Startup opportunities: Fitness meets Gaming in the metaverse
I have never had a unicorn, but I still got VC type returns
It seems that the #vcs mantra in the age of cheap 💵 has become concentrated on:
#powerlaw
#fomo
#homeruns
#hyperscaling
All to achieve the elusive 🦄 valuation status and great paper returns.
Statistically, very few funds give venture type returns of 2️⃣5️⃣ to 3️⃣5️⃣%
- 6️⃣5️⃣% don't manage to return the fund
- 2️⃣3️⃣% return between 1 and 5x
- 1️⃣2️⃣% manage to return to return >5x
There have been many debates around if a VC fund needs to look at each investment as 1️⃣0️⃣0️⃣ x opportunity so that they can hit their return targets, or if there is a model that can look through a different lens, one based on startups that make real money, consistently, and grow in size and earnings over time.
The big question that comes up is around selection, is it really any easier to select #founders that are not aiming to be world changers and industry dominators?
➡️ I looked back over my investments, 2004 to 2020, excluding businesses that I founded, and this is how it looks >>>
- 1️⃣6️⃣ years
- 3️⃣x Cash on Cash return
- 1️⃣9️⃣% annual ROI
When I dig into the diversification of investments which includes 🏥 Healthtech, 🌾 Agritech, 🛍 Ecommerce, 🏪 Marketplaces and do some pattern searching, there are some common points that give me the confidence to say that consistent VC type returns are achievable without massive home runs.
Mind you your 📲 social media accounts and website won’t be as sexy without the Unicorn announcements.
➡️ So here is the common denominator across all of the portfolio companies
- ✅ practically every founder was non-technical
- ✅ practically every founder was an absolute domain expert.
- 💡 They were all solving problems with inside knowledge
- 💡 They all had a community inside their industry
Is there a need for a hybrid venture fund for non-tech domain experts that can build their tech and help them go-to-market?
Read more: How To Build a Start-Up: Ideation