Tag Archives: VC

A Day in the Life of an Angel Investor

Not that kind of angel!

You’ve heard of angel investors and their big brothers, venture capitalists. But what does an angel investor actually do in a day?

I thought I’d break down my day today so you can see how the sausage is made:

1) Read deal memos in inbox. It could be as few as 2-4, or it could be as many as 12 or more.

Since I invest in seed stage startups, I generally look for some traction and a valuation of about $10-15 million. I like to see companies with 6 months of revenue, growing 20% or more month over month.

The traction and valuation criteria eliminate about 99% of startups right off the bat.

2) Send over a developer candidate to one of my companies. Looks like they like him!

Adding value through intros to possible employees and investors is a big part of an angel’s job. I try my darnedest to help the companies I’ve invested in.

I found this candidate via a Slack community for developers. Finding good developers who don’t already have a job is very difficult nowadays.

But I still try! One great engineer can make a huge difference to an early stage startup.

3) Answer LinkedIn messages. Usually the deal flow here isn’t great, but sometimes it can be excellent!

Don’t discount cold messages. Jason Calacanis found LeadIQ because the founder cold e-mailed him, and now the company is worth over $200 million!

4) Read about the industry as a whole. Every day, I try to learn more about technology investing as a whole, not just the companies that cross my desk.

Today I read about how founders can get investors to work for them. I also read about finding the sweet spot between valuation and traction, which will inform me as I read tomorrow’s deal memos!

5) Attend a Q&A w/ two expert angel investors tonight!


Being an angel investor is about continuous learning, first and foremost.

You learn about new companies every day and select that 1 in 100 (or more) you want to invest in. And you learn about technology and business in general, which makes you a better investor!

This constant opportunity to learn is one of the things I like best about angel investing. You see companies doing everything from 3D printing human tissue to revolutionizing e-commerce search.

There’s seldom a dull day!

What have you always wondered about angel investing? Let me know in the comments at the bottom!

Have a great day everyone!

More on tech:

This Week in the Venture Bubble

How to Ace a 3 Minute Pitch

The High Growth Handbook: Scaling Startups from 10 to 10,000 People

Photo: “Earth Angel” by drburtoni is licensed under CC BY-NC-ND 2.0

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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.

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. 

This Week in the Venture Bubble

Venture capital funding is growing at an incredible rate. The money pouring into early stage startups, my playground, has increased by billions of dollars per quarter just since 2020.

I see the perverse results of this cash flood every day. Here are a few, from just this week alone:

1) A company raising a seed round at a $125 million cap with no product in market.

2) An uncapped note. The ultimate schmuck investment vehicle…you don’t even know what you paid for your shares!

3) A restaurant raising venture capital. 

Restaurants can’t scale like software businesses and are far less profitable. And food is not a winner take all market like many software products.

The standard VC playbook is losing money at first to dominate a market. Then, you make big profits later with your favorable unit economics. 

That model doesn’t apply here. 

3) A company raising a seed round at a $150 million valuation.

Some investors are now willing to invest in any business at any price. This may lead to more of the fourth thing I saw this week:

4) A company that had raised over $10 million in funding from blue chip VC’s recapitalized, completely wiping out prior investors.

Despite raising a boatload of funding, the company had never found product market fit and had very poor gross margins of about 25%. (A solid gross margin for a software business is more like 80%).

If we don’t want to lose our money like those unfortunate investors, we need some discipline. Here are my standards:

A) No $100 million seed rounds. Fred Wilson of Union Square Ventures proved this model cannot work.

B) No startups without a product in market unless it’s a very high profile founder. We’re taking sold her last company for $1 billion high profile.

C) No uncapped notes.

D) No low margin, old economy businesses masquerading as tech startups.

Who’s with me? 

What are you seeing in the startup world? Let me know in the comments below.

More on tech: 

How to Ace a 3 Minute Pitch

What I Look For in Startups

Why I just Invested in EyeRate, the Best Online Review Tool

Photo: “Bubble” by zacktionman is licensed under CC BY-NC 2.0

If you found this post interesting, please share it on Twitter/Facebook/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.

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 Crafter, Maker of the Most Beautiful Arts and Crafts Kits in the World

I’m super excited about today’s company! Of all the startups I’ve looked at recently, Crafter might have the most compelling product. This San Diego-based company makes arts and crafts kits of the very highest quality and provides great instructional videos that will have you making beautiful crafts in no time.

A beautiful textile project from Crafter

I never thought I’d consider embroidery until I saw their product! Crafter, also known as The Crafter’s Box, can also help you make quilts, leather bags, and even stained glass! This post barely scratches the surface; you really have to check out Crafter.com and see all this cool stuff! Go ahead, I’ll wait here. 🙂

Learn to embroider!

