High-Impact Entrepreneurship

Join the global conversation

Entrepreneurs

Fifth Annual Endeavor Colombia Conference Brings Together Top Latin American Network Members in Bogotá

The 5th annual Endeavor Colombia Conference took place in Bogotá this month with the theme “A Day to Think Big”, aiming to inspire entrepreneurs and audiences with the high-impact stories of Endeavor’s network and provide a top forum for networking. The […]

October 21st, 2014 — by admin

Read more

In the news

Endeavor Entrepreneur and Global Board Member Wences Casares’ LemonWallet Aquired by LifeLock

Endeavor Entrepreneur and Global Board Member Wences Casares‘ most recent venture, LemonWallet, recently announced its $50 million acquisition by LifeLock, a U.S.-based identity theft protection company. As one of the first entrepreneurs selected by Endeavor, Wences […]

December 18th, 2013 — by admin

Read more
Get RSS Feed

Start-up dilemma: to sell or not to sell

Reprinted from informationarbitrage.com. See original post here.

By Roger Ehrenberg

There is almost nothing more exciting – or debilitating – than the acquisition offer received by an early-stage company. It is generally the single most polarizing event in a start-up’s young life, often pitting acquirer vs. investors, founders vs. investors and founders vs. founders. It is an event that must be handled with great care or else the process can leave lasting scars on an organization, its founder dynamics and its morale.

The investor perspective is heavily informed by the types of investors in the syndicate. If, for example, a company has only taken angel financing, the economics of an early exit can often be compelling for both founders and investors. For a company that has taken in $1.5 million at a $5 million post-money valuation (angels hold 30% of the company via the seed round) and receives a $20 million offer, the angels get a quick 4x return while the founders collect $14 million pre-tax dollars. Not too shabby. While more professional angels might balk at such a quick sale, others will likely chalk up the win and recycle the gains into new investments. The founders, meanwhile, just pocketed a nice chunk of cash. For the first-time entrepreneur, this is surely a life-changing event and one which lays the foundation for a career of less stressful risk-taking now that the house is paid for and the college fund is overflowing. Even if the founders started the company with the goal of building a massive enterprise, a real offer with real cash and real wealth creation is enough to flip more than a few founders from idealist to pragmatist. And the founders have to be honest about this and the investors need to be ok.
(more…)

Diego Piacentini (SVP, Int’l Retail, Amazon) on designing an e-commerce strategy [Transcript]

Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.

Overview: In part 1 Diego Piacentini discusses the strategies and future of e-commerce and how it can change your business. In part 2 Mr. Piacentini discusses the challenges if e-commerce, and how to best use it to your advantage.

Bio: Diego Piacentini has served as Senior Vice President International at Amazon since joining the company in February 2000, and is a member of the Amazon executive team. He is responsible for all International retail operations: Amazon.co.uk, Amazon.de, Amazon.fr, Amazon.co.jp, Amazon.cn and Amazon.it. Prior to joining Amazon.com, Diego was Vice President and General Manager of Apple Computer Europe. He joined Apple Computer in 1987 and was promoted to the post of general manager for Apple Europe in 1997. Before joining Apple Computer, he held a financial management position at Fiatimpresit in Italy. Diego serves on the advisory boards of the Foster School of Business at theUniversity of Washington and of Endeavor, a global non-profit organization helping entrepreneurs in developing countries. Diego is also on the board of the Maasai Association (www.maasai-association.org) supporting their education and health initiatives in Kenya. Diego holds a degree in economics from Bocconi University of Milan. An Italian national, he has traveled and worked across Europe, Asia, Africa and the Americas.

Full Transcript:

Part 1:

If you have a product, you love the product, you will sell it online. One of the first recommendations is always consider having multiple channels. Make your website as good as you can, but also put your product in existing marketplaces if they do exist. There are many marketplaces in the world that are global. One is Amazon.

One of the great things about Amazon is that we are investing a lot in technology that allows sellers from one country to list on Amazon and display the product in all the 8 countries on Amazon.

What does that mean? If you want, we can manage logistics. We can have your company focus at what they’re good at, which is designing, selling, manufacturing your products, and then Amazon can focus on what it is good at, which is how to bring in commerce, customer relations, shipping products, and receiving products. (more…)

After all, what is an angel investor?

Reprinted from Endeavor Brazil’s Endeavor Mag. See original post here.

