THE MIGHTY 25: VETERANS POISED FOR IMPACT IN 2016

Happy to share this list (originally posted here) courtesy of We Are The Mighty. What makes me even more excited is the fact that some of our founders are on the list. They are Blake Hall of Id.me, Taylor Justice of Unite US, John Roger Jr. of Local Motors, and Jeremy Gocke of Ampsy.

Cheers to 2016 everyone!

Within the worlds of politics, business, advocacy, and media there are veterans who continue to serve in a wide variety of ways.  Men and women who once fought the nation’s wars now shape the American landscape by doing everything from building cars with 3D printers to creating fashion trends, from making major motion pictures to passing laws.

The editors of WATM (with inputs from a proprietary panel of influencers) scanned the community and came up with a diverse list of those with the highest impact potential in the year ahead.

Here are The Mighty 25 for 2016:

mcchrystalSTANLEY MCCHRYSTAL — CO-FOUNDER, THE MCCHRYSTAL GROUP

After a legendary career as an Army special operator, highlighted by effectively re-organizing JSOC and leading the war effort in Afghanistan, General McChrystal accelerated into the normally pedestrian world of business consulting. The same drive that made him an effective leader has informed the McChrystal Group‘s innovative approaches to the problems facing their clients. The company’s offices outside of DC feel like those of a Silicon Valley tech startup rather than a traditional Beltway firm, more Menlo Park than K Street, and he’s aggregated a hyper-talented team — including a number of veterans — who are changing the way consulting is done. McChrystal also serves as the Chair of theFranklin Project at the Aspen Institute, advocating for a “service year” as an American cultural expectation. Watch for him to keep the press on there this year.

RELATED: Stan McChrystal talks about his inspiration for the Franklin Project

MoultonS-MA06DSETH MOULTON — CONGRESSMAN FROM MASSACHUSETTS

Seth Moulton’s reluctant entry into politics was spurred primarily by his experiences as a Marine across four tours during the Iraq War – a war he didn’t believe in. After getting his MBA at Harvard and working for a start-up for a while, he decided to run for Congress as a Democrat inMassachusetts’s Sixth District. His first year in office was punctuated by efforts to improve veteran health care through the VA. He also opposed attempts to block Syrian refugees from entering the country. Expect more impact from this veteran lawmaker as his comfort level goes up in 2016.

commissioner-suttonLOREE SUTTON — NEW YORK CITY MAYOR’S OFFICE OF VETERANS AFFAIRS COMMISSIONER

Retired Army Brigadier General Loree Sutton was appointed as New York City’s VA commissioner just over a year ago, and she hit the ground running, leveraging her experiences at places like the Defense Centers of Excellence for Psychological Health and Traumatic Brain Injury and the Carl R. Darnall Army Medical Center at Fort Hood to solve the immediate issues facing Gotham’s veteran community. Her approaches to resilience, using a “working community” model that scales problems at the lowest level, have proved very effective in dealing with issues like claims backlogs and appointment wait times. Her successes in 2016 could well inform how other cities better serve veterans going forward.

TMTM GIBBONS-NEFF — REPORTER, THE WASHINGTON POST

TM Gibbons-Neff served as a rifleman in 1st Battalion, 6th Marines and participated in two combat deployments to Helmand Province, Afghanistan before entering Georgetown University to pursue his English degree. He graduated this year and went from working as an intern atThe Washington Post to earning a spot as one of their full-time reporters. As part of the Post’s national security staff, TM has reported on everything from the ISIS threat to the San Bernadino shootings. Watch for his reach to grow in 2016 as he continues to hones his already substantial journalism skills.

nickNICK PALMISCIANO — FOUNDER, CEO, RANGER UP!

After serving as an Army infantry officer, Nick Palmisciano came up with the idea of creating a military-focused clothing company while earning his MBA at Duke University. He founded Ranger Up! in 2006, and since that time he has led the way in leveraging the power of user-generated content and social media to create a brand that is as much identity as apparel to the company’s loyal consumer base. Nick also walked the walk by deliberately hiring veterans to staff Ranger Up!. Watch for his star to rise this year with the release of “Range 15” — an independent horror-comedy produced in collaboration with fellow military apparel company Article 15 — hitting theaters in May.

mat_bestMAT BEST — PRESIDENT, ARTICLE 15 CLOTHING

Article 15‘s motto is “hooligans with a dream,” and that atmosphere permeates all of the company’s products and productions. Mat Best brought the same attributes that made him an effective warfighter to the marketplace and those have made him a successful entrepreneur, but even more important to the military community is how his unapologetic brio has shaped attitudes around the veteran experience. Mat and his posse are the antithesis of the “vets as victims” narrative; these guys live life on their terms and that lesson has been prescriptive for legions of their peers looking for fun and meaningful ways to contribute at every level. Mat has meteoric impact potential this year as the star of the movie “Range 15,” which Article 15 co-created with Ranger Up!.

