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Moneyball for Tech Startups: Kevin’s Remix
Several people have pointed me to Dan Frommer’s post on Moneyball for Tech Startups, noting that “Moneyball” is actually a pretty good summary of our approach to seed-stage investing at RSCM. Steve...
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A Meta-Startup Manifesto
As most of you know, RSCM is part of the group offering every TechStars company an additional $100K investment. When we first started talking to the TechStars folks, my immediate reaction was “kindred...
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Update on the “Seed Bubble”
Earlier this year, I showed that there was little hard evidence of a general bubble in seed-stage investing. As this recent TechCrunch article shows, the meme has persisted. So I thought I’d take...
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Full Year 2011 “Seed Bubble” Update
Back in April 2011, I crunched the data on seed investing dollars to show there was probably no generalized bubble. Then in November, I updated the numbers for the first half of 2011 and showed that...
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Brad Feld and I Discuss Data
What do you do when you have to make decisions in an uncertain environment with only mediocre data? Startup founders and investors face this question all the time. I had an interesting email exchange...
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Diversification Is a “Fact”
In science, there isn’t really any such thing as a “fact”. Just different degrees of how strongly the evidence supports a theory. But diversification is about as close as we get. Closer even than...
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Even If You’re “Good”, Diversification Matters
I privately received a couple of interesting comments on my diversification post: One of RSCM‘s angel advisors wrote, “I would think most smart people get it intellectually, but many are stuck in the...
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Valuing Seed Stage Startups
One of the questions I most frequently answer about RSCM is how we value seed stage startups. Apparently, being not only willing, but eager to set equity valuations sets us apart from the vast majority...
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Seed Bubble Watch 1st Half 2012
Yes, it’s time for another edition of “Seed Bubble Watch”. The subtitle for this round is, “Still Waiting to Inflate.” For notes on sources and methods, see my previous posts in the series here, here,...
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How Many Angel Investments?
As regular readers know, I’m a huge fan of the AIPP data set collected by Rob Wiltbank. In this TechCrunch article from a while back, Rob corrected the mistaken assertion that angels don’t make money....
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What If the Angel Market Tanks?
In my last post, I showed how diversification helps an angel portfolio get closer to the true underlying return of the market. Based on the AIPP’s historical sample of angel-backed startups that meet...
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Angel Investing: Diversification vs Skill
The data analyses from my last two posts, How Many Angel Investments? and What If the Angel Market Tanks?, have an important alternative interpretation. If you also read my earlier posts on...
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Visualizing Angel Diversification
In playing with the data from my previous angel diversification posts (here, here, and here), I developed the best visualization so far of how to improve your angel portfolio with more investments....
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Full Year 2012 “Seed Bubble” Update
As regular readers know, I’ve been on the lookout for a bubble in seed stage investing. After two years, still no sign. In fact, I’d say that we may be falling somewhat behind. If so, hopefully Right...
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How Could Funding Possibly Be Bad for You?
I have posted quite a bit of analysis that is (hopefully) useful to startup investors. But as someone noted to me privately, I have not provided much direct advice for startup founders. This post is a...
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Series A Considered Harmful?
In my last post, I showed how taking a round of funding logically reduces the available exit options. As a rule of thumb, each round of funding reduces exit opportunities by 10X (assuming a default...
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Another Tilt at the Microeconomics Windmill
As I’ve written before, I am not entirely satisified with how microeconomic theory characterizes firms. So I’m going to take another tilt at the windmill and try to develop a model more suited to...
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“Market Space” Approach to the Firm
In our last episode, I sketched out the goals for my new model of the firm. In this post, I’ll present the high level view of my model, which I call “Market Space” (yes, we’ll be using a...
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“Market Space” as a Multi-Armed Bandit Problem
In the last post, I presented my 30,000-foot view of Market Space. I think it already provides some intuition. From the final diagram, you can literally see the firm’s search problem. But our eventual...
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Hill Climbing in “Feature Subspace”
Looking at the search for profitable products as a Multi-Armed Bandit (MAB) problem illuminates the general complexity of the firm’s challenge (see previous posts in this series: one, two, three). But...
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