The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Latest Episodes:

255. Launching Canada's #1 Local Classifieds Site, Kijiji, The Flourishing Canadian Tech Ecosystem, and What to Look for in Early-stage Marketplace Startups (Janet Bannister) Nov 02, 2020

Show notes

Janet Bannister of Real Ventures joins Nick to discuss Launching Canada's #1 Local Classifieds Site, Kijiji, The Flourishing Canadian Tech Ecosystem, and What to Look for in Early-stage Marketplace Startups. In this episode, we cover:

Walk us through your background and path to VC
What's the thesis at Real Ventures?
Tell us about your time at Kijiji
You became the Managing Partner at Real Ventures a few months before the pandemic. What timing to take on the MP role!
You've talked about how it's just as important to focus on founder development as it is to focus on business strategy and growth... in what areas do you find that founders need the most development help?
Largely speaking, what stats or trends across Canada lead you to believe that it will have a booming tech economy over the next decade?
What city gets most of your attention and what city/region is under-the-radar but shouldn't be?
What are the top 3 things you're looking for in a marketplace startup?
come for tool stay for marketplace... vice-versa?
Balanced scorecard
Let's say you are approached to invest in a Consumer Marketplace company with $5M in GMV, a 30% take rate, and 20% MoM growth for the last 6 months.
- Catch is you can only ask for 3 data points to make your decision.
- What 3 questions do you ask for?

Investor Stories 164: Post Mortems (Tunguz, Isford, Casnocha, Reum) Oct 29, 2020

Show notes

On this special segment of The Full Ratchet, the following Investors are featured:

Tom Tunguz
Grace Isford
Ben Casnocha
Courtney Reum

Each investor discusses a portfolio company that did not survive and why it was that they failed.

254. Going Public via SPACs and PIPEs, The First Mover in Ridesharing That Lost to Uber, and Building the Online Marketplace for Used Cars, Shift (George Arison) Oct 26, 2020

Show notes

George Arison of Shift joins Nick to discuss Going Public via SPACs and PIPEs, The First Mover in Ridesharing That Lost to Uber, and Building the Online Marketplace for Used Cars, Shift. In this episode, we cover:

Walk us through your background and path to tech.
What was the outcome of taxi magic? Shut down?
When you spoke with Bill Gurley - rumor has it he pushed back on the model. Did you consider switching?
What is Shift?
How are you different than Carvana?
How accurately can you price a car sight unseen?
It feels like you are effectively CarMax online... If CarMax is such a good value prop for seekers and buyers, why do you think they only have a 1% market share?
There were lots of ways you could have expanded early on... your offerings... geography... and even product/business lines (like financing)... talk us through the early decisions that were made and how they were made
The name is great but does Gen Z get it? No one shifts anymore
Online marketplace solving an extremely frustrating and time-consuming consumer life event but it's a very Infrequent transaction so you need to be top of mind when someone is buying a new car or ready to make a transaction... How are you thinking about that?
Talk about your decision to go with a SPAC to go public.
The decision to go direct-listing would be in cases where the company is more of a household name?
SPACs were a four-letter word in the '90s... apparently, there were some bad situations... what is the risk here, and how has that been addressed by the modern SPAC structure?
Do sponsors get 2% or 20% off the top?
What was the value of the SPAC vs. the valuation of your company... were you (and other shareholders) diluted by the SPAC investment amount
And the rest/the balance of capital comes from a PIPE, correct?
As an investor, wouldn't the preference be to invest in the SPAC vs. the PIPE?
Building a company in SV or not, and where that is headed?
What advice would you have for founders before selecting VC partners?
What was the experience as an openly gay man building a tech company -- do you think that presented a more difficult path to success?

Investor Stories 163: Strange & Unusual (Warner, Adeeb, Gallagher, Carolan) Oct 22, 2020

Show notes

On this special segment of The Full Ratchet, the following Investors are featured:

Check Warner
Ramy Adeeb
Patrick Gallagher
Shawn Carolan

Each investor describes the most unusual situation or pitch that they've encountered as an investor.

