At MergeLane, we (and most of the startup investors I know) subscribe to the philosophy that startup success is determined by team, team, team, market and idea, in that order. We look for incredibly tenacious founders with a track record of making the seemingly impossible possible, a deep passion bordering on obsession for solving the problem their business is solving, and a huge opportunity cost for pursuing their startup.
I sometimes find that incredibly tenacious founders want to move as quickly as possible to get an investor’s check in their hand. This typically causes frustration on both sides of the table. Before we consider companies for investment, we like to invite them to step back and look at the things that are really going to make or break a company’s ability to raise capital and, more importantly, build a successful company.
Idea: Is your business solving a big enough problem? Does your market actually view this as a problem? Is your market willing to pay to solve this problem? Is the vision of how your company will solve this problem the best way to solve the problem? Can you make your vision bigger?
Market: How big is your market? How much of this market cares enough about this problem to become a user or paying customer? This is a great resource for calculating your total addressable market (TAM).
Team: Are you the right team to execute on your vision? I’d suggest answering these questions specifically:
3) Have your assumptions about your team members changed? Do you need to rethink your roles as team members?
4) What are the critical holes in your team? How will you fill them? Can you leverage mentors, etc. to fill those holes for the next 18 months?
Passion: As you think about these questions, don’t lose sight of the fact that the most successful founders typically build startups to solve problems about which they are deeply and personally passionate.
After you answer these questions, think about whether raising capital from angel investors is actually the right strategy. To answer this question and more, I’d suggest:
1. Reading this post about the types of companies angel and venture investors typically fund
2. Listening to the following in order of priority:
I am extremely disciplined and focused. However, this can also be a detriment. Anything I perceive as a distraction from my to-do list feels stressful, and I have to constantly tell myself that off-the-to-do-list opportunities are often the best opportunities. I was recently reminded of that.
For the final episode of Fund81's first season, I interviewed Jaclyn Freeman Hester from Foundry Group. As someone relatively new to the industry, she has a fresh perspective on what's compelling to institutional investors and an incredible pulse on the landscape for emerging VC managers. Enjoy!
Could I be more effective if I simply surrendered to a schedule that felt natural to me? After some serious self-reflection and experimentation, I can unequivocally say YES.
I’m trying to focus my time on opportunities to operate in my zone of genius and a few select priority areas in line with my passions and in which I feel I can make the most impact, aka my true north. To help all of us stay the course, I thought it might be helpful to share those priorities.
I gave first without question for almost five years. It came back to me in spades. I don’t regret it, and I think it was exactly the right thing for me to do at the time. But then….it just got to be too much.
Dave Balter, the CEO of one of our MergeLane portfolio companies, Flipside Crypto, shares his perspective on investing in the cryptocurrency space. Dave is obsessed with and extremely knowledgeable about cryptocurrency, and has an interesting perspective from both sides of the table.
Most venture capital funds target a minimum ownership percentage when making investments. In this Fund81 episode, Amish Jani, a founder and Managing Director of FirstMark Capital, shares his take on why ownership matters and how funds of different sizes and strategies determine ownership targets.
Venture capital funds are typically structured to have a 10-year lifespan, but venture-backed companies often take more than 10 years to achieve an exit and return capital to their investors. In this Fund81 podcast episode, we discuss solutions to this problem with our our guest, Roland Reynolds.
This year, I decided to do an experiment. To build our MergeLane investor and mentor network, I dedicated four months to exclusively focus on meetings that involved skiing.
Conscious Leadership has been a game-changer for our partnership and our investing. For this Fund81 podcast interview, I invited my business partner at the MergeLane venture fund for high-potential startups with at least one woman in leadership, Sue Heilbronner, to talk about Conscious Leadership.