Tag Archives: Entrepreneur

Why I Just Invested in Capbase, The Startup in a Box

Knowing who owns your company should be easy, right? Just keep a spreadsheet with the names and percentages and you’re all set!

Unfortunately, company ownership is a lot more complicated than that. Different investors buy in at different prices and different terms over time. 

That’s where Capbase comes in. Capbase can handle your incorporation, capitalization table (list of company owners), stock options and a lot more. Capbase is so advanced that when you raise a fundraising round, it can automatically update your cap table as the wire transfers come in!

It’s basically a startup in a box. And it’s taking over the industry. 

Very few corporations use any software solution to manage their cap table. In the future, I think all of them will. And Capbase is hard to beat. 

Best of luck to this awesome team!

More on tech:

Inside a Startup Accelerator Demo Day

What if Everyone on Earth Had Super Fast Internet for $1?

Why I Just Invested in Gauge, the Best Way to Sell Your Car

Photo: “wrapped gifts with string and paper tape scissors on wood table” by PersonalCreations.com is licensed under CC BY 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! 

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. 

Why I just invested in eyerate, the best online review tool

If you run a retail business, you know what a royal pain online review sites can be. Get one unreasonable customer, and all of a sudden their bad day is turned into your business nightmare. An angry one star screed torpedoes your average and you’re left to rebuild, bit by bit.

But what if you could capture ten times as many positive reviews from your happiest customers, cheaply and easily? And at the same time, you could motivate your employees to give the best service ever?

Well, you can. EyeRate, an innovative software startup from the Sacramento area, has created an incredible tool that both generates awesome reviews and motivates employees.

Here’s how it works:

1) Customer gets a haircut (or any other service).

2) Afterward, the customer gets a text message “You just saw Sarah. How was your experience? Rate us 1-5.” (Customer info pulls from the POS, so no need to enter anything.)

3) Customer texts back 5.

4) Customer is automatically prompted to post the review to Google, and does so with a single click.

5) Sarah gets a cash reward (usually $5-10 each time), which is automatically processed by EyeRate. The business owner doesn’t have to do anything.

By prompting happy customers to review you, EyeRate generates an average 10x increase in positive reviews for its clients. If a customer rates you less than a 4, the customer has the option to post OR share their feedback privately with the business owner and the message is forwarded to leadership to followup.

Where would you rather spend your scarce marketing dollars: expensive Google or Facebook ads with questionable usefulness? Or motivating your employees to provide great service and capture the awesome reviews, building your brand online and making your foot traffic skyrocket?

95% of consumers check online reviews before deciding which store to go to. Online reviews are also critical to your position in Google search. This is the where you will make or break your business.

I just invested in EyeRate, and the company is growing at warp speed for a reason: it produces reliable, massive increases in revenue for its customers that far exceed its modest monthly fee. Competitors like Podium and BirdEye can prompt a customer for a review and aggregate the data, but they can’t handle payments to employees, which is how you motivate them to give great service and ask for reviews.

Check out EyeRate today, before your competition does!

More on tech:

ONE OF THE HOTTEST TECH STARTUPS IN THE WORLD CALLS HOBOKEN HOME

WHY I JUST INVESTED IN GAUGE, THE BEST WAY TO SELL YOUR CAR

KEY METRICS FOR STARTUPS: CONSUMER VS. ENTERPRISE SAAS

Photo: “Symbols – Daytime, Barber Pole – Trinity Barber Shop, Storefront next to a Walton’s Restaurant, Other Stores, Pedestrians on Sidewalk” by MIT-Libraries is licensed under CC BY-NC 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Why I Just Invested in Gauge, the Best Way to Sell Your Car

If you have a car to sell, you generally have 3 options:

1) Craigslist. You can get a good price, but buyers are flaky and the process takes forever. If you can sell it at all.

2) Dealer trade-in. Easy but the price is terrible.

3) Sell to a used car lot. See # 2

Now, there’s a much better option: sell your car with Gauge. Gauge is a Salt Lake City-based startup that gets you the highest price for your car, easily. When you list your car with Gauge, you get competing bids from multiple dealers. You pick the offer you’re happiest with, and that’s it!

