CharmHealth’s Post

Startup investment differs from other investment schemes in several key ways: 1. High Risk, High Reward : Startups are inherently risky investments. Many startups fail, but successful ones can offer substantial returns, often much higher than traditional investment options. 2. Illiquidity : Unlike publicly traded stocks or bonds, startup investments are typically illiquid. It may take years before you can exit your investment, either through an acquisition or IPO. 3. Limited Information : Startups often have limited operating history and financial data, making it challenging to assess their potential for success. Investors must rely on qualitative factors such as team expertise, market opportunity, and product viability. 4. Active Involvement : Investing in startups often requires more active involvement compared to traditional investments. Investors may provide strategic guidance, introductions to networks, or other forms of support to help the startup succeed. 5. Diversification : Due to the high risk nature of startup investing, diversification is crucial. Investors typically spread their investments across multiple startups to mitigate risk. 6. Long Time Horizon : Startup investments can take many years to mature. It may take a considerable amount of time before investors see any returns, if at all. 7. Regulatory Considerations : Startup investing is subject to various regulations, depending on the jurisdiction. Investors need to be aware of securities laws and regulations governing private investments. Overall, startup investment offers the potential for significant returns but requires careful consideration, due diligence, and a willingness to accept the inherent risks involved. #startupfunding

DAY 47. Title: Investing in Financial Assets: A Lifeline for Startups Hello, LinkedIn community, Are you a startup founder or entrepreneur looking for ways to keep your business afloat and ensure its long-term success? Today, I want to discuss the importance of investing in financial assets as a means to sustain and grow your startup. In the ever-evolving world of business, startups often face numerous challenges, particularly when it comes to securing funding and maintaining financial stability. However, by strategically investing in financial assets, startups can create a solid foundation to weather uncertain times and fuel their growth. Let's dive into some key reasons why investing in financial assets is crucial for keeping your startup alive: 1. Divide Revenue Streams: Investing in financial assets, such as stocks, bonds, or real estate, provides an opportunity to diversify revenue streams beyond the core business operations. By generating income from various sources, startups can reduce dependency on a single revenue stream, thus mitigating potential risks and ensuring stability during lean periods. 2. Build Emergency Reserves: Having a financial cushion is essential for startups, especially during times of economic downturn or unexpected challenges. By investing in financial assets, startups can build emergency reserves that serve as a safety net, enabling them to cover operational expenses during turbulent times without compromising the business's long-term viability. 3. Capitalize on Growth Opportunities: Financial assets can be leveraged to seize growth opportunities that arise in the market. By allocating a portion of your startup's resources to investments, you can potentially generate additional capital to fuel expansion, innovation, and strategic initiatives. 4. Attract Investors and Partnerships: Demonstrating a sound investment strategy can attract potential investors and strategic partners. A startup that actively manages its financial assets and generates consistent returns showcases its ability to make wise financial decisions, increasing its appeal to potential investors and partners. 5. Prepare for Future Challenges: Investing in financial assets allows startups to proactively prepare for future challenges, such as market volatility or industry disruptions. By carefully diversifying their investment portfolio, startups can create a resilient financial structure that adapts to changing market conditions and safeguards against unforeseen risks. In conclusion, investing in financial assets can be a game-changer for startups, providing them with the necessary financial stability and resources to navigate challenges and seize growth opportunities. Startups can secure long-term success by diversifying revenue streams, building emergency reserves, capitalizing on growth prospects, and attracting investors and partnerships. #StartupSuccess #FinancialAssets #InvestmentStrategy #BusinessGrowth #Entrepreneurship

Hello, entrepreneurs and visionary investors! Today, let’s talk about a critical aspect of preparing for startup fundraising: setting a pre-money valuation that can reasonably propose a 10x return on investment over a period of 5 years. 🔍 Why Is Pre-Money Valuation So Crucial? Focused on Desired Returns: A well-calibrated pre-money valuation is essential to propose to potential investors a desirable return of 10x. This is an ambitious but appealing target in the venture capital world. Balance Between Attractiveness and Realism: Your valuation should be attractive enough to capture investors' interest but realistic enough to not overvalue your startup, risking falling short of expectations. 📈 Strategies for an Effective Pre-Money Valuation: In-depth Market Analysis: Look at market trends and valuations of other startups in your sector for a clear view of the competitive landscape. Solid Financial Projections: Base your growth estimates on a well-structured financial model that shows how you can achieve that 10x return. Sustainability and Scalability: Ensure that your business model clearly shows the capacity to grow and sustain the desired return over time. Transparency and Justification: Be ready to defend your valuation with solid data and sound logic, showing why and how you think you can deliver that 10x return. 🤝 Conclusion: A pre-money valuation aiming for a 10x return in 5 years should be thoughtfully considered and based on thorough analysis. It's a promise of growth and success that must be supported by a solid and realistic strategy. 👥 Invitation for Discussion: Have you experiences or tips on choosing pre-money valuation to achieve a 10x return? What have been the challenges and successes you’ve encountered in this process? We eagerly await sharing ideas and experiences to help each other reach our ambitious goals!

