We were six people this time one year ago. No revenue. Now we’re 300 people, profitable, and just made a $ 250 million acquisition.
As 2020 comes to a long-awaited end, a series of filings indicate that venture capitalists are ending the year with fresh money. According to SEC paperwork, Learn Capital and USV have filed paperwork that shows the firms have raised new, multimillion-dollar funds.
If you’ve been paying attention to news this past year, it’s clear that much of venture capital isn’t just surviving 2020 – it’s flourishing through it. Zoom investing, it seems, is working just fine for cash-rich firms looking to double down on bets in categories from edtech to climate.
First up, New York-based USV submitted a pair of filings on late Thursday. The first filing shows that the firm has closed $ 151 million for USV Climate 2021, which one can assume is focused on climate-tech investments. As my colleague Jonathan Shieber has pointed out, climate tech.
The other, more nebulous filing, is the firm’s $ 22.4 million investment vehicle titled USV Bundled. It’s unclear what this is focused on, but a recent blog post suggests that the firm will continue to double down on its education investments.
Speaking of edtech, Learn Capital, an education-focused venture capital fund, filed paperwork indicating that it has closed $ 132 million in capital. It plans to raise a total of $ 250 million for this fund, which will be the firm’s fourth investment vehicle to date. The edtech category has obviously been booming with interest, which also fueled Owl Ventures to close $ 585 million in new capital in September.
Finally, I’ll give an honorable mention to Lattice CEO Jack Altman’s New Years Eve filing, which shows that the executive plans to raise $ 20 million for a new fund. It’s unclear if this filing indicates Apollo’s next step, a venture fund started by the Altman brothers. The trio, beyond Jack, includes Max and Sam, the former president of Y Combinator who currently serves as the CEO of OpenAI.
In my role as a mentor to aspiring entrepreneurs, I find that most have the technical challenges well understood, but many are a bit short on some basic street smarts, or basic business realities. Thus I often recommend that before you kick off your own business, you join another startup or existing business to see how things really work. Even the best college degree is not a substitute.
For certain, passionately chasing a big financial opportunity in an area you have little street experience is a recipe for disappointment. I will certainly admit that starting and running a business is not rocket science, and you can learn many of the basics in any business school, but here are key additional business realities from my own experience that can lead to downfall:
You can start a business, but it takes a team to grow it. You alone will never find enough hours in a day to keep with all the challenges of sales, support, and scaling the business, in addition to developing and delivering your solution. Actually, building and nurturing the right team is the hard part, requiring communication, hiring, and leadership.
Jeff Bezos readily admits that his first career in a Wall Street-based investment banking firm gave him some keen insights into business realities, before a fear of regret and a personal passion led him to create Amazon, now the largest ecommerce site in the world.
Your leadership skills do not develop without effort. Unless you have a proven track record from a prior career, or experience leading teams in some other context, you can expect stumbles and a long learning curve to lead a team. It starts with documenting and communicating a real purpose and mission in terms everyone can get excited about.
Intellectual property is required for a competitive edge. You may think that patents and copyrights are not required, since your products are so innovative, but you will find that competitors are quick to copy your idea if you don’t protect it. In addition, most investors won’t give you money for scaling if you don’t have a strong property base.
Although Elon Musk doesn’t talk about it very much, he owns over 350 patents through Tesla, just one of his many companies. In addition to locking in his leadership position in electric vehicles, he has also used his patents to negotiate faster growth in his market.
Strategic planning is a required ongoing investment. If you wait for a growth crisis to kick off your next step, it’s probably too late. Planning for the future must be a regular activity, not just an early-stage or once-a-year event. Change happens every day, and it takes time and effort to prepare you for the next step. Survival requires regular updates.
Even the best solutions require marketing to survive. With information overload due to the Internet, you need to find your customers, rather than assume they will find you. That first burst of customers via word-of-mouth or a viral video won’t sustain your growth. Start with a range of platforms, including social media, advertising, and a great website.
Most investors I know have heard many passionate entrepreneurs chanting “If we build it, they will come” in lieu of a credible marketing plan. Let me assure you that companies without marketing plans don’t get the attention of either investors or customers.
Don’t under-estimate or ignore your competitors. As an angel investor myself, I’ve often heard the argument that your solution has no competition. My answer is that no competitors means no market, or you haven’t looked. Neither is good. I want to hear how your offering stands out, and how you have a plan to stay ahead of the crowd.
Having an innovative solution is a necessary, but not sufficient, condition for starting and succeeding in business. You also need the required skills for leadership, planning, operations, and growth, many of which are best acquired from business experience, rather than academia.
These street smarts, if you acquire them early, can save you a lifetime of pain. It pays to build relationships with an advisor or mentor, or work in the real business world for a while, before you strike out on your own journey. It’s more fun to enjoy and see positive results from your efforts, than to spend your life trying to catch up.
