Zach Coelius | @zachcoelius
- Managing Partner, Coelius Capital
- Take rate is less important, there are successful companies that have take rates on both the higher-end and lower-end.
- The most important feature of marketplaces is the value provided to the sellers and buyers in comparison to their other alternatives.
- If you are a commodity, that's bad.
- The way you solve the supply-demand equation is key, take rate is less important.
- This is a classic founder mistake, focusing on things that are not relevant to investors or company success (30 under 30, winning a startup competition, etc.)
- The best startup founders learn that the most important things for success are usually the hardest to solve.
“The secret in the early-stage is to search for winners, and that's a discovery process. The secret to follow-on is to pile in the winners, and that's about information,v understanding what's a winner and what's not, and avoiding losers.” - Zach Coelius
- Zach's three things to keep in mind about follow-on investing:
- Understand that early-stage investing and follow-on investing have very different return profiles and practices, so you should have separate strategies for each
- Follow-on investing is all about leveraging your information. If you have information rights or insights into important data, you can make the decision for yourself. If you don't, you need to use proxies (which firm is leading the next round, etc.)
- As an angel it's not your job to keep the company alive. It’s okay if it goes out of business.
- Jason's advice:
- Bridge financing: Make sure it's a bridge to somewhere and not a dock
- Bankroll management: If you're placing small bets ($1K-$3K on average), you need to get to 25 bets to have diversification
- Example: If you have $100K to invest in startups (money you can lose!) Start out with 25, $2K bets. Assuming 5 investments meet your follow-on criteria, put $10K in each for follow-on. This way you have put 60% of your money into the 5 best companies. (5 x $2K, 5 x $10K)
"The death spiral of most founders is a lack of focus, trying to do too much, fighting too many wars on too many fronts." - Jason Calacanis
- Zach lives by the mantra “One, one, one" Meaning: you need to find the one product or feature that provides incredible value for your customers
- Product suites typically originate from companies that create one wildly successful solution, get massive distribution and then find ways to upsell their current customers with extra products
- Zach advises early-stage startups against building an entire suite of products and trying to then level them up, and instead tells them to focus on their one core solution