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

David Horowitz of Touchdown Ventures joins Nick on a special Crisis Coverage installment to discuss How Corporate VC Will Respond. In this episode, we cover: What is your current view of the venture market given the current crisis? Corporates have a history of pulling back in economic downturns, what will happen now? This is your 3rd economic downturn, What is different about this economic period vs. prior recessions? Are there advantages to new corporate funds vs. existing corporate funds? Committed capital vs. not committed You told me you believe corporations are more important in this environment than startups why? What advice do you have for start-up companies on dealing with corporations? Fair that those discussions or partnerships slow down? What is your prediction when things return to normalcy? 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.

Chris Douvos of Ahoy Capital joins Nick on a special Crisis Coverage installment to discuss the LP Lessons from '01 and '08, The Denominator Effect, Capital Calls & Fundraising in a Down Market. In this episode, we cover: What is the denominator problem/effect? Why does it matter? How do LPs react when they face the denominator problem? How quickly do LPs tend to rebalance their investment portfolio? What's the implication to VCs? How should VCs react when their investors face the denominator problem? LPs lose access to future funds if sell position as secondary? When VCs make capital calls at times like these, what's the ripple effect down the line for these LPs? What were some of the typical LP reactions you've seen from the dot com bubble and the 2008 crisis, that you expect to see again? Can you talk more about the thought process of LPs during a crisis like this? Are they rushing to liquidate? Are they putting that money somewhere else? VC capital calls - guidance? What's the impact on VCs that are fundraising? What type of VCs have had success raising in a down market? What are some best practices/principles for managing LP relationships in a time like this?(Chris was in PE, as Co-head of PE Investing at the Investment Fund for Foundations in 2008 crisis) What was the biggest lesson you've learned from previous crises in 2001 and 2008? VC's metrics are dependent on the market, like PME. What's the impact of the current situation on the VCs performance metrics? Is there some downward pressure for VCs to lower the Net Asset Value (i.e. the valuation of portfolio companies) to reflect the current market situation? Can you explain the disconnect between VCs that want to actively invest (because of lower valuations) and the LPs who are rushing to liquidate? What does this mean for later-stage startups that were thinking of IPO-ing in the near future? 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.

Steve Blank joins Nick on this special "Crisis Coverage" installment to discuss The Playbook for Startup Survival. In this episode, we cover: What industries will be most affected by social isolation? How do you see this playing out over the next 3 - 6 months? How does this pandemic and the impact on the economy compare to the past 3 market crashes? Similarities/differences? Having lived through 3 crashes, what's the biggest mistake CEOs make? So lets say I'm a startup founder -- What are the major questions I should be asking before putting a new strategy together? Let's talk about burn and runway -- can you break down the key elements and how much runway one should plan for? What are the first cost cutting measures that should be taken? Should startups consider a change in business model, go-to-market or even target customer -- why or why not? Do you have any guiding principles when it comes to communication -- whether it be to employees, customers or investors? What happened to startup fundraising at different stages (seed, A, B, C) in the last crisis of 2008? You've stated that the health of the venture business may depend on what hedge funds, investment banks, private equity firms, sovereign wealth funds and large secondary market groups do. What are the possible and likely scenarios in your estimation? What advice do you have for those companies that have limited runway (3 months or less)? How about advice for pre-funded startups that are just getting off the ground? 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.

Mark Suster of Upfront Ventures joins Nick on a Pre-Crisis chat to discuss Building a VC Franchise; The Shift to Bite-Sized Video Content; Last-Mile Attribution; & the Impact of Corona Virus Over The Next 6-12 Months. In this episode, we cover: Last time we had you on the show was December 2016. Any notable updates or changes at Upfront since then? Just chatting w/ Minnie Ingersoll and she was saying how great the Upfront Summit was and how I need to attend next year... what were the highlights for you this year? Content companies are beginning to optimize for quick 1-5 minute gaps everyone has in their day, on their commute, between meetings, etc. where really short form content can be consumed beginning to end. You had a chat w/ Meg Whitman, CEO of Quibi at the Summit... and I'm going to read a quote from your blog post about that interview "her analogy of content like "The Da Vinci Code" which had 464 pages and 105 bite-sized, fully realized chapters. In essence, you're not intimidated by the size of each episode so you dig in and might just read 8 chapters in a sitting before realizing you read 35 pages. And so it is with video." Clearly Quibi is trying to capitalize on this short form video content w/ A-List celebrities and over $1.75B in venture funding... Mark, do you believe this is significant emerging trend or is it overhyped and overfunded? Quibi successfully sold out of $150m in first-year ad inventory even before they launched, which says a lot about the current marketing landscape. Channels like Google and Facebook are becoming saturated, and marketers are desperate to find that new channel that will give them an advantage... thoughts here on the macro digital marketing landscape? Seen any great companies doing last-mile attribution? - Whether it be the corona virus, the election and/or a potential market correction... what do you think the next 6-12 months will hold and what effect will that have on early stage startups, funds and IPOs. What's the biggest mistake LPs or the VCs that are guiding them, make when co-investing? Who haven't you gotten yet as a featured guest at the Summit that you'd like to get in the future? Since we last spoke, you've inserted an "Inclusion Clause" into your term sheets at the firm. Why'd you do it? Talk a bit about investing... You wrote a blog post about key lessons since the first VC check you ever wrote. Can you highlight the most critical things you've learned. - Assessing the intangibles are so important when evaluating an early stage founder ie. grit, personality, drive etc. Are there specifics methods you apply to assess for these intangibles? Are there any traits or characteristics that you think are being over-indexed on by some investors? Jason Calacanis was on recently and mentioned that you work harder for your startups than anyone else... what is your playbook for helping startups and what determines your level of involvement? In early 2019, you wrote a post about why seed investing has declined. You ended the post saying "Seed investing is here to stay (although the firms may change — with some seed funds becoming A investors)." What are the biggest shifts you see happening in early stage VC? It looks as though you took a 4 month "forced hiatus" from the blog. What was the motivation for the break? 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.

