20VC: Techstars Founder David Cohen on Why Seed Investing Is A Different Asset Class To Venture, What Makes The Best And The Worst Board Members & Why Every Company Has To Have A Pessimist In The Room
David Cohen is the Founder and co-CEO of Techstars, the worldwide network that helps entrepreneurs succeed. To date, David has backed hundreds of startups including the likes of Uber, SendGrid, Twilio, ClassPass, PillPack and more. In total, these investments have gone on to create more than $80B in value. Prior to Techstars, David was a co-founder of Pinpoint Technologies which was acquired by ZOLL Medical Corporation in 1999. Later, David was the founder and CEO of earFeeder, a music service that was sold to SonicSwap. If that was not enough, David is also theco-author (with Brad Feld) of Do More Faster; Techstars Lessons to Accelerate Your Startup.
In Today's Episode You Will Learn:
1.) How David made his way from, his words "geeky hacker" to the founder of one of the world's largest accelerators, Techstars and investor in multiple unicorns?
2.) What does David mean when he says that when assessing founders he studies "the moment of integrity"? What does he want to see from founders in those moments? What are some potential red flags? If a negative response, what are the subsequent actions an investor must take in this situation?
3.) How does David think about the right time to establish a board? What are the benefits of establishing your board with the seed round? What does David believe is the key to highly efficient boards? How has David changed as a board member over the years? Why does David believe, when building a company, "you always have to have a pessimist in the room"?
4.) When negotiating deals, what does David mean when he says "the terms must match the story"? How does David determine between a bridge and a bridge to nowhere? What can investors do to protect themselves if the targets of the business are not met and they have an uncapped note in place? How should they communicate this?
5.) Techstars today invests in over 500 companies per year, how does David think about reserve allocation across the portfolio? How does David feel about stack ranking portfolio co's quarterly and concentrating capital accordingly? Why is this not effective? Why should seed and angel investing be an entirely different asset class to VC?
Items Mentioned In Today's Show:
David's Fave Book: The Soul of Money: Transforming Your Relationship with Money and Life
David's Most Recent Investment: Ordermark
As always you can follow Harry, The Twenty Minute VC and David on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
20VC: Techstars Founder, David Cohen on Scaling Techstars Ventures and Investing In Uber, Twilio and Sendgrid
David Cohen is the founder and managing partner at Techstars, so a few amazing stats on techstars first, they have a total of 762 companies of which 90% are active or have been acquired, having raised more than 2bn in funding, as for David he is a serial entrepreneur having founded Pinpoint Technologies which was acquired by ZOLL Medical Corporation in 1999. and David was also the founder and CEO of earFeeder.com, a music service which was sold to SonicSwap.com in 2006.
In Today's Episode You Will Learn:
1.) How David made the transition from Founder to VC with Techstars and Fund I?
2.) Fund I is one of the most successful funds in history; what was the structure with Fund I? Why did David choose a $5m fund size? How did he decide initial to follow on ratio?
3.) Why was David so valuation sensitive with Fund I? Why was David so rigid on a consistent cheque size on Fund I?
4.) Why did David decide to expand from being a solo GP fund? What are the challenges and complexities of fund scaling and did David approach this?
5.) Question from Ari Newman: What does David think about uncapped notes? Why does David like big boring companies? Brett Jackson: How did you meet Ryan Graves @ Uber and how did the Uber deal come about? Jason Seats: Where does David still see inefficiencies in the current venture model?
Items Mentioned In Today's Show:
David's Fave Book: The Soul Of Money
David's Fave Blog: Mattermark Daily
As always you can follow The Twenty Minute VC, Harry and David on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Snapchat here!
If you are looking to make your move into the world of VC or improve your investing skills, Venture Capital Unlocked: Secrets of Silicon Valley Investing is a must! It is a 2 week crash course at Stanford run by Stanford Professional Development Centre and 500 Startups. You will learn the mechanics of all things Silicon Valley investing, check it out here.
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