First an observation on the VC market. Truly, the VC landscape has evolved. Names of rounds, like Pre-seed, Seed, and Series A, used to indicate stages of business traction and funding. Pre-seed generally refers to the first check a company receives. Or, in layman terms, “I have an idea. Take a bet on me!” Meanwhile, Series A, generally means the company has achieved product-market fit: “People want our product!! Real people, not just my parents and relatives!” That change, fueled by huge valuations, tech IPOs, and the push to get into deals sooner for a better chance at returns, has also changed the trajectory of what it means to be an early stage venture capitalist.

Recently, we at Betaworks announced our latest investments centered around “Fixing The Internet: Building A Better Web”. Amongst hundreds of opportunities, these companies stood out and largely were invested in within ninety days.

Three insights that stood out as an investor:

1. 🎯 Have a targeted thesis.

   In writing the first check, you (the investor) are taking the largest risk. And if the product or team is innovative enough, these concepts have few proof points of accuracy. Conviction, therefore, will be largely based on speculation. For instance, at Betaworks, a couple years ago, we defined “Fixing The Internet” as a way of acknowledging that many facets in today’s tech—as governed by the major players—are broken. We deem these to be crucial issues that are impossible for large companies to fix from within. Some of these issues include privacy, the emergence of the decentralized web, and new business models for creators to monetize. In leading up to these investments, we’ve talked to hundreds of companies over the years, aiming not to disrupt or fix from within, but to reinvent and build something new. The team committed to researching this thesis area over years. Thus, when it’s time to invest at the earliest stage, we’re able to get comfort around the risk.

2. 💨 Speed matters. Resist the FOMO.

   These days, funding is flush. It’s not hard to convince yourself to just wait for more proof points before investing. The problem is that when those data points become available, the company you had your eyes on is now at 3 to 5x your proposed valuation. Just like when you see the video game you’ve been eyeing jump back to retail price after you waited for further holiday discount, it stings so bad. After you’ve done the research and scoured the market own the conviction and make the offer.

3. 🤝 VC deals are a two-way street.

   Investment transactions are (usually) rarely a two-way street. As taught by conventional business school textbooks, a good investor wants to buy low, and a good founder wants to sell high. Naturally, that’s a conflict of interest. And for one side (investor or founder) to “win”, the other side has to take a hit. The variance in that win/loss is dependent on the amount of leverage the “winning side” may have. In today’s market, founders often have an equal amount of leverage as investors. Founders increasingly have access to large and varied pools of capital, and are offered generous investment terms. In turn, investors become the sellers, for the privilege of partnering with a great company. We experienced that first-hand. In reviewing hundreds of investment opportunities, we were very selective in the startups we made offers to. Yet, there were still some who politely declined the offer. Frankly, even eighteen months ago, this was more rare.

There’s still a ton to be distilled in the end-to-end investment process, like the intensity of sourcing, due diligence, deal structuring, financing and post-closing that happened over roughly three months. Frankly, each stage is worth writing individual posts about – stay tuned!

Finally, a warm welcome to the portfolio, Readocracy, Rownd, Blockchain Art.