The Seraf Compass

JANUARY 24, 2024

In our interview series we embarked on a journey to explore the experiences and insights of seasoned investors. Through it we uncovered the worst and best investing experiences encountered by these individuals and the valuable advice they have to offer.

advice 147

advice investing investment 147

The Seraf Compass

JANUARY 10, 2024

Entrepreneurs will face a huge number of decisions as they move from concept to commercialization. One of the first major decisions is what type of legal entity to form in order to move their great ideas forward. Why does it matter?

angel investing 199

angel investing investing investment entrepreneurs 199

The Seraf Compass

JANUARY 3, 2024

Smart investors should keep in mind that there is perhaps no more seductive trap for the investor and entrepreneur alike than attributing magical powers to new technologies and new products which give them the ability to cast a spell over customers and make them change their behavior. Rohit Bhargava has written a great piece called The 4 Principles of Delusional Economics.

entrepreneurs 201

entrepreneurs technology 201

The Seraf Compass

DECEMBER 27, 2023

Congrats - you have been working at, or an advisor to, the same company for a long time, and you have amassed a pile of stock options that have been granted to you over the years. You are vested in them so now you have the right to exercise them. But should you?

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224

The Seraf Compass

DECEMBER 20, 2023

Crowdly CEO Dan Sullivan and I did a talk for The Capital Network on the pros and cons of crowdfunding for entrepreneurs and investors. The key point I made is that most people still confuse two very different kinds of crowdfunding activities.

networking 196

networking entrepreneurs capital 196

The Seraf Compass

DECEMBER 13, 2023

When evaluating new venture opportunities, every angel investor thinks about risk, but how we think about it and assess it is very personal. I did an interview with Greg Stoller, a Professor at Boston University's Questrom School of Business, who is studying risk from different perspectives. He asked me for my thoughts on risk from the perspective of early stage investors, and I figured I’d share my answers here.

opportunity 184

opportunity ventures 184

The Seraf Compass

DECEMBER 6, 2023

In Part I of this article we discussed the major topics covered by the legal documents that set up a venture fund. In Part II we addressed the limitations placed on investors in funds, governance standards and key accounting issues. Now let's talk about how to find good legal and accounting services and what tools you will need to manage your fund efficiently and successfully.

venture capital 215

venture capital ventures capital 215

The Seraf Compass

NOVEMBER 29, 2023

One of the biggest challenges faced by early stage investors is to assemble a portfolio of investments that in aggregate return more than 2 times the original amount invested in the total portfolio. In the language of Venture Capital, the goal of a successful early stage investor is to achieve a Distributed to Paid-In (DPI) ratio greater than 2X. In other words, for every dollar you invest in your portfolio, you want to get two dollars back over time.

investing 229

investing investment venture capital capital 229

The Seraf Compass

NOVEMBER 22, 2023

As early stage investors and advisors know, mastering the techniques to hack the board can pay back a CEO’s effort many times over. Helping a CEO prep for a board meeting is super important, but it is a waste if the CEO cannot actually run a good meeting. Well-run board meetings are essential for the success of a company. Here are some tips for running a stellar startup board meeting that you can share with your CEOs.

board 244

board startup 244

The Seraf Compass

NOVEMBER 15, 2023

In Part I of this article we discussed the major topics covered by the legal documents that set up a venture fund. Now let's address the limitations placed on investors in funds, governance standards, and key accounting issues.

venture capital 220

venture capital ventures capital 220

The Seraf Compass

NOVEMBER 8, 2023

Have you ever been in a situation where you are negotiating an investment with an entrepreneur and you can’t agree on the pre-money valuation? Any early stage investor who makes more than one or two investments will certainly run into this issue. It’s never an easy discussion, so it helps if you are prepared ahead of time with concrete facts and figures for your recommended valuation.

capital 230

capital education entrepreneurs investing 230

The Seraf Compass

NOVEMBER 1, 2023

There are reams of advice pieces out there warning startup CEOs that they must pick the perfect board. For early stage startups this advice is theoretically sound but practically useless. As early stage investors know, mature companies may be able to pick a dream board, but startups don’t have a lot of flexible slots open to allow for shaping. Advisors should coach that there are four basic aspects to hacking the board.

board 222

board founder advice startup 222

The Seraf Compass

OCTOBER 25, 2023

If you make a simple mistake while driving, like hitting some black ice you didn’t see, and you skid off the road into a ravine and total your car, assuming no injuries, that’s a bummer and a major inconvenience for you. But if you borrow your friend’s car and do the same thing, sorting out the legalities can be significantly more complicated. Those same dynamics apply to fund investing.

