Oversubscribed Weekly #20

Mike here.

Sorry for the week delay in this email! I’ve been busy with my new gig at AWS (which coincidentally involves me working with startup accelerators and helping founders with fundraising). The first piece of content in this newsletter comes from my day job: 

This slide is from a talk I gave to a NYC-based accelerator this week on fundraising. The talk is basically a cliff-notes version of our book. You can see a readable version of the slides here. If you’ve read our book, this’ll be a good reinforcement. If you haven’t, it surfaces some of the most important points.

And now for some Twitter pontification by VCs:

1/ Ok, this might ruffle some feathers, but here are some thoughts on taking money from next round's investors now (e.g. taking Series A investor money at seed, or seed investor money at pre-seed).

TL;DR the cons usually outweigh the pros.

— Leo Polovets (@lpolovets) April 6, 2019

This tweet thread by Leo Polovets (General Partner at Susa Ventures) is a must read. It’s easy to be enamored by investors with bigger names or bigger check sizes, but there are some downsides to getting ahead of yourself with the investors you let into your round. 

A more subtle, humorous thing to take note of is the exchange in the thread between Leo Polovets and Hunter Walk from Homebrew. It simultaneously shows (1) a universal truth you should be aware of when fundraising and (2) what your end goal should be: (1) investors talk to each other (even when competing), and (2) you should have the mindset that you’re going to get them to compete with each other.

And now, let’s take a very welcome break from Patagonia-wearing male VCs to learn about a topic entrepreneurs don’t like to think about but absolutely need to: M&A. 

Why is M&A important to startups? Once you take investor money, you're expected to reach an exit event in order to produce returns for your investors and for your team. Take a peek at this M&A primer, if you're a founder.https://t.co/NZInOMe4Rk

— Lolita Taub (@lolitataub) April 8, 2019

Lolita Taub wrote this excellent article about M&A for startups. As founders, we like to pitch the big visions of IPOs or hypothetical acquisitions by big corporations. However, it’s important to know how the sausage is made when it comes to acquisitions. If pressed by an investor on exit opportunities, demonstrating a realistic understanding of how M&A works can go a long way.

See you next week!

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