Author Archives: aneudecker

Fundraising: Size of Rounds

Often asked, a surprisingly simple question without a straight answer is: what is the typical size of a _ round. Since I’ve tried to answer it many times, here is a stab on what I have seen over the years, and how they fit in my general buckets. Of course there are financings outside these ranges, but this should cover ~90%* of the distribution for each:

 

F&F:       $20-500K,   Avg 50K

Seed:      $100K-2M, Avg 300-800K

Series A: $1-10M,     Avg 2-3M

Series B: $5-40M,     Avg 7-15M

Series C+: bigger, but things get crazy with either down-rounds, bridges, or giant growth rounds if you are killing it.

 

*while I am pulling numbers out of the air, why not one more!

Startup Weekend Strategies

UPDATE  while I have the unfair advantage of knowing the winners of Nov @nycSW:

  1. GRAND PRIZE –  Waag.it
  2. Design –  Postd.com
  3. Tech –  CK Tech
  4. Biz –  Reading Buddy
  5. Microsoft – (same as GrandPrize)
  6. My Turnstone – JDecker, JBerman
  7. Mashery –  MotiveList
  8. CloudMine –  TaxiNomi
  9. Twilio –  ClosedCapp

CONGRATS to you all, great work, great weekend.  VERY tight call in the judges room!

I thoroughly enjoy Start-up Weekends.

Having been to 4 now (mentoring & judging two), I’ve generalized some strategies / approaches that seem to derive the most value from the rapid-paced 2 day hack-a-thons.

Like any event, haters are gunna hate.  The only major problem I’ve seen is misaligned expectations about the event (usually from first-time participants).  Come to SW with the understanding that:

  1. Your idea will (probabilistically) not be picked.  This is NOT a problem.  I can’t tell you how many sore loosers with pipe dreams of building the next $xB business over the weekend stomp away after the initial pitch session muttering how much they’ll show everyone.  Don’t be a sore looser – that’s not the point NOR the main value of the event.
  2. Don’t pitch the wrong idea.  Certain ideas are better lent to making significant progress over a weekend.  Apps, eTailers are.  New cars, new drugs aren’t.
  3. Landing amazing tech talent is (still) hard.  Just cause you bought at ticket, then made it through/joined a team, you’ll still have to fill out the team.  Just because someone says they are technical, doesn’t mean you should automatically take them
  4. Weirdness around equity is foolish and counterproductive.  Join a team, chalk it up as a learning experience, and make new friends.  Obsession about who owns what is a waste of time and shows you aren’t there for the right reasons.  It’s a WEEKEND.  You aren’t going to build anything worth fighting over that couldn’t be replicated in ANOTHER WEEKEND.  Do your best to be an awesome teammate and people will want to work with you in the future (when it matters).


STRAT #1:  Working on progressing a (real, existing) start-up.  Some people come to get free help on their existing startup.  This tends not to work for several reasons:  a) Other participants realize they are unlikely to really be a part of the team, just a mercenary.  b) Even if they do join, the end discussion is now a bit harder as there is more at risk.  The way this CAN work: carve out a small project within your general business that can serve as validation to the bigger idea or a specific strategy.

STRAT #2:  Fun weekend idea.  IMHO – the best strategy is to come with a bordering on silly / fun / potentially viral idea that could be thrown together quickly.  Why?

  • You can actually get a MVP up by the end, and things that work tend to do much better in the final judging
  • Use it as a pseudo-audition.  You’ll work with these people in a situation that roughly replicated some of the stresses associated with building a business.  Check out how you work with your teammates – are they potential long term partners?  A missed opportunity is walking around and briefly checking what others are making and how they are working.  Are there people on other teams that are rockstars that you can keep in touch with?
  • You’ll enjoy your time if it is fun and something that the other participants will want to try.

STRAT #3:  From scratch -> big, complicated biz.  Given all the other comments, it should be obvious why I’m not such a fan.  Unclear if you can make meaningful progress or validation.


