When should you get on the VC train?

train

I think we can all agree that the startup industry pays too much attention to VC. Our conferences, press, and tweets are dominated by VC-related news. Which fund just raised more capital? Who got funded? Who’s the latest unicorn? I contribute to that fixation in this blog all the time. 

With the rise of accelerators, the holy grail for young startups these days seems to be to get into YC as early as possible and then go on to immediately raise from VCs post demo day. 

There are certainly some massive successes that have followed this hype-laden path: Airbnb, Dropbox and Gusto are some of the biggest winners that come to mind. Closer to home, YC grad Vidyard is crushing it. But they passed on the hype in the Valley. They came back to Canada and took their time. Continue reading When should you get on the VC train?

The Dolphin Dive

There are many reasons why startups fail. From bad timing to poor execution, bad hiring, too much competition, the list is almost endless. Despite these pitfalls, you can always live to fight another day so long as you have cash in the bank. So, for me, the technical reason why companies fail is that they run out of cash.

To avoid this, you need to perfect the dolphin dive. If you’ve ever watched those nature shows, you’ve seen great images of dolphins jumping into the air then diving. They stay underwater for a period of time, and then come up for air.

This is how you need to approach each funding round. Treat it like your last. Make sure your money gets you far enough to either not need more funding or, more likely, to have enough proof points to raise more capital at a significantly higher valuation.

Continue reading The Dolphin Dive

Social Proof is Overrated

social-proof
From the outside looking in, the Valley and startup land in general seems to run on “social proof” – the notion that I should only pay attention to you if someone credible says I should. While it’s a well known psychological phenomenon, the term “social proof” only started showing up in my World as Angel List started to take off.

It’s absolutely true that the best way to meet people professionally is through warm intros. Especially for investors who have an abundance of opportunities to look at. So, in that context, social proof is a good and valuable thing. I only invested in entrepreneurs that came through trusted channels.

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Fundraising? Be a Buyer, not a Seller

If you’ve ever raised capital before, or if you know someone who has, then you know that it’s not easy. It takes a long time, you get rejected a lot and it distracts you from your core business. And even for those who do raise, they often end up with investors or deal terms that cause issues down the road. For many, many reasons – raising capital sucks.

So, what’s the solution? Bootstrapping? No, not necessarily. I fundamentally believe that most worthwhile opportunities require capital. This is a fast-moving World. If there’s a great opportunity out there then someone else is going after it as well. So, capital can help give you an edge.

Continue reading Fundraising? Be a Buyer, not a Seller