Craig-MullaneyCRAIG MULLANEY — STRATEGIC PARTNER MANAGER, FACEBOOK

After graduating West Point and studying as a Rhodes scholar at Oxford University, Craig Mullaney served in the Army for 8 years as an infantry officer, including a combat tour in Afghanistan. After he got out he was on the national security policy staff of President Obama’s 2008 presidential campaign. He also served as the Pentagon’s Principal Director for Afghanistan, Pakistan, and Central Asia Policy and later on the Development Innovation Ventures team at the U.S. Agency for International Development. He is the author of the 2009 New York Times bestseller The Unforgiving Minute: A Soldier’s Education. This year he’ll continue his influence in his role as strategic partnerships manager at Facebook, and among his duties is convincing global influencers and business executives to maintain personal Facebook pages.

david_choDAVID CHO — CO-FOUNDER, SOKO GLAM

This West Pointer and infantry officer took his Columbia MBA and joined his wife in the cosmetics business. Their company, SoKo Glam, specializes in introducing Western customers to Korean cosmetics, beauty trends, and skincare regimens. David’s wife Charlotte scours the market for the best deals to bring to the U.S. while he handles the details around the business including biz dev and accounting. Together they have built SoKo Glam into an international player in a very short time. SoKo Glam also contributes to the veteran community by donating over 40 percent of profits to the USO.

279280-largeSARAH FORD — FOUNDER, RANCH ROAD BOOTS

Texas born and bred, Sarah Ford was a Marine Corps logistics officer who served in both Iraq and Afghanistan. After leaving active duty she received her MBA from Harvard and used that knowledge (along with a Kickstarter campaign) to launch Ranch Road Boots, a company founded on, as their website states, “love—for freedom, West Texas and a hell-bent determination to craft good-looking, well-made footwear.” Sarah continues to honor the branch in which she served; Ranch Road Boots donates a portion of all sales to theInjured Marine Semper Fi Fund.

taylor_justiceTAYLOR JUSTICE — CO-FOUNDER AND CHIEF BUSINESS OFFICER, UNITE US

Taylor Justice honed the grit he now brings to the business world during his days on the football team at West Point. Along with co-founder Dan Brillman, an Air Force tanker pilot, he’s created software that helps organizations to navigate the “Sea of Good Will,” the 40,000 organizations dedicated to helping veterans that have historically presented a challenge because of their sheer number and dizzying overlap. The Unite US site uses what the company describes as “interactive, proximity-mapping technology” to match vets to the services they need — sort of like Yelp for the military dot-org ecosystem. As the Sea of Good Will continues to grow in 2016, the demand on Unite US’s expertise is sure to increase.

Robert_A._McDonald_Official_PortraitBOB MCDONALD — SECRETARY OF VETERANS AFFAIRS

This year Secretary McDonald continued his attempts to leverage his successes in the private sector to solve the daunting problems facing the VA. As he promised at the outset of his tenure he has remained very visible, even going so far as to broadcast his cell phone number to large crowds during his speaking engagements. In 2016 watch for his leadership to be focused on the West Los Angeles VA campus where a recent settlement in favor of improving veteran healthcare in the region has introduced as many challenges as it has created the potential for real change across the entire agency. (For more on that issue check out vatherightway.org.)

MV5BMjEyMzE5NDkzM15BMl5BanBnXkFtZTgwMjkzNDE4NTE@._V1_UY317_CR72,0,214,317_AL_MARTY SKOVLUND — FREELANCE WRITER AND FILM PRODUCER

Marty Skovlund has made his mark in media by bridging the gap between compelling content and deserving veteran causes. His company, Blackside Concepts, spawned six subsidiary brands — all high impact — in only three years. The sale of Blackside in 2015 has freed him to focus on his third book and various film and video projects, including a show idea that involves veteran teams racing across the world for charity. With the luxury of bandwidth, watch for this talented former Ranger to continue to build his portfolio in 2016.

blake_hallBLAKE HALL — CEO, ID.ME

Blake Hall’s company, ID.me, first came to light among the military community as an easy way for veterans to verify their status to obtain discounts and services, but his ambitions live well beyond that utility. “We want to become an inseparable part of Internet identity,” Hall told The Washington Business Journal last spring. His strategy focuses on the twin prongs of identity: portability and acceptance, and if he continues his path of cracking those codes, ID.me has the potential to be ubiquitous in e-commerce, national security, and inter-agency coordination in 2016.