Misc. general advice:
  1. Be proactive and energetic.  In my first SW, I had one of the top ranked ideas in the initial pitch session.  I then sat back expecting it to rain programmers to help.  It didn’t.  The girl whose idea ranked near the bottom ran around the room telling programmers that they walked on water and she was moses…Guess what?…She had a the largest team of good tech talent that weekend.
  2. Use the service providers and mentors.  SW usually attracts some great mentors, judges, service providers ready to give you time and even help you build your product.  Please, it merits repeating: USE THEM.  This access can be invaluable.
  3. Be transparent about your expectations.  I’d start with something like: “that you for working on this idea with me for this weekend.  Let’s have some fun and focus on pushing it as far as we can.”
  4. Remain open to suggestions and critiques.  People just don’t want to work with you if you come across as a dominating figure, convinced you’re always right.


…and props to my friends at CloudMine for their newly announced Gold Sponsorship!  They help you with the backend to quickly build your mobile apps – use away!

Mock Pitch: MoBowl

Just for fun…

To highlight many of the common the mistakes I see in pitches… I thought I would publicly share my mock business pitch made for Genacast & GA’s “VC’s unleashed” event.  It was a fun event where 4 VC associates made fake businesses that the partners publically tore apart.  Now it’s your turn, can you spot all the major errors?

SlideRocket of MoBowl

Investing Thesis

One of the reasons I work for Genacast Ventures (besides the main reason: Gil Beyda himself) is that my personal biases are 90% aligned with the fund’s investment thesis:

  • Early Stage
  • Internet Tech
  • Disruptive / innovative tech
  • B2B models   

Fledgling companyEarly-Stage

Who doesn’t like being on the cutting edge of technology and business?  That being said, not everyone has the stomach for the inherent risk.  Betting on businesses this early means you are relying on gut and your judgment of the founders’ character traits more than tangible data.  Many companies Genacast considers have no revenue, little traction, and an incomplete product.

Let me emphasize, although early sounds sexy, most people are frustrated by “filter fatigue”(tm) of being the first line of defense against the droves of crazies.  For me, the excitement of these unknowns outweighs the enormous risk and effort required to find the needles.  Further, as you move from early to later stages, the work (and associated skillset) morph from emphasizing team, addressable market, and product vision into a deeper analysis of what’s been built, the financials, and likely exit opportunities.  Ex-bankers (or corp. dev. types) excel at these tasks (read: most MBAs trying to get into VC are probably a better fit here).

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= "a series of tubes"Internet technologies

Obviously, Internet adoption continues to grow at a tremendous rate (esp. internationally).  More business is transacted online, the amount of data is growing exponentially, and the resulting white spaces are vast and uncharted.   Areas like Cloud, SaaS, eCommerce, Mobile, Security, BI/analytics, even Gaming will continue to grow as the demand online (including mobile access) expands.

All that being said, the opportunities and risk with more traditional industries (services companies, physical products, [debatably] real estate) are statistically better bets to create & capture value (amass wealth).  These sectors are neglected by many of the most enterprising among us.  Like moths to a flame, many of us flock to these sexy internet/tech/start-up spaces admiring the huge successes (often ignoring the countless failures).

And here, I am GUILTY as charged.  I have always had a penchant for tech & startups and it’s hard to fight with this passion to get excited enough about one of these other spaces.

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THE most innovative product since Pet Rock!Innovative & Disruptive Tech

I am particularly excited by unique and innovative technology.  Genacast’s thesis revolves around interesting tech that serves to un-level the playing field for some amount of time.  Like I mentioned from my 3Qs post, these should not be immediately replicable or transparent when viewed by a savvy user of your service.  Having something truly different translates to a competitive advantage, potential for acquisition, and frankly ability of the team to identify a gap and create rather than replicate.

My qualifier here, (I hope) I am not obsessed with innovation for innovation sake, but realistic about its application.  The tech that sparks my interest most tends to be commercially viable in the short term (1-2 years) where I can see the real-world impact playing out.