On this special segment of The Full Ratchet, the following Investors are featured: John Vrionis David Horowitz Cyan Banister 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.

Ryan Gembala of Pathbreaker Ventures joins Nick to discuss Breaking Convention, Hitting The Fundraise Wall & Why Deep-tech Is Not More Capital Intensive Than Software. In this episode, we cover: Backstory/Path to Venture Talk about your time at Facebook and working in M&A. What's the thesis at Pathbreaker? How do you define pre-seed? Most of your dealflow inbound or outbound? Quote from the website: "We don't believe all great companies, nor all phenomenal investments, look the same early on. So we are flexible, realistic, and patient - solving for supporting the founders best-suited for tackling the most meaningful problems." I'm curious, what are the must-haves that cut across all investments that you do? You've said to me that hardware isn't more capital intensive than software. As a hardware investor myself, that was refreshing to hear but I'm sure there are many founders and investors that would strongly disagree. Why is not more capital intensive? Do you think the time horizon to exit is longer? We've all been in this situation where founders hit a wall — they're running out of money, having a hard time telling your story, investors aren't pulling the trigger to invest, there are team challenges, maybe trouble converting from pilots to licenses... Give us examples of how you dig in and help when it gets tough. We've seen some recent failures or, at least, setbacks in the automation/robotics space. High profile companies like Zume pizza and CafeX have had significant challenges... what's your take on where these companies went wrong? What's your POV on robotics investing and the types of opportunities that are going to be successful? Just speaking to Kane Hsieh at Root about the effect of automation, robotics on jobs... what's your stance on the impact of these technologies on employment? You've had a number of Series A's just here in the past couple of weeks... seems like every time we connect you are dealing w/ a number of up-rounds at A and B. Clearly something is working so congrats on the early success. Talk to me a bit about how hard it is to raise a Series A? Different types of companies have to achieve different milestones/benchmarks to raise and A but have you seen any common traction levels or standards to successfully close an A round? For founders that are considering M&A and maybe some options are emerging for exit... what advice would you have? 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.

On this special segment of The Full Ratchet, the following Investors are featured: Jeremy Neilson Jason Whitney Jenny Rooke 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.

Alex Osterwalder of Strategyzer joins Nick to discuss The Ultimate Testing Framework. In this episode, we cover: Take me back and talk through the origin of the business model canvas? Just to refresh listeners can you provide a high-level overview of the business model canvas and how it's used? Let's chat about your new book, Testing Business Ideas, co-authored with David J. Bland... Why'd you right the book? Who is the target audience? If I'm the reader, what outcome can I achieve after reading this book and applying it's principles? What are the four phases outlined in the book? Walk us through the objective and key elements of the testing phase. A significant focus is the elimination of risks? How does one systematically reduce or remove risks from their business? We recently had Leo Polovets on the program and discussed the challenge of balancing testing with executing. I think it can be difficult to know when something is working well enough that you should stop testing and move forward quickly in that direction. What's your guidance here? How does one avoid getting too caught up in rigid frameworks and checking boxes vs. finding that key insight that warrants 90+% of their attention? 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.

On this special segment of The Full Ratchet, the following Investors are featured: Scott Dorsey Jeff Clavier John Fein 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.

Jason Calacanis joins Nick to discuss Unicorn vs Pegasus, The Softbank Effect, & Impacts of a Recession on VC. In this episode, we cover: Last time we had you on the show was July 2017. What big things have happened over the past (almost) three years with yourself and Launch? Last time you talked a bit about the "Goldilocks zone"... sort of that post-seed, pre-A round. Is that still the stage getting most focus from you? I read an article where you suggested that SoftBank is changing the way Silicon Valley thinks about going public. What are the biggest positive effects you've seen from the Vision Fund? What about negatives and adverse effects? The volume of startups seems to be ever increasing... Any advice for founders on how to stand out? Lots of people talking about an upcoming recession in 2020. If a recession were to hit, what happens to venture? How do you think it could potentially impact startups as well as investors or VCs? How does your investment strategy change in a recession? Anything founders should should do to prepare for a correction? As part of the fallout from WeWork... I've been hearing a lot of VCs talk about a shift from growth at all costs to a focus on profitability. Are these empty words or are you seeing a material change amongst VCs? Want to get your input on investment and selection... First off, in the book, if memory serves, you suggest angels should focus exclusively on SF-based startups and founders should relocate to SF. We recently committed to a Launch Accelerator company that is not in SF, they're in Chicago. Have your thoughts changed on location? What is a unique requirement or heuristic you use that you don't think other investors consider? What are your biggest red flags or dealbreakers? What are some acceptable risks or issues vs. what's not acceptable? I notice you talking about Pegasus startups (vs. Unicorns). What the heck is a Pegasus? What tips do you have for founders to reach the Unicorn as well as Pegasus status? You also talk about the "Dark Pegasus" can you give us some insight into what that entails and how to avoid these startups 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.