“Venture capital” is by definition equivalent to “risk money”, which is part of the mystery.
Basically, VC is an extreme sport where top players amass staggering amounts of wealth and power. And sometimes a huge amount of investors’ money burns so much, it takes off on satellites.
But where does all that money come from and how do VCs make money? Before joining TechCrunch, journalist HJ Jan Kamps worked at the VC fund Bolt, where he interacted directly with early-stage founders.
“Once you’re on the VC-fueled treadmill, you simply can’t go back,” he wrote. “A key aspect of that is the suspicion that many founders don’t really know how venture capital works.”
In this comprehensive overview, he demystifies venture capital to help readers understand how investors think about risk and return, pro-rata rights, and why “VC investing is a highly successful business.”
It should go without saying, but it’s a bad idea to appoint an investor if you don’t really understand how they work.
“As a startup founder, you would never dream of selling a product to a customer you don’t really understand,” Haje writes. “Not understanding why your VC partner is interested in investing in you is dangerous.”
Thanks so much for reading TC+ this week!
Walter Thompson
Editorial Manager, TechCrunch+
@your main actor
Thinking of using your startup equity as collateral? good luck
Image Credits: Colin Anderson Productions pty ltd (Opens in a new window) / Getty Images
Employee incentives are one of the oldest brain hacks. Feed enough fair and tasty food to the right person and they’ll happily work 60+ hours/week or participate in dev sprints on weekends.
But workers interested in liquidation have only two options: wait for a tender offer from their employer or find a private buyer in the secondary markets.
You could say the system is broken. Max Brenner, part of the founding team at Compound, agrees.
Why do mortgage rates go down when interest rates go up?
Image Credits: Andriy Onufriyenko (Opens in a new window) / Getty Images
The U.S. Federal Reserve has raised interest rates to combat inflation, one of the many reasons startup prices are falling these days.
but why?
Higher inflation directly affects access to capital, your customers’ ability to pay and, not coincidentally, the service you receive from suppliers (including your own employees).
“If your customers benefit from inflation, there’s a good chance your company will too,” says Equidam founder Daniel Falopa.
“In most cases, your service providers suffer when your customers use it.”
Pitch Deck Teardown: Mi Terro’s $1.5M Seed Deck
Image Credits: I terro (Opens in a new window)
In March, MiTero raised $1.5 million in seed funding to advance its efforts to turn agricultural waste into proteins.
The company’s founders shared with TC+ a 15-slide pitch deck outlining their plans to use the product in everything from contact lenses to soap dispensers.
Or, as the closing slide says, “Drink more beer, reduce more microplastics.
Dear Sophie: How do I get an O-1 visa on Web3 projects?
Image Credits: Bryce Durbin / TechCrunch
Dear Sophie,
I am a UX/UI designer in Europe working for a web3 company in the United States.
I would like to leave my current position and move to the US for a job where I will have more autonomy, flexibility and work on a variety of projects with clients in the US.
How can I do this? Thanks for your help!
– World Wide Web 3 Wonder
Choose your angel: learn how to invest and what motivates them
Image Credits: A new bird (Opens in a new window) / Getty Images
The “choose your fighter” meme may come from the Mortal Kombat video game, but it’s also useful for seed platform founders looking for investors.
Getting money is top of mind for every angel, but according to Mack Colarich, VP of Assure Analytics, most of them have “a second or third motivation to invest in a startup.”
In a TC+ guest post, he lays out several factors entrepreneurs should consider when buying investors: Do they support the environment? Do you write direct checks?
“Armed with this knowledge, you can strategically choose the right partner for your business,” says Kolarich.
5 investors explain why longevity technology is a long-term game
Image Credits: Lucy Lambrix (Opens in a new window) / Getty Images
In the United States, the average life expectancy has fallen by two consecutive years. In the year In 2019, it was 78.86 years, but in 2020, this figure has decreased by 2 years and 3 months.
The decline was caused by Covid-19, but reporter Anna Heim interviewed five investors who support the development of technology that allows us to live longer and healthier lives.
Life expectancy today is just the beginning, but “space is just getting started and will infiltrate all aspects of our lives in the next five to 10 years,” said one respondent.