The founder, Morgan Spenla, created Crafter after what was supposed to be a relaxing crafting experience turned into a nightmare. Morgan wanted to make a nice necklace, and found herself at Joann’s looking at a thousand different tools and materials. She had no idea what to choose. The store was about to close and her kids were going wild. Morgan wound up with a random assortment of materials and couldn’t find a YouTube video to show her how to turn them into the necklace she wanted. She wound up giving up in frustration. But she knew there had to be a better way.

I doubt Morgan is the only person to have this experience. Crafting has become increasingly popular during the pandemic. If you’re stuck at home, why not make a cool scarf? And I don’t see people giving up their fun new hobby just because things are reopening.

The venture capital world is largely male, and most of us probably don’t do crafts. But that doesn’t mean other people don’t! Arts and crafts is a $44 billion dollar industry that has grown by half in just 5 years, and it’s almost all brick and mortar retail. Crafter could completely disrupt this market. Etsy is the go-to for finished crafts, and Crafter may become the go-to for making crafts. Oh and by the way, Etsy is valued at $25 billion.

On a meeting with Morgan recently, I was impressed by her resourcefulness and dogged persistence. Founders giving up is the biggest killer of startups, and I don’t see Morgan giving up. She funded the company herself for nearly 5 years before raising venture capital, and continues to work long hours to make her dream a reality.

She also excels at recruiting the best people to help her. On a recent episode of This Week in Startups, Morgan shared her strategy of recruiting former Starbucks employees for customer service jobs. They excel at dealing with difficult customers, and if your tech startup can pay more than Starbucks, you’ve got them. This struck me (and the host, noted angel investor Jason Calacanis) as brilliant.

Take a look at Crafter.com and make yourself something awesome! And by the way, that link will save you 20%!

More on technology:

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

INSIDE A STARTUP ACCELERATOR DEMO DAY

CHINA IS KILLING ITS TECH INDUSTRY

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.

This Hoboken-Based Rocket Company Could Revolutionize Space

In the shadow of New York City, I walked down a quiet street beneath an overpass. I came across a squat brick building with no windows. On the door, a small sign was the only indication of what’s inside: Hudson Space Systems.

Founded by graduates of the Stevens Institute of Technology, Hudson Space Systems (HSS) is working to make cheap, reusable rockets available to everyone. The microgravity (weightlessness) that being high above the earth provides is critical to research in medicine, physics and materials science. Cell cultures grow faster, physics experiments are simplified, and materials are tested like nowhere else.

But this invaluable scientific platform has a problem: waiting lists for launches are long and costs are high. HSS’s 3D printed, resuable rocket aims to bring the cost down by 40% and increase capacity until booking space on a rocket launch is as easy as booking a dinner reservation on OpenTable.

SpaceX proved rockets can be reused. What SpaceX did for launching satellites, HSS hopes to do for launching science experiments.

Hoboken, New Jersey, with its density and proximity to New York City, might seem like the last place where you’d find a rocket company. But it’s one of the most educated cities in the country, with over 80% of the population holding bachelor’s degrees or higher, and has a technical university right in town. Tech companies often grow out of universities, as this one did.

Will HSS be able to realize its vision? That’s anyone’s guess, but they have already raised $100,000 in 2020 and are $162,000 into a $250,000 raise that closes in a few days. Since they are currently working on protypes and don’t yet have a product in market, this company is earlier on than the startups I invest in. But if you like getting in on the ground floor, and especially if you have expertise in this area, it could be a great opportunity.

Best of luck to these hardworking men and women on their exciting new business right here in the Garden State!

More on startups:

Photo: “Antares Rocket Launch (NHQ201610170114)” by NASA HQ PHOTO 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! 

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 Austin is #1 in Attracting Tech Workers

Austin, already a significant tech center, is the biggest beneficiary of tech workers being able to live anywhere and work remotely:

Austin is the top beneficiary of tech-related migration in the past 12 months, according to data from Microsoft Corp.’s LinkedIn profiles. Nashville and Charlotte also saw noteworthy migration rates.

Why is Austin #1? Tech workers are finally able to live where they want, and it turns out they have similar preferences to other Americans. The southwest has seen a huge influx of people in recent years, regardless of their occupation. Sun, warmth and cheap housing are powerful draws.

The typical house in San Francisco is nearly 3 times the price of the average Austin house. If you moved to SF for a job and the job no longer requires that you be there, you may leave and pocket the difference.

But there are lots of cheap sunbelt cities. Austin wins due in large part to the presence of a major university. This is something all major tech centers have, whether it’s San Francisco, Boston, New York, or Beijing. Companies often grow out of these universities, and college towns tend to have amenities that attract educated workers. Miami lacks a first rate university, hampering its prospects of competing with the likes of Austin.

Even before COVID, I noticed a strong trend to remote work in the tech sector. I worked in medical software for nearly 15 years. At the beginning, working from home was never allowed. By the end, I was remote 75% of the time.

