Verstra Ventures

𝗢𝗩𝗘𝗥 $𝟱𝟬 𝗠𝗜𝗟𝗟𝗜𝗢𝗡 in annual revenues & exiting to IBM. Done with $0 from VCs. This is Mark Nashman's incredible story... Mark & his partner methodically built their tech business, Clarity Systems, initially as a consulting firm, focusing on data analytics and eventually financial reporting tools. By implementing various projects, they noticed common needs from large organizations, built a toolkit, and eventually made the difficult transition from a service to product (software) based business. At its peak, Clarity Systems was doing over $50 million in revenues and had 420 employees. By 2010, about 15 years into their journey, they exited to IBM. Mark then became an active VC/Angel investor for several years with many wins before formalizing his investing practice by launching INcapital Ventures with his wife, Natty Nashman. In our discussion, we cover a lot of ground: - building a business with no external financing - pivoting from service to product revenues - finding product market fit - the decision to exit - what's his criteria for investments And much more... Some Key Learnings: - product market fit is demonstrated by revenues (crazy, I know...) - customers are willing to pay upfront for products they need, don't give stuff away for free - you don't need venture capital to build a tech business, it just may take longer - VCs who were operators will tolerate less BS from founders who don't bring the good (good metrics) This discussion was inspiring and I highly encourage entrepreneurs, VCs and those aspiring to be successful in the tech ecosystem to give it a listen. #startups #venturecapital #investing #business https://lnkd.in/erEBV8Fi

NOTHING compensates for a lack of revenue traction when raising venture capital... Think you're solving a big problem. Where's the revenue traction? Think you have an innovative solution. Where's the revenue traction? Think you have product market fit. Where's the revenue traction? Think you have a great team. Where's the revenue traction? Think your product is better than your competitors. Where's the revenue traction? With few exceptions, the best narrative when raising money from VCs is that you have great revenue traction that can be supercharged with an infusion of capital. The narrative that you can only get traction after you raise money is weak, and most VCs won't go for it. This is the harsh truth. #startups #venturecapital #investing

Most of my posts are inspired by my frustration of seeing many avoidable mistakes made by founders regularly... One such mistake is being unrealistic in financial modeling and revenue projections. Most early-stage startups don't do this well. But some do it so poorly that it destroys any credibility they have and automatically turns a VC's potential "yes" into a definite "no". My new video goes through one such example. Its a story I've shared in the past, but wanted to make a video on it as part of my experimentation in creating Youtube videos. I've received a lot of invaluable feedback on the few videos I've posted thus far. I've incorporated a lot of improvements based on this constructive criticism and I hope I continuously become better at story telling, editing, and being creative using this medium. If you have an constructive feedback, please share it. Feel free to DM me or drop a comment below. #startups #venturecapital #investing #growth https://lnkd.in/g_8GDsCT

VCs can create negative value for startups. Surprised? Don't be. How do you know if you're dealing with a toxic VC? First is understanding that a toxic VC can actually harm your business beyond repair, regardless of how much they invest. I've seen this firsthand where in pursuit of their own financial or other interest, will undermine the company's success and growth. They muck up and delay board decisions, and intervene in operations in dumb ways, among other activities. There will always be an "Agency Problem" in this type of investing, but I am referring to something beyond this. So what are some telltale signs you are dealing with a toxic VC? 1. They take exceedingly long to complete diligence. 2. They charge you fees. This comes in many forms, such as finders fees, consulting fees, etc. as a condition of investing. 3. They ask for many non market terms. What is "market" changes, but having a good advisor or lawyer will be able to point out what is egregious. 4. They constantly change material terms of the deal throughout closing with poor justifications. 5. They are reluctant to offer references from all portfolio companies. 6. They don't have a track record of partnering with other VCs. 7. If not a CVC, they don't have a committed fund, and need to raise for each deal. 8. They've rebranded multiple times. 9. They have a big ego (more than a typical VC). 10. You don't like them as people. Sometimes startups become desperate for funds and forget that they are bringing in a partner. You won't get married to someone without dating, and you wont hire an executive without extensive interviews, and you shouldn't accept capital from VCs without some diligence into them. Diligence on your potential VCs is a MUST. #startups #venturecapital #investing