RELATED: Blake Hall guest appearance on 3 Vets Walk Into A Bar ‘Can ISIS be stopped?’ episode

jim_murphyJIM MURPHY — FOUNDER AND CEO, INVICTA CHALLENGE

After serving as a Marine Corps infantry officer in Iraq, Jim Murphy earned his MBA at the University of Southern California. During his studies he interned at Mattel, and that exposure sparked an idea. TheInvicta Challengecombines online gaming, action figures, flash cards, and graphic novels to create a one-of-a-kind learning experience. The prototype, called “Flash & Thunder,” profiles Turner Turnbull’s actions on D-Day, but it’s not just a history lesson. It’s an interactive leadership challenge that brings history to life. While the Invicta Challenge is a natural for school-aged audiences, its unique presentation could also prove effective around military centers of excellence. With more games in the hopper, 2016 could be a year where Jim shifts into the next gear.

Jared_LyonJARED LYON — CHIEF DEVELOPMENT OFFICER, STUDENT VETERANS OF AMERICA

Jared Lyon went from a life beneath the waves as a Navy submariner and diver to a life of the mind as a student and academic. In the process of making that transition he became an ambassador for other student veterans. While the Post-9/11 GI Bill is arguably the best military benefit in history, trying to use it can present roadblocks — both academic and environmental — that can keep qualified veterans from earning their degrees. As Jared enters his second year on SVA‘s professional staff watch for him to continue to make life easier for those who’ve followed him back to school.

14388721TYLER MERRITT — CO-FOUNDER, NINE LINE APPAREL

Tyler Merritt founded Nine Line Apparel with his brother Daniel, also a former Army officer. From the start Savannah-based Nine Line was built with a specific purpose in mind, as expressed in the company’s mission statement: “It’s about being proud of who you are, what you wear, and how you walk through life . . . We don’t apologize for our love of country. We are America’s next greatest generation.” After one of Tyler’s West Point classmates lost three limbs fighting in Afghanistan in 2013, Nine Line added a foundation that gives a portion of proceeds to severely wounded veterans and their families.

portrait_amberAMBER SCHLEUNING — DEPUTY DIRECTOR, VA CENTER FOR INNOVATION

After five years and multiple tours to Iraq as an Army Engineer focused on counter-IED ops, Amber Schleuning returned to school to study post-conflict mental health. She’s held a wide variety of consulting and advisory roles with both public and private organizations including the Assistant Secretary of Defense for Special Operations and Low Intensity Conflict andCOMMIT Foundation. As VACI‘s Deputy Director, Amber is in charge of building a portfolio of partnerships with creative, innovative, and disruptive organizations to ensure effective services are available to veterans.

nate-boyer-800NATE BOYER — PHILANTHROPIST, MEDIA PERSONALITY

After multiple deployments to Iraq and Afghanistan as a Green Beret, Nate Boyer left active duty in 2012 and made the unorthodox move of returning to college to play football. His success as the Texas Longhorn’s long snapper led to a pre-season bid with the NFL’s Seattle Seahawks. Although he was ultimately released by the team, the exposure helped him with other elements of his Renaissance Man portfolio, specificallyWaterboys.org, a not-for-profit dedicated to providing clean drinking water to remote regions of Africa. This year Nate is poised to increase his impact with “MVP,” an organization formed with Fox Sports personality Jay Glazer that partners professional athletes with special operators to deal with the common challenges of career transition.

bradharrisonBRAD HARRISON — FOUNDER AND MANAGING PARTNER, SCOUT VENTURES

The same drive that got Brad Harrison through Airborne School and earned him his Ranger tab has served him well in the private sector. After honing his tech chops while working as AOL’s Director of Media Strategy and Development, he pivoted into the venture capital space where he’s been able to use his passion for technology, media, entertainment and lifestyle to assist fledgling businesses. His company, Scout Ventures, has quickly blossomed into one of the premier angel-to-institutional investment firms in New York.

execs_brad2BRAD HUNSTABLE — FOUNDER AND CEO, USTREAM

Brad Hunstable started Ustream in 2007 to connect service members to family and friends, but his vision has grown since then to include everybody, everywhere. Ustream is now the largest platform for enterprise and media video in the world with clients including Facebook, NBC, Cisco, Sony, Intuit, NASA and Salesforce. Ustream’s product suite is evidence of a company that intends to be a tool for both broadcast networks and citizen journalists. As more and more organization turn to video for effective impact, look for this West Pointer’s company to grow even more in 2016.

