CategoryInvesting

Venture Capital (in general) Doesn’t Work

For years I’ve been talking about California Capitalism, how the traditional model of venture capital doesn’t work outside of the Bay Area, New York City, and Boston, and rather than just rant I’ve been explaining and implementing alternative investment models including revenue-based finance and holding companies. The latest issue of American Affairs magazine includes a deep...

The Anti-SPAC

Wall Street has a hot new old tool, the special purpose acquisition company, a.k.a. the SPAC. This is a public company that is nothing more than a pool of capital and set of advisors in search of a business to buy. It is supposedly a more efficient path for private companies to become public companies instead of the following the traditional IPO. At worst it is flawed solution to a flawed IPO...

Creating Angels

Out of the 320 million Americans, fewer than 320,000 are Angel investors, investing in startups. Quick math, that is less than 0.1% of all Americans. The ratio only gets worse elsewhere in the world. Why? Investing in startups is complicated. Historically, it’s a skill learned in an ad hoc apprenticeship, with new Angels observing more experienced Angels for months or years. Few people have...

Three types of companies and three types of mission-driven companies

I categorize companies into three categories: A- Companies focused solely on profits, running extractive businesses, unconscious to the needs of their employees, their communities, and the world as a whole. Most of the S&P 500 and Global 1,000 are in this group. B- Companies that truly care about ESG: Environment, Social, and Governance. In short, companies whose management works on improving...

The Drought of Capital

Entrepreneurs are farmers of ideas.Farmers who are living in a perpetual drought.No matter how well we teach entrepreneurship, the drought creates year after year of failed crops. The fix has little to do with more and better incubators, accelerators, and startups labs. This drought is the lack of capital to support the existing startups. Just as we can’t solve a regional drought by...

Sharing Equity with Employees

There are a few aspects of venture capital whose origins are lost to history. One of these is the 20% stock option pool. Or more simply, the idea that everyone in the startup should own (at least a small amount of) the equity. Does this idea date all the way back to Rock and Davis, or did it come later? Why 20%? Why not 10% or 33% or 50%? Was this idea ever debated, or did one VC decades ago tout...

Yellow Flags, Yes vs. No

A few times per year I attend conferences full of fellow fund managers, managers of family offices, and big impact investors. The rest of the year I share investment opportunities multiple times per week with other investors. From all these conversations, I’ve come to realize the power and benefits of running a business accelerator rather than a traditional venture capital fund. From 10,000...

Too Big to Succeed

Blogging is just one more example of the key lesson I teach entrepreneurs, that it takes multiple iterations to find something that works. That is true not only for products, but also for sales, marketing, and messaging. The words I’ve failed to find in the story of WeWork and its lead investor Softbank I found buried in a CNBC article: Too big to succeed The problem with Softbank’s Vision Fund...

The Tokyo-Riyhad Capital Bubble Bursts

When the WeWork IPO was still a possibility, the Tokyo-Ridyhad Capitalism paradigm seemed outrageous but not impossible. Two weeks later, the bubble has burst but the unwinding seems to be just as outrageous. According to TechCrunch, for all the harm and fraud Adam has caused his employees, landlords, and investors, SoftBank is rewarding him with $1 billion buy out plus a $500 million loan to pay...

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