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Jay Z Launches New Venture Capital Fund

The Rock is in the building.

Jay Z is launching a new venture capital fund with business partner Jay Brown according to a new Axios report. They’ll be focusing on early stage tech startups. No word yet on the fund’s size. Jay’s had some hits on billboard charts as well as investing. He’s also taken his share of lumps. Let’s take a quick glance at his investment record.

The Wins

He was an early investor in Uber participating in the company’s 2011 Series B funding round, when it was valued at just $300 million today Uber’s valuation is at approx $66 billion. Nice!

He purchased Tidal for a rumored $56 million, and recently sold 33% of the company to Sprint for approx. $200 million.

Jay Z co-founded Roccawear clothing and sold it for $200 million in 2007.

The Losses

In 2012, Jay Z’s Roc Nation invested in a company called Viddy, who was aiming to be the “Instagram for video.” Unfortunately the company failed just a few years into the investment.

Roc Nation also invested along with Ashton Kutcher & Marc Benioff in a private jet startup called BlackJet in 2012, but the company shut down last year.

Too Close to Call

In 2011, Roc Nation invested in Stance, a “premium sock company.” I know it sounds a bit weird, socks son?! Stranger investments have blown up, think Snuggie. Who would have thought a blanket with holes in it would gross over $500 millon? Well the sock company, Stance, has raised $116 million. Let’s see how this one pans out.

In the VC game 75% of venture capital investments fail. All it takes is 1 to pop and you’re a legend. The 1 win can obliterate all of the losses many times over. Scared money doesn’t make money. Be smart though!

Martel

Top 20 Reasons Why Startups Fail

We often hear about the success stories coming out of Silicon Valley… Uber, DropBox, AirBnB, etc. but did you know that approximately 75% of venture backed companies fail? According to a Statistic Brain study, 50% of all US companies fail after 5 years. CB Insights researched the top reasons why startups fail and here’s what they found.

 

 

The takeaways

  1. Tinker early and experiment with your product concepts, put it on the market and gauge the impact. Are people paying for your product/service? Is there a high rate of adoption? If yes, then great now build on that. If no, then iterate and try again. Pivot in a completely new direction if you must, but find a product/service that shows promise then double down. Don’t throw good money after bad. In other words, if there’s no product market fit don’t force it. Fail fast and keep it moving.
  2. Make Money. I’m a fan of bootstrapping businesses vs. taking a bunch of money you don’t really need. Having a ton of cash can be a gift and a curse. Build a revenue model into your business early on and reinvest that money into the business to grow. Once you’ve proven you don’t really need the money and you’re doing quite well on your own is when every VC will want to date you and lavish you with all kinds of nice gifts and cash (isn’t that how life goes ;-p). But I digress, develop a solid revenue model then take investor cash to expand more quickly if necessary.
    • There’s always exceptions to the rule. If you’re Instagram, Facebook or YouTube, with an alarming rate of adoption grab as much market-share as possible and worry about monetizing later. That’s only recommended if you’re experiencing exceptional growth.

That’s my take. What’s your experience been? Hit me on the Gram!

Martel

What If I Were to Tell You That You Can Be a Venture Capitalist: IndieGoGo Just Made it Possible

What if I were to tell you that you could be a venture capitalist too. Is that something you would be interested in? Venture capitalism is not just for the wealthy anymore. In May, President Obama passed a rule, part of the 2012 JOBS Act, that allows regular folks like you and I to invest in startups by taking equity positions in them, via crowd-sourcing sites such as IndieGoGo. Previously only accredited investors, individuals with an annual income of at least $200k per year or a net worth of least $1m could play in this arena.

IndieGogo has responded to this opportunity by recently launching equity crowd funding site, Equity IndieGoGo. Now entrepreneurs can offer more than a pat on the back and a cool t-shirt to people who invest in their dream. Entrepreneurs can offer actual equity to investors. It’s a win win for all.

Investments on the Equity IndieGoGo platform start at $100 and investment bank, MicroVentures, handles all transactions including cap table calculations and other back-end investment logistics.

Are you the next Chris Sacca, billionaire VC? What startups will round out your portfolio?

Hit us on the Gram and let us know.

Martel

Startup: So What The Heck is the Difference Between Series A, B and C Rounds of Funding?

In the startup world you often see headlines of company X raising a gazillion dollars in a Series A, B or C round of funding. What does this actually mean? Like most people on the outside looking in all I really knew was the companies were receiving funds in order to continue growing their businesses. Anything after that was Greek to me.  I decided to dive a little deeper and here’s what I discovered.

