The Most Important Principle of Start Up Fund Raising


This post is by Tomasz Tunguz from Tomasz Tunguz


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The most important principle of start up fund raising is: Raise enough money to achieve a set of milestones that will attract a subsequent round of investment from new investors. Last week, a founder of a seed stage company came to pitch. When I told him the opportunity wasn’t a fit for us, he asked me what milestones he would need to achieve to raise a Series A - as he was raising a seed round!

The Most Important Principle of Start Up Fund Raising


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




mile_marker_11.jpg The most important principle of start up fund raising is:
Raise enough money to achieve a set of milestones that will attract a subsequent round of investment from new investors.
Last week, a founder of a seed stage company came to pitch. When I told him the opportunity wasn’t a fit for us, he asked me what milestones he would need to achieve to raise a Series A - as he was raising a seed round! He was calibrating how much he needed to raise for in his seed to make sure he could raise a Series A. After we spoke, he drafted a financial plan to calculate the size of the seed investment he would need to achieve those milestones and added a reasonable cash buffer. In effect, he reverse-engineered his Series A. This is the same process investors follow when investing in a company. During the term sheet Continue reading "The Most Important Principle of Start Up Fund Raising"

The Power of Market Places


This post is by Tomasz Tunguz from Tomasz Tunguz


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Brokers serve two key roles within ecosystems. First, they introduce buyers and sellers. Second, they lend their expertise to help buyers and sellers make the right decisions in the market. The internet neutralizes the first value proposition of brokers by leveling the information asymmetry between buyers and sellers at a far greater scale with much better data than any broker ever could. And for products and services with relatively small price points, commodity goods or where the cost of failure is low, market places often nullify the value (and cost) of an advisor.

The Power of Market Places


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




nyse.jpg Brokers serve two key roles within ecosystems. First, they introduce buyers and sellers. Second, they lend their expertise to help buyers and sellers make the right decisions in the market. The internet neutralizes the first value proposition of brokers by leveling the information asymmetry between buyers and sellers at a far greater scale with much better data than any broker ever could. And for products and services with relatively small price points, commodity goods or where the cost of failure is low, market places often nullify the value (and cost) of an advisor. Market places are arguably the best examples of this kind of disruption. Whether in ad tech (Google AdX), real estate (LoopNet, RedFin), accommodation (HomeAway, AirBnB), goods (eBay, etsy), classifieds (Craigslist), taxis (Uber, Hailo), travel (the GDS systems), financial services (AxialMarket, Angelist) market places are black holes within ecosystems. Market places exert such gravity that once Continue reading "The Power of Market Places"

What I Learned From a Two-Year Fund Raising Process


This post is by Tomasz Tunguz from Tomasz Tunguz


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Once each month I met Peter at Café Habana in Nolita for huevos rancheros drenched in tomato sauce and a glass of fresh orange juice. Mopping up yolks with tortillas, Peter and I chatted about his business: the techniques of scalable customer acquisition, the priorities of the product and engineering team, the structure of sales quotas and the ebbing and flowing dynamics of the market place he and his team were building.

What I Learned From a Two-Year Fund Raising Process


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




cafehabana.JPG Once each month I met Peter at Café Habana in Nolita for huevos rancheros drenched in tomato sauce and a glass of fresh orange juice. Mopping up yolks with tortillas, Peter and I chatted about his business: the techniques of scalable customer acquisition, the priorities of the product and engineering team, the structure of sales quotas and the ebbing and flowing dynamics of the market place he and his team were building. After two years, Peter called to say he was raising capital for his company; he invited us to take part in the process. I lept at the opportunity to work with Peter. I had witnessed how Peter managed adversity and uncertainty in his business and trusted his instincts and intuition. We had forged a working relationship over those breakfasts. During the fund raising process, Peter encouraged me to spend time with his team. In parallel, the Redpoint deal Continue reading "What I Learned From a Two-Year Fund Raising Process"

The Cost of Bad Data is the Illusion of Knowledge


This post is by Tomasz Tunguz from Tomasz Tunguz


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Each time I open Salesforce in my browser, I think of Stephen Hawking. It’s because of an aphorism an entrepreneur shared with me a few weeks ago. He said: The cost to fix a data error at the time of entry is $1. The cost to fix it an hour after it’s been entered is $10. And the cost to fix it several months later is $100+. Take for example a venture capitalist’s CRM tool.

The Cost of Bad Data is the Illusion of Knowledge


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




m_c_escher_magic_mirror_art_print.jpg Each time I open Salesforce in my browser, I think of Stephen Hawking. It’s because of an aphorism an entrepreneur shared with me a few weeks ago. He said:
The cost to fix a data error at the time of entry is $1. The cost to fix it an hour after it’s been entered is $10. And the cost to fix it several months later is $100+.
Take for example a venture capitalist’s CRM tool. If I mistype an email address or the details of the last fund raise, it might cost me a minute or two to fix it at that very moment. A minute of time is worth about $1. If I’m lazy and don’t correct the error, later on that day one of my colleagues might search our CRM for the company and comes across the erroneous record which he suspects is inaccurate. First, he will check Continue reading "The Cost of Bad Data is the Illusion of Knowledge"

The Failure Fetish Fallacy: Learning is at the Core of Startup Land


This post is by Tomasz Tunguz from Tomasz Tunguz


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The valley and startup-land does not fetishize failure despite the increasing reports to the contrary. FailCon is not the Darwin Awards for startups. Founders do not start businesses with the express interest to fail. Instead, the valley is infatuated with the post-mortem of failures and successes alike because within every venture are pearls of wisdom - a subtle but important difference. Extracting and applying these insights can be the difference between success and failure.

The Failure Fetish Fallacy: Learning is at the Core of Startup Land


This post is by Tomasz Tunguz from Tomasz Tunguz


Click here to view on the original site: Original Post




Screen Shot 2013-01-28 at 9.04.49 AM.png The valley and startup-land does not fetishize failure despite the increasing reports to the contrary. FailCon is not the Darwin Awards for startups. Founders do not start businesses with the express interest to fail. Instead, the valley is infatuated with the post-mortem of failures and successes alike because within every venture are pearls of wisdom - a subtle but important difference. Extracting and applying these insights can be the difference between success and failure. This is why founders pursue knowledge relentlessly. Ultimately, iteration and learning speed is the hallmark of great startup teams Startups are vehicles designed to test hypotheses: Will millions of users participate in a photo sharing network? Will tens of thousands of businesses pay $10 per month for easy to use expense reports. Understanding what worked and what didn’t is essential to maximizing the odds of success for new ventures. The valley in its entirety is structured Continue reading "The Failure Fetish Fallacy: Learning is at the Core of Startup Land"