Matt Turner’s Post

Reposting this one from one of my shifu and our Board of Advisor at Equatora Capita - Supernova Ecosystem. I get it some people thinks I hate VCs, I am not. Aside good points mentioned in the article from VCs side, there should be the knowledge from the entrepreneur side to do their homework, learn about the behavior of VC instrument, and the possible consequences.

I've been noodling Greg Isenberg's thread on Twitter about a "zombie startup." It started like this: "There’s a bunch of people who should shut down their startups (or sell them) but don’t....A friend of mine is working on a startup. It’s been 12 years. The business does $2.3M ARR. He has raised $3.5m in VC funding." I come across the scenario A LOT. Some reflections: 1. This founder is doing $2.3M in ARR. To be clear, this is a phenomenal feat. Only 4% of startups reach $1 million in revenue! 2. His revenue is "annually recurring revenue" (ARR). The holy grail of revenue, this means he has predictable cashflow (which he does not need to re-sell) that he can rely on. This founder could be sitting on a beach drinking a mai-tai and his company would still be earning revenue. 3. But he's not. Nor is he relishing his success. Instead: "He started the business with a full head of hair. The guy doesn't have 1 hair left on his head. And I know he's pretty stressed running this "zombie company"." 4. Why? "The business is growing enough to make him feel like he's on the right track and not enough for him to raise follow-on financing." The VC-tail is wagging the startup dog. 5. Why? He. Took. Venture. Capital. 6. Why is that the issue? VC's don't back good companies. They back companies that can deliver HYPER GROWTH and do it QUICKLY. So, despite having created a successful, sustainable small business with a nice little revenue engine, this company is considered a zombie, or "walking dead," in VC-land. 7. What comes next? Hopefully this founder figures out how to give an exit to his investors so this business can continue on, rather this company closing up shop. Sadly, the later is what happens to a lot of VC-backed zombie companies. Greg's thread nicely laid out THE a critical point: "Not everyone needs to be Mark Zuckerberg or Elon Musk. You can still create value in this world by creating businesses that are profitable, provide dividends to your team and yourself. Cheaper and more profitable ever to do it right now. You don't necessarily need VC." Yep. Bingo. In fact, I'd say, you SHOULD (not "can still") "create value in this world by creating businesses that are profitable, provide dividends to your team and yourself." We've done a serious disservice to entrepreneurs and communities by making venture capital the centerpiece of it all. VC isn't bad. In fact, it's a fabulous tool when used properly. But, it should be the exception, not the rule, for how we fund entrepreneurship across the US. https://lnkd.in/eRbCuRai

Research shows that 61% of bootstrapped businesses are profitable in the long run in the startup industry. Fundraising from VC's is a great way to scale a business. But today every startup founder is just focusing on blowing up Twitter with their latest fundraising round. And there are a dozen "founders" building a business with cash flow and profits. They don't need to report their growth. They're too busy building a business. They are focusing on building a Minimum Viable Product (MVP) and validating their idea with real customers before seeking big investments. The truth is, a bootstrap company can be just as successful as a VC-funded one. In fact, according to a study, 52% of bootstrapped businesses survive for at least 5 years, compared to only 30% of VC-funded startups! My advice for you as a founder is- 1. Focus on profitability. 2. Focus on positive cash flow. 3. Build a great product and team. So next time, don’t get attracted to VC funding, remember that there is another way to build a great business. Are you a bootstrapping founder?

Here’s how Sequoia teaches founders to find product-market fit! The venture firm is making instructional materials from its selective startup accelerator available to the public for the first time. Sequoia Capital is one of the best-performing venture firms in Silicon Valley, thanks to bets on companies including Apple, Cisco, Google, Instagram, and Stripe. When Sequoia started Arc, an accelerator program for pre-seed and seed-stage startups, in 2022, it distilled its knowledge about company-building into curricular materials for founders. Now, for the first time, the firm is making those lessons publicly available, starting with a framework for product-market fit. For founders, achieving product-market fit is the key to unlocking growth. The concept is a reminder that great products don’t exist in a vacuum; they need a bevy of eager customers. #venturecapital https://lnkd.in/dbRw3XwC