Selling with Gauge avoids the hassles of shady Craigslist buyers, and the competitive process gets you a better price than taking the car to a dealer.

But what about Carvana?

What about them? Carvana buys your car itself, which means their incentive is to give you the lowest price possible. While Gauge does buy your car directly from you, it does so on behalf of dealers and buyers who want to bid on it. Gauge only makes money if you decide to sell your car on their platform. If you’re not happy with the bids you get, you’re free to sell your car elsewhere. So Gauge has every incentive to get you the best price possible.

This model is working so well they’ve earned a stellar 4.7 star average on Google. Sellers love the great customer service with no fees. Dealers love Gauge too, because they can get better quality cars than at most auctions. And not having to show up at an auction in person is a huge time savings, not to mention being safer.

Gauge is growing very fast, and I’m super excited to be an investor! They only list cars in the Salt Lake City area at the moment, but they’re expanding rapidly, with several new markets already in the works.

If you’re in the area with a car to sell, I don’t think you can do better!

More on tech:

WHY I JUST INVESTED IN CRAFTER, MAKER OF THE MOST BEAUTIFUL ARTS AND CRAFTS KITS IN THE WORLD

7 COMPANIES HAD 3 MINUTES EACH TO PITCH US. THIS IS WHAT HAPPENED.

INSIDE A STARTUP ACCELERATOR DEMO DAY

Photo: “Corvette Stingray” by pyntofmyld is licensed under CC BY 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Why Indian Tech Is Exploding

The Indian tech industry is growing at an incredible pace:

Indian startups have raised a record $10.46 billion in the first half of 2021, up from $4 billion during the same period last year

Salaries are also increasing rapidly, from an average of $40,000 to $70,000, and even $150,000 for some top engineers.

Why is Indian tech growing so fast? I think several changes in the industry in recent years are weighing in its favor:

  • Major investors went remote due to COVID, and have largely stayed that way even as the pandemic recedes in the US. This means they can meet an Indian entrepreneur just as easily as one across the street in San Francisco. This democratization is great for the entire industry.
  • The venture industry as a whole is on fire, with both exits and valuations in the US reaching staggering levels. This gives venture firms more incentive to look outside the US for better deals, and more cash with which to do so.
  • It’s easier to incorporate in the US than ever. I recently invested in a startup that lets companies incorporate, issue stock options, and handle compliance cheaper and easier than ever before. Many of their customers are outside the US, but incorporate here to make fundraising from American investors easy. (More on this awesome company soon!)
  • India is stacked with tech talent. Anyone who has worked at a software company in the US can tell you that Indian-Americans are a huge part of the industry, and they have incredible skills.
  • China is killing its tech industry. Heavy-handed regulation, massive fines, and even disappearances of tech entrepreneurs is having a chilling effect, and the number of Chinese startups breaking out is way down. India competes with China for venture funds, and right now, it’s looking like the better bet.

New regulations that may require companies to expose users and break encryption are the biggest risk I see on the horizon for Indian tech. But with a deep talent pool and ample funding, India’s is a startup scene to watch.

सौभाग्य!

More on technology:

INDIA IS SOAKING UP VENTURE CAPITAL LIKE A SPONGE

CHINA IS KILLING ITS TECH INDUSTRY

7 COMPANIES HAD 3 MINUTES EACH TO PITCH US. THIS IS WHAT HAPPENED.

Photo: “India – Enroute Tso Moriri, Ladakh” by sandeepachetan.com is licensed under CC BY-NC-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

How Do You Know If a Startup Is Getting Traction?

Investors look at a lot of startups before laying a bet. But how do we know if the company’s product is catching on, or has failed to find traction? And as a founder, how do you know if you’re headed in the right direction or…nowhere?

In a recent episode of the superb podcast This Week in Startups, investor Jason Calacanis and guests Craig Zingerline and Allen Chen broke down a key metric: customer retention.

