Startup Funding Espresso – Mistakes VCs Make

Mistakes VCs Make

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Venture capitalists make mistakes just like every other investor.

Here’s a list of mistakes VCs make:

Not investing consistently through the market's ups and downs.

Valuations are better in down markets, and good deals are hard to find in up markets.

Treating venture capital funding as a one-size-fits-all.

There are some sectors of the market that do well with VC funding, while other sectors only waste it.

Quoting returns without taking into account the management and carry fees.

Fees are a cost of investing and should be counted in the return metrics.

Not taking into account the overall portfolio structure.

Time to exit, sector position, and other factors can help build a solid portfolio.

Investing in overvalued startups.

During frothy markets, one can get carried away by stellar startups even though they have outsized valuations.

Not scanning the overall industry for the best deal.

Some VCs choose startups because they are accessible, but this may fail to find the best startup in the industry.

Funding too many deals in a specific application.

Diversification is still a key factor in successful startup funding.

Consider these mistakes VCs make.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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