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Biz 2 Biz Baby

B2B Business Models

In B2C, you could have 2M “users” without any revenue.  Numeric user traction is only an indicator, not real validation of a business until ‘consumers’ start paying (convert to ‘customers’) or you are able to monetize in other ways (ads or emails are pitiful justification).  Whereas in B2B models, having a customer usually means something in terms of large checks in the door.  These customers have considered a capital outlay, gone through a couple meetings and decided you could bring more value to them than the cost.  They act fairly predictably and constructing a pitch that hits their needs is increasingly transparent after learning the dynamics of the space.  Furthermore, your potential customers are identifiable and easily found.  Yes, sales cycles can be long and taxing, but this type of traction is much more indicative of success.

Similarly, the ‘picks & shovels’ approach is a bit of a hedge in a particular model.  If you create the platform that all the couponing sites should use, you are more likely to succeed than the thousands of daily deal, geo-local coupon, discounted shopping, social shopping apps are, since you are linked to many of them.

Since B2C is easily understood by everyone without deep tech or industry expertise, it seems to be the default approach.  Sadly, there is a dearth of good companies pursuing B2B approaches.

Clearly, this is a preference rather than a hard line – have fallen in love with many B2C companies as well…

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closeness = access = potential helpfulnessEast Coast

Personally, I don’t really care about this filter, but it makes sense.  Proximity to young companies is more important than one might think – ability to be there when needed, help make introductions or conduct interviews, proximity to the core of your network tends to be somewhat regional, physical presence at board meetings, etc.  I’m a West-coaster originally, but agree that seed-stage investing should be relatively close if an investor plans to have a substantive impact on progress.


A trip home…Just the Menus

Intentional appetite and jealousy inducing post…

I recently was back in San Diego for 3 days to see my family & friends.  Here are the three meals I ate at home.  The scary/amazing part: this is fairly standard behavior as Dad loves to spend 3-4 hours per day in the kitchen.

(attached images of menus, everything made from scratch, including the sorbets)

Me.

Quirky and animated, I’m proud to be odd.

My current tag line:  

Venture capitalist by day, start-up junkie by night  (who is suppose to be focusing on finishing an MBA)

Officially, I’m:

Raised in San Diego by an awesomely eccentric family, I’ve always been an overcommitted nerd that enjoyed experimenting with new things.  In high school I (proudly) did the dorkiest activities (~glee club, speech & debate, cross-country & track, quiz bowl, i^3…), was lucky to travel (up to ~45 countries today), sail a tall ship, and briefly become a food critic.

I first came east to attend MIT (which I survived with Electrical Engineering & Computer Science and Management Science majors), remained busy with activities (from dance and a cappella to leading the business club), and pursued a start-up with a group of friends: PressAudio.

I spent the next 5 years at Mars & Co. doing strategy consulting.  I loved the challenge, interesting clients, and my coworkers – really can’t complain.  Yet, eventually decided I couldn’t ignore my itch to actively own my destiny and headed to b-school at Wharton (a bit of a stalling pattern while I iterate on new concepts mixed with an excellent launch pad with unparalleled connections).

Today, I am trying to balance all of the above roles (unsuccessfully) and a fiancé who has tremendous patience.

In my free time (hah!), I dabble in:

– Soccer, Ski, Tennis
– Cooking (esp. desserts)
– Philosophy, Neurology, Astronomy

Pitching VCs: know their gut calls

The better VCs usually have fairly pointed questions while maintaining a fairly friendly exterior (many fail on one, if not both, of these metrics – though most tend to be friendly, despite the stereotype).  Our goal is really not to proceed lock-step through the basic mental checklist I mentioned earlier, it’s all about identifying the key issues and gaining comfort you’ve addressed those concerns.  Neophytes or amateurs (myself often included) will march through down this list, but it does show inexperience if they are asking questions with obvious answers.

