Jason Scharf’s Post

Some thoughts, largely inspired by April Dunford, on dealing with positioning in the middle of a black swan event 👇 The recent #NAR settlement has plunged the real estate industry into uncertainty. With changes that could reshape the entire landscape, this moment underscores why strategic positioning is more critical than ever. The exact implications are still unfolding, based mainly on assumptions and predictions. This uncertainty highlights the need for a solid footing—something positioning offers. But given the potential industry upheaval, positioning ensures Local Logic isn't just drifting. It's our way of defining who we are and the unique value we provide, especially now. For tech startups, the only constant is change. That means we must remain agile and use positioning as a dynamic tool that evolves with the industry. It’s about staying relevant and impactful, no matter how the landscape shifts. In times like these, positioning isn’t just strategic—it’s essential. It ensures that Local Logic isn’t just reacting to changes but actively navigating through them with confidence and clarity. #Marketing #Positioning #PropTech

"Venture Capital Pulse Check: Seattle's VC deals saw a shift in the 4th quarter of 2023, a reflection of the broader national slowdown. But don’t let the numbers fool you – key sectors like AI, life sciences, and cleantech continue to magnetize significant investments. Discover why Seattle's innovative landscape is ripe for opportunity, despite market adjustments. #SeattleTech #VentureCapital #InnovationTrends #InvestmentInsights"

Being based in Silicon Valley, we have a number of investors who invest in early stage tech companies. I’m often asked to compare real estate and venture capital investment philosophies. The primary difference is we expect all of our investments to be successful (1.7x+ equity multiple), we don’t bank on one home run to carry nine investments that go to zero.   Our imbedded family office invests in early stage tech companies and I find the philosophies to be more similar than different. Below are some of the key similarities:   1. Execution: We ask ourselves, “do we like the team and do we believe they can execute?” To answer this, we look at a historical track record of execution. We also want a level of confidence the sponsor has identified the key risks associated with their business plan. 2. Alignment of interest – we always look for deals where the sponsor has skin in the game. For example, at Westlake we invest 10-30% of the equity for all of our self-storage deals and raise the rest from family and friends. We see deals where the co-invest is 2% and the fees are 2% so basically the sponsor doesn’t have any skin in the game. For us, this would be a major red flag. We also look to make sure the carry structure and fees align the sponsor and investor incentives. 3. Business Plan – as an investor, do I like what the company does and how the management team plans to grow it. In the case of real estate, it would the property and the investment thesis.   Certainly there are nuances but the basic fundamentals of investing are the same when picking good real estate investments and early stage tech companies. As always, feel free to reach out with any follow up questions.  

I think of our role at Fifth Wall as a diplomat between the real estate industry and the innovation economy. No one knows their problems that need solving better than people who work in the real estate industry. There's a litany of them: financing assets, developing assets, managing assets...we could fill up a novel with every opportunity to improve the real estate industry's pain points with technology. But real estate professionals have less experience identifying the right solution to solve those problems, which creates a tension: we want to listen to their problems, but we don't treat them as the only source of a solution. As "diplomats" we introduce real estate owners and operators (our strategic investors) to tech solutions in the startup space that they probably wouldn't have been introduced to otherwise. This tension isn't always easy. Sometimes we get it wrong. But we've gotten a lot better at managing this tension at Fifth Wall, and it's one of the reasons I believe in sector-specific venture capital firms with deep domain knowledge. #proptech #venturecapital

The CONTINUUM of Innovation Capital at the YTexas Summit. Texas is Building the Epicenter for innovation capital for the next century. Mobilizing $billions from private and public investors. GLENN HART, BoomATX Interviewed the leaders establishing the Continuum of Capital in Texas:  Daniel Hoverman, Texas Capital - First State ETF William T. Nolan, Federal Infrastructure Bank - mobilizing $billions in capital to build 21st-century infrastructure. Joe Milam, AngelSpan, Inc. - State-of-the-Art Venture - The Texas Legacy Fund Morgan Flager, Silverton Partners - Texas Professional Venture at work Matthew G. Reibling, Techsyn Ventures  - Innovation Capital for the physical world Robert Fabbio, Norris Capital Partners - Focused on systematic trading of digital assets Ted Miller, 4M Investments, LLC - New Asset Class, new REIT/MLP business model Night Keyes, Anand Hemnani, Autonomy Institute - Intelligent Infrastructure Economic Zones Mark LaPenna, Xenesis - Leveraging Continuum of Capital More to come: Reed Clay, Crestline Group - Bridging Government with Innovation John Cowan, Next Wave Partners - Venture Portfolio on Intelligent Infrastructure Fred Phillips, TANDO Institute - Designing and guiding complex collaborations for Economic Growth. Paul Leggett, Mithril Capital Management LLC - DOD Trusted Capital for Dual-Use Innovation The CONTINUUM of Innovation Capital is aligning innovation capital with infrastructure capital, leveraging non-dilutive funds, economic development zones, and new policy/tax code on capital gains. Pulling family offices, venture, private equity, infrastructure investors, foundations, pension funds, and a private infrastructure bank into a Continuum of Capital to support Dual-Use Innovation and economic zones. Innovative entrepreneurs looking to raise capital will be coming to Texas - the Industry 4.0 State. The future is going back to building real physical infrastructure and value within all communities. This will make Texas, the friendly and collaborative State, the Epicenter for Industry 4.0 Solutions. As the United States moves to reestablish manufacturing leadership our productivity is dependent on our ability to deploy capital to underwrite Intelligent Infrastructure and the portfolio companies building on top of it. State of the Future #ContinuumofCapital #innovation #infrastructure #nationalsecurity #partnerships #growth #jobs #familyoffices #venture #privateequity #pensionfunds #infrastructurebank #investment #leadership #productivity #economy  #infrastructure #investment #leadership #northstar #autonomy 

