Erica L. Van Steen’s Post

As early-stage investors, while we often talk about companies, we really invest in people -- specifically those who are rewriting the narratives of how we LIVE, WORK, and PLAY 🏌🏾♀️👨🏾🔬 🤹🏾♂️ 👨🏾💼 Yet while generation-defining founders are a rare breed, we as an industry constantly try to bucket them for easier screening and sorting ... LAME ⛔ We at Redpoint Ventures analyzed 100+ consumer unicorns in hopes of debunking the generally accepted stereotypes surrounding what traits define successful consumer founders. The results might surprise you… https://lnkd.in/gq8XnEcP #venturecapital #startups #consumer #founders

🚀 Unlocking Long-Term Success: Discover the pivotal role of Founder Equity Vesting in startups! Learn how this strategy safeguards ownership, aligns interests, and fosters commitment for enduring growth. Dive into the article to navigate the world of equity distribution and leadership continuity. #Startups #EquityVesting #Entrepreneurship

Are you a startup? You must think about your board of directors. Check this article to learn why having a good board of directors is critical for your success. #startups #startupsuccess #boardofdirectors #scalingbusiness

Nwanja, Emmanuel is an Advisor of the African Youth Diaspora Organization (AYDO). Recently I reposted this article to the member group and he pointed out: For young Africans building startups, I will add something slightly unpopular. *GIVE OUT EQUITY* to competent people so that you can be successful. Many African startup builders don't have the financial runway to pay salaries even if they want to. Yet, they fight to retain large equity holdings. From my experience, I have seen this do three things: 1️⃣ *Demotivate people over time, even co-founders* --> "Why am I and other team members struggling to build with you without pay and at the end get only 0.1% while you keep 98%? " 2️⃣ Attract an incompetent bunch only looking to bear titles and look good. 3️⃣ Discourage sustainability-focused investors from investing because employee equity has a way of boosting startup success if done right, so why not? Youths easily move on from one company to another these days so how do you try to keep your good teammates, especially when they could get a better paying job? NB: I can’t help but understand his POV and feeling it every time when I support a Startup in kind. In response, i shared this: I remember being in my EMBA negotiation class taught by a law school professor. Whilst everyone seems to focus on how to negotiate and win the biggest piece of the pie 🥧, professor gave everyone an AHA moment by challenging us together we build a larger pie so everyone gets to win. Recently I encouraged Ùgò Chúkwú to think about going out of traditional fundraising methods and invite micro-investors. I like micro-investment because it builds a sense of community and almost certainly guarantees early adopters engagement level. He surprised me by presenting an agreement used by Y-Combinator. Basically, the pie gets bigger every time there is a successful trigger event at a funding round. So even though initially the share seems really small, as the company scales, the value of the shares grow. I feel this can be a good way to nurture African Startups. Am I right? #Startups #Investments #Fundraising #Entrepreneurship #Innovations McKevin Ayaba Jeff St-Louis Happy Koffi Djebou 🇬🇭🇩🇰 Kojo Ahiakpa, MPhil., mMBA., MBA Telly Valerie O.

💸 𝐇𝐨𝐰 𝐌𝐮𝐜𝐡 𝐄𝐪𝐮𝐢𝐭𝐲 𝐒𝐡𝐨𝐮𝐥𝐝 𝐘𝐨𝐮 𝐆𝐢𝐯𝐞 𝐀𝐰𝐚𝐲? 💸 Research by Blossom Street Ventures revealed that at the IPO stage, tech company founders typically retain a median ownership of 15%, with an average of 21%. If you hand over 30% or more in the early rounds, you will not have this equity by the time the IPO comes around. The image below shows what would happen if every round diluted the founders’ stake by 30%:  > At Series A, the co-founders would own 26.7% > At Series B, the co-founders would own 18.5% > At Series C, the co-founders would own 12.9% Be careful not to give more than 30% of equity during the early stages since it leads to: 🛑 𝐃𝐞𝐦𝐨𝐫𝐚𝐥𝐢𝐳𝐞𝐝 𝐟𝐨𝐮𝐧𝐝𝐞𝐫𝐬 > Founders may feel under-compensated for their hard work, resulting in a lack of motivation and commitment 🛑 𝐋𝐢𝐦𝐢𝐭𝐞𝐝 𝐠𝐫𝐨𝐰𝐭𝐡 > Excessive dilution hinders the startup's ability to raise future rounds of funding at favorable terms > Investors may be wary of how little ownership is left for founders 🛑 𝐑𝐞𝐝𝐮𝐜𝐞𝐝 𝐯𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐲 > Over time, founders with minimal ownership may decide to abandon the project due to the high opportunity cost, impacting the company's long-term viability It might feel like a quick win in the short term, but it can hinder a startup's growth and impact future funding. How much equity are the VCs typically asking in your experience? 💬 #StartupSuccess #FounderEquity #VentureCapital #IPOInsights #Entrepreneurship #TechStartups

