What we're reading...
Heidi Roizen of DFJ writes a set of pointers for surviving the downturn. She advises startups to not cling to valuations, to get to cash flow positive on the money they already have in the bank, and to focus maniacally on metrics. Link
Kanyi Maqubela at Collaborative Fund gives his advice for getting into venture capital:
Cliff Oxford at Forbes writes about the difference between Pandora's and Uber's exit strategies. He compares Pandora's exit problems to the bear attack scene in The Revenant. Link
Arielle Zuckerberg discusses her first six months at Kleiner Perkins. Link
A study of Bitcoin by researchers at Cornel suggests that the system cannot be widely used without undergoing a major redesign. To give some perspective, Bitcoin can currently process seven transactions per second, while Visa's system can process 2,000 per second. Link
Hunter Walk of Homebrew answers tough questions about product management in a podcast. Link
David Fairbank of NextView debunks the myth that business school grads do not make good founders. He finds that of all the startups with billion+ valuations, nearly a quarter of those have founders with business school degrees (primarily from Harvard). Link
Leo Polovets advises startups to avoid piecemeal seed rounds. While you may save yourself a very small amount of dilution, you are taking some risks. Future capital is not always guaranteed, for one. And the other problem with piecemeal seed rounds is that it takes time away from the product you are trying to build. Link
This entire post is based on one key premise: the most dangerous risk for any startup is existential risk. One more time: the most dangerous risk for any startup is existential risk. If you have money but no product-market fit, you can keep iterating on your product. If you have money but your team is lacking, you can spend to upgrade your team. If, however, you're out of money, it doesn't matter how much beautiful code you have written or how many pilot projects you have lined up, because you're done. If you accept this premise, then you'll understand why a few extra percent of dilution is well worth reducing your existential risk by 20% or 30% or even 50%.
Tech Crunch lists their favorite companies from yesterday's 500 Startups Demo Day Link
Tianxiang Zhuo of Karlin Ventures writes that 2016 is the 'year of the bridge round.' Zhuo gives investors a framework for analyzing whether they should participate in a bridge round. Some of his high-level questions: 1.) Do you still believe in the company? 2.) To what extent will the bridge round generate you a better return? 3.) Does your participation allow the company to attract new investors? 4.) Are you the most exposed investor? Link