TechInAsia just launched their GlassWall portal: Where founders leave anonymous reviews for us VCs in the space. Some thoughts on what founders want after reading dozens of reviews vs realities: 1. They want more than money Network access, investors on speed dial, operational support. In early stages, this might not be possible. Most funds investing in those stages prioritise portfolio diversification and deal velocity. Given the size of portfolio, individualised support for each team can be challenging. Get aligned on expectations and balance your dream investors roster accordingly. 2.They want quicker deal-making One perspective is some VCs are intentionally dragging out the process. Reality is VCs have to answer to LPs. Especially in big rounds, expect the ‘dating period’ to stretch out for investors to build conviction. That said, I don’t condone sudden ultimatums or pressure-tactics to bring down valuations. VCs should take the time to build conviction, not string founders along. 3.They want to be respected There is no room for VCs to be disrespectful to founders. Granted, founders need the capital and VCs have it, VCs are standing on the shoulders of founders and their hard work to succeed. It costs nothing to be kind. Politely decline deals, avoid talking down to founders. Founders/ people remember how you make them feel. 4.They want the awesome terms Some VCs put out predatory terms. Some founders ask for rich valuations that they have yet to grow into. This is a conversation that needs both sides to negotiate and discuss. Great terms are relative and also dependent on market environment. The best terms are the ones that both founder/ VC can agree on and set the company up for success. Given the horror stories I have heard, I welcome this initiative. It gives power back to Founders and keeps VCs honest. That said, we should remember that there're two sides to the fundraising conversation. There is currently no way to “verify” reviews. Founders should wield this power constructively. Thanks Tech in Asia for introducing this to keep VCs honest P.S. Now when can we have an LP Glasswall 😉?

Looking forward to this event in Washington alongside Celeste Ford, Michael Mealling, Donald Moore and Judith Pryor - moderated by Jose Del Rosario 🛰 We'll be discussing: What is the financial outlook for 2024? What is the appetite for risk? What are investors looking for in funding space ventures?

Nine months into my tenure at M13 🚀, I think I can officially say my proudest accomplishment to date is getting Latif Peracha to mention Taylor Swift's Eras Tour TWICE in our latest investor letter. We know all too well the challenges many founders are facing today (in fact, we predicted this correction back in 2019), and companies are being forced to strike a delicate balance. But if you think these macro conditions will last forever, you need to calm down. We're excited about the blank space for innovation that this environment is creating, and the advancements taking place in #AI and #blockchain right now are beyond our wildest dreams. It's an enchanted time to be making #venturecapital investments, and despite market fluctuations, our core venture philosophies never go out of style. (In seriousness, this is a great read—about M13, but also just about the future of tech and its impact write large. Substantive, big ideas stuff. Check it out if you have a minute.)

Sitting here in September 2023, we believe this is a tremendous time to be making venture capital investments. In our mid-year letter to investors, M13 Partner Latif Peracha reviews the major macro forces that have shaped the current moment, our firm’s venture philosophy, and what we’re most excited about investing in. With capital tightening, company mortality will continue to rise, freeing up talent and dollars for new opportunities. We know that challenging macro conditions are not just unavoidable, but healthy: headwinds can provoke necessary resets and ultimately create a stronger ecosystem. Exceptional founders are not worried about rates (they will go down) and multiples (they will expand). And 2023, 2024, and 2025 will be tremendous years to make seed and Series A investments given the technological breakthroughs we are living through. Read more about the tectonic shifts we’re paying attention to in the tech market—and how our investing philosophy fits in: https://lnkd.in/gDQxst2A

Nothing new in there, but helpful to see in a straightforward snapshot: recent VC trends overall evidencing a tightening in funding availability - and the tempering of the prior cycle’s exuberance: 1) Less competition among investors = lower valuations and tighter terms 2) Sharp drop in fundraising and difficulty for GPs in realizing exits = lower liquidity 3) Lower valuations + lower liquidity = down rounds (for those who survive) and higher start-up failure rates due to lack of access to capital Particularly tricky for capital-intensive ventures, such as many in climate tech (notably, those focused on hardware development, manufacturing and commercialization) - many of which have high likelihood of impact at scale, and the potential to catalyze sustained employment and more equitable growth.