This investor favored chart is indicative of how the point gets lost of where value comes from. Value doesn’t just come from increasing amounts of capital. In fact rounds of capital only occur due to management/founders and their initial IP/Innovation/Ideas having further demonstrated their commercial feasibility. Taking away sufficient ownership incentives from Founder’s/Management is a mistake that results in the downside effects noted in other comments to this posting.

This week in SF, I had a really fascinating conversation with one of my favorite investors, Elizabeth Yin , #cofounder and #GP of Hustle Fund #AngelSquad - love their core tenet that a #founder #investor can “look like anyone, and can come from anywhere!” (Not to mention they are super decisive and can write a check faster than anyone in the biz…Eric Bahn Shiyan K. Haley Bryant Brian Nichols ) Elizabeth’s recent blog post synthesized our #startup convo so well (amazing bc I can’t even remember what I had for lunch yesterday!)…if you’re not subscribed or not following her, you probably don’t care about succeeding in #startups (no biggie…lol!) We discussed the merits and mechanics of #venture #investing and whether it was better (or worse) to consider #theexit BEFORE starting the company. I loved the dialogue, but I do realize talking to Elizabeth about investing is like talking to #stephcurry about how to shoot better 3-pointers! Don’t worry, I’m not delusional (at least I don’t think?…but aren’t all #entrepreneurs a little tho’?) Still, you have to appreciate the genuine openness and love for what we both do as a #founder #investor or startup #enthusiast Jacob Lee Phillip Kwan Anuj Bhalla Emanuel Tafese Julio Cerne Chaves Mike Hsieh Byron Wang Michael Young Joyce Zhang Gray Take a read and drop us a line. Would love your input on why you think I’m right (just kidding…) and which side of the table you usually sit on…

Without considering the potential paths to checkmate, planning your next chess moves is impossible. Similarly, in the dynamic world of startups, where more than 90% exit via M&A, the importance of a well-crafted exit strategy is often underestimated. I had the privilege of discussing the strategy for these critical, yet frequently overlooked aspects with Dr.Tom McKaskill — a serial entrepreneur, angel investor, and expert in exit strategies, widely regarded as 'Dr. Exit.' In addition to discussing my own company's strategies, here are my top 3 takeaways from this conversation: 1. Investors who do not understand the strategic value of a startup, and hence cannot envision the exit strategies, should not invest, as the risk is too high. 2. In M&A deals, it's often not about the direct revenue that the startup can generate, but about the revenue potential that the acquirer can realize after purchasing the startup. Consider, for example, biotech R&D firms and big pharmaceutical firms. 3. When planning for exits, startups need to consider what is in the minds of the buyers — that is, what criteria are on their M&A target checklist. Often, startups build things that the buyers do not need, such as distribution channels, because the buyer already has plenty. Startups might also build a large portfolio of customers when only one or two would suffice to prove to the buyer that their solutions work. Tom also offers dozens of free books on his website www.tommckaskill.com that might be useful for investors, startups, and corporate development teams. I heard that the publication of his book 'Ultimate Exits' in 2010 significantly increased discussions about exit strategies at angel investor conferences. Special thanks to Daniel Roney for organizing this meeting. #exits #exitstrategy #startuplife #startuplessons #startupjourney

TOMORROW: Join our next *live* Venture Visionaries, where Paige Craig will sit down with Niko Bonatsos of General Catalyst! 💡 Niko loves working with first-time technology founders with strong product instincts who treat every decision as a learning moment, as "these are essential traits of entrepreneurs who build great companies." He looks for very early-stage consumer products and services that "most people might perceive as crazy, funny, or even controversial," because those strong reactions indicated the founder was creating something disruptive. Tomorrow, we’ll be diving further into what he believes sets breakthrough startups apart from the rest. RSVP ↘ https://lnkd.in/ej4nj6vJ

Here a useful cheat-sheet for founders - though imo a bit too generous - each new round should be 15-20% dilution, not 30% as outlined here - but of course all subject to negotiation and supply and demand