Gabriele Grecchi’s Post

Best post I've read all day: a great post by Fred Destin on how we deal with ourselves, I think founders can also recognize the exact same internal thought process.

Hubris is Bad. Self Awareness is good. Optimism is essential.

Great post by Fred Destin (Stride.VC) for young investors: Venture investing is complex, and distinguishing luck from skill takes time. You might excel in decision-making but face failure, be labeled a legend due to luck, or be underestimated until a later success. In venture, outcomes and decisions aren't as correlated as assumed. Focus on refining decision-making, detach self-worth from outcomes, and engage in self-aware feedback. Skill comes from implementing a rigorous predictive method and addressing biases. It's a challenging game, but stay persistent—you might be on the right track. 🚀 #VentureInvesting #InvestmentJourney #StayPersistent

For younger investors: here's some hard shit to consider re: venture investing and track records. Untangling luck from skill is complex and takes time. Some configurations you might find yourself in: Case A/ You back the right company, make all the right decisions, fail horribly. Your partnership thinks you suck, you get lambasted in the press, maybe you even get fired. You go back and coldly analyse your decision making; if it was solid - you should probably write that check again! Case B/ You back a rando company with scant process, hit it out of the ballpark, make the Midas List, everyone calls you a Legend. You got lucky but now your ego is all tangled up in your own genius. Imposter syndrome kicks in, because somewhere in your system you know you haven't cracked any sort of code. Case C/ let's go next level confusing: you're a young partner and back 5 companies in Fund V. Yay. But three years on, none of them look like winners yet, they're just trudging along. Everyone thinks you're meh as your partnership raises Fund VI. Turns out you put absolutely the right "type of risk" in the portfolio and your sixth investment is a triple fund returner. Who knew? Go figure. In venture - outcomes and the quality of decisions are not nearly as correlated as one might think. Conversely, any unskilled player with a checkbook can hit the jackpot once in a while. It's a shitshow. So you need to - learn to detach your self-worth from the quality of the outcomes and focus on the quality of your decision-making instead. - define, hone and refine these decision-making processes patiently over time - have rigorous and self-aware feedback sessions to assess the above Skill is not developed by time and experience alone, but through the implementation of a rigorous method of building predictions, seeking hidden knowledge to build these predictions, and systems-based decision making that addresses your own biases. This is why this game is hard. But hang in there, you might just be on the right track :-)

I have attended all the early-stage investment panels at P33 Chicago TechChicago Week. Founders, here is the scoop on how to nail fundraising 🍨 🥄 Step 1: understand the game Spend time to understand how the VC asset class is structured and whether your company's growth trajectory can fulfill the return expectations of this asset class. You need to determine early on if you fit the venture math model or not. 🥄 Step 2: build with relationships investors before you make an ask Warm introductions are the most guaranteed way to get on a VCs calendar. If you don’t have friends with VC friends, you need to start making some. Most funds invest in companies referred by founders they backed or investors they share deal flow with. It should be relatively easy to connect with the founders of more established companies and ask them to introduce you to their inventors. Early-stage relationship building is an ideal time to seek advice, understand investor theses, and learn about the diligence process. Having a deep understanding of how a fund operates can set you up for success when you are ready to open your round. 🥄 Step 3: master the art of the follow-up The lack of follow-up kills a deal immediately. VCs pay attention to: Can a Founder follow up? Can they communicate well with updates? Has their thinking evolved since the first conversation? Can they share new insights between the first and the second call? Can the founder execute a deliverable? VCs have an overwhelming amount of calls a day. This is why you need to remind the investor what you talked about, and what got them excited about the opportunity you presented. Speak to the areas the investor was hesitant about during the call. Share more data, calculations, and articles to back up your storytelling. Make sure information is readily available to them after the call to keep the conversation going. Don’t forget, VCs are constantly fundraising themselves, and probably follow the same steps with the LP relationship building. They heavily rely on the information shared by their portfolio companies, to tell the success of their existing fund to new LPs. If you are not offering good data in the beginning of the relationship, you probably won’t be able to make a VC look good in front of their LPs later on. Don’t let someone pass on you, because you were not nailing the communication piece. Thank you for your generous insights: Landon W. Campbell Drive Capital Ryan Broshar Matchstick Ventures Rebecca Sholiton Kahnweiler LongJump Haley Bryant Hustle Fund Ellie Bahrmasel Further Faster Ventures Allison Lechnir Hyde Park Venture Partners Thank you for showing us the best time at the poker table and taking us to experience Lake Michigan: Rafiq Ahmed Monika Razdan Dipalo Ventures