By Cássio Spina

Translated by Jack Connor

The term Angel Investor, or Business Angel, was coined in the U.S. in the early twentieth century to describe investors who bankrolled the production costs of Broadway plays, taking risks and providing implementation assistance in order to take part in the financial rewards. The concept evolved into investments made by individuals, usually professionals or successful entrepreneurs in start-ups, providing not only financial capital but also intellectual support for an entrepreneur through their experience and knowledge. This is how it ended up being known as Smart Money.

For their investment, the Angel-Investor receives a minority equity share and has no executive position in the company, rather acting as an advisor guiding entrepreneurs and participating in strategic decisions, greatly increasing their chances of success as well as accelerating development.

The angel investment in a company is usually done by a group 2-5 investors, both for dilution risk as well as to share the commitment. It is worth noting that the current trend for performing the most efficient angel investment is by designating an investor-leader (Lead Investor or, sometimes just as a Deal Leader) that makes the pre-project evaluation and negotiates with the entrepreneur, which is then presented to other angel investors (in this case called followers). With this investment method the process is faster and more effective, as accomplishing the whole process as a group can be exorbitantly slow, since it can be a challenge to reconcile investors’ schedules for even a simple meeting, not to mention that consensus can take months to reach.

Of course, the lead investor must receive additional compensation for his added dedication, not necessarily in money, but by having a different percentage share of the business, as they must make more time available to accomplish this whole investment process. Nothing prevents a single angel investor from acting as a business leader for one company and a follower for another, it actually allows them to increase productivity and opportunities. On the other hand, if the main activity of the angel investor is with another company, and they have little willingness to engage in the entire investment process, it is recommended that they become a follower.

Salim Ismail on Singularity University [Transcript]

Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.

Overview: Salim Ismail, successful angel investor and entrepreneur, former vice president of Yahoo! and current executive director of Singularity University discusses what Singularity University is and does and how technology will radically change the future.

Bio: Salim is a successful angel investor and entrepreneur – his last company, Angstro, was acquired by Google in August 2010. He has operated seven early-stage companies and is a frequent speaker on internet technologies, private equity and entrepreneurship. For the last two years, Salim has been the Executive Director of Singularity University, which is training a new cadre of leaders to manage exponentially growing technologies. Prior to that, Salim was a Vice President at Yahoo! and the Head of Brickhouse, Yahoo!’s internal ‘ideas factory’ where game-changing ideas were brought in, built and launched. The unit analyzed thousands of ideas and launched four products during that year, the latest being Fire Eagle. He also serves as co-founder and Chairman of Confabb.com, co-founded PubSub Concepts and is also on the board of Breakthrough (www.breakthrough.tv), a global human rights organization focused on violence against women, racial justice, and immigrant rights. He Twitters his thoughts at @salimismail.

From the full remarks:

Salim: Singularity University is a nonprofit organization in Silicon Valley. We are a nonprofit and educational university founded by Google, Nokia, Kauffman Foundation, etc. And we basically pivot around the idea that computing is going up exponentially. You are familiar with Moore’s law, right? It shows that price performance of computing has been doubling every 18 months for 60 years. And this is driving a lot of the innovation and underpinning a lot of the destruction that is happening in the world today.
(more…)

Hiten Shah on expansion & making data-driven decisions [Transcript]

Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.

Overview: Hiten Shah, CEO at KISSmetrics, discusses the state of data analytics today and the challenges ahead, and offers some advice on how to make good data-driven decisions.

Bio: Hiten started on the Internet by founding a Internet marketing consultancy, ACS. He then went on to create Crazy Egg, an analytics tool that visualizes the user experience on a website. Now with KISSmetrics he is building a data driven solution for to help online businesses make better business decisions. Hiten is passionate about helping other entrepreneurs and startup people.

Full Transcript:

Background

Let me begin by giving some background on myself and how I think about metrics. I went to UC Berkeley undergrad and prior to that I only ever had one job which was a summer internship at a medical devices company in Orange County. From early on, I realized that I wanted to start my own company versus working for someone else.

Actually, it started when I was six years old. My dad said then that you shouldn’t work for anyone. He is a physician; he goes to work, he makes money for every hour that he works, and he says if you are an entrepreneur it’s not like that. You can scale your time better. Yes, it’s harder, but it’s usually a better life, and the funny thing he said is you usually use your brain more.

