Dropping an investor

I’ve seen a few cases recently where a startup decided to remove a particular investor from their regular “update” emails. The startups were doing this because they found out that the investor had invested in (or otherwise supported) another company that they viewed as competitive.

Fast forward a year or so, and the startup needs more money. The investor they haven’t been communicating with feels frustrated, having not heard from them in some time. It doesn’t feel very good to them to invest again because of this.

The fix is easy. If you’re worried that an investor has a conflict of interest, just talk to them about it. If you still don’t feel comfortable, try sending them a slightly “filtered” email update. But be transparent with them about why you’re doing that. In most cases, the investor will either understand or give you a good reason why your impression was wrong in the first place.

The problem arises when you stop communicating and don’t even explain why. This is never good.

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Pitch Your Insiders First

Imagine you’re about to go out for your next round of funding. Who do you pitch first?

It should be your insiders! Pitch first to those who have already invested. They are the most likely to give you direct and honest feedback to help you make your pitch better. They’re also more likely than anyone else to invest (again).

At Techstars, we’ve invested in more than 800 companies. We helped hundreds of them raise Series A rounds after their initial seed round. We’ve helped our accelerator program alumni raise billions of dollars. We want to help, and we are good at it. Yet it amazes that some companies still just hit the market without asking us or their other insiders to give them critical feedback on their pitch!

From our vantage point, it’s easy to see a correlation between those that pitch their insiders first and those who have the shorter and more successful follow on fundraising experiences. It’s not just about the feedback they get by pitching insiders first, it’s the awareness they generate. This often leads to introductions, re-investment from the insiders, and other goodness.

Don’t be silly. Pitch your insiders first!

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Back from Sabbatical

I spent the last month completely offline, not working. I hadn’t done that in the 8 years since i founded Techstars. Last year, we raised a new venture fund and I was on the road twice as much as normal. When we closed it in January, I promised myself and my family some time for rejuvenation last this year. Needless to say, it was amazing. I feel very refreshed and energized, and I’m raring to get back at it today.

I’m not going to detail the time off. Instead, I thought I’d record a few random takeaways.

Time to disconnect: People may ask how long it took me to truly disconnect. I’d put it at about 5 days. For the first 5 days, I woke up thinking about work, and instinctively reaching for my phone to check email and other messages. After that, it was completely gone until I was flying home. I think this worked both ways at the start, because various co-workers contacted me on each of the first 5 days via text message – probably also instinctively, but also due to a couple of small emergencies.

Emails: I didn’t check my work email once while i was gone. Only about 1,200 emails came in over 30 days. Typically I get about 300-500 per day. It turns out if you don’t email as much, you don’t get as much email. Well, that, plus tons of great co-workers covering for you and dropping you quickly to bcc. I sent 44 personal emails in those 30 days and received about 25 back. Most of those were scheduling activities.

Weight: I gained 1.8 pounds during my 30 days of sabbatical, which is under 1% for me.  I put this in the miracle category, the way I ate on vacation. I was able to play tennis about twice a week, so that must have helped. I think I ate ice cream in the middle of the day on about 75% of the days (exclusively chocolate, of course, with one exception which was a clear mistake).

Massages: I got two eighty-minute massages in the last month. I’ve put it on my list to get at least one of those a month from here on out. I think it can really help with the pains of too much travel.

Books: I read five. My favorite was Give and Take. Highly recommended for everyone. A ton of actionable stuff in there for our #givefirst organization at Techstars. One I re-read was Zen and the Art of Motorcycle Maintenance. Hadn’t read that in 20 years. If you’re in that bucket, re-read it. I took away many new meanings later in my life than i had before.

People might wonder if any new inspiration or “aha moments” came to me while not thinking about work. Yes, a few. I won’t detail them here. It seems true that inspiration does occasionally hit when you’re not focused on it at all.

I want to thank my co-workers for allowing this and covering for me while I was out for a month, most notably my incredible assistant and my partners. One thing I did think about on the time away was the people that I missed. I’m very lucky to work with such a great and dedicated time that lives by the Give First mantra. It’s nice that Techstars and our venture fund is at a point where stepping away for a month is just not a problem. I think that’s a sign of a healthy business. Things seem to have gone very smoothly. Perhaps too smoothly. 🙂

 

 

 

 

 

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Giving up the ghost early

There is four times as much seed capital in the venture market this year as there was 1 year ago. Because of this, it’s easier to attract seed funding than it has been in the past.

I’ve noticed a disturbing new trend and I think it’s related. Startups are “quitting” when the first year doesn’t go as planned. The founders shut the business down, and either take a job or go out and start a new company with more of that plentiful seed funding. In some cases, they just exit with an acquihire and get themselves a nice compensation package without any material return of capital to their investors.

Startups are hard. Rarely does the first year or two go exactly as planned. The hockey stick doesn’t emerge quite like you thought it would. It takes persistence and determination in almost every case, if you hope to be successful.

The thing I worry about is that the Facebook movie and tons of seed funding have made it almost too attractive to get into entrepreneurship. Founders can live for a year or two on seed capital, have some fun, and punch their lottery ticket. If things don’t take off immediately, they can simply move on to something else.

I’m not saying this is the norm or even typical. Most founders are well intentioned and in it for the long haul, of course. This is just another of the myriad problems in figuring out what’s real given the oversupply of seed capital in the market today.