venture capital 222

venture capital ventures capital investing 222

The Seraf Compass

OCTOBER 18, 2023

The first time you receive stock options as an employee is a magical moment. You feel suddenly part of something bigger than just earning a paycheck. You daydream about how various financial scenarios might play out. You take a sudden interest in the wellbeing of your company and the factors which affect its stock price. It is no surprise therefore that startups are nearly universal in their adoption of stock options as a tool for attracting, motivating and retaining new hires.

strategy 203

strategy investing investment startup 203

The Seraf Compass

OCTOBER 11, 2023

At Launchpad, we invest in dozens of companies every year. In the past, we frequently faced situations where we put a lot of work into diligence with a company and suddenly found out we were miles apart on deal term expectations and couldn't close the gap. This is a waste of time for all involved, and is the kind of frustration that leads to “deal fatigue” for investors trying to build a portfolio of investments.

entrepreneurs 209

entrepreneurs investing investment 209

The Seraf Compass

OCTOBER 4, 2023

Advisory boards are not always that well understood, but they can be a huge driver of success for start ups. Advisory boards can provide a company with experience, connections, perspective, and legitimacy. And there are times when they can provide encouragement to even the most battle-hardened CEO. But how do they work and what are the mechanics of getting one set up?

board 252

board 252

The Seraf Compass

SEPTEMBER 27, 2023

When I began making angel investments almost twenty years ago, I had no concept of what it meant to build a portfolio of early stage tech company investments. It wasn’t because I lacked financial savvy. I considered myself a fairly knowledgeable investor in the public markets. I understood key investing concepts like portfolio diversification, risk-adjusted investment return, market capitalization, and staging capital.

angel investing 215

angel investing startup investing investment 215

The Seraf Compass

SEPTEMBER 20, 2023

Conventional wisdom is that startups with cofounders succeed more often than startups run by solo entrepreneurs. Whether true or not, startups with multiple founders face key issues that will affect the company and its ability to raise money, grow, and ultimately be successful.

angel investing 280

angel investing founder investing investment 280

The Seraf Compass

SEPTEMBER 13, 2023

In Part I of this article we talked about the challenges and responsibilities General Partners face. In Part II we took a closer look at the time commitment involved when you're ready to invest in a company, what's required when serving as a board director, and how GPs should handle communications with their LPs. Now let's focus on the time required for networking and fund affiliations.

board 195

board networking investing investment 195

The Seraf Compass

SEPTEMBER 6, 2023

Angels talk a lot about mentoring, but how many know what it really means? If you can’t describe what a great mentor does, you’ve probably never been one. A great mentor relationship is actually a pretty rare and special thing.

entrepreneurs 267

entrepreneurs 267

The Seraf Compass

AUGUST 30, 2023

As your angel career develops, and you start to build a larger portfolio of companies, you are increasingly asked to make follow-on investments. Not only do companies need investment to get off the ground, the faster they grow, the more cash they need. Whether to follow-on, and how to follow-on, are questions which have long given rise to angel debate.

investing 268

investing investment development 268

The Seraf Compass

AUGUST 23, 2023

In Part I of this article we talked about the challenges and responsibilities General Partners face managing a fund. Now let's take a closer look at the time commitment involved when you're ready to invest in a company, what's required when serving as a board director, and how GPs should handle communications with their LPs.

board 304

board investing investment 304

The Seraf Compass

AUGUST 16, 2023

Networking is often cited as a core skill for entrepreneurs. But it is just as important for angel investors, whose job it is to help connect their companies to the people, resources and customers they need to succeed. Most investors have some or all of their professional career behind them and assume they know how to network. But it never hurts to review the fundamentals, right?

networking 301

networking entrepreneurs 301

The Seraf Compass

AUGUST 9, 2023

Venture Capital is one of those professions that is idealized by many and misunderstood by most. From a distance it seems like it should be great. You are your own boss, you set your own hours, you are not stuck behind a desk, you hang around with interesting go-getters and you sling big piles of cash around. What could be better? Let’s take a close look at some of the issues and challenges you will face in building a successful venture fund.

venture capital 270

venture capital ventures capital 270

The Seraf Compass

AUGUST 2, 2023

A group of angels turns up their nose at a company making a useful, well-targeted and well-validated computer peripheral product. The smart entrepreneur behind the company asks a pretty fundamental question in response: “Why do angel investors often turn up their noses at real, down-to-earth physical product companies and instead chase ethereal web and process flow services businesses?

