Social Proof is Overrated

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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The State of Canadian VC…

I spent a couple of days last week at the Canadian Venture Capital Association’s annual conference. Pretty much every fund in the country was there.  Perhaps it was the perfect Montreal weather, but the mood at the conference was very positive. Weather aside, there are lots of reasons to be optimistic about VC in Canada – and we have a great opportunity ahead of us – IF we play it right.

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Do you matter to your investors?

The model for funding tech startups has changed a lot in recent years. While angel investing has been around forever, Angel list is blowing it up, making it easier for angels of all shapes and sizes to find deal flow and come together. VCs are also getting in on the action with many VCs participating in seed rounds on and off Angel list.

While all this activity is mostly good, and more startups are getting funded, there is a risk for startups in this funding model. Investor groups are getting larger and larger. I recently did a deal with 13 co-investors. How will all these co-investors react if the company hits hard times and needs more $ before it has hit its key milestones? How does the founding team extract value add from so many investors?

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