*** First published on Inc.com on 12/15/2020 ***
How many entrepreneurs do you know that “almost” made it big? Startups are very risky, and most fail. Yet entrepreneurship is one of the fastest growing trends in business today. Surveys show that entrepreneurs are among the happiest people in the world, despite the challenges. Yet it would pay real dividends to know at the start what separates the “also-rans” from the winners.
As an advisor to many entrepreneurs and startups, I’m always looking for early signs that usually lead to an “almost” success, but I have found them hard to pin down. Maybe that’s the reason I was intrigued by the classic book, “Almost: 12 Electric Months Chasing A Silicon Valley Dream,” from Hap Klopp and Brian Tarcy. It’s a true story of “almost” at Ardica Technologies in Silicon Valley.
Even startups with a cast of gifted geniuses and seasoned entrepreneurs can easily fall victim to these malaises. Here are the key lessons from this story and my experience that I believe every entrepreneur should take to heart:
- Invention without commercialization is not a business. Your technology may be amazing and the opportunity huge, but these alone don’t ensure a business success. It still requires solution delivery, a team working together, and customers with money to spend. Make sure you are building what customers want, rather than what you can build.
- Running short on money often leads to bad decisions. Vendors and most people on your team need to keep getting paid, or their loyalty quickly shifts to retribution. Crisis survival decisions can easily be counter-strategic and lead to product and people credibility gaps. Soliciting timely and adequate funding is more critical than development.
- Multiple cultures cannot co-exist in a single company. Culture is simply “the way we do things around here,” and it trumps strategy every time. Everyone on the team must share the same purpose, values, and goals. Culture clash can be some people driven by technology and others by customers. The founder sets the culture by words and actions.
- Startup leaders must exhibit trust and transparency. Successful entrepreneurs must create and maintain an environment of team trust to build loyalty and commitment. They need to focus on people behaviors, rather than personalities, to engender trust. Then they “say what they mean and mean what they say” all the time every time to prove it.
- Team conflict that turns into friction will slow you down. The best startup teams don’t shy away from healthy debates between team members or founders. That’s the way smart people with innovative insights make real change happen. But heated debates can generate so much emotion and friction that the entire team becomes dysfunctional.
- No amount of passion will save a solution that is not ready. If you solution doesn’t work, or exhibits quality problems in the marketplace, no amount of determination or expertise will save you. For high technology solutions, almost working is failing. Founders need to be realists, to understand when to pivot and when to fall back in recovery mode.
- Get rich quick is not a viable startup strategy. Entrepreneurs driven primarily by money are usually disappointed, which can cause them to give up too early or set poor goals. Seth Godin once said that overnight success in startups takes about six years, and Seth is an optimist. Make sure you enjoy the journey as well as the destination.
- Failing to plan is planning to fail. Like the old refrain, if you don’t know where you’re going, you will probably end up somewhere else. If you don’t formally communicate a plan, everyone will follow their own default, killing the teamwork and productivity you need to survive. No startup is so simple that everyone knows what is in your head.
These are all crucial business lessons that are best learned by reading, not repeating. If you see the symptoms in your own startup, there still may be time for recovery, or it may be time to jump ship before disaster strikes. If it’s too late for you, then at least take consolation in the fact that failure in a startup is not a career-ending disgrace, and should be worn as a badge of honor.
As an aspiring entrepreneur, you might wonder what it’s like to start a business after a year marked by the ongoing COVID-19 pandemic. Maybe you’re a little nervous or even second-guessing plans to fully open your doors (physical or virtual) in 2021.
In a year as unprecedented as 2020, entrepreneurs showed the world the kind of resilience they and their businesses are made of amid the coronavirus. A certain sentiment rang true this year, despite its many challenges: now is the best time to start a business. Yes, there are many uncertainties ahead, but that tends to be par for the course when starting and running a business.
Entrepreneurship has always meant taking risks, and the risks are worth the rewards.
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Here’s what aspiring entrepreneurs hoping to get their start in 2021 can learn from the businesses that survived, and thrived, in 2020:
Create a pivot-friendly business model
“Pivot” has been a critical verb for startups and small businesses during the coronavirus pandemic. Many have had to pivot their business models based on customer needs and public health policies.
Some businesses took to creating PPE, like masks and hand sanitizer, to assist frontline workers and customers in need. Other businesses, particularly those in the service industry like restaurants and bars, adjusted the way in which they served their customers. Rather than dine-in, these establishments pivoted to takeout and curbside delivery options.
As you enter the world of entrepreneurship, your ability to pivot may ultimately be a key factor in what helps you sink or swim. There are four factors that define business models, and four questions you should be able to answer when working to create a pivot-friendly business model.
Take a look at your projected business model and assess for the following:
- Differentiation and pricing. Beyond competitive prices, what else helps differentiate your offerings to customers?
- Marketing and sales. What kind of meaningful marketing strategy can you create that interests customers and allows them to build trust in your business?
- Production and delivery methods. How will you produce physical products sold by your company and get them safely into the hands of customers?
- Customer experience and satisfaction. How do you meet the expectations of customers?
