Fresh Insights

Analyses, Musings & Observations

Cold email a VC, especially me – here’s how

Most VC hate cold emails from entrepreneurs. Reasons vary: i) often times cold pitches are poorly prepared; ii) skeptical VC will say to themselves “why couldn’t you find a warm relationship to fund this” or “why am I seeing this and not someone else;” iii) some VC insist that you actually go out and find…
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Sell a solution, not a product

I just finished reading Strategies That Win Sales by Mark Marone & Seleste Lunsford.  It’s worth a deeper read, and below are some of our favorite excerpts.   Support depends on complexity.  “The product or service being sold will impact the appropriateness of channel (e.g., organizations with highly technical products will require live support through…
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Autopsy of a Dead Venture Backed Company

In 2017 we had our first zero at Blossom Street Ventures.  I’ll withhold the name of the company, but I do want to share key learnings from that experience. Below is an autopsy of a dead company.   Build a product for one market.  Our portfolio company built phenomenal technology but didn’t actually productize.  The…
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Startup salaries for CEOs

We’ve seen a wide range of CEO salaries at venture backed companies, from as low as $35k annually to as much as $325k (plus bonus).  While there is no dataset explicitly outlining salary levels at early stage companies, we can use the salaries from tech companies at their IPO to get a sense for what…
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One big investor is a mistake

Whether you’re raising debt or equity, our advice is to get as many investors/lenders as possible.  While there are drawbacks to having a lot of investors, in our view the pros far outweigh the cons.   The biggest cons of having lots of investors are that it makes the cap table larger meaning you may…
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When non-recurring revenue is good

VC love businesses with recurring revenue, and many VC won’t ascribe any value to non-recurring revenue streams.  That said, do not make the mistake of forsaking non-recurring revenue streams.  If you do, you’re ignoring a great source of free financing as well as other benefits.  Non-recurring revenue streams like onboarding fees and installation fees are…
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Margins in SaaS are terrible

We hear too often about how “SaaS has great margins,” but that’s just not true.  The margins in SaaS are terrible as the data below show.  The table has 75 publicly traded SaaS companies with median revenue of $314mm meaning they’re well past the startup stage and margins should benefit from their scale and maturity. …
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Negotiating with your investment banker

We’re currently hiring an investment banker to represent one of our companies in a sale.  It’s exciting, but selecting a banker is a lot of work.  Below are the things you need to watch for in the engagement letter with an investment banker.   Term.  The term of the engagement is generally set at 1…
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Moving to California improves your odds dramatically

California has always been a magnet for venture capital, attracting 50% to 60% of all  venture capital invested annually.  But, does this mean California is where the most successful tech companies are? After all, raising capital is not synonymous with success.   To answer the question, we looked at the headquarters of 139 publicly traded…
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Advice on selling your business from an investment banker

Recently an investment banker named Tom Metz was kind of enough to share his book with me entitled “Perfect Your Exit Strategy”.  It’s about going through an exit with an investment banker.  Below are direct quotes I found most informative but it’s well worth the read. “Business owners should begin thinking about their exit strategies…
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