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Unicorns and tom brady

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The most important factor in selecting early stage investments is the team. But how does one evaluate a team without years of experience and pattern recognition? Some data and tips to guide the new …

The most important factor in selecting early stage investments is the team. But how does one evaluate a team without years of experience and pattern recognition? Some data and tips to guide the new and aspiring angel investor.

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  • A little bit about me…
  • Three things we all look for Market and product is somewhat easier to evaluate. But teams are more murky
  • Institutional investors look at a lot of things. Background, references from who they know, etc Usually comes down to gut. Gut isn’t bad, it comes from pattern recognition. But how do you get pattern reco if you are just starting out?
  • Let me touch on a few interesting data sources that might help guide a new angel 50 VC’s, 86 investments Fascinating. Unstructured “gut feel” interviews are used widely and a poor indicators Hypothetical discussions are poor indicators. “what are you going to do in X, Y, Z scenarios”? Read the research, or the book which gives concrete guidelines to evaluating people, doing reference calls, etc.
  • More data. Took a sample of “successful” companies from SAI top 100 Similar study done by David Lee at SV Angel with their portfolio Note – any loose conclusions are only for Digital Media / Internet space (including ad tech). My area of focus, but not the only way to invest
  • This was the age of the founders when they started their companies20% 25 or under About 2/3 are under 25
  • Most aren’t college dropouts Many have graduate degrees This was surprising. Many founders did not have technical backgrounds. (but most founding teams did) MBA’s get a bad rap. But they are well represented among this sample
  • More than half were first time founders A small percent were “inexperienced” Rob Kalin – founder of Etsy. Was a furniture designer. Almost half were “experienced” first time founders. Guys like Brian Halligan who had leadership roles at startups or relevant companies but had never been “the man” (although he is the man now) A big chunk are repeat entrepreneurs. But only a small % are what I’d call “repeat winners”. Guys who’ve built a company to meaningful scale and had a successful exit. Most are more like Drew Houston at Dropbox. They founded something, but never had a big win.
  • So, what are some things to take away from this data? There is an obvious profile that everyone wants to back.
  • Another profile that is attractive is something my partner Lee calls “Tom Brady” entrepreneurs
  • Some of the best companies are founded by people with very little experience. What to make of them? Authentic – serving an authentic need that they see that others miss. Young entrepreneurs are great here because a) they see what you don’t b) they see the future better What you lose in experience, you can make up for with creativity and hustle. In the way they design products, the way they do marketing and PR, etc. Not sure if Matt Lauzon is here – definition of hustle. Getting meetings with VC’s, cold calling his CTO from a company that had just been acquired, etc
  • Best due diligence is to be able to watch an entrepreneur execute over time. Kind of like watching the patriots practice
  • Best way is to get embedded into the startup ecosystem. It’s not that hard. Many of the angels and speakers here were not plugged in 1 year ago. Helps with both seeing movies and doing DD Go to WebInno, others. See my hitchhiker’s guide
  • It’s true. We have a privilege to be sharing space with the great entrepreneurs of tomorrow A huge portion of top entrepreneurs spend time here It’s only getting better – more companies getting to scale – HubSpot, CSN, others that are filled with Tom Brady’s

Transcript

  • 1. Unicorns and Tom BradyPicking Winning Founders
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 2.
    • Dedicated Seed Stage Fund
    • 3. Sector Focus: Internet-enabled innovation
    • 4. DNA:
    • 5. Just Getting Started:
    2
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 6. 3 Things We All Look For
    CONFIDENTIAL - DO NOT DISTRIBUTE
    Attractive
    Market
    Great Team
    Winning Product
  • 7. But How To Evaluate Team?
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 8. Data From Academics
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 9. More Quick Data
    Age of founders
    Education / Background
    Experience
    Thanks to Kevin Kwok!
    Source: Business Insider
    Note: International companies were excluded from this analysis. Square and AirBnB were added to the dataset
  • 10. Age of Founders
    CONFIDENTIAL - DO NOT DISTRIBUTE
    Vast Majority of Founders Under 35
    Source: Business Insider
    Note: International companies were excluded from this analysis. Square and AirBnB were added to the dataset
  • 11. Most Aren’t College Dropouts
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 12. Backgrounds of Founders
    Source: Business Insider
    Note: International companies were excluded from this analysis. Square and AirBnB were added to the dataset
  • 13. Unicorns
    CONFIDENTIAL - DO NOT DISTRIBUTE
    • Repeat entrepreneur with previous success
    • 14. Motivated enough to still work their butts off
    • 15. Targeting a market they understand and have an unfair advantage
    But ask yourself: Why am I seeing this deal?
    • Played zero NCAA games his first 2 years at Michigan
    • 16. #199 draft pick
    • 17. Backup to Drew Bledsoe
  • Tom Brady Entrepreneurs
    CONFIDENTIAL - DO NOT DISTRIBUTE
    • Seen the playbook of success
    • 18. Ambition / something to prove
    • 19. Patience for excellence
    • 20. Played zero NCAA games his first 2 years at Michigan
    • 21. Backup to Brian Griese
    • 22. #199 draft pick
    • 23. Backup to Drew Bledsoe
  • How To Evaluate Young First Timers?
    CONFIDENTIAL - DO NOT DISTRIBUTE
    Authentic
    Creative
    Hustle
  • 24. Invest in Movies, Not Snapshots
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 25. Get Embedded in the Startup Scene
    CONFIDENTIAL - DO NOT DISTRIBUTE
  • 26. CONFIDENTIAL - DO NOT DISTRIBUTE
    Closing Thought
    The Next Great Entrepreneur Is HERE!
    • 20% of Digital 100 founders went to school around BOS!
    • 27. Don’t let them slip through the cracks!
    Note: School data includes both undergraduate and graduate studies
  • 28. Good Luck!
    CONFIDENTIAL - DO NOT DISTRIBUTE
    @robgo
    www.robgo.org
    www.nextviewventures.com