So when I got out of college, my current co-founder was still in high school and he had one customer paying $3,500 a month for SEO. He was very good at it. He knows everyone in the industry. Even before high school, he was trying to build his own website. So he basically got in touch with all the SEO experts at the time. That was when it wasn’t as crowded and there were a lot of good people, and bad people. He hired a lot of them. He’s very entrepreneurial. I actually stayed in college 5 and a half years and made some money while I was there so I decided to convince him that we should start a company. I didn’t know what I was going to do except that I couldn’t do anything like work for someone else. (more…)

Andre Ferreira on Brazil’s economic prospects [Transcript]

Endeavor is pleased to make public the following transcript from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.

Overview: Andre Ferreira (Ernst & Young, Brazil) describes the economic prospects of Brazil in an intimate Q&A session. Andre Ferreira works in strategic growth markets for Ernst and Young in Brazil.

Transcript:

Andre: Today the objective is to understand what you guys are looking for with Brazil and Latin America. So would you like to know a little about Brazil? The size? The issues?

Question: Issues and culture and how you perceive foreigners.

Andre: Recently we had a great newspaper, a financial newspaper. In the first page we saw that Brazil is issuing visas for foreigners working in Brazil at a higher level than ever before. Nowadays we have few resources in terms of human capital. This has become a challenge nowadays so foreigners are very welcome. In Brazil, one of the challenges is the government. They do not provide enough resources for our population. In the last 8 years, we faced a huge change. More than 40 million people went from the poor to the middle class. And they are looking for health assistance, for education, so those kinds of businesses became very huge businesses. As a result, there are a lot of people we need to prepare to work. This is good for education and in the coming years we will have better prepared people. In the last five years, three or four or five private university companies became listed companies. We have an issue, which is education, but we also have opportunity for the companies that are looking to fill those positions. It is the same in the health field.

This is a picture of Brazil. We have the regulation, but it is not so clear. The rules are references, not to be fully in compliance with. We used to say that we pay taxes as the richest country, but we receive as a poor country. This is why there are a lot of opportunities for private companies that fulfill those needs. Nowadays, Brazil is experiencing a boom due to the transition and change of power. More than that, we have those sporting events in 2014 and 2016 and we need more infrastructure facilities. This is also a challenge because we need some investment from the government. When we look at Brazil 10 years ago and we look at Brazil now, we notice a dramatic change and many opportunities. In the beginning of any company and any business, there are few resources, few management resources, few human resources, but nowadays everyone is looking for ways to invest in Brazil. There are a lot of opportunities. My suggestion depends on your business. You can have different ways to get there. You have to evaluate very well and try to find a reliable company to invest in. (more…)

On being a leader

Reprinted from informationarbitrage.com. See original post here.

By Roger Ehrenberg

I’m a Midwestern guy and I was raised to be polite. And while 18 years in the markets put some dents in the veneer, I will say that being blunt, straight-forward and honest is a quality I appreciate in others. There was a very good post titled On Honesty in Startupland, where this notion of being able to receive tough feedback (hopefully delivered in a respectful way) versus hearing sugarcoated BS is important for growth. I firmly agree. This post was largely written from the perspective of an outsider giving feedback to an insider, e.g., an investor, consumer or another tech entrepreneur offering feedback to a founder. However, equally as important is the dynamic working in the other direction, from the founder out towards investors and others. And this is where I’ve seen some mistakes made that are a direct function of inexperience and/or a latent desire to please rather than to lead.

For instance, there are times when a founder just needs to tell their investors “This is the way I want it done.” It can relate to business strategy, financing dynamics or any other issue that impacts the company and where a clear decision is required. This is not to say that input shouldn’t be solicited and feedback taken: it absolutely should be. But the buck ultimately has to stop with the CEO, and if the CEO cedes effective leadership to the Board it will create both an unhealthy dynamic and an untenable situation as more real-time decisions need to be made. And truth be told, what the CEO thinks is right may not agree with what the Board thinks is right. And this is ok, as long as people are heard and their views are respected. But the CEO needs to lead. Period.

I have found that many first-time entrepreneurs grapple with this issue. They’ve never taken angel or venture money. They have a huge sense of obligation to leverage the syndicate they’ve assembled. They also are somewhat cowed by the amount of experience and force of personality sitting around the table. It requires a high degree of self-confidence and esteem to really lead in the face of people with years more experience than you. However, they invested in you because of your vision and your capacity to drive the business. They want to see you step up and lead. But there are times when they can’t help themselves and become overly controlling (which is in the DNA of many successful people) unless actively managed by the CEO.

