Tag: startup investing

How to choose a winning startup (hint, start with the founders)

The 3 M’s angel investors consider before investing As an investor (whether angel, VC, or seed) arguably the most essential element in identifying a promising investment is the management team.  This idea led to the famous mantra that just like in real estate there are 3 L’s – Location, Location, Location; in the startup investing world there are 3 M’s – Management, Management, Management. In fact, many VCs prioritize talented, creative, and experienced management over a great idea, product, or booming sector.  Carlos Eduardo (not the European soccer player) is the co-manager and partner of Seedcamp (a leading micro-seed investment fund in Europe) — he claims that: “A startup’s management team is its lifeblood… no amount of awesome ideas will ever overcome a fundamentally flawed management team.”  (Source) Still not convinced?  Why do startups with great ideas fail? According to research from the University of Tennessee, while almost all startup failure is due to some sort of mismanagement, 30% of all startup failures can be directly attributed to what it describes as Unbalanced Experience or Lack of Managerial Experience....

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Now, investors in Israeli startups will have an easier time monetizing their shares

Markets for shares in private companies have seen a roller-coaster of a ride the past few years. Companies like Sharespost and Secondshares, were thriving firms, enabling founders and early investors in startups to sell some or all of their stakes — without the need for an IPO or M&A transaction. These markets were a godsend for many entrepreneurs and early-stage investors. But that was all before Facebook IPO’d. The massive social network provided so much of the liquidity on these exchanges that after Facebook went public, these markets saw their liquidity dry up. Matching supply and demand in private shares Low liquidity in private shares markets amplifies the effects of small transactions. Just like in thinly-traded stocks on Wall Street, one buyer or seller can cause share prices to swing wildly given the large differences in Bid and Ask prices. Same thing goes for private shares. If a founder is looking to unload a portion of his stake, just the signal of a seller in the private stock could send the stock price reeling. Major stock exchange, Nasdaq believes...

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