S.M.A.R.T principles which stand for specific, measurable, achievable, relevant, and time-bound, can be integrated with startup investment. Here’s how we can integrate the S.M.A.R.T principle with startup investments: 𝟏. 𝐒𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐆𝐨𝐚𝐥𝐬: Define clear and specific investment objectives. Are you looking for short-term gains, long-term growth, or a specific financial target? Be clear about what you want to achieve. 𝟐. 𝐌𝐞𝐚𝐬𝐮𝐫𝐚𝐛𝐥𝐞 𝐏𝐫𝐨𝐠𝐫𝐞𝐬𝐬: Develop key performance indicators (KPIs) to measure the progress of your startup investments. This might include metrics like revenue growth, customer acquisition, or market share. 𝟑. 𝐀𝐜𝐡𝐢𝐞𝐯𝐚𝐛𝐥𝐞 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭: Evaluate the feasibility of your investment goals. Assess whether the startup has the potential to meet these goals and if the market conditions are favorable. 𝟒. 𝐑𝐞𝐥𝐞𝐯𝐚𝐧𝐭 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭: Consider whether the startup is relevant to your overall investment portfolio and financial objectives. Does it align with your investment strategy and risk tolerance? 𝟓. 𝐓𝐢𝐦𝐞-𝐛𝐨𝐮𝐧𝐝 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐇𝐨𝐫𝐢𝐳𝐨𝐧: Set a specific time frame for your investments. Determine when you expect to see results or when you plan to exit the investment. By integrating S.M.A.R.T principles into your startup investment strategy, you can make informed investment decisions that align with your objectives, track progress effectively, and increase your chances of success in the dynamic world of startup investing. #Investment101 #SmartInvesting #StartupFunding #ParamountVentureCapital #PVC

Why should you know this? Investors: Both individual and institutional investors need to know the distinctions to make informed investment decisions. Knowing whether you're better suited for the stability of PE or the potential high-growth, high-risk of VC can help optimize your portfolio. Entrepreneurs: Startup founders should understand the nuances to determine which funding route aligns with their business stage and objectives. This knowledge can help them approach the right investors and tailor their pitches accordingly. Understanding the distinctions between Private Equity (PE) and Venture Capital (VC) is vital for investors and entrepreneurs alike. Here's a simple breakdown: 1. Stage of Investment: - PE: Invests in mature, established companies. - VC: Focuses on startups and early-stage companies. 2. Company Size: - PE: Deals with larger companies, often in need of restructuring or growth strategies. - VC: Funds smaller, high-growth potential startups. 3. Ownership and Control: - PE: Typically acquires a significant ownership stake and often seeks control. - VC: Takes minority stakes, supporting founders in decision-making. 4. Investment Horizon: - PE: Expects returns over several years (3-7+). - VC: Aims for higher-risk, higher-reward opportunities with longer-term potential. 5. Exit Strategy: - PE: Often exits through sale or IPO (Initial Public Offering). - VC: Aims for startups to grow and potentially exit through acquisition or IPO. 6. Risk and Return: - PE: Generally lower risk, with moderate to high returns. - VC: Higher risk due to early-stage investments, with potential for substantial returns 7. Funding Amount: - PE: Involves large investments, often in the millions or billions. - VC: Typically invests smaller sums in startups, ranging from thousands to millions. In summary, while both PE and VC aim to generate returns, their strategies, target companies, and investment approaches differ significantly. PE is about optimizing established businesses, while VC seeks to nurture and scale innovative startups. — resource : study material

"Over half of US startups expect their next funding to come from VC, while only 6% believe in organic growth. Yet, less than 1% of startups actually receive VC money, while ~80% bootstrap their foundation." The 2010s were a decade of free money. Following the subprime crisis in the US and the sovereign debt crisis in EU, it kicked off with #QuantitativeEasing and continued with years of near-zero interest rates. As a result, VC money flowed to all kind of startups, some of which were ill-suited for #hypergrowth, and #FOMO (Fear Of Missing Out) kept the bubble going for some time. Now that the 2022-2023 contraction brought everyone back to earth, it's high time for startup founders to get back to the fundamentals of #entrepreneurship: a #community to serve meaningfully, a #valueproposition that delivers benefits, a #bootstrapped #CustomerAcquisition and operation, #metrics to demonstrate #ProductMarketFit. Then #funding will come, but funding of a type that is in-sync with the type of growth the startup can deliver.

