A Quote by Justin Kan
Early-stage startups are all about the founders and team.
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The stage of investing that I do is seed stage, so it's really early. Here's a pair of founders who maybe have a prototype. They have a little bit of traction, maybe one employee, tops. At that stage, you really, really can only evaluate a company based on those founders and what they've been able to build. It's very, very team driven.
Seed stage is an investment area that is really important for early stage startups. It feels like there is a need for trusted, experienced people to work with and to guide startups at this level.
Startups are companies that are still in the process of searching for a business model. Ventures that are further along and executing their business models are no longer startups; they are early-stage companies.
For a lot of people, one of the reasons they don't like to work for founders of startups is that they can be sensitive and protective around what they've built. You have an emotional attachment to the early marketing and technology materials, and you don't want to hear that anything's wrong with them.
Startups are often best at solving the personal problems of their founders. The more diverse the founders, the more types of problems can be solved - and the more people who will be positively impacted by technology.
I think co-working spaces, incubators, and accelerators outside of the Bay Area do a lot to foster a local startup scene - which is really important for early founders, but I also think that exposure to the Bay Area is extremely valuable for startups.
The market is ridiculously overcrowded with early stage investors. This results in a talent drain, where the best talent gets diffused and work for their own startups.
I have seen a lot of now-great companies at their earliest stages, and these early-stage startups are not built by the senior people who know how to run and scale big-company machines.
I love working with really early stage startups where the outcome is still in doubt. Maybe they'll go on to greatness, or maybe they'll never get off the runway at all.
At Andreessen Horowitz, we talk about the notion of being 'too hungry to eat.' That's to say, we often see startups that are so entrenched in the product that the founders forget they need muscle to grow.
The thing that kills startups at some level, is the founders giving up.
Minority founders often feel like they are on the outside looking in when it comes to Silicon Valley and tech startups in general.
It's often lost in most Silicon Valley startups, the importance of storytelling when most people are thinking about they assemble their team and the critical functions that the team needs to be successful. Storytelling is normally not on the list.
The reason why we decided to put the focus on minority and women-funded startups is because this demographic of companies and founders is just underrepresented, they're under-invested in.
When I started to go out there and listen to different startups or different CEOs talk about how you build this company from a two-person team to a team of 500, I really just stepped back and was like, 'Well, it's not necessarily a business, but football has a lot of similarities to that.'
Companies that acquire startups for their intellectual property, teams, or product lines are acquiring startups that are searching for a business model. If they acquire later stage companies who already have users/customers and/or a predictable revenue stream, they are acquiring companies that are executing.
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