The tech sector has reconfigured itself during COVID to operate remotely and is unlikely to go back. As an investor in startups today, I’ve seen venture capital firms start to hire anyone regardless of where they live. Will they fire these employees or force them to move once COVID is over? Not likely. Also, investors are finding they can meet with a lot more companies over Zoom than if they had to travel between offices. These efficiency improvements aren’t going away.

What venture firms do affects the whole tech sector. Many often required startups they invested in to move to SF. But that’s a thing of the past.

I’ve actually never been to Austin, but I hope to soon! I took a class at UT-Austin online this spring, and it was superb. Austin has clearly invested in education, and now it’s reaping the rewards.

Dig into these posts for more on tech and startups:

Photo: “Austin Texas” by adactio 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:

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.

One of the Hottest Tech Startups in the World Calls Hoboken Home

In the birthplace of baseball and Frank Sinatra, on a quiet street near the waterfront, lie the offices of one of the hottest tech companies in the world: Attentive.

We’re used to thinking of the tech startup scene as confined to the Bay Area. Maybe a few in New York City proper, maybe. But one of the most significant new tech companies of today is right here in the Garden State.

A tech startup is a big deal when it becomes a “unicorn,” or reaches a valuation of $1 billion. Of all US companies that have reached that holy grail in 2020 and 2021, Attentive is the 4th largest. Its current valuation is $6.97 billion, a staggering sum for a company that’s only existed for 5 years.

Attentive is a messaging platform that helps companies communicate with their customers. It allows businesses to send personalized text messages that help drive sales. E-mail inboxes are overflowing and promotional e-mails tend to get lost in the shuffle, but customers are a lot more likely to notice a text message. After all, that’s how they communicate with family and friends every day.

Attentive is not the first unicorn this single square mile has produced. Hoboken-based e-commerce site Jet.com was sold to Walmart for $3.3 billion in 2016.

Why has this tiny town of only 50,000 people produced two giant software companies in just a few years? I think the reason is that over 80% of residents have at least a bachelor’s degree. Indeed, Hoboken is the 35th most educated city in the country. If you look at the other cities on that list, you see quite a few tech hubs, such as Menlo Park, Palo Alto, and Cupertino in California.

The more we can promote higher education, particularly in STEM fields, the more of this type of success we will see. It makes me prouder than ever to be a New Jerseyan. I only wish I had been an investor in this one!

Have a great holiday weekend everyone!

Dig into these posts for more on startups:

Photo: “New Jersey – Hoboken: Washington Street Brownstones” by wallyg 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! 

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.

India Is Soaking Up Venture Capital Like a Sponge

It’s not just about the Bay Area anymore. Indian startups have raised venture funding at a record pace this year, on track to double from 2020:

Startups raised total investments of $7.8 billion in the first four months of this calendar year, which is almost 70% of the overall corpus of $12.1 billion raised in entire 2020 and more than 50% of $14.2 billion raised in 2019, data from US-based research firm PitchBook shows.

More here.

The average deal size is also near record highs, at $25 million. The most valuable venture-backed startup in India is Paytm, a payments and e-commerce company, at $16.7 billion.

India has seen 13 companies reach unicorn status this year ($1 billion valuation and up), an impressive figure. The US remains far and away the leader, with 288 total unicorns as of last month. China has 133, and India is third at 32.

As a US-based investor, I see a lot of companies pitch, but not those from India. The American and Indian VC markets don’t seem well connected. I’m not sure how to fix that, but I’m eager to have access to this big crop of quality companies. The most active VC firms in India are a mix of American and Indian organizations. With numerous people from India staffing (and starting) US tech companies, I hope to see more connections between our markets in the future!

Dig into these posts for more on startups and venture capital:

Photo: “Agra – Taj Mahal” by micbaun 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! 

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

Venture Funding Just Doubled in 1 Year

I came across an incredible stat last night:

Worldwide venture funding has nearly doubled YoY reaching $125B and grew by half QoQ in Q1 2021, according to Crunchbase. On average, two startups crossed the unicorn valuation threshold each working day during the first three months of the year.

Users increasing their engagement with online tools due to the pandemic, along with easier exits via Special Purpose Acquisition Vehicles (SPACs), were two big factors in this extraordinary increase. I’d also be willing to bet that a big jump in the money supply, which is showing up everywhere from meme stocks to cryptocurrenices, is a factor.

In startups I’m looking at, I’m seeing valuations in the $10-15 million range even on seed stage companies. A few years ago, that might have been $5-6 million. I can’t say I love those higher prices, but if a company achieves a valuation of $1 billion (not to mention $10 or $100 billion), whether you got in at a $5 or $15 million valuation may not matter.

I’ll be watching to see if these trends continue or if the industry is setting itself up for a crash. With consumers becoming more and more used to doing everything online during 2020, along with loose monetary policy, I think that any downturn is probably quite a ways off.

For more on venture capital and startups, check out these posts:

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