For example:

  • If you come to me saying mobile bowling lane booking – I’m asking about market size, not whether it is going to work (that’s assumed).
  • If you come to me telling me about a insulin delivery device, I’m not worried about market size.  I’m probably worried about IP and approval, possibly go-to-market strategy.

Other major concerns that I see very often: scalability, crowded competitive/substitutes space, addressable market size, revenue/business model, long-term defensibility (an acceptable answer is “it’s not” rather than defending something that’s not).  Think hard about the top one or two gut issues investors will have with your idea and be prepared to NAIL them This is your best chance at success.

Furthermore, investors (possibly irrationally) love metrics:

  1. Traction (uniques, page views, etc.)
  2. Cost per acquisition  (relevant search term costs, conversion rates, etc.)
  3. Customer’s lifetime value  (revenue per customer, churn rates, etc.)
  4. Engagement metrics  (number of returns, social sharing or virality coefficient)

If you don’t know yours – get on it!

Current favorite film source: Korea

Likely akin to most lovers of foreign films, I’ve gone through my country phases (Italian -> French -> Spanish -> Latin American…) but most recently, I’ve been impressed with the masterpieces coming out of South Korea.  Admittedly, they aren’t for everyone (they are quite violent, gory, dark, depressing), but the cinematography, mood, and plot twists surpass any individual country’s output in the 00’s (especially adjusted for output).

I’ve scoured the internet for articles celebrating this recent explosion of quality cinema coming from Korea, but most are dated and cite movies from an era before all of my favorites existed.  About ten years back, there was enthusiasm for films like “My Sassy Girl” (shamed to admit, I have yet to get my hands on a copy – Netflix doesn’t carry anymore).  The Koreans deserves recognition and attention for their vastly improved and more recent work.

If you’re new to the Korean film scene, (or are only accustomed to older titles), let me help get you started:

Start with Chan-Wook Park’s films (the first three comprise his revenge trilogy, Oldboy being a required introduction to the genre)

  • Oldboy – mysteriously released from private imprisonment for 15 years, Odaisu has 5 days to figure out the motivation of his captors.
  • Sympathy for Mr. Vengeance – Mute and deaf Ryu is willing to do whatever it takes to save his dying sister
  • Lady Vengeance – Accused of murdering children, shy Geum-ja seeks elaborate revenge on the true perpetrator
  • Joint Security Area – North and South Korean border guards develop a forbidden friendship
  • I did not like his most recent title: Thirst

More recent titles:

  • Memories of Murder – detectives attempt to track down a serial killer
  • The Man from Nowhere – Inadvertently caught in a conflict between his neighbor and local gangsters, Cha is thrust into a fight he didn’t want
  • I Saw the Devil – A cat and mouse game between a rouge detective and the man who killed his wife
  • The Chaser – when his girls start disappearing, a pimp is forced to track down the source of their seeming departure
  • Spring, Summer, Fall, Winter…and Spring – a beautiful and serene film (unlike ALL of the others) about a boy’s childhood lessons and eventual return to a monk’s floating house.
  • Mother – Out to liberate her mentally challenged son, an elderly woman seeks the truth, but is it more than she can handle?
  • A Tale of Two Sisters – are these recently released sisters truly crazy or the victims of something more sinister…

…And many of these are available for instant play on Netflix (but make sure not to watch a dubbed version – ruins any foreign film)

Caveat: the downsides

These movies are graphic and unforgiving – those with weak stomachs or that shy away from dark themes need not apply.  Most Americans want their movies to end on a positive note, all the outstanding plot strings tied down.  If you fall into this category, you are destined for disappointment.

Moreover, however surprising the plot twists, the general themes of these movies tend to be VERY similar – murder, revenge, some action, and characters from the darkest corners of society.  Obviously, be prepared to read subtitles and patient enough for movies that start slowly and build (rather than come charging out of the gate).

