What We’ve Been Reading

Designing startup metrics to drive successful behavior

Great companies are almost always run by great management teams. And great management teams know that the only way to improve a process is to start by measuring it. Good metrics should also be actionable, and drive successful behavior. In this post David Skok, at for Entrepreneurs, hope to help show how to figure out which metrics matter the most, and how to design them in such a way as to drive behavior that will lead to the results that you want.

Why startups prefer raising seed capital from angel investors rather than from seed funds

Seed funding, typically the earliest investment in a startup, is no longer the territory of angel investors and dedicated seed funds. Stealthily, big-ticket venture capital funds that normally make large bets in startups are writing smaller cheques to younger companies as well, marking a tectonic shift in investment dynamics. Read why Shonali Advani and Evelyn Fok, ETRetail.com, believe startups are looking more and more at angel investors.

Prioritize Product Development by the Four Stages of Use

When prioritizing feature development, Ben Yoskovitz, Instigator Blog, likes to think of a product in four pieces: Ongoing Engagement, Onboarding, First User Experience and Marketing/Growth.

These are actually the steps a user goes through during their lifecycle with your product (listed in reverse). Think of your product less in terms of features and more in terms of the experience you’re trying to provide from start to finish.

21 Characteristics of an Entrepreneur (And How to Master Them)

As an entrepreneur, you will need to master a number of skills to achieve success.

From the ability to notice new business opportunities; to being happy when taking risks; from being a natural promoter to being particularly adept at cultivating networks than others.

In fact, the range of skills that successful entrepreneurs demonstrate has led to some debate about whether or not entrepreneurs are born or made. Read what the blog at EpicLaunch have to say about the born vs. made debate.

Products are Lines, not Dots

Jevon MacDonald, Startupnorth.ca, sees a lot of founders and startups struggling with explaining what they are trying to accomplish. Many are just focused on how they are going to do the next thing. The next release, the next pitch, the next campaign.

Releasing a product is not an accomplishment in and of itself. Launching isn’t either. Getting a feedback and signs of traction never quite feels like enough.

New Investor Technology to Provide Insights into Investing in Private Companies

Genesis by Lagniappe Labs
Platform Resulted from Collaboration by Investment Data and Software Development Industry Leaders

VC Experts and Switchback Partners, a software development team based in Austin, Texas that specializes in stock market trading and analytic platforms, join to reduce inefficiencies in the private market analysis and transaction space. The new entity, Lagniappe Labs, federates large volumes of private company information from many difficult to acquire sources. Their platform, “Genesis”, provides tools that allow users to build their own analysis on technicals around the specific private financing deal terms, Valuations and Multiples, Cost of Capital, and many other models to satisfy research due diligence practices. Genesis also allows users to build their own indexes and themes on private companies and then compare those against similar public companies.

Read the full Press Release

What We’ve Been Reading

This post is an assembled collection of insights, stories and commentary on startups, venture capital and entrepreneurship.

Zero-sum marketing channels: Good or bad for a startup to pursue?

Many marketing channels are “zero-sum,” meaning that if one company wins a piece of the channel, other companies cannot also use that piece. Jason Cohen looks at whether zero-sum marketing for startups is a good idea in Zero-sum marketing channels: Good or bad for a startup to pursue?

What Startups Can Learn from General McChrystal about Combining Strategy and Execution

 Over at First Round Review, Adam Pisoni interviewed General Stanley McChrystal to see how he helps companies become more effective. They examine one key question: “How do you create a cohesive strategy where many people are executing in unison when the strategy and environment are constantly changing?” Read some of General McChrystal’s thoughts on the subject in What Startups Can Learn from General McChrystal about Combining Strategy and Execution.

Understanding an M&A Term Sheet

 Congratulations! You just received an offer to acquire your company.  A serious buyer will present you with a term sheet that covers the basic terms of the transaction.  Do not make the mistake of agreeing to a term sheet without consulting with your lawyer. Jamie Leigh, Partner at Cooley LLP and blogger at CooleyGo, goes over why it’s important to understand term sheets before you agree to anything in UNDERSTANDING AN M&A TERM SHEET.

Startups are like Patients. They Need Doctors and Hospitals.

I interact with a lot of startups on a daily basis, while they are in various stages of evolution. Often, it feels like being a doctor or running a hospital. That led me to think that startups are a little bit like patients. Some are in the Intensive Care Unit. We’re not sure if they will survive. They need intensive care in order to make it. Every other day someone will come into the Emergency Room, with something urgent that needs to be looked at, either because they had an unexpected accident, or because a problem erupted and they are bleeding. William Mogayar at S-U-M Startup Management examines the analogy of startups and patients in Startups are like Patients. They Need Doctors and Hospitals.

Treasury Department Starts The Regulatory Ball Rolling For Marketplace Lenders

Guest post by Richard P. Eckman, Gregory J. Nowak, Esuga T. Abaya, and Ashleigh K. Reibach – Pepper Hamilton LLP

On July 16, 2015, the U.S. Department of the Treasury (the Treasury) issued a notice and request (the Request) for public information concerning the role of marketplace lending in the financial services industry. Treas. Notice 138 (July 20, 2015). Marketplace lenders, or “peer-to-peer lenders” as they are often referred to, are online platforms that match investors with borrowers. Some platforms cater to small business borrowers, others focus on consumer lending, and others focus on real estate lending, receivables factoring, student loan origination and much more. The marketplace lending industry originated $12 billion in loans of various types in 2014, two platforms have gone public, and several securitizations of these loans have been packaged and sold. Yet, the industry has remained largely ignored by policymakers and regulators on any systemic basis — until now. In the consumer area, there are a host of federal laws that apply to loans made to consumers, and many states also act to protect borrowers, regardless of who the lender is. Nevertheless, the state-by-state patchwork of laws and regulations, and the application of securities and banking laws designed for other purposes and generally applicable here, have caused slower evolution of this marketplace than would otherwise have been possible had the “rules” been more carefully and robustly designed.

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From Around the Web

This post is an assembled collection of insights, stories and commentary on startups, venture capital and entrepreneurship.

Banks and Entrepreneurs: Breaking the Logjam

The partners at Matrix Partners look at the innovation occurring in the fintech sector and why the banks are not leading it.

The Babe Ruth Effect in Venture Capital

Chris Dixon, General Partner at a16z, looks at the “Babe Ruth” effect in venture capital and why new VCs have trouble with it in his blog at CDIXON BLOG.

The Management Framework that Propelled LinkedIn to a $20 Billion Company

First Round Capital – The Review looks at how well defined decision making authority is key to successful CEO transitions and some of the management lessons Jeff Weiner learned.

Proposed Treasury Regulations May End Private Equity Management Fee Waivers

Brian M. Blum, James Chudy and C. Brian Wainwright at Pillsbury Winthrop Shaw Pittman’s InvestmentFund Law Blog look at the common practice of private equity firms converting their right to receive management fees from the funds they manage into the right to receive profits and distributions from the funds through management fee waiver arrangements to achieve a lower tax rate and how the IRS may want to change this.

If You Chase Two Rabbits…

Tomasz Tunguz, Partner and venture capitalist at Redpoint, looks at “When is the right time to expand geographically, add a second product or pursue another customer segment?” Read what his three part answer is.