BfhMNnACUAAAq9yJESSE IWUJI — PROFESSIONAL RACECAR DRIVER

Jesse Iwuji started racing cars on a whim during his last semester as a midshipman at the Naval Academy, once Division I football was over for good. Since that time he’s moved up the ranks of American stock car racing, balancing time commitments at the track and juggling sponsors with his duties as a Navy surface warfare officer. Most recently he’s partnered with the Phoenix Patriot Foundation. “We dedicate each race weekend to a wounded veteran and his family,” he said. Jesse plans on getting out of the Navy at the end of his current tour to pursue bigger things as a NASCAR driver. He hopes to move up to the K&N Pro Series soon, driving a bigger car in front of bigger crowds. After that he wants to make it to the Xfinity series and, finally, the Sprint Cup.

RELATED: Navy officer feels the need for NASCAR speed

Even_HaferEVAN HAFER — CEO, BLACK RIFLE COFFEE COMPANY

Evan Hafer always cared about a good cup of coffee regardless of where his Army duties took him, even when serving with the Green Beret in a variety of hostile regions. He founded Black Rifle Coffee — a “small batch roasting” company — this year with a simple motto:  “Strong coffee for strong people.” In a commerce ecosystem known more for hipster baristas and progressive causes than unflinching patriotism and weapons expertise, BRCC is unique. (It’s doubtful any other coffee company would call a product “AK-47 Blend,” for instance.) BRCC’s attitude has caught on with the veteran audience; look for more warfighting grinds as well as a growing inventory of merchandize with a similar type-A tone in 2016.

imagesBRIAN STANN — PRESIDENT AND CEO, HIRE HEROES USA

Brian Stann has been labeled a “hero” in a couple of phases of his life, most notably when serving as a Marine Corps platoon leader in Iraq — actions that earned him the Silver Star — and winning titles as an ultimate fighter, including the WEC Light Heavyweight Championship in 2008. After announcing his retirement from the UFC in 2013 the Naval Academy alum assumed the role of President and CEO of Hire Heroes USA. Hire Heroes focuses on three different elements of the veteran hiring equation: empowering vets to find great jobs by building their confidence and skills, collaborating with military leaders and transition coordinators to build awareness of the company’s capabilities, and partnering with more than 200 companies, like Comcast and Deloitte, to find vets great jobs. This year Hire Heroes could emerge as the vet job board of choice as the company works to improve on its already impressive metric of 60 hires per week.

gockeJEREMY GOCKE — FOUNDER AND CEO, AMPSY

There are veterans who work in the tech sector, and then there are veterans like Jeremy Gocke who carve the leading edge of the tech sector. After getting an “Accelerator Finalist” nod at SXSW in 2014, the West Point grad and former Army Airborne officer founded Ampsy to slow the rate at which content falls into what he calls the “social media abyss.” Ampsy has a suite of social aggregation tools designed to improve a brand’s reach across the Twittersphere by solving what the company website calls “a major leakage problem in the customer acquisition and retention funnel.” Look for Jeremy to continue to stay ahead of the digital pack in 2016.

John_B_RogersJOHN B. ROGERS, JR. — CEO AND CO-FOUNDER, LOCAL MOTORS

Former Marine Corps infantry officer John B. Rogers, Jr.’s love of automobiles is only rivaled by his hatred of inefficient processes, which is why he created Local Motors, a company that uses Direct Digital Manufacturing (a.k.a. “3D printing”) to build cars. “Car manufacturers have been stamping parts the same way for more than 100 years,” he said. “We now have the technology to make the process and products better and faster by linking the online to the offline through DDM.” With the upcoming launch of the LM3D — the company’s first 3D printed car model — 2016 has the potential to be huge for Local Motors. Can you say “microfactory”?

