Marvin Liao’s Post

One commonality I’ve noticed in the best Early Stage Venture Capital investors is the ability to critically evaluate people (often founders) and deals. The human brain is excellent at simplifying complex things to make the world around us easier to grasp and navigate. This is beneficial in most scenarios. In other times such as when it relates to our assessments of other people this mechanism becomes less beneficial and more detrimental. This looks like “Human X was successful in Venture 1. Human X hails from Place A and graduated from School.” We then model this example and overlook anyone who doesn’t fit this model. With good intentions, to counter this we then lean the other way creating alternative founder profiles to focus on. We see this same thing happening in politics and voter behaviour across the world. Do you think it’s possible for more humans to get to a place where critical, merit-based evaluation of others become the norm? #thinkingoutloud #earlystagevc #investments #founderprofile #africanfounders

🧐 Some startup founders believe that a financial model is only necessary for investors, seeing it as an outdated attribute of fundraising important only to venture capitalists. Questions like "Why should we build a model if it's unlikely to happen anyway?" or "How can I make accurate assumptions at this stage of the business?" are common among founders. Is there a chance that a financial model could be an effective tool for managing business operations? Founder and CEO of RiseGuide by venture builder SKELAR, Oleksandr Matsiuk, shared insights about building the financial model in his op-ed column for AIN: why it's important, what it includes, and how it should look like to generate income for the business. 💊 Find out more about this magic pill for founders by following the link in the comments.

🎯 Stand Out in the Funding Game: Nail Your Investor Documents! Did you know only 0.05% of startups get venture capital funding? That’s just 1 in 2,000! 🚀 If you're aiming to secure funds, it's critical to create investor-ready documents that grab attention and build trust. Here are some proven tips to increase your odds: 1️⃣ Clarity is King: Investors skim first—make your pitch deck visually engaging and straightforward. 2️⃣ Highlight Metrics that Matter: Include KPIs like CAC, LTV, or revenue growth to show traction. 3️⃣ Mistakes to Avoid: Don’t forget to stress-test your financial model! Overly optimistic projections without solid justifications are a major turnoff. 💡 Pro Tip: Always keep your pitch tailored. According to a recent study, investors are prioritizing clear exit strategies and risk mitigation now more than ever. Start strong, avoid common missteps, and you’re already ahead in the fundraising game! 🏆 What’s been your biggest challenge in preparing investor documents? Let’s discuss below! 👇 #FundingTips #StartupSuccess #PitchDeck #FinancialPlanning #InvestorReady

LET THE INVESTOR SPEAK, part 1: "Find yourself a person who asks questions that hurt, and who pushes you to care about the dead boring stuff." That's Raoul Dobal's advice on how to spot the perfect investor and board member. As an angel investor, active board member and CTO of PMG Investment Solutions AG, Raoul is ready to get his hands dirty and to serve as an active and committed board member in the startups he invests in. It's also the best way for him to make sure his investees will succeed: giving them an experienced and hands-on support, and making sure the nitty-gritty aspects of growing a company are not neglected. We're talking compliance, data security, HR strategy, and the legal setup. Because while building an awesome product might be the most activating thing to do, setting the reliable groundwork is what's going to help limit future risk. As a startup that got ISO-27001-certified in its first year of existence, we at Neur.on couldn't agree more. In our case, legal and banking clients are only working with us because we can prove how secure our data flows are. That's super boring stuff. Until it isn't. ---------- In the ongoing series "Let the investor speak", I'll showcase personal insights from investors all across the board to help you diversify your search for an angel investor or VC company.

- 🧠 Understand VC motives: They're seeking unicorns but may lack funds or industry focus to invest promptly. - 🤔 Assess your needs: Ensure your startup's readiness and compatibility with the VC's goals before proceeding. - 🚫 It's okay to decline: Meetings offer reflection, insights, and relationships, even if funding isn't immediate. - Want full insights? Subscribe to Tech in Asia to read the entire article.