Every city has a Question

(Fully aware this post is laden with bias, prejudice, stereotypes, classism, narcissism, racism, neo-natzism… obviously, I hope you see the intended humor in this post, not the any of the above)

I’ve always felt that each city I’ve spent a decent amount of time in had an underlying, often times unspoken, question that established your respective standing in their minds.  Even if the issue was not addressed directly, initial conversations often skirt around the core issue, hoping it might be offered or derived from other information.

  • Boston:  “Where did you go to school?”  (i.e. how educated are you?)
  • NYC:  “How much money do you make?” (or “Where do you work?” – just a proxy for the first)
  • DC: “How much power do you have?” (or “Who do you know?” in terms of political/government power)
  • LA: (a quick glance from head to toe), ostensibly seeing how good your plastic surgeon is OR “Who do you know?” (different than DC à in terms of fame)
  • San Fran: “How are you changing the world?” (two acceptable forms here: innovation/start-up or environmentally)

Then there are cities that have some blend of the above, highly distinctive cities:

  • Philly (so far): “Where did you go to school?” + “How much money do you make?”
  • Seattle: “How are you saving the world?” (usually environmentally) + “what eco-friendly, outdoor activity are you passionate about”

Yes, this might be for a specific slice of the population in many cases, but I sensed some degree of these questions from a good majority of the people I interacted with.

If agree/disagree with any of these let me know.  And, more importantly, if your city is not on here, let me know what you think that underlying question is in your experience.

Personal Philosophy

I’ve tried to challenge myself to develop a moral framework by which I could be judged against, here’s where I am at:

 

“The Philosophy of Realism”

(wow, that might sound a bit too pretentious -> name suggestions? Objectivism, etc. already taken)

Axiomatic

Objective Truth – Objective truths exist.  We may never fully comprehend them, but striving to attain these truths will gradually improve our collective understanding of our surroundings and ourselves.  (as in my longer paper, think of full knowledge on any topic as an asymptote that we collectively strive to climb towards as we learn new supporting evidence)

Objective Morality (may be derived from the first) – Although broad-sweeping moral absolutes do not exist (e.g. murder is wrong), given the full context of a situation, there is a “best” way to act.  Full knowledge of the context and consequences of an action is nearly impossible, nonetheless, through better understanding of the prevailing factors and results of past, similar decisions, we can make a fact-based judgment on which course of actions would achieve our collective goals most effectively.

 

Personal Code

  1. Apply the scientific method broadly – require objective, verifiable, replicable evidence to support your stances.
  1. Constantly pursue better understanding of yourself and the universe around.  Educate yourself and enlighten others about topics you have knowledge. Be active in pursuing knowledge and creating new ideas.
  1. Constantly question held beliefs and assumptions.  Where possible, strive to only hold beliefs for which you have adequate reasons that can be objectively supported.  Value rational & reasoned debate with opposing views.  Be alert and open to contrary evidence.
  1. Aim to seek out, expose, and minimize dogma through respectful conversation, publications, and legal efforts (where appropriate).  Conversationally, make it intellectually shameful to use logical fallacies or faith arguments (“because I believe it to be so”) to support a view/conclusion.

 

Societal Goals

  • Maximize eudemonia (yourself, those around you, and future generations).  Start by being happy and treating those around you well.
  • Minimize innocent suffering.
  • Strive to equal the initial playing field.  There is a wide range of situational inequality at birth (through no fault of the child); as much as possible, help bring equal opportunity for success from early childhood.
  • Continuous progress towards understanding and implementing objective truths (& associated morality).
  • Do your best to leave the world a better place without causing undue burden on yourself (not to an unhealthy cost to yourself or those depending on you).
  • Enable the lasting survival of as many ecosystems as possible – we not only depend on the survival of these species and ecosystems, they also may hold insights into our own species, medical cures, and solutions to large scale problems (e.g. pollution).

 

As with anything, I am open for feedback and invite thoughtful disagreement – fire away!