Establish strong partnerships
More than ever before, startups and small businesses relied on the support of their communities to stay in business this year. Many companies also established partnerships with other like-minded businesses. These strategic partnerships are based on key ingredients, including customer engagement and mutual benefit for both parties.
Finding a great partner to work with may happen during any stage of your startup’s journey, but it’s a great idea to find likeminded individuals to work with from the start. Creating a partnership with another business full of specialized experts can not only allow both businesses to rise above the competition; it can help get your new company one step further to being recognized as a trusted professional.
Retain a nimble mindset
Great opportunities often come out of difficult times. During COVID-19, entrepreneurs and small business owners have seized opportunities to find ways where they can improve and grow with their customer base.
Starting your business, whether it launches in late 2020, 2021, or another year entirely, means the willingness to be nimble. Use moments of uncertainty to think and create. Identify new areas to learn and grow. Remember that failure is a possibility, but use it as motivation.
This unprecedented time has taught existing business owners that they will emerge all the more aware and ready to hit the ground running in the new normal. And if you’re planning on starting up in the New Year, there’s never been a better time for new and innovative ideas to improve all areas of business and life.
I was just curious if I should bother learning No-Code to build an MVP and if someone else with a technical background did this. I don't know if the time spent learning one of these tools is going to save me time in the long run – I could just build it using something I already know. In addition, I am also considering to pre-sell the idea without building a product at all and just faking it/creating mockups, in that case what would be a good tool to use that is easier than Figma, for example.
Building tech startups takes cash — and lots of it. But when you’re talking space startups, you’re talking galactic-level money. Costs blast right through Earth’s exosphere and become, literally, astronomical. If space is your jam, you’re going to need financial help, and you’ll learn where and how to access it at TC Sessions Space 2020 (December 16-17).
Set your transporter coordinates for our Fast Money breakout sessions. You’ll hear presentations from leading space accelerators and funding programs. You’ll learn how to access grant money and — wait for it — you can schedule individual appointments with representatives from each program.
PSA: Don’t have a pass yet? We’re offering a BOGO deal. Buy one Late Registration ticket for $ 175 and get one free. You and a colleague pay just $ 87.50 each — that’s less than the early-bird price. Buy your passes before this deal ends on Sunday, November 29, at 11:59 p.m. PST.
Attend these Fast Money breakout sessions and then use CrunchMatch to schedule private meetings with program reps:
- Fast Money — Space Force Innovation Ecosystem: The USSF wants to partner with innovative non-traditional companies as we look to build out the space architecture of the future. Come learn how to join us. Major Ryan Pennington, Deputy, Space Force Ventures, SMC Space Ventures.
- Fast Money — The Space Force Accelerators: Learn how the Hyperspace Challenge, Catalyst Space Accelerator and other government accelerators can connect you to the U.S. Space Force. Gabe Mounce, Director, Space Force Accelerators, Air Force Research Laboratory.
- Fast Money — Working with the Army to Operationalize Science for Transformational Overmatch: Learn about DEVCOM Army Research Laboratory and the xTech Program of prize competitions that accelerate innovative solutions that can help solve Army challenges. Peter Khooshabeh, Regional Lead, DEVCOM, ARL West.
- Fast Money — Advancing Space Technology with NASA SBIR: Learn about the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs powered by NASA. Jenn Gustetic, Early Stage Innovations and Partnerships Program Director, NASA HQ Space Technology Mission Directorate.
- Fast Money — NAVWAR SBIR/STTR Primer: The SBIR/STTR is a robust program designed to help small businesses address government needs while promoting commercialization. This session is dedicated to providing a primer on the program with tips on getting involved and getting engaged with the Naval Information Warfare Systems Command (NAVWAR). Shadi Azoum, Small Business Innovation Research & Rapid Innovation Fund Program Manager, Naval Information Warfare Systems Command.
- Fast Money — Introduction to In-Q-Tel’s investing activities in the commercial space sector: In-Q-Tel is a strategic investment firm that works with the national security community of the United States. For 20 years, In-Q-Tel has served one mission: to deliver the most sophisticated strategic technical knowledge and capabilities to the U.S. government and its allies through its unique investment model. Over the past decade, In-Q-Tel has been one of the most active investors in the commercial space sector, with a broad investment thesis that touches many aspects of the sector. This session will provide an overview of In-Q-Tel as a whole, as well as a discussion of the firm’s activities in the commercial space sector. Tom Gillespie, Managing Partner and Investment lead for In-Q-Tel’s Field Technologies Practice.
- Fast Money – Enabling a dual-use business model with Defense Innovation Unit (DIU)
Explore all the TC Sessions: Space presentations in the event agenda and start planning your schedule now. And don’t sweat any conflicts — with VOD, you can catch anything you miss at your convenience.
Learn how to find and access the funding to fuel your space startup. Don’t miss the Fast Money breakouts at TC Sessions: Space 2020. And get your buy-one-get-one-free ticket before our week-long Black Friday sale ends Sunday, November 29, at 11:59 p.m. PST.
Is your company interested in sponsoring TC Sessions: Space 2020? Click here to talk with us about available opportunities.