MoneyNeverSleeps: Lessons Learned from 1,000 Startup Deals | The American Bankpocalypse

Eoin Fitzgerald asks Pete Townsend about his lessons learned from seeing over 1,000 deals in the last 18 months, so they riff on easy-to-remember mental models, investing in lines not dots, building relationships with founders, how those relationships evolve post-investment, and the founder having the most credible voice in the room.  Also, Eoin and Pete take a quick look at the trinity of bank failures in the US with Silvergate, Silicon Valley Bank, and Signature Bank.

STORIES COVERED:

When it Rains it Pours (Liang Wu, Life in Color blog, 13-Mar-23)

Signals: “SVB, Signature, & Silvergate”-gate (Nik Milanovich, This Week in Fintech, 14-Mar-23)

Should I Keep My Money in Bitcoin or a Bank? (Daniel Kuhn, CoinDesk, 14-Mar-23)

SUMMARY OF LESSONS LEARNED:

1 – Have a framework – something that you know cold and can work into a conversation with founders, and repetition is really the only way to build the framework into a true mental model. Pete uses the Techstars framework of ‘team, market, traction, idea’.

2 – Lines not dots – reaching an investment decision takes multiple interactions, multiple dots that connect to form a timeline. That timeline either reaches a peak and plateaus at a deal or drops off quickly and then crashes and burns. You need to increase the depth and breadth of those lines by bringing in people you trust to talk to founders you’re interested in and gather more insights.

3 – After the investment – shifting the narrative post-investment is critical, especially when the founder is raising their first round. You need to teach founders not just how to fish, but also how to find the right pond. That bank balance you funded as an investor will erode quickly if the founder doesn’t make it to their next round.

4 – The Founder’s voice – the founder has the most credible voice in the room, and they need to find their voice. After your own investment, you can do all of the coaching you want, but you can’t pitch for the founder. All you can do is make thoughtful introductions and hope they put their best foot forward to raise their round.

LINKS:

Sam Hinkie on Invest Like the Best podcast – episode 204 and episode 88

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