  • Seed Round – So you’ve  come up with a great idea but you need funds to get the idea off the ground and really test if there’s a market for your product or service. You’re planting the seed for your business. Once you’ve tapped out of finances from friends, family and your personal stash to jump start the business, in comes Angel investors. These investors typically provide the funds for this early stage of your business for a percent of the company, naturally. Angel investors are wealthy individuals with a minimum net worth of $1 million who  earn over $200k per year in income. During the Angel round of investing startups typically raise $150k to $2m.
  • Series A Round – Now that the business has developed a track record and has exhibited good signs that it’s a going concern it’s time to improve the product and begin scaling up. This is where the big boys and ladies come in. Venture Capital firms invest heavy paper aka boat loads of cash in exchange for their piece of the pie (of course) and lending their expertise and knowledge. Series A rounds typically raise approximately $2m to $15m.
  • Series B Round – This round is similar to the previous one. Many of the same VC players are involved. The goal here is expanding the company’s reach, acquiring the proper talent for the organization, increased marketing and advertising takes place in this round. The funds raised at this stage run between $7m to $10m.
  • Series C Round – At this point you’re clearly a successful company. You may need funds for a strategic acquisition, or  expansion into foreign markets, etc. In addition to the VC firms, Angel and other early investors you have some new faces.  Hedge Funds, Investment Banks and Private Equity Bankers enter the fray here. They have a ton of cash and expertise that they infuse into the company to continue the expansion.
  • IPO – The Investment Bankers can help bring the company to public markets via an “Initial Public Offering.” This allows us common folk to get a piece of the pie by purchasing shares via our favorite trading platforms/brokerages. We own a portion of the company and in exchange they receive funds (the cost of each share purchased) to further develop the business.

 

ABC

Now you know your A,B,C’s!

 

Martel

Check out Investopedia for more details on the different stages of funding.

 

Kobe Bryant Launches $100 Million Investment Fund

Looks like we have a new player in the venture capital business (See what I did there? Basketball… Kobe… Player? Ok moving on). This is good news for Moguls on the Grind changing the world through entrepreneurship. Kobe has partnered with former CEO of Web.com, Jeff Stibel to create Bryant Stibel. The $100 million fund is currently self-funded by the two partners (must be nice or silly, didn’t anyone ever tell Kobe about O.P.M. It’s better to invest with Other People’s Money). The duo intend to focus on media, technology and data ventures. Currently the fund is closed to outside investors (stop being selfish Kobe, we talked about this already).

Bryant and Stibel have been investing together for some time now. The firm has positions in 13 companies, including notable investments such as: The Players’ Tribune, LegalZoom and Alibaba.

Well played Kobe. Cheers to even greater success off the court.

Martel

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The Female-Only VC Firm Killing it in Silicon Valley – Forerunner Ventures

Forerunner Ventures is a women only investment firm killing it in the male dominated venture capital industry. Let’s take a closer look at this company that’s flown under so many people’s radar.

Forerunner Ventures was founded in 2003 by Kirsten Green. The company specializes in e-commerce investments. They’re philosophy revolves around capitalizing on the growing trend of shoppers ditching brick and mortar businesses for online shopping. This investment strategy is clearly paying dividends. Since July of this year, 2 startups have sold for at least a $1 billion (unicorn status). Dollar Shave Club was acquired by Unilever for $1 billion and Jet.com acquired by Walmart for $3.3 billion. Can you guess the only venture capital firm with the wisdom (or luck) of having invested in both companies? You guessed it, Forerunner. Their investment in Dollar Shave Club alone is expected to earn over $40 million for the firm. Nice!

Some of Forerunner’s other notable investments include Birchbox, Warby Parker and Hotel Tonight. Is there another billion dollar exit around the corner? We shall see.

Are you the founder of a game changing startup? We’d love to hear your story. Hit us on the Gram.

Martel

 

Did You Know Actor, Ashton Kutcher Started a Company and Turned $30 Million to $250 Million?

 

5 Years ago Ashton Kutcher and friend Guy Oseary invested $500k in a little known company called Uber. That investment is worth a cool $50 million today. Not bad for the “Dude, Where’s My Car” actor. Ashton and Guy, along with a 3rd investor formed a company called A-Grade Investments. Before long they had billionaires such as Mark Cuban, David Geffen and Eric Schmidt begging for a piece of the action (well maybe not begging). After their initial home run with Uber, A-Grade was able to easily raise funds for further investments. The company subsequently invested early in startups that are now household names such as Pinterest, Aribnb, Spotify, Uber, Shazam and Skype. Over 6 years Ashton and gang have turned $30 million into $250 million. Let the good times roll!

Hmmmm maybe we should start a Mogul Grind Investment Fund. We have top talent that can give Ashton a run for their money! I’m on it MGs.

Martel

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