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

Latest Episodes:

240. A Blazing Fast Path to $B+; Binary Outcomes; The Fintech Revolution; and A New Approach to Employee Comp (Henrique Dubugras) Jul 20, 2020

Show notes

Henrique Dubugras of Brex joins Nick to discuss the Blazing Fast Path to $B+; Binary Outcomes; The Fintech Revolution; and A New Approach to Employee Comp. In this episode, we cover:

Background -- path that led to Brex?
Origin story for Brex Tag-line / One sentence overview
What's so different about Brex?
Why is more than just a credit card?
How has the pandemic affected the business thus far?
What do you offer that no one else does?
Who do you consider to be competition?
What is the moat here - why can't another well funded startup replicate your offering?
A criticism I've heard is that, when businesses need credit most, when bank balance/working capital is low, is when Brex cuts off access to credit. What's your response?
How would you describe your leadership philosophy?
Are you recruiting/hiring? Is the approach different while 100% remote?
What's the compensation structure at Brex?
One of the fastest companies to multi-billion+ valuation -- more pressure w/ all that capital?
With the raise and expectations some suggest that the outcome is binary -- is it?
What advice do you have for early-stage, pre-A, founders trying to build a venture scale business?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Investor Stories 149: Post Mortems (Gembala, Dorsey, Yin, Fluhr) Jul 16, 2020

Show notes

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

Ryan Gembala
Scott Dorsey
Elizabeth Yin
Jeff Fluhr

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

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

239. What's Next in Gaming; The True Essence of Product-Market-Fit; & Investing with an Emphasis on Retention and Engagement (Gigi Levy-Weiss) Jul 13, 2020

Show notes

Gigi Levy-Weiss of NFX joins Nick on a special Crisis Coverage installment to discuss What's Next in Gaming; The True Essence of Product-Market-Fit; & Investing with an Emphasis on Retention and Engagement. In this episode, we cover:

Background and path to venture.
The thesis and your focus at NFX?
Did you invest in Houseparty when it was Meerkat?
You've written about your thoughts on PMF... How do you assess whether a company has real product market fit?
What advice would you have for those still trying to find it?
With this focus on product and retention... What's your response to investors that say distribution is more important than product?
Why do you think VC interest has been declining in the gaming space?
What has been the history/evolution in the gaming sector?
What's next for gaming -- Is there a step beyond the platform?
Are there any niches or segments within gaming or esports where you see the most potential?
3 Data points:
- Let's say a gaming startup comes to you... they have 50k DAUs, K value of 1, 20 % MoM growth...
- What 3 data points do you ask for and why?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Investor Stories 148: Strange & Unusual (Kupor, Koh, Tunguz, Douglass) Jul 09, 2020

Show notes

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

Scott Kupor
Melody Koh
Tom Tunguz
Jim Douglass

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

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

238. GP and LP Alignment, Challenges for Emerging Fund Managers, and How the Explosion in Seed Fund Volume Plays Out (Jaclyn Hester) Jul 06, 2020

Show notes

Jaclyn Hester of Foundry Group joins Nick on a special Crisis Coverage installment to discuss GP and LP Alignment, Challenges for Emerging Fund Managers, and How the Explosion in Seed Fund Volume Plays Out. In this episode, we cover:

Tell us about your background and path to VC.
For those who don't know, talk about the approach at Foundry with both the LP and GP model.
Foundry traditionally had no apprenticeship model and no junior investors... were you the first?
Pandemic... Are you making investments currently and what are you hearing from other LPs?
What's your advice for GPs re. building relationships and momentum w/ LPs during these uncertain times?
What's the biggest mistake emerging managers make when fundraising?
What do new fund managers underestimate when starting a venture firm?
Does it matter how specific a thesis is? Do you need to see a unique, focused and compelling edge or are you just as receptive to a generalist w/ a strong network and track record?
What question tends to trip up GPs?
What are some of the most important things GPs should ask LPs when raising?
What do you think are the most important things GPs and LPs need to be aligned on for a successful relationship?
How does the explosion in volume of seed funds affect you approach to selection?
How do you think this plays out -- most funds fail? Returns more evenly distributed? Power law no longer applies (or is less pronounced)?
Fast forward 5 years and let's assume there's been a fundamental shift in early stage Venture. What do you think is the most likely, largest change that's occurred?
What advice do you have for young people that aspire to be a VC someday?
Not going to ask for favorite GPs but, I will ask, if you could break quarantine to grab a cocktail w/ one GP -- who do you choose? ; )
3 Data Points...
- You're approached by an emerging VC firm raising fund II. The fund manager did not work for a large, brand-name venture firm before and she has never had an institutional investor. Net TVPI is 1.4, and Net IRR is 35% and it's a 2018 vintage.
- The catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
- What 3 questions do you ask?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

237. Advice for Founders -- Reaching out to VCs, Pitching over Zoom, and Closing Capital Amidst a Pandemic (Nick Rishwain, Hannah Konitshek, Nick Moran) Jul 04, 2020

Show notes

Nick Rishwain and Hannah Konitshek of The LegalTechLive Podcast interview Nick to discuss Advice for Founders -- Reaching out to VCs, Pitching over Zoom, and Closing Capital Amidst a Pandemic. In this episode we cover:

