDA).

Read more here.

The post [Insightec in PR Newswire] Brazilian Health Regulatory Agency Approves MR-Guided Focused Ultrasound To Treat Essential Tremor And Tremor-Dominant Parkinson’s Disease appeared first on OurCrowd Blog.

OurCrowd Blog

[Insightec in PR Newswire] China National Medical Products Administration Approves MR-guided Focused Ultrasound To Treat Essential Tremor And Tremor-dominant Parkinson’s Disease

HAIFA, Israel and MIAMI, Feb. 10, 2021 /PRNewswire/ — Insightec®, a global healthcare company focused on creating the next generation of patient care, announced it received market approval by The National Medical Products Administration (NMPA), the Chinese agency for regulating drugs and medical devices (formerly the China Food and Drug Administration, or CFDA).

Read more here.

The post [Insightec in PR Newswire] China National Medical Products Administration Approves MR-guided Focused Ultrasound To Treat Essential Tremor And Tremor-dominant Parkinson’s Disease appeared first on OurCrowd Blog.

OurCrowd Blog

Setting These 3 Types of Goals is Essential to Your Startup’s Success

The following is excerpted from “Exit Rich: The 6 P Method to Sell Your Business for Huge Profit” (January 26, 2021; Fast Company Press) provided with permission by authors, Michelle Seiler-Tucker and Sharon Lechter.

Let’s face it: Rarely does someone go into business with the end game in mind. Think back to when you started or bought your business. You were probably beyond the moon excited to be your own boss, able to create your own financial freedom and to have more quality time to spend with your family. However, those dreams became overshadowed rather quickly by the overwhelming demands of building and running your business—or, worse yet, your business running you!


Your Guide to the Season’s Hottest Gifts from Dell: Download Now and Save up to 39% Off

The biggest issue I see with business owners is that they don’t plan their exit, or end game, when they launch their business. Even when they do plan on selling their company eventually, they usually haven’t determined their desired sales price or range. Sadly, most entrepreneurs and franchise owners don’t think of selling until they’re forced to due to boredom, poor performance, or a catastrophic event. These, unsurprisingly, are usually the worst times to sell. The best time to sell is when your business is doing well and trending up.

It’s natural to set goals. Unfortunately, however, many people never achieve them. Perhaps they have not set a specific written goal, or they have not set a specific time frame. Most importantly and most likely, they have not identified their WHY.

You can’t bake a cake without flour. If you did, your cake would never rise. The same holds true with your business. If you leave out the key ingredient, your WHY, the sales price will never rise to your desired expectations.


Related: Why Entrepreneurs Shouldn’t Be Afraid to Ask for Help

The rules of goal setting

To keep focused on your WHY, it is important to set goals for your business. Goals will keep you moving forward.

The rules of goal setting are simple:

  1. Define a specific goal
  2. Set a time frame to accomplish your goal
  3. Determine your WHY

It’s almost impossible to set goals when you are unclear of what you really want in your life. Setting meaningful goals takes some serious soul-searching to determine what you really want to accomplish in your business and personal life.

Most of us entrepreneurs are super busy running our businesses, tending to our families and handling life’s everyday occurrences. It’s hard to determine what your ultimate goals are when you are so overwhelmed on a daily basis. Therefore, it’s imperative to take some time to escape the noise and try and do some deep meditation and soul-searching to determine what you really want.

There are three types of goals that you should consider:

A-Type Goals 

A-type goals are the goals you know you can reach with little to no effort, because you have done it before. There are no real hurdles to overcome, and there is absolutely no growth in obtaining these goals.

B-Type Goals 

B-type goals take a little more effort, but they are obtainable. It may help you grow a little to pursue a B-type goal, but it won’t push you to learn new skills or challenge you to grow outside your comfort level.

C-Type Goals 

C-type goals are those goals that are completely outside your reach, and you have no idea how you are going to accomplish them. C-type goals are what excite us, what get our juices flowing, and what keep us in the game, no matter how difficult the obstacles are.

These are the goals that have invented electricity, the internet and smartphones. These are the goals that changed the world. They are not easily obtained, but like the lesser goals, they must be specific, have assigned time frames, and—most importantly—encompass a defined WHY.


Sign Up: Receive the StartupNation newsletter!

Beware, though. Your C-type goals will be full of distractions, roadblocks, potholes and crashes. As a result, you must identify and stay true to your WHY and stay on course, despite everyone and everything that is trying to deter you and knock you off your path.

If your C-type goals do not scare you, you are not reaching high enough. You might be saying, “I don’t have all the answers, competency or skill sets; therefore, I will never reach my C-type goals.”

On the contrary, if you know all the answers, you are on the wrong path, and you won’t experience any growth along the way. Once your C-type goals are clear, the magic happens, the specialist appears, answers show up and a path is created.

“Exit Rich” is available for pre-order now and can be purchased via StartupNation.com.

The post Setting These 3 Types of Goals is Essential to Your Startup’s Success appeared first on StartupNation.

StartupNation

5 Essential People to Have in Your Network as You Begin Your Entrepreneurial Journey

Succeeding as a new entrepreneur might seem more challenging now than ever before. According to the Bureau of Labor Statistics, 20 percent of new businesses don’t survive for more than a year, and nearly half survive only five years.

Looking through the lens of COVID-19, recent reports show that millions of businesses could close in the next few months, depending on the ongoing impact of the crisis. However, this shouldn’t dissuade you from your path of business ownership—some of the most successful businesses in history started during a recession.


StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here

The key is to connect with the right professionals to make your life easier. If you’re an aspiring entrepreneur, make sure to connect with the following five people:

Certified Personal Accountant

Having a financial expert and advisor in your corner is essential, and a certified public accountant is one of the best options.

According to Investopedia: “Running out of money is a small business’ biggest risk. Owners often know what funds are needed day-to-day, but are unclear as to how much revenue is being generated, and the disconnect can be disastrous.”

A CPA will help you understand and optimize your finances to ensure long-term success. What’s more, CPAs will also make sure that the following tasks are done correctly:

  • Leveraging appropriate tax deductions: You can’t afford to leave money on the table or pay more taxes than you need to without deducting your business expenses. CPAs identify and advise on how to best deduct and potentially even make end-of-year investments for the best outcome.
  • Forecasting future finances: CPAs help you plan for the future, using data to support their decision, so you know when to make investments, how to best allocate resources, and when it’s wise to scale.
  • Managing audits: A recent survey of 1,000 business owners found that 28 percent were audited or received a notice from the IRS. A financial professional will ensure you’re adequately prepared for an audit and help you through the complex process, should it happen.
  • Preparing for the unexpected: During the pandemic, businesses applied for government relief programs like the Paycheck Protection Program (PPP). When disaster strikes, these programs can provide imperative support, but can be difficult to navigate. According to Mark McKee, the President and COO of OnPay, of the businesses that applied for PPP, 73 percent said their accountant’s advice was important during the process.

Related: How Smart, Strategic Networking Can Transform Your Business During a Crisis

Business, marketing or sales coach

Doubt and apprehension can be detrimental to a new business owner, manifesting itself in a case of imposter syndrome.

Ann Vertel, executive leadership speaker and founder of the Vertel Group, explains to Entrepreneur: “When it hits new business owners, the effects are both subtle and powerful, causing them to doubt their accomplishments and preventing them from taking necessary risks. Left unchecked, imposter syndrome can derail your entire business.”

Certified coaches exist in all verticals and can help you step up to the plate to take on new responsibilities while building confidence in yourself. Different coaches offer value in different areas, so here are a few to consider:

  • Marketing coach: As a business owner, you are your own best marketing asset, with your expertise, excitement and authenticity. For example, a social media coach can specifically help you harness that authenticity to craft the right message and reach potential customers and clients on the platforms where you’re likely most active.
  • Sales coach: All leaders need a foundation in sales. In their sales coaching guide, the experts at Lessonly explain that sales coaching focuses on skills more than numbers or hard selling techniques, and that coaching ultimately builds overall confidence.
  • Business coach: General business coaching focuses on you and your journey as a business owner. You work together to tap into all the personal and professional elements that go into running and growing a business.

Networking pro

One challenging aspect of starting a business is breaking into your industry. While fellow business owners might be seen as the competition, they’re actually valuable assets. Networking is the way to reach them, along with other like-minded individuals who might serve as partners and vendors to support your startup’s growth.

As the Harvard Business Review explains, “Professional networks lead to more job and business opportunities, broader and deeper knowledge, improved capacity to innovate, faster advancement, and greater status and authority.”

Make it easy for yourself and find a networking expert to help you break into the scene. This might be someone who can introduce you to the right people and offer advice on which type of events and networking platforms are best. The beauty of power networkers is that they thrive on connecting others, they understand the ropes and they want to welcome new members to existing groups.

Website developer and designer

Building a website can be challenging if you’re not tech-savvy; a developer and designer will make your life easier. Sure, you can hack it with a DIY website builder, but your best value is in running your business, not teaching yourself how to build websites. A critical lesson to learn as an entrepreneur is that time is money. By cutting corners, you spend way more time than necessary on tasks (like building and managing a website), when it could have been cheaper and faster to hire a professional.

Plus, ongoing maintenance may require the help of a professional, and having a developer on speed dial can eliminate that stress. Remember to ask folks in your network for recommendations; a genuine testimonial is invaluable in selecting a web developer.


Sign Up: Receive the StartupNation newsletter!

Mentor

Whether official or unofficial, having a mentor to guide, support and encourage you is key to making it through the first few years. Research by Endeavor found that 33 percent of the most successful startups had founders who were mentored by other successful entrepreneurs, and that mentorship was a significant predictor of overall performance.

Unlike a coach, a mentor is typically unpaid, and is someone who’s more experienced and has been on the entrepreneurial path for many years already. He or she is an expert in his or her industry and is able to provide insights and support when you come up against challenges and frustrations.

Connect with the right professionals at the start to level up your business

Novice entrepreneurs must learn to juggle more roles and responsibilities than ever before; all while having the confidence, energy and drive to lead their company. It can feel like a herculean task, but there are professionals available who can make your life easier and your business more successful. While it’s a natural inclination to be lean and bootstrap, establishing working relationships with CPAs, developers and coaches is well worth the investment in time and money.

The post 5 Essential People to Have in Your Network as You Begin Your Entrepreneurial Journey appeared first on StartupNation.

StartupNation

Logistics became more essential during COVID-19 – Moses Enenwali, CEO and Co-founder, Topship – Nairametrics

Logistics became more essential during COVID-19 – Moses Enenwali, CEO and Co-founder, Topship  Nairametrics
“nigeria startups when:7d” – Google News