“Sequoia Capital Teaches Founders to find Product-Market Fit~The venture firm is making instructional materials from its selective startup accelerator (Arc), available to the public for the first time.” “When Sequoia started Arc, an accelerator program for pre-seed & seed-stage startups, in 2022, it distilled its knowledge about company-building into curricular materials for founders. For founders, achieving product-market fit is the key to unlocking growth.” “Founders today need to do more with less, & get to product-market fit as efficiently as possible. Sequoia’s framework defines three product-market fit archetypes & outlines different ways of thinking about each one~(1) hair on fire problem, (2) hard fact, (3) future vision.” “Product-market fit isn’t a new idea: Sequoia Founder Don Valentine taught the concept, and venture investor Marc Andreessen popularized the phrase in a 2007 blog post~(The only thing that matters is getting to product/ market fit.)” ~Hamptons at Boca Raton, Florida

I made a snarky tweet over the weekend about how it's easier to be a founder of a venture capital fund than to be a founder of a startup, having done both myself. When you're starting a VC fund, there is one big element of stress that you don't have to worry about: product-market fit. VC is a pretty established concept at this point. It turns out that there is generally excellent demand by founders to take a VC's money. Contrast that with being a founder of a startup: in my experience, it's taken 3-5 years of grueling experimentation to find product-market fit. PMF is arguably THE existential threat to early startups, and many of these companies simply never find it--even with ample funding. All that said, being a founder of either is harder than any regular job I've ever held. And it's so much harder if you're striving to be at the very top of your game. I can't imagine doing anything else for work personally.

z21 Ventures prioritizes empowering early-stage founders with tailored ecosystem support and mentorship, driving impactful growth. Their founder-first approach and extensive network of industry experts are instrumental in amplifying portfolio success. I confidently refer early-stage founders in my network to z21 Ventures as they possess unparalleled insight into early-stage businesses. #z21ventures #venturecapital #startupgrowth #earlystageinvesting #communitydriven

The journey of startup fundraising is a process of risk removal. At each Series, certain risks are expected by investors, certain risks diminish, and the company gets more valuable as they do. With enough foresight, founders can leverage the timing of their raises and control the answer to the age-old startup question, “What are we worth?” Here’s serial founder and venture capitalist Eric Feng's for founders on strategically timing every raise 👇 https://lnkd.in/eV4yWbjF

In 2010, Chris Sacca invested 300,000 USD into #uber. He made an exit of 1,000,000,000 USD exit in 2015. The bulk of Chris Sacca's fortune comes from investing in #startups. He became a full-time #angelinvestor in 2006 after leaving #google - starting with seed rounds of #photobucket and #twitter. He has also invested in #instagram, #twilio, #stripe, and #kickstarter which contributed to his billionaire status as well. Explore Angel Investing Opportunities in Southeast Asia: https://lnkd.in/gwWe-Tt2 #angelinvesting #investing #venturecapital #vc #founders #entrepreneurship

ANNOUNCING the founding of Aviso Ventures with my partner from two decades Nick Galbreath. TLDR: we’re investing in the next generation of enterprise saas leaders with the goal of giving them an unfair, competitive edge with our first hand experience building companies to help them through ALL THE THINGS. Longer Version I’ve had a lot of people ask me ‘what has been the best part of selling our company?’ and this is it: You get to work with only those people who you WANT to work with for the rest of your life. Seriously, it’s awesome. So who do I want to work with? Founders I love helping them through all the crazy ups and downs they go through getting their business off the ground. While we at Signal Sciences went from 0-100m business in 10 years, you’d think it was all fun and games. But, trust me, it was the hardest thing I’ve done in my life! Leaning on our experience to support amazing founders is what Aviso Ventures is all about. SIGN ME UP. Thanks to Nick who has been laying the groundwork for Aviso, we’re off to the races. He wrote up a great post that has more detail on our strategy and approach from a fund perspective you can read here ( https://lnkd.in/gJp3D4RE? ) but this is my favorite part: “We wanted to be founder-friendly but that word gets tossed around a lot, so we wanted to make that tangible. We aren’t chasing unicorn status, ownership stakes, or board seats. We invest early, and just like the founders, we dilute with them and thus sensitive to issues on additional fundraising. We don’t do follow-on investments so there is no “signaling risk” with us. We know a lot of highly lucrative exits occur before unicorn status, which are all but ignored by the venture industry. Thus the fund is designed to be deeply aligned with the founders.” Huge shout out and thanks to our growing list of operator LPs who share our excitement about Aviso and this startup community. LET’S GO. A LOT more news and info to come including getting to announce the first teams we’ve invested in. But, please reach out with any questions and definitely follow along at our aviso ventures page for the latest. PS if you’re headed to Black Hat next week, don’t be a stranger, we’d love to connect live hopefully at a poolside cabana :)