Do you have product-market fit? There’s no one better to answer that question than the people who use your product every day. Here are the customer retention numbers to look for, over a 6 month period, for different types of startups:

  • Consumer social (think Instagram): 25% is good, 45% is great
  • Consumer transactional (think Uber): 30% is good, 50% is great
  • Consumer SaaS (think Netflix): 40% is good, 70% is great
  • Small and medium business (SMB) and midmarket SaaS (think Freshbooks): 60% is good, 80% is great
  • Enterprise (big company) SaaS (think Oracle): 70% is good, 90% is great

As you can see, business-to-business products should be a lot stickier than business-to-consumer ones. Consumers are fickle and their investment is minimal. At the other end of the spectrum, major corporations don’t adopt new software lightly. It’s a process that sometimes takes years and costs a fortune. So they don’t switch often, either.

The panel emphasized that you don’t have to get to these numbers right away, but that they should be a goal. Good luck!

For more on startups, check out these posts:

If you found this post interesting, please share it on Twitter/Reddit/Facebook/etc. using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!

Photo: “Jason Calacanis” by jdlasica is licensed under CC BY 2.0

This Is How Vlad Tenev Built Robinhood

“You can break down Robinhood into a series of small steps, the first one being start Robinhood, and every subsequent one being some variant of don’t stop and keep going, right, and you end up where we are today. “

In his mid-20’s, Vladimir Tenev lived in New York City. His apartment was tiny and spare. All his time went into his high frequency trading startup. Then mom came to visit.

When she saw his shabby surroundings, she began to cry. She told him she had a friend who worked at Macy’s. Maybe, she could get him a job there.

It must’ve taken great fortitude for Tenev to push ahead with his own business, despite few signs of success and the anguish it caused his family. But push ahead he did. Today, the company he built, Robinhood, has over 13 million users and plans to IPO soon at a valuation of around $40 billion. Tenev’s net worth exceeds $1 billion.

Tenev came to the United States as a child from Bulgaria and attended the elite Thomas Jefferson High School for Science and Technology, which US News ranks the best public high school in the entire country. What would’ve become of Tenev if he had stayed in Bulgaria? He might have had a very normal life. But giving this smart kid a superb education and access to a great entrepreneurial ecosystem turned him into a billionaire executive.

Tenev didn’t stop learning when he finished school. He taught himself to write iOS apps by watching free Stanford courses online while commuting on the Caltrain. It really shows you what a person can accomplish learning on one’s own for nothing now that knowledge is much more freely available.

Robinhood faced numerous obstacles along the way, but Tenev and co-founder Baiju Bhatt blasted through them. It took two full years of constant work to build their product. Venture capitalists were highly skeptical of their business. How could they make money without charging commissions? How could they beat giant competitors like Etrade and Charles Schwab? And could a couple of math guys make a beautiful consumer product?

But they kept pitching, and ultimately raised $250,000 from Google Ventures. Tenev couldn’t even get a job interview at Google 4 years prior. What if he had let that discourage him from ever approaching Google for an investment?

Just days before a meeting to approve a critical license Robinhood needed to operate, they were still $500,000 short of the required capital. Only the birth of an executive’s baby saved them by providing an excuse to postpone. By the new date, Tenev had raised the money.

A key lesson for startups: Robinhood didn’t worry about monetization until it achieved a large user base. It was confident that, like Instagram, winning enough users would give them all the opportunities for revenue they’d need. And they couldn’t put the cart before the horse.

What sticks out to me most about the Robinhood story is Tenev’s perseverance. At first, his business looked laughable. Later, it gained a bit of traction but faced seemingly insurmountable obstacles in fundraising.

But he just keep pushing, day after day. Now, 11 years after he started his first company, he sits at the helm of one of the hottest startups in the world.

For more on startups, check out these posts:

If you found this post interesting, please share it on Twitter/Reddit/Facebook/etc. using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!

Photo: “File:TechCrunch Disrupt NY 2016 – Day 2 (26902081436) (2).jpg” by TechCrunch is licensed under CC BY 2.0

NBA Top Shot: An Overnight Succcess 8 Years in the Making

NBA Top Shot’s popularity is exploding. Users pay to own an iconic basketball image or video clip, such as Lebron James dunking on someone (plenty of those choose from!). Their ownership is recorded on the blockchain in what’s called a Non-Fungible Token (NFT).