There's a way to reduce all those VC losses, and it's a strategy investors already understand

We launched a new issue today within our newsletter at Nodes Ventures. Whilst building Tools for progress - our flagship issue that collates the most intriguing reads each week across blogs, social posts, and academic articles - we found that there wasn't a tonne of good content out there for angel investors (Mario Gabriele and The Generalist being a bold exception). So we decided to build our own. Our new issue, Community Wisdom, features intimate conversations with accomplished angel investors, distilling their most profound insights into focused stories. Every two weeks, we dive deep into one key lesson that shaped their investment journey. We've kept the pieces short (we know how busy you all are) and actionable. For our first one, Beth Carter interviewed me and wrote this piece. We have a really strong lineup of angels for future issues. Angel investing is a nebulous craft, favoured by lone wolves. But, we’re so much better as a collective. We hope these insights help both emerging and long-time angel investors up their game. Enjoy!

Monday morning Brain Food. "Simply put, outlier returns, while less frequent, are all that matter." I only recently connected with Sumeet Gajri and found this piece super interesting. Of course, we now know that VCs forgot about outlier returns in the early 2020s. Sumeet introduces the Tail Ratio, a new metric that helps LPs better evaluate fund managers by focusing on the improbable outcomes required to return a fund. During the pandemic, massively inflated valuations and an influx of capital distorted market reality. The Tail Ratio offers a more down to earth perspective, emphasising realistic expectations and the challenge of achieving the outlier returns we thought were here to stay. Applying the Tail Ratio can lead to strategic investment / realistic valuations, ultimately promoting healthier growth in the VC space. Check out Sumeet's insights here - Sumeet look forward to more from your substack soon!

𝗛𝗼𝘄 𝗪𝗲𝗹𝗹 𝗗𝗼 𝗬𝗼𝘂 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗩𝗲𝗻𝘁𝘂𝗿𝗲 𝗖𝗮𝗽𝗶𝘁𝗮𝗹? Every startup founder wants to raise money, but most don’t truly understand how venture capital (VC) works. Here’s a quick guide to get you started: 1️⃣ 𝗠𝗼𝗱𝗲𝗿𝗻 𝗩𝗲𝗻𝘁𝘂𝗿𝗲 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗦𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲: How capital flows from Limited Partners (LPs) to startups through VC funds. 2️⃣ 𝗩𝗖 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰𝘀: Key metrics like Net IRR and MOIC, and how returns are calculated. 3️⃣ 𝗧𝗵𝗲 𝗝 𝗖𝘂𝗿𝘃𝗲: The difference between the investing phase and the harvesting phase. 4️⃣ 𝗧𝘆𝗽𝗲𝘀 𝗼𝗳 𝗟𝗣𝘀: From pension funds to sovereign wealth funds—who’s really backing VCs. 5️⃣ 𝗜𝗻𝘁𝗲𝗿𝗶𝗺 𝗠𝗲𝗮𝘀𝘂𝗿𝗲𝗺𝗲𝗻𝘁: How quarterly reports track performance. 6️⃣ 𝗗𝗶𝘀𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻 𝗼𝗳 𝗥𝗲𝘁𝘂𝗿𝗻𝘀: The mechanics of carried interest and profit-sharing. Why does this matter? VC isn’t just about securing money—it’s about building relationships. As Chris Tottman often says, “Understanding how VCs think and operate is the foundation for better partnerships.” Start with this guide. Better knowledge leads to better opportunities. Enjoyed the post? Follow Rubén D. for more You can also join 100,000+ founders and VCs who receive these insights in my weekly newsletter: https://lnkd.in/dtifw4mC

VC is dangerous to founders. Just do the math. Take a $500M VC fund that writes 25 checks of ~ $20M each and gets ~20% ownership in each company. A "good" result for this VC's fund (to hit $1.5B) is: - 15 companies go to ZERO - loss of $300M (exit at zero) - 5 companies return the capital - $100M back to the fund (exit between $20-100M) - 2 companies 5x - $200M back to the fund (exit at $500M) - 2 companies 8x - $360M back to the fund (exit at $1B) - 1 company 50x - $1 BILLION back to the fund (exit at $5B) That’s $1.360B returned on $500M. But look at what happened: 5 had meaningful outcomes. 5 more or less failed... And 15 founders FAILED OUTRIGHT. Most founders had bad results, but the VCs don't care because they're well-diversified. Obviously, this is rough math, I'll flesh it out in this week's newsletter. Link in first comment.