Investor Stories 47: Lessons Learned (Tsai, Mougayar, Shah)

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On this special segment of The Full Ratchet,

the following investors are featured:

  • Christine Tsai

  • William Mougayar

  • Semil Shah

Each investor illustrates a critical lesson

they have learned about startup investing and how

that has changed their approach.

FULL TRANSCRIPT

Christine Tsai Investor Thesis Strategy

Mougayar blockchain startup investing

Shah Exceptional Founders

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101. The Man Behind the Mic, Part 2 (Colin Keeley Interviews Nick Moran)

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In this episode we flip the script and the host of Tech in Chicago, Colin Keeley, interviews Nick Moran with questions from the listeners including:

  • Nick Moran listener Q&AHow did you meet your investment partner, Jeff Heitzman?
  • What’s your investment thesis and how do you evaluate startups for investment?
  • What’s an ideal case study or example of a business that you’d invest in?
  • Why are you a better option to take money from than the 1000+ other early round investors?
  • Colin KeeleyWhat are the economics of New Stack vs a more traditional fund or an angel group… At the end of the day, how do you guys make money?
  • What resources, aside from the show, do you recommend to investors and entrepreneurs?
  • After living in both California and Colorado, how’d you decide to move back to Chicago?
  • What are the best and worst things about the startup ecosystem in Chicago?
  • How can listeners help you?
  • Is there anything that has surprised you about VC through your experience?
  • What advice do you have for entrepreneurs and investors?
  • What’s next for you, TFR and New Stack?

Read More…


100. The Man Behind the Mic, Part 1 (Colin Keeley Interviews Nick Moran)

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For this milestone #100 episode, the host of Tech in Chicago, Colin Keeley, interviews Nick Moran with questions from the listeners including:

  • Nick Moran listener Q&ANick, there are a number of brands that you own: The Full Ratchet, Venture Weekly, New Stack Ventures, and Moran Capital Partners. Why all the brands and what are you doing with each?
  • Can you take us back to your beginning and talk about your experience at Danaher, before you went off on your own?
  • Why the decision to transition full-time into angel investing?
  • Colin KeeleySo, after you got involved as an investor how’d you decide to start a podcast about venture capital?
  • How have the goals for TFR evolved since you started?
  • How did you decide to go the Angel List syndicate route instead of raising a venture fund?
  • How do you select your guests and topics for each episode?
  • Who are some of the dream guests that you’d like to have on in the future?
  • What episode is your favorite?
  • What are some of the key lessons learned after 100 episodes?
  • How many investments have you made and how much do you invest in each deal?
  • Why did you choose to use Angel List to syndicate your deals?
  • How do you source your deals?

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Investor Stories 46: What’s Next (Gurrieri, Wilkins, Mohnot)

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On this special segment of The Full Ratchet,

the following investors are featured:

  • Sergio Gurrieri

  • Peter Wilkins

  • Sheel Mohnot

Each investor discusses sectors, drivers and/or

trends that may have significant impact in the

future and are potentially positioned for outsized returns.

 

FULL TRANSCRIPT

Sergio Gurierri What's Next Startups

Wilkins Startups What's Next

Sheel Mohnot What's Next in Fintech Venture Capital

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Investor Stories 45: Exceptional Founders (Parker, Tunguz, Heltzer)

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Download_v2Nick Moran Angel List

On this special segment of The Full Ratchet,

the following investors are featured:

  • Andrew Parker

  • Tomasz Tunguz

  • Jason Heltzer

Each investor describes an outstanding entrepreneur that

they’ve worked with and the key traits and behaviors

that make for the best startup leaders.

FULL TRANSCRIPT

parker exceptional founders venture capital

Tunguz exceptional founders venture capital

Heltzer Exceptional Founders Venture Capital

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Dumb Money Breeds Lazy Behavior

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Below is the ‘Tip of the Week’ from Ep 99. Public Policy for Angel Investors, Part 2 (David Verrill)

In today’s interview, David warned about the potential hazards of crowdfunding.  His take is that startup investing is a very risky asset class.  One where experienced angels can still lose a lot of money.  It requires experience, sophistication, due diligence, an organized strategy to access and invest in the best entrepreneurs and it’s just a lot of hard work.  While he supports new money being invested in startups, his concern is that these investors may not know how to protect themselves in a specific investment and also from fraudelent actors selling the dream of the next tech unicorn.  And, when a class-action suit occurs related to crowdfuning, it will also disparage the angel investing asset class.
 
I share David’s concern but, for today’s tip, I want to consider the effect of “dumb money” on founders.  Examples like crowdfunding for equity don’t just adversely impact those deploying capital, but also those that are raising capital.
 
 As I see it, there are three types of “Dumb Money.  Money that’s too early, too much, or from bad sources
  
Too Early
 Often inexperienced investors are quick to pull the trigger on big ideas.  But therein lies the problem.  These are ideas, not viable businesses.  And when a first-time entrepreneur takes money at the idea stage, their risk is removed.  Many will find out that the idea is unrealistic.  The problem doesn’t exist.  The customers aren’t interested in their solution.  Or, worst yet, the founder-theirself isn’t passionate about the business.  Sometimes the best thing an investor can do for a founder, is just say no.  Founders can learn much about themselves and their business in the early days without external financing.
 
