AACE Venture Fund’s Post

The Power of the 118-Hour Decision We are the sum of our decisions: personal, business, political, financial. Our most important decisions—quitting a job, relocating to a new country, committing to a long-term project, or investing in a startup—require a lot of time and attention. Relying on 30-second elevator pitches, cowboy-style decision making, and leaping into risks based on intuition will lead to bad decisions. When you can’t afford to make a bad decision, remember the 118-hour rule that the world’s best investors follow. https://lnkd.in/gdjJ9889

Data rooms matter. The more organized and detailed the documentation is, the better. Cascade Seed Fund sees over 1000 deals a year and digs in on about 300. The opportunities and founders we work with are in the PNW and, given the broad networks of our investors and founders, we also invest in targeted opportunities that are referred by trusted sources from across the US and Canada. I don't have an exact number, but I have reviewed thousands of diligence documents, matching the data provided to the story the company has shared in the pitch and looking for missing data, weak points, and points of strength that affect the potential success of the investment. If you have a start up, start now and include all key documents. Below is a link to a Series A checklist. It's a starter framework. Build it now. https://lnkd.in/gVuU9ehF

Value investing works on (somewhat mature) companies. This is undeniable. In public markets you see c. 5% outperformance over the long term by investing in the cheapest 20% of companies via EV/EBITDA. It’s not rocket science. The vast majority of fund managers underperform that significantly. The world is (too slowly) realising that and transferring more and more assets to passive. Slick sales is slowly being overcome by rationality. But should it work in venture? I really don’t think so. Drawing from Soros’s Alchemy, this is due to a reflexivity effect. The share price of a large company shouldn’t meaningfully effect it’s performance. They’re usually not raising capital. Therefore value investing works because competitors are usually somewhat similar, so buying the cheaper one gives you a better return. Startups are raising capital consistently. Under Power Law, a small number of them will take most of the market. If we take two similar companies at similar stages and sizes: Startup X raises 5 @ 50m pre Startup Y raises 1 @ 10m pre For Y to beat X, it must deploy its capital 5 times more efficiently than X. Usually the difference between the top leader and the biggest loser is less than 50%. So it’s almost impossible for Y to win Y will go out of business and the “savvy” investor, who “negotiated a great deal” will get -100% on their investment. If the market is big enough, investors in X will do quite well. It’s somewhat like the observer effect in physics. In this case, the behaviour of the external investor materially effects the results. Therefore if you’ve got “valuation discipline” as a core thesis element, I’d guess underperformance of your fund is intrinsic and inescapable. This is a huge driver of why US beats Europe in venture. (In microcosm, also why London beats rest of UK). This is before even including self selection/hot deal effects. I’d love to see investors writing and thinking about this more. P.S. A simple way to process-ize this is to benchmark a market and look to back those who’ve raised at the highest valuation consistently over multiple rounds. History doesn’t repeat itself but it rhymes. Probably not super easy to explain this to analysts at pension funds… #shipsandshipping #maritime #founder #investing #vc

Investing as an angel investor can be rewarding, but it comes with its share of risks. Here are the top 5 risks every angel investor should be aware of: → Startup failure: most startups fail within the first few years due to market fit, competition, and financial mismanagement, etc. The risk of losing the entire investment is high, making diversification essential. → Team competence risks: the startup's success heavily relies on the founding team’s ability to execute their vision and manage operations effectively. A lack of necessary skills or experience within the team can lead to mismanagement and potential failure. → Limited due diligence: without thorough vetting, you may invest in companies with undiscovered issues like financial instability or legal challenges. Comprehensive due diligence is crucial to identify red flags. → Lack of market insight: understanding market trends and dynamics is crucial for making informed investment decisions. → Solo investment decisions: making investment decisions alone can lead to biases and oversights. Minimise these risks by joining truffl venture club. We offer access to vetted projects from top venture funds and family offices, ensuring you invest in high-potential opportunities. Apply to join here: https://lnkd.in/dtGfNKvt #angelinvesting #startupfunding #venturesyndicate

Curious about the risks lurking behind inside-led rounds? Part II of our article series "Inside-Led Rounds: A Founder's Friend or Foe? 🤔" sheds light on the flip side. In Part I, we explored why inside-led rounds can be advantageous in favorable market conditions. But what happens when the tide turns? In this installment, we delve into the risks founders face and how to mitigate them. Here's a glimpse of what we cover: 💡 The potential downsides of concentrated VC ownership 💡 Mitigation strategies to address these potential risks 💡 Other financing or exit options (e.g. debt, M&A) And more. Check out the full article by Rebecca Mitchem, CFA for an in-depth look at navigating inside-led rounds in today's dynamic startup landscape: https://lnkd.in/gecG4PJm

Venture capital is a relatively new space emerging only in the last several decades. Sort of. Technically, investors have long sought capital to pursue risky business ideas for many centuries. Key elements of VC (especially risk-sharing partnerships) can be traced back to the Genoese merchants of the 15th century and American whaling voyages during the 19th century. However, it seems to generally be agreed upon that the "traditional VC era" really began after the Second World War. Harvard Business School Professor General Georges Doriot and others founded the American Research & Development Corporation (AR&D). AR&D was the first public corporation to specialize in investing in "illiquid securities" of early-stage businesses. This investment group had been formed alongside local Boston civic leaders to support and develop young entrepreneurs and their ideas that had been developed during WWII. Doriot has since become an incredibly important figure, thanks to his simple rules that nearly all VCs follow today. #VentureCapital #New2VC #LearnAboutVC