"Do you know anyone who would be interested in investing? Can you introduce us or share our deck?" All too often, I receive such requests from startups we choose not to back. Yes, it's critical to network, but using this strategy in this context? Not effective. Its easy to think "well if 1/100 help, then its worth it". No, its not. Such referral requests, without the right foundation, can tarnish someone's reputation. It portrays a lack of seriousness and a misunderstanding of the dynamics of relationships and reputations. Referrals to VCs aren't quick tasks - they're time-consuming and carry a significant reputational risk. Believe me, I don't do them without serious thought. And because of this, I've made some successful introductions that resulted in investments. So, how do you get from ignored requests to great introductions? 1. Be targeted. Does the VC you're asking even play in your sandbox? A biotech investor likely can't help much with intros to DC2 investors. 2. Be specific. Ask for intros to certain individuals and state why. Show that you've done your homework and aren't asking the VC to do the heavy lifting. 3. Make it easy. Provide exactly what you need them to share about you. Your deck, an intro email - make sure they're well-written, well-designed. 4. Build a relationship. No shortcuts here. A VC won't invest time in you if you don't invest time building a relationship with them. An active VC will get these requests so often it would be impossible for them to help everyone. 5. Pick the right timing. If a VC declines you, they likely don't see a viable investment. So, they probably won't refer you. Wait for a positive update or build an impeccable relationship (see no. 4). Remember, the path to a successful VC intro isn't paved with random requests. It's built on understanding, effort, and respect. Best of luck out there. #venturecapital #startups #investing #entrepreneurs #sales

Struggling to sell a product??? Remember that Balenciaga was selling a garbage bag for $1,800. And people bought it. A lot of people. Don't despair, just about anything is possible... #business #investing #fashion #itsliterallyagarbagebag #culture #startups

As an entrepreneur and investor, I've seen my fair share of critical mistakes that result in startups failing... Check out my 1st standalone Youtube where I discuss 10 common habits and mistakes startup entrepreneurs make. A lot of these mistakes are avoidable with enough preparation, guidance and grit. This video is largely an experiment if I should spend more time creating Youtube videos. Your constructive criticism and feedback on the style, content and approach would be greatly appreciated! Please message me privately. #startups #venturecapital #business #investing #entrepreneurs

Many early-stage startups aren't ready to raise venture capital, making unforced mistakes that are easily avoidable. Check out my latest attempt at making Youtube videos, where I discuss the 10 things a startup MUST do before raising money from VCs. This primer will give some highlights on what to do, and how to do it. Some of these mistakes are easily avoidable with just a bit of preparation and advice. But, if you ignore these steps, you will make what is an already difficult task of raising VC even harder. I am beginning to enjoy the process of making content but its still experimental. Your constructive criticism and feedback on the style, content and approach would be greatly appreciated! Please message me privately. https://lnkd.in/g7xajpJe #startups #venturecapital #business #investing #entrepreneurs

When you are building a startup, only 2 things really matter for success: 1. Solving a painful problem in a large and/or growing market 2. Fast and consistent execution Very hard to do, but also very simple. Best of luck out there everyone. #venturecapital #startups #investing #innovation #business

10 things startups should NEVER say when raising venture capital... No. 7 may surprise you 1. "Want [insert basic info], sign an NDA 1st" 2. "We are so unique we really don't have any competition" 3. "If we only get x% of the market..." 4. "We have a lot of interest so you have to decide quickly" 5. "Company X, which is worse than us in every way, received a valuation of Y, so..." 6. "We are conservatively projecting growth of [insert crazy #]" 7. "We are only looking for value-add investors" 8. "We will get the traction after we raise..." 9. "Its 𝘭𝘪𝘬𝘦 recurring revenue because we expect customer will buy every year" 10. "The founders don't do intro calls with VCs until later in the process" Regarding #7, most of the time its a feeble attempt to assert some control over the process. Most startups would (and should) take an investment from a good VC, regardless of the perceived "value-add", which is usually elusive in the best of cases. #startups #venturecapital #investing #business #fundraising #entrepreneurs