Being a successful investor requires mastery in these three areas:
#38 Essential Skills in VC
Both private equity and venture capital are usually considered 2nd careers. Why? Because there’s no time to learn on the job. More importantly, you’re working with other people’s money and mistakes can be costly, both financially and reputation-wise. That being said, getting into VC is like passing your driving license. You’re legally allowed to drive but it will be some time before you are competent.
Being a successful investor requires mastery in these three areas:
Even if you have aspirations of being an entrepreneur, it’s often a good idea to work for someone else for a little while. Whether that’s a start-up or a corporate, you’ll likely need a solid cover letter. During my early career, I struggled to find good advice. Luckily for you though, I’ve done loads of research and been through the school of hard knocks so you don’t have to. The below techniques will make you one of the few candidates that master your cover letter, thereby dramatically increasing your chances of getting the job.
Jack Ma, founder of Alibaba, is a truly inspirational entrepreneur. His story is one of succeeding against the odds, which he attributes to persistence and smart business strategy. He speaks of the importance of learning vicariously through other people’s mistakes. It is a strategic blunder to assume you’ll get it right first time, so rather take the time to learn what not to do from others who have already gone through the pain of making their own mistakes.
Do you know why they call it a Pipedream? It refers to a time when people used to smoke opium pipes, get high, and then come up with ideas that would never work. The 4-Hour Work Week falls firmly in this category. How do I know? Because I worked an extra 10 hours a week for nine years trying, and recently sold the business for £1 (ZAR 20) plus the discounted stock.
There is loads of generic advice about interviewing out there. I consider these things the ‘hygiene factors’ that need to be in place at a minimum. I’m now taking you to the next level with gold-dust that you can sprinkle on your already excellent interview technique. It will take you from “we think you suit the role” to “we must have you!” Now to be clear, I’m not advocating being inauthentic. Quite the opposite really because the below are fairly self-selecting and if you can’t pull them off, you probably weren’t right for the role anyway.
Team, Team & Team are the 3 most important characteristics for an early-stage start-up right? Then why isn’t there more practical advice out there to help look after you valuable entrepreneurs? I’m not talking of course about finances but rather the things that may properly cripple your ability to execute on your business plan: mental and physical health. There is loads to discuss with mental health but let’s start off with some basics about physical health, specifically food. Whether you’re an entrepreneur, corporate lawyer or gardener, if you want to perform at your peak, you need to look and feel your best. Getting the right nutrition is key.
Forget Tesla, Space X and Hyperloop. I’m talking about something more exciting. I’m talking about the Cape Town start-up that managed to shake up the global F1 and leisure boating industry.
In its life, Caudwell Marine received between $80m-$100m in funding. That’s well over one billion Rand. In South Africa, that goes a very long way so it might as well have been one billion US dollars. This was no ordinary start-up!
“Every era has its defining moments. Every generation has its icons and heroes whose great inventions capture hearts and minds with their cultural contributions."
"Our friend Tim Bergling (1989 – 2018) was one of those bright shining stars who impacted the world with the music he gave us. Through his music he shared his joy, his pain, his passion and in a short time I would see the tremendous impact our collaboration would have on the world and it would change my life forever. Thank you, Tim.”
#30 Entrepreneurs I Most Admire
In his book, the Toilet Paper Entrepreneur, Mike Michalowicz says that once you decide what you want to be, you should find 10 people in the world that are the best in that field. Then follow and emulate them.
I admire people who have changed the world for the better and willingly share their experiences so that others can do it too. They all happen to be entrepreneurs but I’m sure there’s many other examples out there.
Most good company ideas are stolen. Success is all about timing and execution. How do I know this? Because I’ve spoken to countless wealthy entrepreneurs who were not ashamed to admit it. I might have also done it myself once before. It worked brilliantly except for the tiny yet pivotal fact that the product didn’t lend itself to repeat business...
Case in point, before Facebook there was Ringo. It launched a full 8 months earlier, in June 2003. After only 3 months it had 200,000 users with a weekly growth rate of 10%.
It’s that time of year when you might consider the habitual practice of writing down new year’s resolutions for 2020. Subliminally beating yourself up for not accomplishing many of 2019’s goals. Stop. Don’t engage in this self-sabotaging behaviour for a second longer. Try this instead:
Write down a list of things that worked well for you and things that did not.
We have all heard that some of the best businesses start in a restaurant with some rough notes scribbled on the back of a serviette. If that is the case, then why are countless people studying entrepreneurship and going back to [business] school to learn how to write business plans?
