CategoryAssumptions

Learning never stops

A key tenant to the Lean Startup philosophy is the repeated cycle of learning.  Launch.  Measure.  Learn.  Repeat. Too often, first-time entrepreneurs think they know the right answer, when in fact they don’t even know the right questions to be asking. For successful established companies, this cycle of learning never stops. Case in point today, when Fledge took a field trip to visit...

Valuation, a big difference between Angels and VCs

Outside of California, where it feels like all investors are professional investors, and following up on last week’s post about one difference between Angel and professional investors, another difference is the way the deal terms get set, especially valuation. First-time entrepreneurs don’t understand how startups gets valued.  Neither do first-time startup investors. In my MBA class...

Novel, but Certain (to Work)

The more one dives into startup investing, the most one finds Catch-22’s.  This post is about the tradeoff between being inventive and copying a known business model. Novelty.  The risk-averse investors who make the high-risk investments in startups tend to like new ideas.  They are early adopters of new ideas and new technology.  They enjoy the excitement that comes with novelty and...

Online vs. In-Person, an apples to apples, Fledge to Fledge comparison

In the 21st Century, companies need to experiment to survive and thrive. This is even more true for startups, where the first idea to work may not be the best idea for the long run. With this in mind, my business accelerator, Fledge, ran an experiment this Autumn… FledgeX, an 100% online version of our intense entrepreneurial training program. The results were not entirely as expected. Time The...

Assuming everyone wants an exit

The last time I presented at an event for investors, the first five people all asked me the same question, “Any exits yet?” The more years I spend focusing on revenue-based investing, the more that question is getting on my nerves.  Perhaps some of that is on me, as the talks I give are generally titled “Investing without Exits” or “Alternative Exits” or...

California Capitalism

What is the story with the unicorns?  Is there a tech investment bubble?  What on earth is going in in the venture investing world? The short answer is that we’re at a crux of a paradigm.  The paradigm wrapped around investing venture capital in startups. Few people I talk to know that venture capital, as practiced today, is a fairly new concept.  People instead assume...

Aligning entrepreneur and investor incentives

In the last post, I talked about how revenue-based investments are a lower cost of capital than traditional equity.  In this post, as promised, I’ll explain how they also better align the the incentives of investor with the entrepreneur. To start with, always remember to put yourselves in the other person’s shoes when raising money.  Investors invest to make a positive return on their...

A 60% discount (for entrepreneurs)

Revenue-based investments are quite uncommon in startup investing, and as such, few entrepreneurs and few investors understand their benefits. The traditional form of startup capital is equity, with investors expecting a “10x” return on their investment, i.e. they expect that the company will be acquired for a sufficient amount that the investment will earn the investor at least 10...

What happens in Seattle (and elsewhere)

As the collective we bootstrap the impact ecosystem, hole after hole becomes more apparent.  Business models.  Talent.  Funding.  Etc. Far less obvious, but as important, is the information hole.  Specifically, the lack of information on what is happening around the impact-oriented world.  And where it’s happening.  And who is making it happen. This is one assumption I discovered very...

An Investor Co-op?

In the world of social responsibility, co-ops are a corporate form that stands out as an functioning design. Consumer co-ops are a well-worn form for grocery stores (PCC and a dozen others here in Washington State), for retailers (see the multi-billion dollar REI), producers (see Organic Valley and Equal Exchange), and savings (see any credit union). Expanding that cooperative ethos across the...

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