There’s no one-size-fits-all solution to building a business. Building a new venture is all about iterating and finding the right pieces to put the puzzle together. Here are some examples of how my co-founder and I discovered those pieces while building OneFund: 1. Finding our value proposition After working at two different asset managers and looking to invest my money, I had the following problem: I saw absolutely nothing worth investing my own money in. People had securitized everything: farmland, wine, whiskey, you name it. 99% of the time, the people investing in those would never see their money again. After seeing this and remembering how 85% of the U.S. economy is driven by private markets, my co-founder John and I wanted to find a way for individuals to get access to these vehicles at more palatable minimum sizes. If we could do that, we knew we had an underpenetrated pool of assets (individuals writing high-value checks) that fund managers weren’t chasing — and we knew we could give it to them. That was the basis for OneFund: democratizing access to the private markets. It was a win-win for both fund managers and retail investors. 2. Focusing on transparency Finance and investing are full of jargon, and a lot of it is meant to confuse or deceive you. When we were iterating on OneFund’s investment portal, we kept our audience of public investors in mind — people who were new to private markets. We knew if we failed to make everything clear to them, we would lose them and their money. That’s why we prioritized transparency on OneFund. When you create an account and go to our investment portal, you’re able to see all the information that a typical institutional LP would be able to see prior to making an investment. That includes: ✓ Past track records ✓ Official marketing desks Our information flow is just as good as a typical institutional update. You won’t find that level of transparency on any other financial platform. 3. Not taking venture capital While we were building OneFund, John and I were considering how we wanted to raise money. VC was a popular option. As an investor, I like VC. As a business owner, I’m cautious of it. Why? Because once you take money from venture capitalists, their sole reason for investing in you is making money. This means you’re likely to end up on the venture-backed treadmill. You’re sprinting to attempt to raise money, scale the business, and achieve unrealistic growth targets — or risk losing VC investment. John and I didn’t like that situation. To us, building a business isn’t about speed. It’s about the end outcome. We wanted to set ourselves up for success and we felt having VCs breathing down our neck would accelerate the process and cause us to crash. So we stayed away from VC. John and I kept our W2 jobs and bootstrapped OneFund on our own during weekends and nights for six months before going to market. (cont 👇)

Totally agree Randall. The core purpose of a #VC fund is to generate returns for investors. It's essential for fund managers to match goals with LPs' expectations. Your comments on the African-American Fund experience shed light on these nuanced dynamics. ROI remains the priority. #VentureCapital #InvestmentInsights #vcfunding

Optimising Fund Raise “Scarcity and demand are important to driving an oversubscribed process to completion, but those rounds don’t become high demand because the founder has created the illusion of high demand.” Tactical lessons 1. Keep investors warm. Even when you’re not fundraising, it’s worth carving out time to talk to venture capitalists. Use it as a chance to hone your storytelling skills, discover potential weaknesses, and gauge which investors are most interested in what you’re building. It will help streamline your process when the time comes. 2. Run a tight process. When you are ready to raise a round, do it with conviction. Raising in a half-heartened manner is a recipe for a drawn-out process with little momentum. Drive investors towards a close, but be careful not to create artificial urgency. It can turn VCs off and cause them to step back. 3. Raise on story or metrics – not both. Focus your fundraise on either a galvanizing narrative or your strong numbers. If you try to tell both stories simultaneously, you may end up with a vaguer and less compelling pitch. Choose one or the other based on the state of your business. If you don’t have great numbers yet, focus on the story of the market opportunity. If there’s less conviction in the overall market, lean into your stellar metrics. 4. Optimize for the right partners, not the highest valuation. It may be tempting to go with the term sheet that values your startup most highly. Often, that’s the wrong decision. Instead of optimizing for valuation, pick the investors that can do the most to help your business over the coming years. That profile will likely change depending on the round and the state of your company. 5. You only need a few yeses. Rejection is an inevitable part of fundraising. Even the hottest companies are unlikely to be a fit for everyone. When you’re in the midst of a tough raise, it’s worth remembering that you only need a couple of yeses to close a round. The process is about finding those true believers as efficiently as you can. Some of the best advice from the best CEO's: 🛖“You can raise on numbers or you can on story, but you shouldn’t raise on both.” 🛖“When I am not fundraising, I will take casual 30 - 45 minute calls with 10 or so investors every six months.” 🛖“A CEO should always know their business’s risks, ordered from high to low.” 🛖“Fundraising success and company success are correlated, but most founders confuse what causes what.” Startups looking for fundraise can reach out : [email protected] #Fundraising #StartupFunding #VentureCapital #SeedFunding #Entrepreneurship PedalStart Blume Ventures Faad Network Pvt. Ltd Angel One Mumbai Angels Hyderabad Angels Neeraj Tyagi Nikhil Kamath Startup Chaupal® - An Integrated Platform for Startups Marwari Catalysts Mithila Angel Network

