Are you a seed-stage founder who’s building a unicorn?
Last month, at ProWellTech Early Stage, I spoke to NFX Founding Partner James Currier about where ideas for billion-dollar companies come from.
Currier, who was an angel investor in Patreon, Lyft and DoorDash, said startups that grow into unicorns have three basic forms of defensibility:
- Network effects: Your product becomes more valuable as more people use it.
- Embedding: Integrate your services so deeply, customers “cannot rip them out.”
- Data loops: Gather, process and act on real-time data.
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“This is really only talking about world-changing, big-ass businesses with a lot of impact that could be a billion dollars or more in value,” he said. “That’s what we’re investing in. And what I’m talking about today is only for the people who want to build those types of businesses.”
After giving a presentation he’d previously shared at Harvard Business School, Stanford and MIT, Currier outlined the mental models unicorn founders adopt and offered candid advice for early-stage entrepreneurs, including his thoughts on building a founding team:
“You have to figure out what you and your team are capable of doing. There are all these big pivots that you need to take, but you might not have the people for it. And then it’s a real tear-down.”
Thanks for reading!
Editorial Manager, ProWellTech+
Hidden in plain sight: 5 red flags for investors
Table of Contents
Investors may review hundreds of pitches each year, which means they’re compelled to make decisions quickly. It’s not a great system — because it’s largely based on relationships, bias is baked into the recipe.
And given the rapid pace of dealmaking, “even the most experienced angel investors — and VCs — can overlook red flags that are subtle and not immediately apparent,” writes Marjorie Radlo-Zandi.
Drawing from her years as a mentor, an angel and a board member, she shares five scenarios that should give investors second thoughts, e.g., “where the founder has a romantic or spousal relationship with a staff member.”
Are you spending too much on paid acquisition?
Every startup isn’t ready to hire a full-time marketer, but that’s no excuse to toss money out the window on paid acquisition.
In his latest TC+ column, growth marketer Jonathan Martinez explains how to use Google Sheets to create a regression analysis spreadsheet to track and optimize weekly spending and customer acquisition costs.
“What’s great about this kind of analysis is that it provides a clear depiction of what your optimal expenditure is at the paid channel level,” he writes.
“If you’re looking to get analytical and have a minimum of 90 days of data at varying levels of spending, a regression analysis is your answer.”
Generative AI and copyright law: What’s the future for intellectual property?
Are AI-generated works eligible for copyright protection?
In an article written by Gai Sher and Ariela Benchlouch from the Innovation and Technology practice group at Greenspoon Marder LLP, the authors recap a recent guidance document released by the U.S. Copyright Office’s document and examine multiple legal developments in the space.
“While the future of AI and its legal ramifications remain uncertain, we are seeing the emergence of competing interests come to light between authors, AI companies and the general public,” they write.
How to find the right investors for your startup
You can’t tell a compelling story unless you know your audience, which is why effective founders exhaustively research investors before they send a pitch deck.
In his latest article, Haje Jan Kamps shares a six-step process that helps first-timers articulate which traits they’re looking for and “how to identify investors that invest in your space, stage and geography.”
Western sanctions against Russia: Tips for tech companies managing compliance risk
After its unprovoked invasion of Ukraine, much of Russia’s tech talent fled and Western nations levied sanctions to isolate its economy.
The U.S, the EU, the UK and other countries recently moved to punish Russia further with additional sanctions, “including expanded export controls over drone components, electronics, industrial equipment, and other items,” writes Anthony Rapa, a partner at law firm Blank Rome.
In this TC+ post, Rapa offers a detailed overview of the latest export controls and addresses concerns “over the ongoing diversion to Russia of items restricted under sanctions.”