How have valuations been impacted from the pandemic?
How long will lower valuations persist?
Are VCs actively doing deals right now?
What's the most common mistake that founders make when approaching you for funding?
How much information would you prefer a founder share with you upfront (deck, financials, incorporation, docs, etc.)?
How often have you met a founder early, been added to their monthly update list and then come back to make an investment?
Should founders become more clinical when selecting investors?
How do you convince founders on New Stack as an investor?
There is one area that New Stack is really hands-on -- what is it?
What are some things a founder can do to get funded while he's only got a well thought out idea and business plan?
Many founders don't know if their business is venture scale. How do you determine if a business is venture-backable or not?
How does a sector that hasn't had huge exits at large multiples (like LegalTech) impact the way you assess startups in that sector?
How do you evaluate high recurring revenue vs. low recurring revenue?
Do you have any suggestions for a founder that is pitching now that it is completely remote?
Overall advice you're giving your portfolio companies right now?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Investor Stories 147: Lessons Learned (Osterwalder, Clarkson, Cardamone, Polovets) Jul 02, 2020

Show notes

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

Alex Osterwalder
Beezer Clarkson
Michael Cardamone
Leo Polovets

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

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

236. The Four Fundamentals of Investing; the Future of Micro Mobility; and Hunting Consumer Unicorns (Shawn Carolan) Jun 29, 2020

Show notes

Shawn Carolan of Menlo Ventures joins Nick on a special Crisis Coverage installment to discuss the Four Fundamentals of Investing; the Future of Micro Mobility; and Hunting Consumer Unicorns. In this episode, we cover:

Tell us about your background and path to venture.
What's the thesis at Menlo Ventures?
Can you explain the "Four Fundamentals" framework for investing and give us a brief description of each?
What are you looking for in terms of unit economics?
You like to invest in technologies that change everyday life for the better. Do you have a sense for the needed technologies and then find founders in those areas, or do you identify compelling entrepreneurs that then guide you to emerging technologies that will shape the future?
Have you been in the situation where you identified the right consumer trend and technology required to deliver but you picked the wrong startup?
Is there a priority of importance amongst the four?
Which do you think investors most often get wrong?
Let's talk about consumer a bit...Many VCs think that consumers and consumer behaviors evolve quickly in unpredictable ways. And b/c of that many VCs avoid consumer. What's your response?
We've seen an explosion in Cloud and SaaS recently, and some question whether there's room for another big consumer company, what is your response to this and which areas do you see the biggest opportunities in?
Before the pandemic, the future of scooter companies was murky with challenging unit economics and fleet maintenance... while governments were, in some cases, were imposing regulations and putting a halt to deployment. What does the future hold for the scooter companies?
How do you view these situations, like scooters, where there's low differentiation and a number of players trying to scale and grab share quickly?
Any other micro-mobility trends that you're watching closely, aside from scooters?
Changing gears away from micro mobility and into AI for a bit, why do you think we haven't seen many unicorns in consumer AI?
Where (sectors, categories) do you think the initial consumer AI unicorns will come from?
Let's say that you have a micro mobility company that is currently operating in 3 cities within one region, grossing $500K monthly and growing 30% month to month.
- Which 3 data points do you ask for and why?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

Investor Stories 146: What's Next (Gallagher, Tavel, Deeter, Kim) Jun 27, 2020

Show notes

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

Patrick Gallagher
Sarah Tavel
Byron Deeter
Jim Kim

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

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

235. Why Corporate VC Gets a Bad Wrap; Microsoft's Fresh Approach to CVC; and Key Insights to Acquire Mass Users (Tamara Steffens) Jun 25, 2020

Show notes

Tamara Steffens of M12 joins Nick on a special Crisis Coverage installment to discuss Why Corporate VC Gets a Bad Wrap; Microsoft's Fresh Approach to CVC; and Key Insights to Acquire Mass Users. In this episode, we cover:

Background and path to venture.
Overview of the thesis at M12.
Investments since COVID? Changes in strategy, markets of interest.
CVC has the reputation of being very slow, not leading deals, imposing restrictive terms, and thinking only about broader success of their parent company— what's different about M12?
What's your approach to sourcing?
You are known as a user acquisition expert in the valley... having generated millions of app downloads for Path, Color and Acompli. One of your main suggestions is to "Dismantle the silos" ... what do you mean by that?
You've cited the top three things you need to make your app part of the zeitgeist -- can you walk us through each and why they're critical?
Talk about the 'Leaky Bucket' of new user acquisition and how to avoid it?
What's a good level of user retention (%) after 6 weeks?
What are the biggest differences in approach when acquiring consumers vs. enterprise customers?
What are the main KPIs/OKRs you track when optimizing a sales funnel / team?
I'd like to talk a bit more about the startups you work with...What are the key factors you're looking for in investments?
How do you work with your portfolio companies?
Why should every startup be thinking about culture as they build their companies?
How are founders today different from founders 20 years ago?
What tips do you have for founders pitching investors remotely?

To listen more, please visit http://fullratchet.net/podcast-episodes/ for all of our other episodes.

Also, follow us on twitter @TheFullRatchet for updates and more information.

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