NBA Top Shot is a creation of Dapper Labs, a Canadian blockchain company. It started selling NFTs of cats called CryptoKitties. From these humble beginnings, Dapper Labs has grown to a million users on NBA Top Shot alone and recently raised $300 million in venture capital at a $2.4 billion valuation.

In an interview with CEO Roham Gharegozlou, angel investor Jason Calacanis marveled at how far this company has come:

Another 8 year overnight success in the making. It’s so funny how, as a founder, you can go from being like a punchline of a joke to the absolute belle of the ball.

Calacanis noted that video games have already sold digital items for real money for years, so the NFT business model is really not that much of a stretch. What’s more, for the young, owning a digital asset feels much more natural than owning a baseball card.

Dapper Labs plans to branch out to other sports leagues, and ultimately to recording ownership of items beyond video clips and images. If Dapper controlled the ownership records of, for example, cargo, this could be a truly massive company.

I was impressed with Gharegozlou’s perseverance over nearly a decade, going from obscurity to a partnership with a top sports league and a unicorn valuation. I was also impressed by how forward thinking the NBA is. If the creator of CryptoKitties came up to most major businesses with a proposition, they wouldn’t even get a reply. In its work in the crypto industry, as well as its highly successful COVID protocols, the NBA is clearly doing something right.

Give this intriguing interview a listen!

For more on NFTs and crypto, check out these posts:

If you found this post interesting, please share it on Twitter/Reddit/Facebook/etc. using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!

Photo: “LeBron James New York City More Than a Game 3 by David Shankbone” by david_shankbone is licensed under CC BY 2.0

The Top 5 Things That Changed When I Started Working for Myself

For fourteen years, four months and eleven days, I worked in software. My job was like a lot of jobs: conducted in a cubicle or sometimes remotely, during regular business hours, and almost every week of the year.

In July of 2019, I left that job to make my investment business full time. I still remember the feeling when I walked out of the office for the last time into a hot, sunny summer’s day…”Wow, this is it, I’m really gone”.

Looking back on the past 21 months, I decided to write down a few of the biggest changes in my life since leaving the world of corporate employment:

1) Your time is your own. When I wake up in the morning, I eat breakfast and do a little journaling. I can plan out a day focusing on whatever I want. The ability to design your own day is a huge difference from working at a company, where you’re crossing off items on someone else’s to-do list.

2) You find yourself suddenly immersed in new areas on a regular basis. In the last couple of months, I’ve done deep dives into COVID, vaccines, meme stocks, and startups. Some for business purposes, some just because I’m interested. When your time is your own, you find yourself delving into new topics a lot more frequently.

3) It’s harder to decide what success means. At a job success means not getting fired, getting a raise every year, and maybe a promotion. How do you define success in your own business? That’s a lot more subjective, and I tend to move the goalposts further whenever I reach a goal. This can put you on something of a treadmill. It’s important to get off sometimes and smell the roses.

4) You have more energy. Even though I almost never use an alarm clock anymore, I wake up earlier and am more energetic in general. Being able to do what I want with my time gives me energy. Doing what someone else wanted all day tended to drain it.

If you can make money through something other than selling your time, like investing or writing or selling a software product, you can remove that ceiling on your income.

5) The sky is the limit. My investments this past year made far more than I ever made working, and new investments I’m planning in early stage startups could blow away all previous earnings if things go right. (Or go to zero if they go wrong!)

If you work for a company, your raises usually come yearly and they’re only so much. There’s a limit to how much an employer will pay for an hour of your labor in most fields. What’s more, you only have at most 24 hours a day to sell! But if you can make money through something other than selling your time, like investing or writing or selling a software product, you can remove that ceiling on your income.

If you can generate enough income to fund even a modest living, and you aspire to work for yourself, I encourage you to do it!

If you can generate enough income to fund even a modest living, and you aspire to work for yourself, I encourage you to do it! If you can’t, build up a side business over time and eventually you’ll be ready!

