The asymmetry of the investor-founder relationship, how to return an investor’s fund and the surplus of founders.

Happy Sunday.

And hello from I-81S today, en route to Knoxville for the week. I’ve spent the last ~2 weeks trying to catch up on the backlog of emails and new investments. Now it’s time to get back in the saddle…

1. “It’s pretty bad, and I know this happens for a lot of VCs.” [Link] [Tweet]

The investor-founder relationship is full of asymmetries.

The founder sees her own deal while the investor sees hundreds of deals (sometimes per month). The founder is pushing their own deal along while the investor tries to keep up with previous investments while pushing new ones through. You get the point.

The art of the follow-up is tricky. For founders trying to gain (or re-gain) the attention of investors, you need to create FOMO and greed without being pushy, needy or worse. (Easy, right?)

2. “VCs need to return a minimum of 4x the amount they’ve raised, which really means 5x.” [Link] [Tweet]

If you walk into a VC meeting without knowing the size of their latest fund, you’re setting yourself up to fail.

Businesses return funds, not ideas.

3. “You want to turn a profit, you want to build an asset you’re proud of, and you want to enjoy yourself.” [Link] [Tweet]

 

If you’re convinced that you can’t build a business without getting an investor onboard, you’ve clearly been reading the wrong things.

Venture capital is a tool, not a milestone, for all businesses.

4. “If you decide you want to play the VC game, just be sure to learn how the score is tallied.” [Link] [Tweet]

Defining traction is hard because every business is different. In the context of VC, it’s important to recognize that the rate of traction increase is the most important thing.

5. “California is the eighth largest economy in the world. The Midwest is the fifth.” [Link] [Tweet]

If there was a list of things I’ve been thinking but haven’t had the chance to write about, this would be it.

Having driven nearly 25,000 miles around the US and Canada this year (with another ~5,000 to go before the end of the year), there’s no doubt that the number of startups — especially fundable ones — is increasing everywhere. Sure, there’s a lot of noise to deal with as an investor but that’s part of the gig regardless of where you’re based.

I’m not sure that every other investor is going to be willing to buy a RV and drive around but I do think we’ll see more VC firms sending associates and venture partners out to demo days and tech events throughout the Midwest over the next 3-5 years.

Note: if you run an accelerator, manage a fund or are an active angel investor anywhere in the Midwest, your goal ought to be to become the most visible investor within a ~500 mile radius. Don’t worry about your home town or backyard.

6. “There isn’t a shortage of developers and designers. There’s a surplus of founders.” [Link[Tweet]

THIS.

7. “We’ll remember it as the AirPod launch—a seminal moment in the advent of the voice age.” [Link] [Tweet]

OK, first things first, I have an iPhone 6 Plus and I think I’m going to keep it for now. #oldschool

We’ve got an Amazon Echo in the Airstream (and one in the apartment back in DC). Alexa isn’t perfect but, compared to Siri, she’s wayyyyyy better/smarter/faster.

I find the current version of Siri, as compared to Alexa, to be frustrating to use. Half the time I use Siri with my iPhone or Apple TV, she doesn’t understand the request. The rest of the time, the lag is so annoying that I choose not to use Siri at all.

I agree with the idea that AirPods may be the first “mainstream” product that could push us into voice computing but Apple’s got a long way to go with Siri.

8. “Over 5 weeks, meet with 100 investors to close $500k in your seed round.” [Link] [Tweet]

Sometimes I get the impression that founders think that raising money is a matter of being in the right place at the right time. Or saying the right thing to the right investor. Or something else related to luck.

Raising money is a process. And, like any process, it requires a funnel. If you want to raise money, you better be ready to talk to a lot of people along the way.

9. “You can always feel when product/market fit isn’t happening.” [Link] [Tweet]

Having made this mistake in my own companies in the past: keep your team small and your burn rate ultra-low until you find PMF.

10. “Even when your job description is simple, there are ways to create new responsibilities for yourself.” [Link] [Tweet]

Whether you realize it or not, you’ll never have true job security unless you think of yourself as an entrepreneur rather than an employee, manager or whatever other title you might have currently.

Firehose

You can get the full stream of the things I read, it’s all on Twitter — follow me: @paulsingh. You can always find me (and the rest of the Results Junkies community) in Slack, apply to join.

-P

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