Honorable mention:

DAKOTA MEYER — Never Outgunned, TIM KENNEDY — “Hunting Hitler,” JAKE WOODTeam Rubicon, MIKE DOWLINGvatherightway.org, ZACH ISCOL —Task&PurposeBRANDON YOUNG — Team RWB, MAURA SULLIVANDepartment of Defense PA

THE MIGHTY 25: VETERANS POISED FOR IMPACT IN 2016

Residential Real Estate Platform Nestio Lands A $8M Series A Round

This article was originally posted by TechCrunch and can be viewed here.

Nestio, the NY-based leasing and marketing platform for residential landlords, announced today that is has raised $8M in Series A funding.

The round was led by Trinity Ventures, and had participation from previous investors including Freestyle Capital, Joanne Wilson, and TechStars.

The platform, which originally launched as a tool for renters to find apartments, has now grown into a full service tool for landlords and brokers, allowing them to manage inventory, track leads, and advertise listings – all while communicating in real-time with consumer-facing websites like Trulia and Zillow.

Impressively, Nestio is now is responsible for originating half of New York City’s rental listings, and has already generated over $20 million in additional revenue for clients. While still just live in NYC, the company plans to use this new funding to expand to Boston, Chicago, Miami, and Washington, D.C.

Caren Maio, cofounder and CEO of Nestio, explained that these cities were chosen because current NYC customers own property in these cities, and have been asking to use the product at their other rental properties. By having customers onboard in these new cities from day 1, the company should have a head start as it begins its nationwide expansion.

Beyond expansion, the new funding will also be used to develop Nestio’s product roadmap as well as bulk up the sales, marketing, and engineering teams.

The company also announced that they are bringing on Scott Wolfgang, formerly of Quotidian Ventures (and former Hootsuite board member) as CFO.

Residential Real Estate Platform Nestio Lands A $8M Series A Round

How I Make Sure Work Doesn’t Ruin My Vacation

Be Happy

Here’s the scenario: you have a vacation coming up in two weeks. You should be looking forward to it, imagining yourself letting stress melt away under the sun or on the slopes, but all you can think about is the work that will pile up while you’re away. You might even feel like skipping the vacation just to save from all of the stress that comes with leaving the office. But we all need a vacation sometimes, it just takes some minor, but strategic planning to get you in a vacation state of mind.

I thought about writing this post because, as I type, I am on my annual family getaway in Wellfleet on Cape Cod and although I am periodically checking my email, I am getting some much needed relaxation and quality time with my kids. Whether you are an executive or an intern, I thought sharing my own tips could…

View original post 511 more words

How I Make Sure Work Doesn’t Ruin My Vacation

How To Raise $20.5 Million The Signpost Way

This post was originally published on Brad’s personal blog at mayorbrad.com 

This month our longtime portfolio company, SignPost, humbly announced the close of their $20.5 million dollar Series C.

The Company offers consumer marketing tools and manages its customers’ presence on sites like Yelp, while leveraging data from credit card transactions and social media to send targeted marketing messages that drive sales, referrals and reviews.

For Scout, it is a proud day because Stu Wall was one of our first entrepreneurs when we launched Fund I.   We were originally introduced to Stu through another one of our entrepreneurs, Dan Gellert.   Dan is another great entrepreneur with a special place in Scout’s legacy, as he was one of my first board seats.   He sold his company GateGuru to TripAdvisor which enabled us to make our first LP distribution in Year 1 and gave us the credibility to raise more money.

As I reflect on how proud I am of both entrepreneurs and the journey I’ve experienced with them as an investor, I think its important to reflect on how we got here and how to replicate this relationship with more entrepreneurs.

(1) Our best deals are normally sourced through our entrepreneur network.   This is why its so important to always treat an entrepreneur with a level of mutual respect.

(2) When you get to meet an amazing entrepreneur, have the mindfulness to identify their potential and don’t be caught up in the day to day to miss the opportunity.

(3) Each and every relationships between an entrepreneur and investor is based on trust and communication.  Without these two key variables, its difficult to build a company that can win.

(4) As an investor, as soon as you find a kick ass entrepreneur don’t hesitate in helping them build and motivate their team.   No great entrepreneur can build an awesome company without a supportive and passionate team.  Stu asked me to talk to the entire Signpost team (now 213 strong!) the day before we announced to them the news of this raise.  I was inspired and I think the team was pretty fired up as well.

Building great companies is hard to do and it takes a really, really long time.

Don’t rush.

Value each entrepreneur and spend your time making a difference, not being a pain in the ass.

