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The VC Bible & Mindset - Entrepreneurs must read

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VC Bible: Andrew Romans THE ENTREPRENEURIAL BIBLE TO VENTURE CAPITAL: Inside Secrets from the Leaders in the Startup GameAndrew Romans THE ENTREPRENEURIAL BIBLE TO VENTURE CAPITAL: Inside Secrets from the Leaders in the Startup Game

1. Find a Top-Tier VC to Lead and Join the Board

  • Add Angel Dignitaries to Series A VC Round:
    • Instead of raising USD 5M for Series A, consider raising USD 4.5M plus adding 20 smart money investors (CEOs/Co-Founders across the USA, Europe, Israel) with USD 25k each. Announce these 20 when publicizing the round.
    • Instead of R$100k in one startup like Bossa, diversify: invest R$20k in 5 startups.
    • Ideal Angel Investment: $500k.

2. Getting Started

  • Quote: “You create your own universe as you go along" - Winston Churchill
  • If you only want to make money, entrepreneurship and early-stage investments might not be for you.
  • Stats from Silicon Valley:
    • 10% of angel-backed deals ever raise VC funding.
    • Of those that get VC funding:
      • 60% fail.
      • 30% return cash on time.
      • 10% make all the profit for the VC funds.
    • Consider taking this risk as young as possible. Now could be the time to decide whether to go with VC or bootstrap, like Vila dos Tangarás.
    • Read as much as possible.

3. Early Hacking

  • Hire students willing to work for free to gain experience.
  • The term angels originated from early Hollywood film investors.
  • 3:30:300 Rule - Seed/Series A/Series B:
    • 10% at CAD 220k pre-valuation of 2.25M: Angels/Antler (5x).
    • 11% at CAD 1M pre-valuation of 8M, post-valuation of 9M: Seed (10x).
    • 10% at CAD 10M pre-valuation of 100M, Series A (10x).
    • 8% at CAD 100M pre-valuation of 1.1B, Series B (10x).
  • Quote: “Innovation distinguishes between a leader and a follower.”
  • Examples: Groupon and eBay were among the fastest-growing companies in history.
  • For first-time entrepreneurs, focus on angel investors rather than VCs.

4. Idea and a NEED

  • The most successful founders had an idea and a need to change something that was directly connected to their own lives and experiences.
  • A co-founder should be someone who you already have built something with. Often, one comes up with the idea, and the other asks, "May I build this with you?"
  • Many lame ideas become successful — like Airbnb. It’s about how you solve a problem and grow with persistence.
  • 40% of Silicon Valley Angels fail, which is still the best ratio.
  • Silicon Valley Angels invest in people, like Ben Silberman (Pinterest).

5. Accelerator Programs

  1. Y-Combinator
  2. TechStars: Only 1% are selected out of 1,700 applications.
    • Offers $18k in exchange for 6% equity.
    • Apply to multiple accelerators simultaneously.
    • Resources like F6s help accelerate.
    • Link: f6s.com, and other resources like morrow.co.

6. Online Funding Resources

  • angel.co (Now Wellfound: also useful for hiring talent and developers).
  • gust.com (A platform for starting, growing, and funding ventures).

7. Cases and Triggers

  • Airbnb exploded during the 2008 financial crisis when people in New York needed to rent out their houses for extra money.
  • DropBox founded by Drew Houston.

8. Deliver Returns to LPs

  • Investors are primarily interested in returns on their Limited Partnerships (LPs).