“Check, please!” VCs are risk takers by their very nature (e.g., they operate in a paradigm where 7 out of 10 investments fail). Therefore, it is shocking to me that they are not pouring money right now into startups with (i) proven management teams, (ii) great technology, and (iii) strong market exclusivity. NOW IS WHEN YOU WANT TO INVEST! Instead, many VCs are sitting on the sidelines waiting*; meanwhile, their overall cash stockpiles to invest continue to go up! As an LP and angel investor, I have been very active in 2024. And if my day jobs were not so demanding, I’d be doing even more investing right now. My premise is simple: “buy low, sell high, and always be aligned with long term value creation.” By the time this market turns around, it will be too late to find great deals easily and plentifully. *waiting for jobs data, interest rate changes, election results, GDP reports, and anything else that the greatest companies don’t care about since they perform regardless of conditions, ‘rain or shine!’

Whilst every venture capital or private equity firm believes itself to be unique, the reality is that, for most CEOs and entrepreneurs, the similarities between firms are more obvious than the differences. So how, as a venture capital or private equity investor, do you persuade an entrepreneur or CEO to choose your proposal over that of a competitor? Alice and I - both experienced private equity investors - did our investment apprenticeship with an organisation which placed selling well at the core of its competitive strategy. The ability to create and build rapport with a CEO/entrepreneur and to pitch our proposal persuasively was considered to be an essential element in the investor's toolkit. Yet, today, we meet very few investors who possess even the most basic concepts of selling. Do you or your team understand the difference between features, benefits and advantages? Can you articulate in a few words why a CEO/entrepreneur should choose you and your firm in preference to your rivals for the deal? How much time do you waste on deals that don't happen? In recent years we've been asked by a number of firms to coach them on selling skills. We've now written up our insights and observations in a book. We think it's an insightful and provocative treatise on the art of winning deals and essential reading for all venture capital and private equity investors. The book will cost you less than £10 but could land you a deal worth millions. So the only question you need to answer is - why wouldn't you buy it? https://lnkd.in/efsmqzaT

A Guide for Young VCs: Navigating the World of Venture Capital Breaking into the world of venture capital can be challenging, but with dedication and the right approach, it's certainly achievable. Here are some key strategies to help you navigate the industry and accelerate your career: 1. Shadow in Meetings and Take Initiative: It's all about passion need to pull up socks for doing individual work off-hours or at home (networking or putting extra effort into understanding deal structure). Use office time to see pitches and portfolio company meetings with partners. You will learn well from the best partners and the taste/thought process of the partners. 2. Become a Value-Added Team Member: Proactively find ways to extend partners' usefulness leverage their time, and take up work actively. Find works that take off others' plates. A lot of the job is unglamorous but the early days are for it. 3. Expand Your Knowledge Base: Learning the various ways you can structure a deal to grant extra value is vitally important (such as competitors, and networking with VCs who have deals in similar segments). In addition, a lot of people don't take the time to learn this, so it gives you an edge. Go to sites such as EUVC and NVCA site and read through the major documents e.g. term sheet, and shareholder rights. 4. Embrace the Hustle: Be prepared to put in the extra effort to succeed. The path to success in VC can be challenging, but perseverance is key. Don't let setbacks deter you from your goals. #venturecapital #investor #hiringventurecapital #venturecapitalroles #guidetovc #nvca #usventurecapital #usstartupecosystem #termsheets #euvc

🌟 Exciting Opportunity Alert for Founder Friends! 🌟 Applications now open until March 31 to the Morgan Stanley Inclusive Ventures Lab! Mighty Well, María Del Mar Gómez Viyella, Yousef Al-Humaidhi and I are alumni of this incredible program, I can attest to the invaluable support and resources provided to participating companies. Here's what you can expect if selected: 💼 Investment of Capital: Morgan Stanley provides participating companies with $250,000 for each company in their New York-based program and £250,000 for each company in their London-based program in exchange for a 5% equity stake. 🤝 Powerful Networks: Gain access to Morgan Stanley's extensive network of bankers, financial advisors, and technology experts, as well as potential clients and investors. 🎓 Mentoring and More: Benefit from personalized mentoring, coaching, and guidance from industry experts to help your company grow and scale. As alumni of the program, Mighty Well still receives ongoing support and mentorship from the Lab. A heartfelt acknowledgment goes out to Calvin Lam, Morgan Stanley Managing Director and Mighty Well Board Observer, and Portfolio Manager, Stefan Lehmann-Karp, and supporting team. I am deeply thankful to Carla Harris and Alice Vilma for their support, vision, and invaluable contributions. 📚 Tailored Curriculum: Access a customized curriculum covering finance, sales strategy, marketing, branding, and private sessions with industry experts. 📈 Pitch Day to Investors: Showcase your company during Demo Day to investors, potential business partners, and customers, raising your profile and opening doors to new opportunities. Learn more and apply here or send me a DM to ask more about my experience in the program: https://lnkd.in/eZTwjxCp #StartupOpportunity #VentureCapital #Entrepreneurship #MorganStanley #InclusiveVenturesLab #DiverseFounders