For more on improving your life, check out these posts:

Photo: “The Workaholic NSA” by herval is licensed under CC BY 2.0

Key Metrics for Startups: Consumer vs. Enterprise SaaS

I listened to a fascinating podcast this morning in which Jason Calacanis, an early investor in companies including Uber and Calm, broke down how to measure startup success. The key metrics depend on what kind of company you’re looking at:

Consumer companies:

  • Of the biggest users, how many are retained? For example, if someone used the app 3 times a week on average last month, how likely were they to return this month? Much of your app engagement is driven by the most active users.
  • What is the customer acquisition cost versus the revenue from each customer? Half to two thirds of the spending of fast growing consumer companies is marketing, even outpacing staff salaries! And that makes sense if you’re customer acquisition cost is $50 but you can get $100 from them. You should do that all day. This is also relevant for SaaS startups.
  • For marketplaces, how often do transactions happen? Higher revenue transactions, like booking an Airbnb, can be less frequent. Low revenue transactions, like taking an Uber, need to be more frequent.
  • Also for marketplaces: what is the take rate? How much money do you get from each transaction?

Enterprise Software as a Service (SaaS) companies:

  • How many customers “land and expand”? Since enterprise SaaS tends to have a lower churn rate (customers leaving), how many become customers and then buy more licenses (“seats”) for more of their staff is key. Another way customers can expand is if you start selling more products and they buy those too.
  • Churn rate is less relevant. You don’t see as many customers cancelling because businesses put more consideration into a software purchase and then rely on it for their company’s success. A consumer is much more likely to take a flier on a Hulu membership than a company is to do so on a SaaS product. This means if you keep selling enough licenses and new, adjacent products to existing customers, you don’t even need to increase customer count much. This is less true for consumer startups.

Bonus: Dating apps face some special challenges. Facebook and Instagram sometimes ban them from advertising, and it’s very difficult to get them approved in the Apple app store. This may be because some are used to scam people and companies want to protect their users.

Some great info in this podcast! I’ll definitely be using it to guide my investment decisions. On the whole, SaaS seems a lot easier. Customers are less fickle, have deeper pockets, and are more willing to pay for something than consumers who have been trained that if it’s on the internet, it’s free.

If you found this post interesting, please share it on Twitter/LinkedIn/email using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too! 

Photo: CEO of hot startup Clubhouse, “Paul Davison” by jdlasica is licensed under CC BY 2.0

Amazing Drugs Are Going from the University to the Graveyard, While Patients Pay the Price

Was the cure for cancer invented in a university, only to be shelved for a lack of funding?

University labs are creating incredible drugs on a regular basis. Unfortunately, most will never get to the patients that need them so desperately. This is the conclusion of an intriguing book I just read, Preserving the Promise: Improving the Culture of Biotech Investment, by Scott Desain and Scott Fishman.

The problem is that universities don’t have the massive funds it takes to bring a drug candidate through clinical trials to FDA approval. What about Big Pharma? Well, they’ve been cutting their R&D budgets drastically for years.

This leaves early stage biotech investors to fund much of the commercialization of new drugs, and there simply aren’t enough of them to fund all the good candidates. Indeed, the number of investors specializing in this area is shrinking. This doesn’t surprise me given that most early-stage investors focus on software startups and have a software background themselves.

This does leave the few angel investors who specialize in biotech in an enviable position though: more great companies out there than there are angels to fund them means big slices of great companies for less money, and thus higher returns. This is an area that I may be branching out into in the future. Being even a tiny part of creating a new lifesaving drug or medical device would be incredible.

University policies also hinder the effective commercialization of research, the book notes. Technology Transfer Offices own the patent, but sometimes are hesitant to license it unless they can get lots of revenue for it right away, which is hard for a fledgling company to provide. In other cases, they bury the patent, thinking it unpromising. And university conflict of interest policies can often stop the inventor from continuing to work on the research with company funds. This separates the technology from the person who is best positioned to advance it.

In all, this seems like a neglected area with a lot of problems. That we rely on it for virtually all new drugs is scary. But investors like myself should eye the area with interest, especially given rich valuations in software startups.

For more posts on biotech, check these out:

If you found this post interesting, please share it on Twitter/LinkedIn/email using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too! 

Photo: The co-founders of BioNTech, a biotech success story. “Forschungszentrum der Biotech-Unternehmen BioNTech AG und Ganymed Pharmaceuticals AG” by MWKEL-RLP is licensed under CC BY-NC 2.0