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Fundraising tactic, Community as your moat, Developing a superpower #0025

December 19, 2023

19/12/2023

FUNDRAISING TACTIC

The Venture Crew on Marc Andreessen's "Onion Theory of Risk" and how founders can apply it to successfully raise venture capital in “Marc Andreessen: Understand "Onion Theory Of Risk" To Raise Funding For Your Startup”

  • Onion Theory of Risk:

    • "As a startup (especially before Seed funding), you are just layer upon layer of risk. Even after you get your first round of funding, it’s not the money that makes those risks go away, it’s what you do with it."

  • Types of Risks Faced by Startups:

    • Risks include "Founding Team Risks," "Product Risk," "Technical Risk," "Launch Risk," "Market Acceptance Risk," "Revenue Risk/Cost of Sales Risk," and in some cases, "viral growth risk."

  • Peeling Away Layers of Risk with Funding:

    • "What only 1% of founders accomplish is peeling away each layer of risk from the initial fundraising round; where 99% fail to achieve this."

  • Pitching to Investors with an Understanding of Risks:

    • "If you are raising the pre-seed / seed (first funding round) - you can say that - 'With the amount of personal investment or from family friends - I have achieved the milestones and eliminated these risks. Now I am raising Seed round - Here are my milestones, here are my risks, and by the time I go to raise series A round here is the state I will be in.'"

COMMUNITY AS A MOAT

Cristian Pinto, Investor at Daphn, highlights the importance and evolution of community-driven business models in “The future will be driven by community”

  • Defining a Community in Business Context:

    • “The way that I think about community is utility plus belonging. Utility is, this product helps me get something done that I need to get done. And belonging is, there’s a feeling I have around this product." — Sarah Drinkwater, GP and Founder at Common Magic.

  • Community as a go-to-market and distribution strategy:

    • "After seeing [...] software solutions using community for co-creation or engagement, we observe startups using community in their specific sector as the core basis for their go-to-market and distribution strategies [...] There are a lot of synergies to be explored between the product-led growth concept and Community-Powered GTM."

  • Future of Community-Powered Models:

    • “We are community junkies and are convinced that the startups that know how to leverage highly engaged groups will be the ones who will be able to build the strongest distribution MOATs."

DEVELOPING A SUPERPOWER

Category Pirates, introduces the concept of "Category Superpower," which emphasizes making a difference for others as a path to personal growth and success in “Category Superpower: Why Your Greatest Strength Depends On Making A Difference For Others“

  • The Concept of a Category Superpower:

    • "A Category Superpower is what you do that makes an exponential difference for others [...] The value of your superpower is directly proportional to the value you create. For others."

  • Identifying Your Category Superpower:

    • "Start by asking yourself: What problems are you obsessed with solving? What radical outcomes have you delivered in the past? What’s your swagger that shows the world you mean business? What’s your unique Point of View that lets you see possibilities no one else can?"

  • Differentiating Between Passion and Superpower:

    • "Your answers will help you begin to uncover your Category Superpower. You then want to focus on communicating and leveraging that superpower in the service of others... The key to a successful career (and a successful life) is your ability to make a genuine, lasting difference for those around you."

  • The Importance of Swagger in Executing Superpower:

    • "Swagger is the oomph factor—the force that brings the other three components to life... For Elisha to say something like 'safety elevators are going to enable an entirely new kind of building' is as outrageous a thing as any Category Designer could possibly say. But he did it."

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