September 14, 2012 at 22:04Strategies for investing in the early stages of online startups
First abstracts.
1a . Regarding the Internet, only stellar startups can justify venture capital investments.
2a . At an early stage, it is impossible to calculate a star startup. Paul Graham clarifies that stellar is not just successful, stellar success of startups with sufficient experience can apparently be predicted.
3a . Paul also adds that even at a not very early stage - the first two years - stardom is also not determined.
Hence the conclusions about possible strategies for early stage investors:
1b. Inflate bubbles. PR and escalate pathos both around individual (their portfolio) projects, and around startup startups in general. In fact, this minimizes risk, since stardom becomes mainly media and manageable, it ceases to be an objective market characteristic of demand. In part, this is also a way to really generate non-existent demand, but such an aspect in full implementation requires serious investments, which is usually not done for the initial stages. The result is a profitable investing business, where the loser may be the next stage investor if he cannot inflate even more and then resell the project to someone else. ( Update as of November 9, 2012 - an excellent text with research on Instagram on this topic ).
2b. Investing in many projects based on statistics - if one out of ten fails, it will cover all costs, including the rest, and still bring good profit. However, we look at point 3a - investments of all early stages are stacked in two years, where nothing is normally predicted. Those. an investor of an early stage, in principle, has no statistics; he always sells cats in a poke, even if they are really fat and really beautifully packaged. So this item is practically excluded from consideration.
3b. Minimize not risk, but costs through cooperation with many other investors. I can not say anything about such an investor mini-crowdfunding. Perhaps this approach requires a reputable ringleader. More precisely, it just needs to be purposefully developed. In general, crowdfunding itself looks like an attractive thing.
4b. Refute point 1a and invest in simply successful projects, even if they are not stellar. Now, claims have often come across that Internet startups are just a business. Normal business. And ordinary business does not necessarily require a stellar shot. You can earn figuratively speaking on a tent with shawarma and gradually open a second tent and a third. But here, of course, you need to take into account the specifics of the Internet - everything changes quickly enough. You will develop and build one for a long time, then suddenly another will appear and completely change the market.
Then purely my gag, completely opposite to the current state and trends in the industry.
1c. The emphasis should not be on events in real life. My personal experience is that in real meetings, projects can never be presented and understood better than on the Internet. This is similar to Skolkovo - I initially said that it was absurd to invest gigantic money in real objects, but in the Internet version of Skolkovo it could have a tremendous effect. In short, I affirm that in the future everything will come down to Internet implementations anyway.
2c . To call on the analysis of projects the wisdom of the crowd, this should be part of the mentioned Internet implementation. Use advanced things, such as prediction markets .
3c. From point 2a it follows that money should be given to all Internet projects in general. Well besides quite obviously inadequate. This is especially true in Russia, where the total number of projects is very small.
4c . If you give money to everyone, the number of inadequate ones will increase sharply. Therefore, it is necessary to develop rating systems and dropout at the rating level. They probably correctly say that the main thing in a startup is people. So it is necessary to analyze people, but not always directly. There are indirect characteristics of a successful person and they are most likely to appear outside the thematic area of a particular startup. With modern technology, it’s quite feasible to count up to one startup and all startups.
PS Once I even proposed a certain projectin which the mentioned approaches would be implemented.
1a . Regarding the Internet, only stellar startups can justify venture capital investments.
2a . At an early stage, it is impossible to calculate a star startup. Paul Graham clarifies that stellar is not just successful, stellar success of startups with sufficient experience can apparently be predicted.
3a . Paul also adds that even at a not very early stage - the first two years - stardom is also not determined.
Hence the conclusions about possible strategies for early stage investors:
1b. Inflate bubbles. PR and escalate pathos both around individual (their portfolio) projects, and around startup startups in general. In fact, this minimizes risk, since stardom becomes mainly media and manageable, it ceases to be an objective market characteristic of demand. In part, this is also a way to really generate non-existent demand, but such an aspect in full implementation requires serious investments, which is usually not done for the initial stages. The result is a profitable investing business, where the loser may be the next stage investor if he cannot inflate even more and then resell the project to someone else. ( Update as of November 9, 2012 - an excellent text with research on Instagram on this topic ).
2b. Investing in many projects based on statistics - if one out of ten fails, it will cover all costs, including the rest, and still bring good profit. However, we look at point 3a - investments of all early stages are stacked in two years, where nothing is normally predicted. Those. an investor of an early stage, in principle, has no statistics; he always sells cats in a poke, even if they are really fat and really beautifully packaged. So this item is practically excluded from consideration.
3b. Minimize not risk, but costs through cooperation with many other investors. I can not say anything about such an investor mini-crowdfunding. Perhaps this approach requires a reputable ringleader. More precisely, it just needs to be purposefully developed. In general, crowdfunding itself looks like an attractive thing.
4b. Refute point 1a and invest in simply successful projects, even if they are not stellar. Now, claims have often come across that Internet startups are just a business. Normal business. And ordinary business does not necessarily require a stellar shot. You can earn figuratively speaking on a tent with shawarma and gradually open a second tent and a third. But here, of course, you need to take into account the specifics of the Internet - everything changes quickly enough. You will develop and build one for a long time, then suddenly another will appear and completely change the market.
Then purely my gag, completely opposite to the current state and trends in the industry.
1c. The emphasis should not be on events in real life. My personal experience is that in real meetings, projects can never be presented and understood better than on the Internet. This is similar to Skolkovo - I initially said that it was absurd to invest gigantic money in real objects, but in the Internet version of Skolkovo it could have a tremendous effect. In short, I affirm that in the future everything will come down to Internet implementations anyway.
2c . To call on the analysis of projects the wisdom of the crowd, this should be part of the mentioned Internet implementation. Use advanced things, such as prediction markets .
3c. From point 2a it follows that money should be given to all Internet projects in general. Well besides quite obviously inadequate. This is especially true in Russia, where the total number of projects is very small.
4c . If you give money to everyone, the number of inadequate ones will increase sharply. Therefore, it is necessary to develop rating systems and dropout at the rating level. They probably correctly say that the main thing in a startup is people. So it is necessary to analyze people, but not always directly. There are indirect characteristics of a successful person and they are most likely to appear outside the thematic area of a particular startup. With modern technology, it’s quite feasible to count up to one startup and all startups.
PS Once I even proposed a certain projectin which the mentioned approaches would be implemented.