***This post is dedicated to the memory of a new and dear friend.  All of our hearts are a little less full tonight.  We love you Kelsey.***

How To Raise $20.5 Million The Signpost Way

Valuation As A Coordination Device (Part 2)

This post was originally published by John Ryu on Medium

I wrote a post here awhile back titled “Valuation As A Coordination Device” but given the conversations today around valuations, I think it makes sense to highlight something I said in that post:

My response was to forget about that $5 million as valuation and to think of it more as a coordination device…

If everything goes the right way, what do you think the value of this startup will be 12 months from now?

And if you believe in the vision and potential growth trajectory, what does the ownership [and financing] of the company have to look like today so that everyone who has to be involved to enable it will be happy and motivated?

tldr: It’s helpful to think of a valuation as a coordination device that reflects the present state of a future high risk/high reward scenario playing out that makes everyone involved happy.

 

Valuation As A Coordination Device (Part 2)

Talking Tech With MeetAdvisors: Do VCs Read Business Plans?

This post was originally published by Brad Harrison at mayorbrad.com

I was recently invited over to MeetAdvisors for an interview with one of their hosts, Rachel Pollard. MeetAdvisors is a great platform where entrepreneurs can search for, find, and network with advisors and fellow entrepreneurs.
Rachel and I spoke about the recent history of startups, the genesis of Scout Ventures, how we view where technology is going, and about a very pressing question: do venture capitalists read or care about business plans?

Click here to watch the interview!

Talking Tech With MeetAdvisors: Do VCs Read Business Plans?

Are these the bubbles you’re looking for?

The more unicorn bubble chatter I hear, the more I think about the 2007 financial crisis and about the mispricing of risk that happened then.  At the root of all the bad stuff that occurred was the severe mispricing of mortgage backed securities (MBS) and collateralized debt obligations (CDOs).  Loans were pooled into portfolios and then those portfolios were sold off based on tranches of risk.  These derivative securities are very complicated and the big three ratings agencies (S&P, Moody’s, Fitch) were providing favorable ratings for them at the time.  Everyone went along with the ride until the market wised up.  At that moment, they became unsellable “toxic assets”.

350px-Securitization_Market_Activity

“By the end of 2009, over half of the CDOs by value issued at the end of the housing bubble (from 2005-2007) that rating agencies gave their highest “triple-A” rating to, were “impaired”—that is either written-down to “junk” or suffered a “principal loss” (i.e. not only had they not paid interest but investors would not get back some of the principal they invested).” – Wikipedia

To give you the severity of the mispricing:

“Rating agencies lowered the credit ratings on $1.9 trillion in mortgage backed securities from the third fiscal quarter (1 July – 30 September) of 2007 to the second quarter (1 April – 30 June) of 2008.” – Wikipedia

So why is this relevant today?

 

Because it prompts this question: Is there potential mispricing happening in the current tech boom? Here’s a stab at one answer: It’s right in front of the us on the cap tables of unicorns.

 

Here’s a growth stage fundraise example to illustrate how current valuations happen:

Company A growth round fundraise: $250 million
Shares sold: 10 million
Price per share: $25

 

Market Capitalization:
Screenshot 2015-05-01 16.25.34
Congrats, we just made a unicorn.

 

If billion dollar valuations have proliferated because investors are increasingly more comfortable with them as long as they get generous downside protection, then the value of that protection has to come from somewhere. It doesn’t appear out of thin air.

 

That additional downside protection in the form of things such as liquidation preferences and ratchets can negatively affect the other shareholders in any exit scenario that isn’t good to great. Common shareholders have it the worst because they are at the bottom of the totem pole.  In other words, the higher share price paid in later stage growth rounds should be partially offset by a decrease in price per share of the earlier classes of stock.

 

The standard method of calculating market capitalization “breaks” because not all shares are the same.  Shares of Series D Preferred should be more valuable than shares of Common, Series A, B, or C.

 

Instead of the market capitalization calculated above, a “truer” valuation would look something like this, where the price per shares for each class should be discounted relative to the latest round:

 

Company A example valuation using difference prices per class of stock:Screenshot 2015-05-01 16.41.24

 

 You can see this sort of exercise knocks off a lot from these valuations.  If the rise of unicorn valuations are partly explained by the tradeoff of more onerous liquidation preferences and other terms being piled into the later rounds, logic says that the earlier rounds should be discounted relative to the price paid in this round.

 

Anyways, this is one area where the traditional accounting methods fail to tell the complete story of what’s happening these days in the growth stages of venture capital.

 

Is this evidence of dangerous bubbles in formation?  In and of itself, no, but I’ll leave that open for you all to discuss.