If you’re thinking of starting a business, think about it as a minimum of 5 years and likely 10+ years. That’s what it’s going to take to be successful. And that’s the commitment you should make before taking money from outside investors.

 

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Separated at Birth: Techstars and Startup Weekend

Today we announced that Techstars has acquired UP Global, which includes Startup Weekend and many other fantastic events and programs. Startup Weekend is my absolute favorite global event for entrepreneurship. If you’ve never been to one, you’re really missing out. At these events (there about 1,000 per year from Boulder to Mongolia to Chile to New Zealand), entrepreneurs and the community gather to build startups in 54 hours. It’s all fueled by an incredible global network of people on a mission to inspire, educate, and empower individuals and communities through entrepreneurship.

Startup Weekend was quite literally born in my office at Techstars in 2007. During the first ever Techstars class, Andrew Hyde (an early Techstars employee) came into my office and told me about his idea for Startup Weekend. He said he had been inspired by the Techstars “startup summer” that he was witnessing, but wondered what it would be like to inspire others with something similar over the course of a weekend. My reaction was simply “go do it.” And boy, did he. Andrew organized that first Startup Weekend that same summer, right here in Boulder. All of the 10 companies in Techstars participated in the weekend and worked on something with the community called VoSnap. While that company never went anywhere, something important had happened. Many people were inspired to go do a startup of their own. Teams were formed that would last nearly a decade.  Lawyers, accountants, programmers, designers – everyone showed up to contribute. It was an adrenaline fueled weekend of pizza, coding, and learning by doing that I will never forget. The end result was an expanded community of entrepreneurs here in Boulder, many of whom I still keep in touch with today.

A few years later, Andrew had scaled Startup Weekend into a global phenomenon. Events were happening all over the world. Andrew was literally flying to and organizing each one, fueled by the passion he had for people discovering their love of entrepreneurship. Ultimately, he decided this wasn’t scalable and the business was formalized. Marc Nager, Clint Nelsen, and Franck Nouyrigat got involved and brought real structure and operating chops to the table. As CEO, Marc built Startup Weekend, and UP Global, into an important part of an emerging global startup community. Techstars remained involved informally – we hosted and attended events, promoted them, and ultimately funded many companies that emerged from these weekends through our accelerators and venture capital funds.

About six months ago, Marc and I were sitting around talking about the “journey” of an entrepreneur from discovery and love of startups through to accelerator, funding, and IPO or exit, and how this all plays into mentoring and giving back. It’s always been fairly obvious to us both that UP Global (through Startup Weekend, Startup Week, Startup Next, Startup Digest, and more) was inspiring and encouraging entrepreneurs to “get going”. Techstars was helping the ones that were building businesses by growing their networks, providing intense mentorship, attracting seed capital, and scaling up through additional funding. It suddenly felt like it was the right time to join forces because we had built such complementary portions of highway along this “entrepreneurial journey”. We looked at each other across the room and basically said “you complete me”.

While we plan to continue to grow their footprint and reach, Techstars will leave Startup Weekend and these other assets largely untouched, and they will not be branded as “Techstars.” Marc Nager will remain in charge of these programs and become our Chief of Community. Along with Marc, we are 100% committed to keeping them open, community based, and global. Effective immediately, fees previously associated with Startup Next have been eliminated – enabling more entrepreneurs to take advantage of that resource to help them prepare to scale. But don’t expect many more changes except for us to try to broaden access to what already exists.  These programs are magical as they are. We can now simply provide a “continuation” for some startups emerging from them and provide access to capital and additional network when appropriate.

I’m excited to work with Marc, Andrew, and the amazing people of UP Global to continue to work towards our combined vision of creating the world’s first truly global ecosystem for entrepreneurs to enable them to bring new technologies to market. I hope to see you soon at an upcoming event.

If you have questions or concerns about TS+UP, please reach out to me directly or visit http://www.whatsup.community/ for FAQs and more information.

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Overhead

Yesterday, I didn’t leave my house.

I was supposed to be in San Francisco for a board meeting but I was forced to cancel the trip suddenly. It left me with a rare day with only that one meeting (which I had to attend remotely) on my calendar. Otherwise, my calendar was wide open. I can’t remember that last time my calendar looked that way. I ended up doing that meeting online, and putting it on my big screen TV in my basement. It was really as good as being there. I caught every nuance because of the big display. It felt great. Obviously I missed the personal interaction with the management team, but that was really the only drawback.

I then realized that the entire rest of the day would have been spent traveling.  I would have missed bedtime stories with my son, but because I didn’t have the overhead I got to do that too. Sure, I probably would have gotten a ton of email done on the plane. Maybe a call on the way to the airport. But really, the travel was pure overhead. Leaving my house would have been overhead too. I didn’t go out to lunch either, I just ate a quick sandwich at home.

Because of the lack of overhead, it was easily the most productive day I can remember. It was pure maker time, except for that one meeting. I crushed my task lists and caught up on several very important projects. I did a couple of urgent calls (this happens daily – something is always urgent when you have a large portfolio of companies). I went to bed feeling energized and great about what I had accomplished.

My only regret was that I bothered to shower or put regular clothes on. That cost me a couple of minutes. But my wife was OK it, especially the shower. And I’m pretty sure the other board members appreciated not having to witness my pajamas.

I highly recommend you have one day in your life with zero overhead. Doing this will help you think about which of the overhead items you want to add back in and which you want to try to reduce or eliminate. You may be amazed by what you find. I sure was, and it’s leading to a few changes.

 

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