Apparently, a lot of fund managers don’t understand the purpose of a fund.  The purpose of creating a VC fund is to provide an ROI for the limited partners who have contributed to the fund. They are investors, and they want an ROI, typically above 15%.   Yet, when I hear from people creating a fund, I often hear that they are doing it to help entrepreneurs, or provide funding to minority owned businesses, or to promote social impact companies. Now, of course, those are all worthy goals, and goodness knows they need funding. But that isn’t the purpose of any fund.  Fund managers typically get paid a management fee, which means they are working for the limited partners, the investors. And that means that their primary goal is to provide the expected ROI to the investors. If you have a goal to help entrepreneurs, then you need to figure out an arrangement whereby you get paid by the entrepreneurs to find them money. But you should not be taking money from one side and providing free services to the other side. And for good reasons.  What if you find a great company that doesn’t fit into your desired box but has the promise of a very high ROI?  How do you explain to your investors that you took a pass on making a lot of money? Several years ago, I made an attempt to raise an African-American Fund. At the time, there were none in the US.  I attended a conference hosted by the Minority Business Development Agency, and I spoke on a panel discussion about venture capital. I casually pitched my idea, and of course there was a lot of support for it. So I asked people, suppose I create a fund that had primarily African American limited partners, such as yourself.  Would you want to see the investment going primarily into African American owned businesses or not?  It was an honest question, and I wanted honest answers, because I really didn’t know which would be best. Every single person stopped for a moment and thought carefully. And their answer was always the same: “I would want you to invest in the best companies, regardless of ownership, because my money is as good as anyone else’s.”   Fair point. And I’ve learned since then that at the end of the day, investors want an ROI however it’s achieved. That isn’t to say you can’t find great companies that are social impact or minority owned – most of the best companies we have seen at The Washington DC ArchAngels have been such companies. But since about 90% of all tech companies fail, you need to have an extraordinary deal flow to be able to find the small number of top level companies that fit into your box. If you don’t, then perhaps you should concentrate on just trying to provide an ROI for investors. Believe me, that is difficult enough as it is! If you are raising a fund, your primary goal is to provide an ROI to the limited partners. You can have a goal of investing in a certain type of company, but you need to have buy-in from the limited partners in advance.

And this is the space so many believe in? People mock disclosure and see it as unnecessary burden and cost, that no one reads.  Due diligence is so boring and stops velocity so I can't make money🤔 Once you have been through a few moments where the tide goes out you understand or your just ignorant. Amazing how we can have submissions about sophisticated investor status and it's access to wholesale products, such as mentioned, yet no one talks about the research that has emerged showing the issues and misinformation.  Nor do people talk to the Canadian Pension scheme's experience or the Norwegians stoping the wealth fund from getting into this space. If you are allocating to this stuff are you documenting the conversation with the client where you explain giving up consumer protections for access to higher risk lower return assets?  Do you calculate the cost of product, including all the aspects to cost..yes I know you don't know the performance but they would have definitely given you the estimated target IRR.  So you can use that as the basis for a scenario. If you cannot run a scenario for disclosure purposes or stress test scenarios you have to ask yourself how can you recommend these products. #financialadvice #financialadvisor #superannuation