What I learned from investing in 138 early-stage startups

Such a 🤓
  • it’s not about the idea
  • it’s about the market
  • it’s about the teamit’s about momentum
  • don’t get bushwacked by flashy videos
  • revenue curves are king
  • there are always bulls
  • there are always hawks
  • make up your own mind
  • know and balance your bias
  • co-invest with institutions
  • follow-on and double down
  • don’t double down on your losers
  • early-stage valuations are what you can justify
  • funds are likely to invest in the really early-stage of the spectrum
  • do your own research, don’t follow the crowd
  • learn how early-stage startups work, what makes them succeed or fail
  • understand the type of shares you’re buying
  • focusing on unicorns is for VCs and the press
  • only invest what you’re happy to lose 100% of (take into account tax relief)
  • expect to get nothing back
  • talk to your investments, help them
  • forecasts are fairy dust, look at fundamentals
  • place bets, don’t try to pick winners
  • just because you don’t get it doesn’t mean it’s bad
  • EIS and SEIS are awesome
  • SEIS stage is a quantum higher risk than EIS
  • money is just numbers, don’t be emotional
  • miracles are for fairy tales
  • spray and pray can be an almost strategy
  • making decisions will contain conscious/unconscious bias (be aware)
  • investing in something that fails doesn’t make you the dumb money
  • being a founder is one of the hardest jobs there is, be nice but balanced

What’s a good investment?

For me it’s all about the team and momentum. Can they execute and learn and run fast enough to find their fit before the money runs out? Is there a beachhead market they can be successful in to hit milestones and extend their runway? Then, is the space or problem they’re currently trying to address ugly enough to warrant a new solution or could there be one at a near term point?

What is risk?

Risk, of course, is inherent. I don’t think we should be afraid of taking risk. Pretty much any investment you make has risk. It doesn’t give me the same knot in the stomach it used to.

  • reaching idea validation through experiments that have (at least) some directional evidence or resulting insight
  • gained early traction with a sub-segment of customers
  • who are their first hires and what do they bring
  • found a scalable channel with appropriate unit economics
  • have they built a product that people love
  • found strategic partners, or an advantage through partnerships
  • tested and expanded into new channels
  • have they leveraged network effects successfully
  • how have they grown revenue and reinvested it
  • what roles they’ve hired for, in what order
  • launched in adjacent markets or new products to expand their range

Returns

It’s currently too early to tell but there’s starting to be a few compelling data points to say it’s going ok so far. About 90% of the companies I’ve invested in are still active after several years, which is significantly higher than what I see working around the industry at large. We’re starting to see better transparency about further rounds the startups make, so that’s a good indicator of how it’s going. There’s also going to be added liquidity with secondary markets which is quite an exciting and much-anticipated development.

Bio

Adam is on a mission to build better startups. He’s growing a worldwide community of creative people all learning to code with SuperHi, and helping other startups find their voice and grow through Spindizzy.

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Adam Oskwarek

Adam Oskwarek

952 Followers

I help build and grow things on the internet. Product + People + Growth. Together we can go further. “chief climate officer” @ Zopeful.com