 
Too Much
In my first year of angel investing, I cut a check for $50k to an early-stage company that had just launched.  They closed a total of $300k from a small syndicate of angels and commenced an aggressive marketing campaign.  Four months later, the money was gone and their only major learning?  “These marketing channels aren’t going to work.”  They hadn’t tested a range of traction channels and found the avenues to double-down.  Rather they tripled down on a hypothesis and now had nothing to show for it.
 
Now, $300k doesn’t seem like a lot of money.  But, it was both too early and too much.  They didn’t need $300k to throw at marketing.  They didn’t even have a strategy with a set of KPIs to measure against.  Look, sometimes a big infusion of capital is just what a company needs to reach the next level.  But, in many cases, too much money drives lazy behavior.  Would this startup have blown $300k of their own money on ineffective marketing?  Likely not.  They would’ve found the channels that drive the most ROI for their time and money… which is ultimatley what they did, once their cash reserve was gone.
 
 
From Bad Sources 
This is the one that bothers me most. Read More…

99. Public Policy for Angel Investors, Part 2 (David Verrill)

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Today we cover Part 2 of Public Policy for Angel Investors with David Verrill of Hub Angels Investment Group. In this segment we address:

  • Recently I was a little uncomfortable when I noticed an investor that was live streaming a demo day via Periscope, where startups were discussing fundraise details. Would this be at risk of being considered a general solicitation?
  • Any other public policy issues related to the top three priorities that you’d like to touch on?
  • Who, within the ecosystem, is taking action on public policy issues for angels?
  • Are there any other efforts on either regulatory or legislative side?
  • Can you walk us through the actions and/or processes that you execute to improve the public policy situation?
  • What, in your estimation, are the biggest risks to the fundraising environment re. today’s topic?
  • What can individual investors do to support and improve the fundraising environment re. today’s topic?
  • Do you have any final thoughts on the topic that we didn’t cover?

Read More…


98. Public Policy for Angel Investors, Part 1 (David Verrill)

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Download_v2Nick Moran Angel List

David Verrill of the Hub Angels Investment Group joins Nick to cover Public Policy for Angel Investors, Part 1. We will address questions including:

  • David Verrill Startups Angel Public PolicyCan you talk about your experience at Hub Angels and how the group and investments are structured?
  • Can you tell us the story of how you became involved with the ACA and ultimately became chairman?
  • Today’s topic is public policy issues for angels… Can you start off by talking about why public policy issues are an important consideration for angel investors?
  • Is there a way you structure or frame the angel-related issues within the public policy spectrum?
  • What are some of the current top priorities in public policy for the ACA?
  • Late last year, congress passed the PATH act, related to capital gains, and the SEC recommended tweaks to the accredited investor definition. Can you give us an overview of the updates on each of these issues?
  • What terms and or classifications must there be at time of an investment for a startup to be considered QSBS and for angels to get a capital gains tax exemption?
  • How does the QSBS cap gains exemption work with convertible notes?
  • I recently read through the HALOS Act ie. the Demo Days Bill that was passed by House of Representatives on May 2nd… Can describe what this bill allows and why it’s significant?

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97. Student-Focused VC Funds, Part 2 (Peter Boyce II)

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Today we cover Part 2 of Student-Focused VC Funds with Peter Boyce II of General Catalyst & Rough Draft Ventures. In this segment we address:

  • One of the biggest issues I’ve encountered at university is that schools and their students have been siloed. How have you considered bridging the gap between business, engineering, cs, and other schools?
  • Are you employing a sector or technology-driven thesis within this approach? Why or why not?
  • Why do you think that the returns for this model can be attractive for LPs?
  • How do you measure success of your efforts w/ Rough Draft? Is it the same set of financial KPIs that you’d traditional use or do you look at success differently?
  • Any missteps or mistakes you’ve made that you’ve learned from and has driven a change to the approach?
  • For those investors that have or want to focus on dealflow in university environment, what advice would you have for them?
  • For young entrepreneurs that are at a university and are interested in building a venture-funded startup, what advice do you have for them?

Read More…


Vote Early, Vote Often

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Below is the ‘Tip of the Week’ from 97. Student-Focused VC Funds, Part 2 (Peter Boyce II)

With a tip title like this, you may expect that I’ll try to say something clever about the unprecedented political race for the US presidency. But no, this is not a show about politics even if I’m borrowing a political phrase. The reason for the title relates to these Student-Focused initiatives and long-term value they may drive.

There are a few things that we’ve heard over and over again on the show. An investor who identifies a phenomenal team, working on the wrong problem. And in many of these cases, the investor chooses to pass. But, others have talked about how they’ve made small bets early, not on the idea, but on the people. Others have become advisers for these startups, helping them fail fast or prove them wrong. In each of these cases, the investors see some remarkable ingredients for success. Maybe the entire recipe doesn’t make sense, but the key elements, namely the founding team, causes the investor to vote with their time or their money.

Another situation we often hear about on the show has to do with the strength of relationships. Some investors are completely passive, providing no value beyond easy money. They throw $100k in, to top off a round, and the startup never hears from them again. Other investors are very hands-on, as we discussed in episodes 55 and 56 with John Greathouse from Rincon Venture Partners. This group gets very involved, very early and builds a trusting relationship with the entrepreneur. Both totally different strategies with their own merit.

But, as we can see from today’s discussion, there is tremendous value in making early bets on great people. Peter votes with his time and with money. He gets involved, mentoring and coaching the student Read More…


Listener Feedback

Jonathan Hart

If you building a startup, I can't stress enough that my favorite podcast is @TheFullRatchet .. latest eps w @davemcclure are v informative!