Thinking around entrepreneurship has evolved. Historically there was belief that it was not possible to teach entrepreneurship. That has changed. Not only is it possible to teach, it has a positive correlation with success!
#26 The Dark Angel Start-Up Game
Entrepreneur: “Nailed it! I’ve found an Angel investor who’s agreed to invest £10k at my £5m post-money valuation and is willing to let me have a 6-figure salary.” Friend: “But that only gives the angel a 0.2% equity stake in your business…plan. How will they ever make a return?”
This is one of those cases where if it sounds too good to be true…(you know the rest). Ok, so what’s the catch?
Starting a new business is an exciting time with many questions to be answered and decisions to be made.If you are a founder, you will most likely be working for free, perhaps alongside an existing job, until you can take the plunge to go full-time when the business starts bringing in money, whether that’s through investment, debt finance or early sales.
However, in addition to the founders, many businesses will need other talent and skills to take the business forward.
For anyone working in the corporate world, there’s a book I highly recommend by Albert Bernstein called Emotional Vampires: Dealing With People Who Drain You Dry. As it turns out that not everyone has your best interests at heart and you need to know how to identify these sociopaths in order to protect yourself, your mental health and your career. The book has helped me tremendously.
In the start-up world, there are other types of vampires. This time they’re looking to get their fangs into your equity. Here’s some tips on how to ensure you keep the bloodstains off your shirt.
Fancy trying to catch a falling knife? There's probably no better analogy to describe distressed businesses. They are not for the feint at heart.
I admire people who take on the challenge because ultimately they save jobs and help the economy grow.
If you decide it's for you then please make sure it's not your first investment and make sure it's not your last dollar!
Private Equity has become an increasingly attractive asset class. Unfortunately due to its success, lots of capital has poured into the sector. More capital chasing the same number of opportunities has increased prices and reduced returns.
Nonetheless, there are still some very good opportunities and many VC-backed businesses will exit to PE so its still a very exciting time to be investing.
Yes, we would all like to invest in the next Facebook, Snap, Instagram, but if presented with the business plan at the outset, would you have taken the plunge?
I think VC is as much about gut feel as it is about rigorous investment criteria. In fact, many very successful VCs will tell you that they've turned down investments in some of the world’s greatest companies. Is this proof that VC investing is much as an art as a science?
With Angel investing, I think the main question you need to ask yourself is: "Do I have enough follow-on capital if their estimates are not quite right?"
This list is by no means exhaustive and there are plenty of other factors that you should consider so this is a starting point for those looking to get into the industry.
During a finance interview you will often be asked: “What is your investment thesis?”
The interviewer will tell you that there are no right or wrong answers and that they just want to get an idea of how you think. This is not entirely true as some answers are probably more right than others...
Great business idea? Check. Shiny pitch deck? Check. Investor meeting? Check. What's next you might be asking? Turns out it’s a very good question.
All VC-backed entrepreneurs will tell you that fundraising involves a steep learning curve, requires resilience and lots of work. It is unfortunately a large business distraction and can occupy your life for the best part of six months. Being prepared both mentally and administratively is key to success.
There’s one sure-fire way to succeed with an MBA. Teach it instead of studying it. With University fees at an all-time high, there has been a staggering increase in the number of schools, of varying quality, providing MBAs. There’s now a whole industry getting rich off this once acclaimed degree.
The ubiquity of MBA grads mean that the degree has been commoditised. Accordingly, here’s a stream of reasons why you’d probably be better off putting a deposit down on a house than pursuing an MBA:
Loads of mid-career people consider an MBA in an effort to differentiate themselves and break through the proverbial glass ceiling at work, whether it be real or perceived.
Committing to an MBA is no joke especially in terms of finances and time. There’s a reason they call it the ‘divorce course’. That being said, there’s an overwhelming number of reasons why it’s a good idea.
A 30-year career at big bank finally leading to a promotion to CEO, what could go wrong? Ask John Flint, who was only in situ at HSBC for another 18 months. Even someone with a seeming ‘job-for-life’ wasn’t safe.
If you rely on a monthly pay cheque, nor are you. With that in mind, can you really afford not to have Income Protection Insurance?
You started your own business because you have a great talent for providing a particular service. You make a decent living, but you never feel as if you are getting ahead. Why is your experience not being reflected in your bank balance?
In the business world, they often talk about ‘levers’ that you can pull to improve profitability. For most service providers, there are 3 key levers:
Disclaimer: Views expressed here are solely in my private capacity and do not in any way represent the views of organisations I might be affiliated or associated with.
Copyright 2022 The Tippy Top ©
Copyright 2022 The Tippy Top ©