entrepreneurs 288

entrepreneurs 288

The Seraf Compass

JULY 26, 2023

There can be tremendous advantages to working with angels in groups. The key is the speed with which an entrepreneur can find her champions. There is more process, but the results justify the effort.

pitching 281

pitching entrepreneurs 281

The Seraf Compass

JULY 19, 2023

As an active angel investor in the Boston tech sector, I witnessed many paths to a successful return on my invested capital. Sometimes the path is short and sweet. Other times the path is long and convoluted, but ultimately leads to a happy ending. I subscribe to the belief that as an angel investor I should be open to a variety of investment opportunities as I build a successful, early stage company portfolio.

sustainability 238

sustainability startup venture capital opportunity 238

The Seraf Compass

JULY 12, 2023

Entrepreneurs often cite “first-mover advantage” when asked to defend their early-stage businesses. They believe it will help them compete and defend their margins. It has come up several times, both in class discussions and at a MassChallenge panel I moderated on working with angel investors. Since everyone loves a good myth, I figured I would take a moment to examine this one.

entrepreneurs 315

entrepreneurs 315

The Seraf Compass

JULY 5, 2023

For the final step of the Seraf Method for valuing early stage companies, we bring it all together and apply our adjustments to a valuation starting point. As the Berkus, Payne and Risk Factor Methods illustrate, you have to start somewhere. But, in our view, an approach based on picking an arbitrary one-size-fits-all number does not drive a good enough result.

startup 287

startup 287

The Seraf Compass

JUNE 28, 2023

Are you walking around looking for swashbuckling daredevils as investment targets? Do you assume that the process of innovation is a series of great leaps and brilliant insights? You might be making a mistake. Entrepreneurship is arguably much more incremental, and much less risk-centric than that.

entrepreneurship 258

entrepreneurship innovation investing investment 258

The Seraf Compass

JUNE 21, 2023

Now we transition from the more macro concepts of the first two worksheets, Exit Practicalities and Financing Requirements, to a more micro set of issues. Worksheet Three helps you assess the relative attractiveness of a particular deal in the real world market context of your market at the relevant moment in time. How many times have you heard someone explain away a deal that couldn’t raise money, or a deal that raised at a seemingly crazy high valuation as “a function of the market” or “what t

startup 182

startup financing finance 182

The Seraf Compass

JUNE 7, 2023

After considering exit practicalities for a company in Worksheet One of the Seraf Method, the purpose of Worksheet Two is to gauge how much capital it is going to take to move that company to the most logical point of exit and estimate the impact that financing plan should have on the valuation you should pay. This is important to assess in the valuation context because, as we have discussed previously, more capital required means more financing risk and more dilution for you, both of which dras

financing 215

financing finance startup enablement 215

The Seraf Compass

MAY 31, 2023

In Part I of this article we addressed trends in VC fundraising, the roles played by GPs and LPs, and key questions fund managers should expect during the prospecting process. In Part II we looked at the primary elements of a fund prospectus and the critical skills every fund manager should possess. Now let's dive into fund size and sources of capital.

venture capital 293

venture capital VC capital ventures 293

The Seraf Compass

MAY 24, 2023

In Part I of this article we addressed trends in VC fundraising, the roles played by GPs and LPs, and key questions fund managers should expect during the prospecting process. Now let's take a closer look at the primary elements of a fund prospectus and the critical skills every fund manager should possess.

venture capital 310

venture capital VC capital ventures 310

The Seraf Compass

MAY 10, 2023

Staying on top of the early stage investing world requires a lot of reading. One of the biggest trends we witnessed over the past few years is the rapid pace of new early stage venture fund formation combined with significant growth in the amount of capital invested. A decade or two ago, most of the new funds were traditional VC funds located in technology hubs in the US and a few other countries around the globe.

venture capital 299

venture capital VC capital ventures 299

The Seraf Compass

MAY 3, 2023

Warren Buffett is known for turning a great phrase. Besides being the second richest person in the world, he is a creative writer with an ability to explain complex topics in a simple and effective way. Buffett’s concept of winning the Ovarian Lottery is an excellent starting point for the second article in our series on building a diverse portfolio.

creativity 213

creativity 213

The Seraf Compass

APRIL 26, 2023

There is a lot of confusion amongst new entrepreneurs on the subject of advisory boards versus corporate boards of directors. Some of that confusion is justified because there is some conceptual overlap. But they are very different animals.

board 289

board entrepreneurs 289