 
 
 
 
 
 

Are these the bubbles you’re looking for?

You are the product until the product is ready

dagenclose

This post was originally published on Medium.

I meet with lots of founders who are quick to give me their startup elevator pitch. Yesterday, I was at an event where most of the founders I met were pre-product. They were all ready to get right into the pitch right as soon as we shook hands (this wasn’t a pitch event). I found myself saying “Great, I’d love to check it out when it launches” and the conversations continued on for a bit but they all pretty much ended there.

If you’re pre-product, I’d suggest a completely different way to approach these conversations — focus the story on yourself because you are the product until the product is ready.

Talk about who you are and what you know. Display your passion. Develop the story to show why you’re the right founder to be solving the problem you’re focusing on. Use this approach to build relationships so that when your product is ready for demo, investors will remember you and have context.

You are the product until the product is ready

The Modern Face of Angel Investing

This post was written by Ameet Padte and originally appeared on the SeedInvest Blog

Traditionally, the angel investor community has been comprised of a small set of well-connected individuals located in a few hub cities across the country. With the advent of online equity crowdfunding, this limited group is expanding and a new type of angel is emerging. Here are 5 ways that equity crowdfunding has changed angel investing:

1. Increased Access to Deal Flow
Prior to the rise of online funding portals, there were several hurdles limiting an investor’s deal flow. For one, an investor needed to be close to one of the country’s few innovation hubs (e.g. San Francisco, New York City, Boston, etc.) to reach entrepreneurs coming out of those regions. Unless they had strong personal or professional ties to established startup communities, investors outside these regions lacked direction when looking for startup investment opportunities. In addition, under the old rules of private placements (Rule 506(b) of Regulation D), companies were prohibited from advertising their raise, requiring that they rely on their existing networks and warm introductions, further containing investment opportunities within the existing startup community. Under Title II of the JOBS Act (Rule 506(c) of Regulation D), companies can now engage in “general solicitation” allowing them to advertise their raise and theoretically reach any accredited investor, regardless of location. This change in policy has allowed equity crowdfunding platforms to consolidate deal flow from around the country onto an easily accessible online platform, democratizing access across geographic and social lines.

2. Fresh Perspectives
Historically, investors have only diversified within the traditional asset classes (stocks, bonds, commodities, and currencies). Those who invested in private deals typically restricted investments to local real estate and small businesses. Startup investing was limited to investors with a pre-existing network and a history of activity in the startup space, often as both an entrepreneur and an angel investor. Equity crowdfunding is opening early-stage investing to individuals who haven’t spent as much time in the tech ecosystem. These angels can provide entrepreneurs with fresh eyes to judge their efforts and give feedback entrepreneurs may not have received from the traditional startup community. Furthermore, many of these new angel are successful professionals from various backgrounds who are able to use their career experiences to be true value-add investors, providing insightful advice, making strategic introductions, and leveraging their networks for the startups in which they invest.

3. Easier Evaluation
Even if investors had a strong network and access to entrepreneurs, they had to evaluate deals through the time-consuming process of meeting individual companies one-on-one. In addition, there has been no easy way to access the key documents and financials of a potential investment. Online equity crowdfunding platforms have streamlined this laborious process, allowing angels to engage with entrepreneurs online and consolidating a company’s business plan, legal documents, and financial information in one place. As a result, angels can now quickly conduct due diligence on multiple investment opportunities. Because angel investors review multiple startups across a variety of sectors, a new investor can now quickly gain an understanding of the startup investment landscape and feel more confident in evaluating potential investments.

4. Easier Diversification
Traditionally, angel investors placed relatively large bets on a small group of startups. This trend was driven by inadequate access to startups across verticals, limited exposure to high-quality deal flow, and the need for startups to achieve their fundraising goals from the small number of active angels in their community. Today, via equity crowdfunding platforms, angel investors can access multiple startup investment opportunities in a variety of industries. Also, because entrepreneurs fundraising through equity crowdfunding platforms have access to a larger group of potential investors, they can potentially achieve their fundraising goals with lower investment minimums and a larger number of investors. Angel investors can therefore diversify their startup investment portfolio by making smaller investments in a larger number of companies in various industries.

5. More Transparency
Dialogue between angel investors was historically limited. Geographic barriers and insular communities prevented communication between different angel groups. As a result, angel investors were limited to the viewpoints present in their immediate networks and were seldom exposed to outside ideas. Equity crowdfunding platforms break down these communication barriers and create online communities of investors. These serve as forums for investors from different backgrounds to discuss potential investments. Investors can share investment insights and learn from each other’s varied perspectives and experiences.