They key take-away is as follows: don’t confuse the desire to please with the obligation to listen. A good CEO takes in lots of feedback from smart people, is a keen listener and extracts the best insights from each. But just because feedback was offered doesn’t mean it needs to be taken. Be respectful but be firm. And by all means, be a leader.

Roger Ehrenberg is the founder and Managing Partner of IA Ventures. Roger currently sits on the boards of BankSimple, Kinetic Global Markets, Metamarkets, Recorded Future, and The Trade Desk, and is a Board observer of SavingStar. Formerly, he served on the boards of Alphacet, Buddy Media, Global Bay Mobile Technologies, Magnetic, Selerity and Stocktwits. For his complete bio, click here.

The multiplier effect: an op-ed by Mariano Amartino

Reprinted from Mariano Amartino’s blog, Denken Über.

Original post here; translation appears below, followed by the original version in Spanish.

By Mariano Amartino

Translated by Jack Connor

The people at Endeavor just released this video which is a collection of more than 200 interviews with selected entrepreneurs asking the question “How can a country where everything seems to be going bad have such a thriving Technology community?” And it’s interesting to see that the numbers show this sector is still growing.

Now it’s interesting to see a detail that many people miss, which is the constant back and forth that exists in every healthy ecosystem in existence; for example, mentoring and strategic advice form a part of the individuals and the network which the video mentions.

In the video they name several entrepreneurs who have been successful in their time and who are now more generous than anyone could’ve hoped; some examples from the video include Wences Casares, Marcos Galperin, and Andy Freire (it would be impossible to mention all of them without forgetting someone). But something which particularly caught my attention is how they map out Argentine tech companies created since 1999 until today (within their range of influence, not 100% of them), and how they measure the influence of each one based on three parameters:

– Were mentors for other entrepreneurs
– Invested in other business
– New businesses created by ex-employees

Which is coherent enough to understand the relationships which exist in this market. Looking close up you’ll see that the world is smaller than could’ve been imagined, and that the relationship between influential businesses (based on these three parameters) with other less influential enterprises is gigantic.

Now this leaves me thinking that if in this complicated, competitive, and jealous business environment we have been capable of creating more than 81,000 employees and more than $1.5 billion in revenue…What would we be capable of doing if we amplified the spectrum of influence over small and innovative businesses?. Putting forth an example: looking strictly at the numbers from Patagon’s exit its weight is incomparable relative to that of Digital Ventures, but looking at the video you’ll see that the positive, multiplicative influence on this ecosystem makes its importance come closer thanks to constant investing activity (un example of two people who always surprise me by their generosity: Casares y Voltes, who are always available to give advice or respond to an email.)

Backtracking a little, if in this time period there were no accelerators or incubators (now there are two), and no specialized funds (now there are also two), if big business has a presence in this market (from MSFT to Google), and now there is a technology district and a National Agency of Science and Technology, why can’t we make this effect even bigger?

Where I’m going with this is that in order to sustain the success of these businesses (beyond just financial exit strategy) and ensure that there is an inspirational environment, an analysis is necessary of who are the successful nodes, how these nodes inspire others (because inspiration is invaluable when it’s real) and what makes these nodes successful to society so that we know what we should replicate and what we should not.

I don’t know if the phrase “multiplier effect” is correct or not, but we should, as an industry, see if we can really measure the influence of the people in our market so that we can learn from these parameters to compete better and more often…against others who may have a better infrastructure, but not the same spirit.

==

Original Spanish version

El efecto multiplicador: o como una red de emprendedores crea un ecosistema

La gente de Endeavor acaba de liberar este video que es un resúmen de más de 200 entrevistas a emprendedores de los seleccionados por ellos y preguntando ¿como puede ser que un país donde todo parece estar mal puede tener una comunidad tecnológica tan grande? Y es interesante ver que los números muestran que el sector sigue creciendo casi sin parar.

Ahora es interesante ver un detalle que muchos pasan por alto que es el constante ida y vuelta que se fomenta en cualquier ecosistema sano que exista, por ejemplo el mentoring o los consejos estratégicos forman parte de la cultura de algunas personas y de esa red que se menciona.