Aligning the right investors for a startup is crucial for several reasons: 1. Shared Vision: The right investors understand and share the startup's vision, mission, and long-term goals. This alignment ensures that the company and its investors are on the same page, minimizing conflicts and maximizing support. 2. Strategic Guidance: The right investors bring valuable industry expertise, connections, and knowledge. They can offer strategic guidance and mentorship, helping the startup navigate challenges and make informed decisions. 3. Access to Resources: Well-aligned investors can provide access to essential resources, such as capital, talent, and business networks. This support can accelerate the startup's growth and expansion. 4. Long-Term Commitment: When investors are aligned with the startup's vision, they are more likely to be committed for the long haul. This stability and continuity in funding enable the company to focus on sustainable growth. 5. Reputation and Credibility: Having reputable and well-respected investors on board can enhance the startup's credibility in the market. It may attract other potential investors, customers, and partners. 6. Cultural Fit: The right investors will understand and respect the startup's culture and values. This compatibility fosters a positive working relationship and ensures that the company maintains its identity and core principles. 7. Support during Challenges: Startups often face unforeseen challenges. The right investors stand by the company during tough times, offering support and assistance in overcoming obstacles. Overall, aligning the right investors is not just about obtaining funding but about finding partners who can contribute significantly to the startup's success and growth.

If you're an investor or entrepreneur wanting to do better in 2024 - it's time to master the emerging concept of ergodic investing! Such a needless waste of capital: https://lnkd.in/eMwWh2zh Imagine if it had all delivering impact, regenerative, net positive and ROI outcomes instead. It can in 2024! Want to know more about ergodic investing? Read the book: "The Ergodic Investor and Entrepreneur", take one of our investor programmes at Evolutesix, join our next incubator; and contact me if you've dry powder looking for a new way! Alexandra (Alie) Korijn, Trae Ashlie-Garen (thank you for alerting me to this), Paul B. , J. Randall Nye, John Fullerton, Ron A Porter, PhD, Ole Peters, Scott Brown, Carrie Norton, Daniel Kehrer, Stephen Vasconcellos (We/Ours/Us)

