“Venture capital” is semantically equivalent to “dangerous money”, which is part of its mystique.
Essentially, VC is a high-stakes extreme sport in which top players can amass astonishing amounts of wealth and power. And sometimes a huge pile of investor money burns so bright that it’s picked up by satellites.
But where does all that money actually come from and how do VCs actually make money? Before joining businesskinda.com, reporter Haje Jan Kamps worked at VC fund Bolt, where he interacted directly with fledgling founders.
“Once you’re on the VC-powered treadmill, you can’t easily step back,” he writes. “As a result, I suspect a lot of founders don’t really know how venture capital works.”
In this comprehensive explanation, he deconstructs venture capital to help readers understand how investors feel about risk and return, pro-rata entitlements, and why “UK investing is a hits-driven business.”
It should go without saying, but it’s a bad idea to pitch an investor if you don’t have a good idea of how they work.
“As a startup founder, you would never dream of selling a product to a customer who doesn’t really understand you,” Haje writes. “Not understanding why your VC partner might be interested in investing in you is dangerous.”
Thank you so much for reading TC+ this week!
Walter Thompson
Editorial Manager, businesskinda.com+
@yourprotagonist
Contents
- 1 Are you planning to use your seed capital as collateral? Good luck
- 2 Why do startup valuations fall when interest rates rise?
- 3 Pitch Deck Teardown: Mi Terro’s $1.5 Million Seed Deck
- 4 Dear Sophie: How do I get an O-1 visa to freelance for web3 projects?
- 5 Choose your angel: learn how they invest and what motivates them
- 6 5 investors explain why longevity technology is a long-term game
Are you planning to use your seed capital as collateral? Good luck
Image Credits: Colin Anderson Productions pty ltd (Opens in a new window) / Getty Images
Employee incentives are one of the oldest brain hacks. Offer the right person enough equity and delicious snacks and they’ll be happy to work 60+ hours/week or participate in a weekend dev sprint.
But employees interested in accessing liquidity have only two options: wait for an offer from their employer, or find a private buyer in the secondary markets.
“You could say that the system is broken. I agree with that,” says Max Brenner, part of the founding team of Compound.
Why do startup valuations fall when interest rates rise?
Image Credits: Andri Onufrijenko (Opens in a new window) / Getty Images
The US Federal Reserve has raised interest rates to curb inflation, just one of the many factors driving startup valuations down today.
But why?
Higher inflation directly affects access to capital, your customers’ ability to pay and, not coincidentally, the service you get from providers (including your own employees).
“If your customers are taking advantage of inflation, chances are your business will too,” said Equidam founder Daniel Faloppa.
“However, in most cases, when your customers benefit, your service providers suffer.”
Pitch Deck Teardown: Mi Terro’s $1.5 Million Seed Deck
Image Credits: Mi Terro (Opens in a new window)
In March, Mi Terro raised a $1.5 million seed round to scale up efforts to convert agricultural waste into proteins that can be used to replace outdated plastics that have polluted our environment.
The company’s founders shared a 15-slide deck of cards with TC+ going through their plans to use spent grain to make material for everything from contact lenses to detergent capsules.
Or, as the closing slide states, “Drink more beer, reduce more microplastic.”
Dear Sophie: How do I get an O-1 visa to freelance for web3 projects?
Image Credits: Bryce Durbin/businesskinda.com
Dear Sophie,
I’m a UX/UI designer in Europe, working for a web3 company in the United States.
I would like to resign from my current position and move to the US to take up work that will give me more autonomy, flexibility and the opportunity to take on a variety of projects with different clients in the US
How can I make that happen? Thanks for your help!
—World’s Web3 Wonder
Choose your angel: learn how they invest and what motivates them
Image Credits: Newbird (Opens in a new window) / Getty Images
The “pick your fighter” meme can be traced back to the video game Mortal Kombat, but is also relevant to seed stage founders looking for an investor.
Making money is paramount to every angel, but according to Mack Kolarich, VP of Assure Analytics, most of them also have “a second or third motivator that drives them to invest in startups.”
In a guest post from TC+, he explains several factors entrepreneurs should consider when shopping for investors: Do they support a local ecosystem? Do they write instant checks?
“Armed with this knowledge, you can strategically select the right partner for your business,” says Kolarich.
5 investors explain why longevity technology is a long-term game
Image Credits: Lucy Lambriex (Opens in a new window) / Getty Images
In the United States, average life expectancy has fallen for two years in a row. In 2019 it was 78.86 years, but in 2020 that figure has shrunk by 2 years and 3 months.
The decline was due to COVID-19, but reporter Anna Heim interviewed five investors who support startups developing technology that can help us live longer and healthier lives.
Longevity is an emerging vertical these days, but “space is just now taking off and will infiltrate all aspects of our lives over the next five to 10 years,” said one respondent.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.