As newcomers to the field, today’s angels are bringing fresh perspectives to startup investing and contributing valuable knowledge, networks and capital to entrepreneurs. As their sophistication and experience grows, startup companies only stand to benefit from this new face of angel investing.

 

 

The Modern Face of Angel Investing

Guest Post: A Busy Entrepreneur’s 3-Step Guide to Reading Business Books

Andrew Cohen is the Founder and CEO of Brainscape, an adaptive mobile education platform that helps you learn faster.  This article originally appeared at Entrepreneur.  You can follow Andrew on Twitter.

If you regularly read entrepreneurial blogs and Twitter feeds, I’d be willing to bet that barely a day goes by that you don’t see some list of “The 50 must-read books for entrepreneurs.” This is on top of all the Amazon, StumbleUpon and Goodreads recommendations along with other suggestions that you receive on a daily basis.

Such a stream of reading material can get pretty overwhelming for us time-starved founders! With the hundreds of book recommendations that regularly cross our desks, how should we prioritize what books we should read?

I’ve developed my own system to help solve this problem. Effective entrepreneurial book reading, in my opinion, is a combination of three factors: on-demand book sourcing, diligent list-keeping and actionable reading.

1. Source your books on an as-needed basis.
Simply hearing that a book is “great for entrepreneurs” does not necessarily mean that it would be great for you — at least not right now. After all, every industry, product, founder, company and stage is different, so why should you accept a blanket book recommendation from some generic blogger? You will get much more benefit by seeking business books based on specific challenges that you are facing in the short or medium term.

For example, if you have an early-stage startup in the early product development phase, you may need to read books about agile product design iteration. If you are starting to hire employees for the first time, or are having issues with team dynamics, then you should probably read management books. Or maybe you need to raise money from investors, improve your sales process, establish a digital marketing strategy or make your team more metrics driven.

Improving your ability to identify your own weaknesses will allow you to seek more targeted and actionable reading material for your particular needs.

You should also keep in mind that you may not even need to read a full book in the first place. Depending on your existing skills, the area of skills needed and the amount of time you have, you might be able to gain sufficient knowledge from the interwebs, from the Amazon reviews and/or from a business book summary service such as Get Abstract.

Whatever entrepreneurial literature you read, just make sure you are reading it on an on-demand, as-needed basis, not simply because the cool kids seem to be reading it. Your management time and mental bandwidth are the scarcest resource at your company.

2. Keep good lists of books to read
All entrepreneurs hear frequent book recommendations from their friends and from the bloggers that they read. The trick is learning what to do when the recommendations pile up faster than you can read the books.

In the cases where you don’t have time to read a book immediately (and/or where you aren’t quite “ready” for the type of advice that the book entails), it is extremely helpful to keep a backlogged “Books to Read” list somewhere. In fact, the ability to manage many such lists is one of the most important and underrated entrepreneurial skills.

I’ve seen founders keep books-to-read lists in Evernote, Dropbox, Any.do and in the native iPhone “Notes” app (which is where I keep mine). Wherever you keep your list, it’s particularly helpful to record the name of the person who recommended it to you (if it was indeed a person), so you can remember whom to thank once you do get around to reading it. This tactic has given me great excuses to catch up with old friends when I finally read their recommended business books or novels many years after the fact.

3. Read books effectively and actionably.
Once you’ve decided that you’re going to dive into a particular book, you should use your reading time as efficiently and productively as possible. Having good speed-reading skills always helps, but you should also ensure that you are internalizing and acting upon all your key takeaways. Your method of note taking likely depends on the format of book that you are reading and/or your style of organization.

If you’re like me, you scribble notes in the margins (or add notes in iBooks), and then when you finish the book, you flip through the pages and transfer your notes into a digital format or to-do list that you can address later. Other people like to immediately add key takeaways to their to-do lists and/or fire off quick emails to team members each time they encounter an epiphany while reading.

The important thing is that you lock in any new lessons before the book ends up back on your shelf and out of your mind. Discussing your action items with your team — and even re-reading the Amazon reviews after you’ve finished the book — can help solidify your new knowledge by putting it into perspective.

Taken together, these active reading practices can ensure that your valuable reading hours yield the maximum benefit for your business and for your own professional development.

Guest Post: A Busy Entrepreneur’s 3-Step Guide to Reading Business Books