253. The Changing "Search Image" of Founders, Lack of Diversity = Missed Opportunity, and COVID Effects on the BLM Movement in Europe (Eric Collins) Oct 19, 2020

Show notes

Eric Collins of Impact X Capital joins Nick to discuss The Changing "Search Image" of Founders, Lack of Diversity = Missed Opportunity, and COVID Effects on the BLM Movement in Europe. In this episode, we cover:

Walk us through your background and path to VC
What's the thesis at Impact X?
As a black CEO and fund manager, in what ways do you think your experience fundraising was different than your white, male peers at other firms?
How do you approach sourcing?
What's unique about the way you've built your network vs. other firms?
Less than 1% of venture funding goes to black-led and we've heard the tired line that "not enough companies are founded by underrepresented founders and black founders"... Are you concerned that you'll have fewer deals or less pipeline?
What's the right number of deals per year where you feel like you're seeing a sufficient amount?
I've heard about the "deep analysis" you do and how that creates the edge. Can you describe what this entails?
Do the issues run deeper in the LP community than even the GP community?
Are the return expectations different for your LPs vs. a non-Impact fund?
A lot of the impact you are creating is long-term in nature. What are the leading indicators of success for your fund?
How do you set objectives and measures to know if you're winning/exceeding the plan?
In response to the pandemic, the gov't created a number of programs to help fast-growth companies. What was the impact on your underrepresented pipeline and portfolio?
Black Lives Matter has been the center of attention here in the states. What's the status of the movement in the UK and how has it impacted your efforts at Impact X?

Investor Stories 162: Lessons Learned (Kerby, Hester, Napier, Blank) Oct 15, 2020

Show notes

On this special segment of The Full Ratchet, the following Investors are featured:

Richard Kerby
Jaclyn Hester
Lanham Napier
Steve Blank

Each investor illustrates a critical lesson learned about startup investing and how it's changed their approach.

252. Decentralization of VC, Why Your Fund Size is Your Strategy, and Why Startup Formation is the Most Important Contributor to Economic Growth (Erik Torenberg) Oct 12, 2020

Show notes

Erik Torenberg of Village Global joins Nick to discuss Decentralization of VC, Why Your Fund Size is Your Strategy, and Why Startup Formation is the Most Important Contributor to Economic Growth. In this episode, we cover:

Walk us through your background and path to VC
What were the biggest lessons learned from Product Hunt that you took to investing?
Recently had Ben Casnocha on... anything specific you'd like to add about the thesis behind Village Global?
How do you think about working with experienced vs non-experienced angels?
How do you think about portfolio construction for VG?
Fast forward... some angels have strong early signals of success, others don't -- do you cull the herd or amplify those that are good pickers?
Considering this, why do you think so many VCs have concentrated portfolios?
How do you think about follow on investing?
What is the role of a pre-seed firm?
If there's a weakness in the Village model... what is it?
Part of your model is to increase the amount of founders and investors. What do you say to those that argue there's too much capital already?
What's does the future look like for Venture?
What's your advice for people getting into venture?
Three data points
- Let's say you're approached to invest in an early seed stage SaaS startup...
- The founder is a technical serial entrepreneur with two solid 8-figure exits. And she has a credible co-founder that is more business/commercially focused;
- An MVP of the product has been launched and was the top product of the day on Product Hunt, when it launched;
- and The Product launched two months ago and currently has $5k of MRR.
- The catch is, you can only ask 3 questions for 3 specific data points, in order to make your decision. What three questions do you ask?

Investor Stories 161: What's Next (Hsu, Vrionis, Vassallo, Hsieh) Oct 08, 2020

Show notes

On this special segment of The Full Ratchet, the following Investors are featured:

Jonathan Hsu
John Vrionis
Trae Vassallo
Kane Hsieh

Each investor discusses sectors, drivers, and/or trends that may have a significant impact in the future and are potentially positioned for outsized-returns.

251. Funding the Misunderstood Technical Founder, Self Evaluation as a Solo Capitalist, and Capital to Underwrite R&D risk vs. S&M risk (Farooq Abbasi) Oct 05, 2020

Show notes

Farooq Abbasi of Preface Ventures joins Nick to discuss Funding the Misunderstood Technical Founder, Self Evaluation as a Solo Capitalist, and Capital to Underwrite R&D risk vs. S&M risk. In this episode, we cover:

Walk us through your background and path to VC
Why did you launch Preface?
What's the thesis at Preface?
How do you define enterprise/infrastructure frontier enterprise?
What's most different about your approach?
Are the businesses you fund created and ideated by the founders or is it a collaboration between you and the founders or do you take concepts and bring them to future founders?
What's your approach to sourcing?
Because your model is different and the founder profile is a bit different than most... in what unique ways do you provide value post-investment?
You're a solo-capitalist... How do you evaluate yourself and keep some checks/balances on your decisions?
Did you put together an LPAC -- if so how big is the group, how often do you meet and when/where do they help?
Are you actively investing in open-source startups?
What are your thoughts on the Bifurcation in the VC industry... capital underwriting of R&D risk vs. S&M risk?
What are your thoughts on biases in founder selection, data-driven predictors of founder success?
What's been the greatest challenge in your VC career and how have you overcome it?
You're passionate about Diversity, having founded Diversity.vc in 2016. How are you practicing a more inclusive style of venture capital?
Three data points... hypothetical investment scenario