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š¶ 16 Lessons from Brad Feld (Partner @ Foundry Group)
Expanding startup investing out of Silicon Valley, networks of trust, benefits of flying under the radar, and what the market rewards in a downturn
Clay Norris
October 19, 2023 ā¢ Estimated Reading Time: 7 minutes
Good morning š
He wrote the book āVenture Dealsā, which has been read by thousands of aspiring investors and entrepreneurs. He is the co-founder of Techstars and a partner at Foundry Group.
He has invested in hundreds of founders over his 20+ year, and here are some of our top lessons from studying Brad and his career.
Explore all investor deep dives here.
Lessons
Economics and control are the only things that matter within a term sheet. Everything else is gravy.
Networks of trust are rooted in relationships based on a common set of norms and values that bind a group of people together. Successful outcomes in startups and venture investing require teamwork that is grounded in this trust along with a shared sense of purpose.
Flying under the radar > always being in the spotlight. Focus is a competitive advantage for founders, and focus is hard to come by when you are the center of attention.
Markets reward growth until they donāt. Then they reward profitability. The trick is to be in a position to make the switch when you need to.
You donāt know anything until youāve lived through a downturn. Scars create wisdom.
Emotions are the enemy of good decision-making. The best investors are able to remove the emotion completely from the decision.
Should you fire employees who are high on culture and low on competence? No ā you should find them a different role that they are better suited for.
The better your mentors, the better your career options. Mentors help you see around blindspots, and they level with you when youāre being irrational. Techstars is built around the mentor-support model, and their portfolio companies are able to leverage the collective knowledge of all of the mentors within the program.
A healthy obsession is required. All of the entrepreneurs you admire have been maniacal about building their businesses. You donāt need to necessarily match this level of obsession, but you need a healthy version of it if you want to succeed.
Fund size consistency matters. All of Foundry Groupās funds have been the same size. Feld found that growing like crazy as a fund meant that more time would go towards training inexperienced entrepreneurs and less time towards working closely with the more experienced ones.
Quotes
āYou want to start a company, you need to go to Silicon Valley, is no longer the narrative"
āFailure is a key part of entrepreneurship, but, as with many things in life, attitude impacts outcomeā
"We are in need of diverse teams more than ever, but we are unfortunately hardwired to distrust people who are different from us. The ability to consistently overcome this limitation of human nature separates vibrant innovation systems from the others.ā
"A lot of people rely on the same arguments over and over again when negotiating. People who negotiate regularly, including many VCs and lawyers, try to convince the other side to acquiesce by stating, 'That's the way it is because it's market.' We love hearing the market argument because then we know that our negotiating partner is a weak negotiator."
āThere are only a few key things most VCs look at to understand and get excited about a deal: the problem you are solving, the size of the opportunity, the strength of the team, the level of competition or competitive advantage that you have, your plan of attack, and current status. Summary financials, use of proceeds, and milestones are also important."
Together with the Vauban
How smart investors structure deals š§
If youāve never structured an SPV deal, Iāll let you in on a secret ā¦ Structuring them is BRUTAL. |  |
There are a million things to know, theyāre complex, and they can become so expensive that you start to question whether itās even worth all of this work for the deal.
Thatās where Vauban comes in.
Their team is running a webinar next week (10/26) to run through everything you need to know to set up your first SPV deal. Itās free to attend, and it will have useful info for anybody looking to start syndicating deals.
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