Dentro del video se nombra a algunos tipos que marcaron hitos en su momento y que hoy son bastante más generosos de lo que uno puede esperar; algunos ejemplos del video: Wenceslao Casares, Marcos Galperin o Andy Freire (y otros que sería imposible mencionar sin olvidar a alguno) pero si algo me llamó la atención es como mapearon las empresas de tecnología creadas en Argentina desde 1999 hasta hoy en día (dentro de su rango de influencia no el 100% de ellas) y como miden la influencia de cada una en base a tres parámetros:

– Fueron mentores de otros emprendedores

- Invirtieron en otras empresas

- Nuevas empresas creadas por ex empleados

Lo cual es bastante coherente para entender la relación que existe en este mercado, si uno mira de cerca va a ver que el mundo es más chico de lo que imagina y que la relación de empresas influyentes (basadas en estos tres parámetros) con otras menos influyentes es gigante.

Ahora, esto me deja pensando que si en este ambiente complicado, mercado competitivo y celoso, somos capaces de haber generado más de 81.000 empleos y más de u$s1.500 millones en ingresos en 2010… ¿que seríamos capaces de hacer si logramos ampliar el espectro de influencia de las empresas más chicas e innovadoras? Pongo un ejemplo: si uno mira los números fríos del exit de Patagon el peso relativo sobre Digital Ventures es incomparable pero si uno mira los parámetros del video va a ver que la influencia positiva o multiplicadora sobre el ecosistema se acerca un poco gracias a la acción constante de los fundadores (ej de dos personas que siempre me sorprenden por su generosidad: Casares y Voltes que están siempre dispuestos a dar un consejo o responder un mail).

Entonces vuelvo un poco atrás ¿si en este tiempo no había ni aceleradoras/incubadoras (ya hay dos), ni había fondos especializados (ya hay dos), si toda empresa grande tiene presencia en el mercado (desde MSFT hasta Google) y ahora hay hasta un distrito tecnológico y una agencia nacional de ciencia y tecnología porque no podemos hacer que este efecto sea más grande aún?

A que voy con esto a que así como sostengo que las cosas hay que hacerlas bien (más allá del éxito financiero) o que hay modas inspiracionales (“hu hu hurra.. da todo de vos!”) es necesario un análisis de quienes son los nodos exitosos, de como estos nodos inspiran a otros (porque la inspiración es valiosa cuando es real) y de que es lo que hace que estos nodos sean útiles a la sociedad para saber que cosas replicar y que cosas no.

No sé si la frase “efecto multiplicador” es correcta o no, pero deberíamos (como industria) ver si realmente se puede medir la influencia o no de las personas en nuestro mercado y que podemos aprender de esta parametrización para poder mejorar y así competir más y mejor… frente a otros que tienen mejores infraestructuras pero no sé si tanto espíritu.

5 steps to start and fund a social good enterprise

Reprinted from startupweekend.org. See original post here.

By Lior Levin

Many people find it attractive to start projects that work toward the good of the less fortunate. Social good enterprises raise money to help others, and you can become involved with your own efforts to build and fund an enterprise. Here are 5 things you can do in order to be more effective in your efforts:

1. Start with Your Passions

When starting a social good enterprise, you need to look for something that interests you. Find a cause that resonates with you and your values. You want to be able to bring your passion to your work. Otherwise, you might not be able to keep things moving. Any start up requires hard work, long days and even longer nights. If you aren’t involved with something that you are interested in, chances are that you won’t stick with it, and it will peter out.

Plus, your enthusiasm is obvious when you are involved with something you are passionate about. If you want to raise funds for your social good enterprise, you need to be emotionally invested. Donors can sense your dedication, and they’ll be more willing to give.

2. Start Small

Don’t expect to bring in $1 million over the course of a single weekend. Think about what you can accomplish now, and build on that. Ask for small donations to accomplish one small task. Even if it’s asking for $10 from your friends and family to help you put together hygiene kits, that small action can get you started in your enterprise. As you accomplish the small tasks, you will find yourself able to raise more money, and your visible efforts will bring in more donations from others so that you can start accomplishing loftier goals.

3. Define Your Purpose

Your social good enterprise should be identifiable. There should be a purpose to your efforts. Figure out what you want to accomplish, and then articulate it to others. Your efforts should focus on that purpose. Don’t just brand yourself as a “non-profit” organization. Instead, use active language to define your purpose, and to help guide your actions. Not only will your purpose keep you on track, but it will also let others see what you are doing. Being able to clearly define what you do will encourage others to donate, and will aid in fundraising efforts.

4. Be Involved in Your Community

Don’t forget to be involved in your community. You can raise grassroots support in your local community, as well as provide help to others in your community. Starting with a solid base is important, and it will help you meet others. People are interested in donating their time and their money to social good enterprises when they can see the effects. Show some effect in your community first, and then branch out to other geographic areas.

