When we create a new company, we are the CEO. And the CMO. And the CTO. You get the picture. Why do we do this? There are many reasons, but they can all be boiled down to these two words: dispassionate and experienced.
Are You Experienced?
Our team is experienced. We’ve invested in, founded, grown, operated, sold, and killed dozens of companies. There isn’t much we haven’t seen. We formed such a team, and will continue to grow the team, because of the statistic that most new founders don’t really understand: 9 out of 10 startups will fail. Of the 10% that ‘succeed’, less than 5% of those will raise substantial capital. And of those that raise capital, less than 10% will have an exit event that brings value to the shareholders.
Knowing these numbers, why would anyone invest in a 23-year-old kid with a great idea? Because Gates, Zuckerberg, Brin, Page, Dell, etc. It can happen, but the odds are better if you invest the same money over time in PowerBall. When we are ready to raise a Series A round for one of our portfolio companies, we can very confidently put forth a team that investors can confidently invest in.
Are You Passionate?
The word “dispassionate” needs more explanation. Most founders will tell you that whatever it is they are doing is “their passion.” That’s great. It means they love it and will work really hard, but it also means they cannot, will not, or don’t want to see the reality of a startup that has less than a 1% chance of succeeding in the long term. Passionate founders can push through incredible odds, obstacles, and barriers simply because of their passion. However, when things go south, they are not objective enough to make wise decisions.
For us to boast that we are “dispassionate” means that we are objective as we dig through the diligence process to determine if a business is viable. And we’re not just reading someone else’s research. We’re doing the research. Hands on, hands dirty, sleeves up. We’re in deep, but if it’s not going to work, we will be the first to tell a client that it’s a no go, because we will be the ones “going”.
Got a great idea or some really defensible IP? The first test is this: we will be the CEO. Are you ok with that?