𝗧𝗼 𝗩𝗖 𝗼𝗿 𝗡𝗼𝘁 𝗩𝗖? 𝗧𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗦𝘁𝗮𝗿𝘁𝘂𝗽 𝗤𝘂𝗲𝘀𝘁𝗶𝗼𝗻! - 𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝘀𝗶𝗴𝗻𝘀 𝗶𝗳 𝗮 𝘀𝘁𝗮𝗿𝘁𝘂𝗽 𝗶𝘀 𝗩𝗖-𝗳𝘂𝗻𝗱𝗮𝗯𝗹𝗲 𝗙𝘂𝗻 𝗳𝗮𝗰𝘁𝘀: Nearly 500,000 businesses are started every single month. Only ~6,000 of these startups get angel investments, and less than 500 attract venture capital. It doesn’t mean your idea sucks, but it could mean it doesn’t fit the VC fund model or thesis. Aside of overdilution, some indicators why: ➡ 𝗣𝗮𝗿𝘁-𝘁𝗶𝗺𝗲 𝗳𝗼𝘂𝗻𝗱𝗲𝗿𝘀: That’s fine and can be a great side hustle – just don’t expect VCs to get overly excited: if you are not fully committed, why should others be? ➡ 𝗨𝗻𝗶𝘁 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰𝘀: Alibaba drop-shipping with a stable 15% margin is probably no category leader scenario. The motto is scale hard or fail hard. ➡ 𝗙𝗼𝘂𝗻𝗱𝗲𝗿-𝗺𝗮𝗿𝗸𝗲𝘁-𝗳𝗶𝘁, 𝗻𝗼 𝗲𝘅𝗽𝗲𝗿𝗶𝗲𝗻𝗰𝗲 𝗼𝗿 𝘁𝗲𝗮𝗺: VCs like to improve their odds of success and invest in teams/people. But: (tr)action can speak louder than bio-words. ➡ 𝗦𝗰𝗮𝗹𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗮𝗻𝗱 𝗺𝗮𝗿𝗸𝗲𝘁 𝘀𝗶𝘇𝗲: Fund economics, power law: VCs have to look for outliers, i.e. a sizable opportunity that can scale and exit in fund runtime (“cute niche” or “30-year horizon” no bueno) ➡ 𝗨𝗻𝗱𝗲𝗿𝗱𝗶𝗹𝘂𝘁𝗶𝗼𝗻: Single founder, control freak. After Series A in a VC case, founders own ~50%. Sharing is caring - if you don't like to part with equity, other avenues might be better suited. ➡ 𝗡𝗼 𝘃𝗮𝗹𝗶𝗱𝗮𝘁𝗶𝗼𝗻: Even at pre-seed, some degree of traction/validation is expected. This is where hustle meets creativity meets solution-driven. VC darlings are massively scalable, capital efficient, w/ rapid iteration cycles, recurring revenues, low marginal costs. 𝗜𝗻 𝘀𝗵𝗼𝗿𝘁: 𝘀𝗼𝗳𝘁𝘄𝗮𝗿𝗲 𝘀𝘁𝗮𝗿𝘁𝘂𝗽𝘀. That’s why deep tech, service, and hardware companies usually have a harder time and need special investors. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗱𝘆𝗻𝗮𝗺𝗶𝗰𝘀: Over half of US startups expect their next funding to come from VC, while only 6% believe in organic growth. Yet, less than 1% of startups actually receive VC money, while ~80% bootstrap their foundation. 𝗩𝗶𝘀𝗶𝗼𝗻 𝗮𝗻𝗱 𝗿𝗲𝗮𝗹𝗶𝘁𝘆. Most founders start their journey because they want to be their own boss. The more you raise, the less control. If you want full autonomy and no reporting, VC might not be your jam. And that’s cool, there is no shame in bootstrapping, it is having a fabolous comeback since 2022. 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀: 𝗪𝗵𝗮𝘁 𝗺𝗮𝗸𝗲𝘀 𝗮 𝘀𝘁𝗮𝗿𝘁𝘂𝗽 𝘂𝗻𝗶𝗻𝘃𝗲𝘀𝘁𝗮𝗯𝗹𝗲 𝗳𝗼𝗿 𝘆𝗼𝘂? 𝗙𝗼𝘂𝗻𝗱𝗲𝗿𝘀: 𝗔𝗿𝗲 𝘆𝗼𝘂 𝘀𝘁𝗶𝗹𝗹 𝘀𝘁𝗿𝗮𝗽𝗽𝗶𝗻𝗴 𝗼𝗿 𝗮𝗹𝗿𝗲𝗮𝗱𝘆 𝗿𝗮𝗶𝘀𝗶𝗻𝗴? #venturecapital #founderjourney #startup #fundraising

How I think about startup stages: (And why we invest in Series A companies) 🚂HYPE TRAINS: Regardless of the stage, we try to avoid these actively. This typically represents startups that fundraise at insane valuations, sometimes even pre-product. At the height of euphoria and speculation amongst narratives... (e.g. Dot-com, Crypto) These sometimes play out, but investors take massive risks to participate. 🌱SEED STAGE: Most are likely pre-revenue. You get really attractive value if the business pans out. On the flip side, there aren’t as much historical data to do deep due diligence. It’s a bet on the founders and market, Versus the fundamentals of the business. The strategy of portfolio management at this stage also differs: Many smaller bets, versus fewer high-conviction ones. Necessary to manage risk. 🚀SERIES A: I find this stage ideal to invest in and our fund focuses on this stage: → Typically would have found product-market fit → A history of metrics to dig into and determine growth potential → Revenue/unit economics [and customer interviews] as basis for Due D → Core team hired and field-tested → Team more familiar with fundraising Overall I find this stage to offer attractive returns adjusted for risk. You get some background info to inform the decision → Lower Risk Because the startup is still young at this stage → Attractively valued 🚡SERIES B,C,D… and beyond: At these stages, the business is typically more mature. They’ve found ways and channels to scale. They’ve removed more risk factors in the business. → With more certainty comes higher valuations. Investors can still find decent deals here, but it gets much more expensive. Depending on the size of the fund and the returns promised, it might not always make sense. - Every investor and fund will operate slightly differently. You’ll need to choose according to your: → Risk appetite → Investment horizon → Target growth What’s your favorite stage?