5. Leverage Your Networks

One of the best ways to get the word out about your social good enterprise is to leverage your networks. Use Facebook, Twitter and other online social media to make connections and spread the word. You can also use your offline networks as well. Look for ways to involve your networks in fundraising, and you see things start to take off and snow ball. The power of networking can also put you in touch with advisers and others who can help your effort succeed.

Bottom Line

If you want to do good by starting an enterprise designed to help people, you have to start small and leverage your network. It’s hard work, but if you focus on something that’s important to you, define your purpose and recognize that you will have better success if you start small, you will find yourself growing at a fine pace and doing a great deal of good.

This guest post is written by Lior Levin, a marketing consultant for a css company and, who also consults for a company that provides to do list applications for businesses and individuals.

What successful investors teach us about investing in startups


Reprinted from startupweekend.org. See original post here.

By Lior Levin

Investing is never a sure thing according to those who have succeeded. If you can’t find a sure thing, the next best bet is to learn from the best practices of successful investors. Here are tips from active angel investors who have enjoyed success with some of today’s leading technology companies:

Investors Rely on Networks

Networking has always been a critical part for investing, especially for angels taking on high risk wagers in startup companies that are unknown quantities. Alan Deutschman writes in Fortune Magazine, “Angels rely on informal networks of friends, past or present colleagues, lawyers, and accountants. They tend to invest in small packs, with inexperienced souls following the lead of seasoned ex-entrepreneurs.”

Since investors live all over the world, online networks are becoming increasingly important for investors to network together. A group such as LinkedIn’s Deal Flow Network has over 11,000 members and provides a simple way for investors to share tips about strategies and upcoming opportunities. Online startup communities, such as Go Big Network and Fundingpost, also make it possible for investors to search for new opportunities.

Look for a Strong Team

While it may be hard to figure out whether the public will catch on to a new product, investors have found that it’s much easier to evaluate the quality of the team in a company. In fact, the leadership is the only known quantity in a startup.

Ron Conway, who is most famous for investing in Google, shares that a company’s team is most important to him. “We start with the people first. We think the ideas that entrepreneurs start with evolve and change dramatically from the beginning and sometimes end up unrecognizable, so we believe in investing in the people,” he says.

Investors Stay Involved

Investors know that they can’t get a good sense for the direction of a startup without becoming involved in the startup and asking hard questions. While some prefer to spread their funds in small amounts among a large number of startups, those who want to know which companies are worth additional investments will often become involved as a consultant or advisor.

Chris Sacca, a former Google employee turned investor, places a high priority on remaining involved with his investments. “He plays an active role in the companies in which he invests by becoming an advisor, further ensuring the brands continue their successful trajectories.”

Investors Look at Salaries

Launching a business often involves dips in revenue, and a startup will only survive if it can manage expenses during this fragile time. Salaries are one item on a company’s balance sheet that catches the attention of some investors.

Peter Thiel, an investor in Facebook and LinkedIn, suggests that salaries tell us more than we would expect. “The best predictor of a startup’s success is how much the CEO is paid. The larger his salary, the more likely everyone else is paid high, and therefore, the faster you’ll burn through money. If the CEO is paid less than average, it more likely his interest will line up with the equity shareholders.”

Investors Seed Multiple Ventures

Risk and failure are inevitable aspects of investing in startup companies. While the rewards can be tremendous, there is no guarantee that an investor will see that money ever again. In light of this reality, many investors explore a wide range of opportunities rather than placing all of their capital on a few companies.

Bill Clark of MicroAngel Capital Partners suggests the following pespective: “Given the high rate at which startups fail, it’s wise to spread your risk by investing in more than one. The goal is for a few successful startups to more than pay for the ones that fail.”

Understand the Exit Strategy

Bill Clark suggests that investors should understand the possible scenarios that may unfold in the life of a company and how failure or success relate to your investment. For example, if the company is successful and is bought, make sure you have planned for that scenario. He writes, “Every startup should have a clear exit strategy that they can share with investors. They should have a list of competitors who might be interested in an acquisition or the plan could be to go public”

Investing in a startup will involve high stakes. Even experienced investors admit they sometimes miss opportunities or lose bets they’ve made. If you’re considering a venture that involves an unknown startup company, seasoned investors have many tips to share that can cut down the potential risks you’ll face.

Contact us

Press center

Community

Newsletter Sign Up