In one of life’s serendipitous moments, our most recent portfolio company Diffuse Energy has moved into a new office…on Shearwater Drive. Has to be a good sign!

The standard line in venture is that the only way to get a meeting is via a warm-intro. Don’t bother with cold-contacting a VC, it’s said. We’re not fans of this approach, and here’s why.

In 1964, the typical S&P 500 company was in the list for 33 comfortable years. By 2016, this had reduced to 24 years. And it’s forecast to shrink to just 12 years by 2027. The pace is innovation and disruption has literally never been faster.

Playground XYZ came 8th in the Deloitte Fast 50 – what a great company to be involved with.

The fuel that startups run on is uncertainty. Large companies tend to value waiting for higher fidelity information before entering a market. This is your opportunity.

Bessemer Venture Partners, one of the oldest firms in the industry, celebrate their anti-portfolio: all the great deals they said no to. It makes for great reading.

You set the valuation, I’ll set the terms. The catch that often comes with achieving unicorn status.

Making a loss should be a temporary state. And it should be incurred or, the state maintained, with deliberate decisioning.

Much the chatter surrounding the IPO of the We Company (aka WeWork) relates to the eye-watering valuation being sought. Yet recently there’s speculation that the IPO may end up closer to $20 billion, as opposed to the the $47 billion valuation SoftBank offered when they invested $5 billion in January 2019.

In late 2013 Y Combinator released its innovative Simple Agreement for Future Equity (SAFE) investment instrument. The purpose of the SAFE was to allow pricing to be deferred in an early investment round, as early stage companies are somewhat difficult to value. YC wanted to take some of the benefits from Convertible Notes (which are debt) and make them available in equity form. Thus the SAFE was born.

As the managing partner of Shearwater, I frequently find myself thinking about the quality of our own ‘product’. One of the differentiators of Shearwater is that we’re three founders investing our own money to back the generationally best tech companies in Australia and NZ

J.P. Morgan released data this month that $90 billion has been pulled from active funds in public equity markets in 2019, while $39 billion flowed into index-style funds. Passive funds (including quant funds) now control a whopping 80% of equity assets. Passive investing has won the public markets.

In the early 1980s AT&T asked McKinsey to estimate how many mobile phones would be in use worldwide by the year 2000. Their conclusion was it would be a niche market of around 900,000 subscribers. They were off by 108 million.

As investors in high growth tech businesses, it’s typical that our portfolio companies have an employee share option plan (ESOP) in place. ESOPs allow staff to feel ownership in a business and lets them benefit from growth in the value they directly contribute to. This is why ESOP is a common device around the world for ensuring alignment between founders and their employees.

Sun Tzu said: ‘If you know the enemy and know yourself, you need not fear the results of a hundred battles’. When seeking investment, it helps to understand the business model of the firm you’re pitching.

Ever wanted to sit in on a success pitch to a leading Silicon Valley venture firm?

Entrepreneurs should realise early that a rejection from a venture fund typically says everything about the *fund* and its internal issues, and almost nothing about your business and its likelihood of success.