/Joanne Wilson’s Top Insights | Angel S5 E10

Joanne Wilson’s Top Insights | Angel S5 E10

Top Insights

  • Raising at a juiced valuation can have devastating downstream consequences for a startup.
  • Recent momentum in funding underestimated founders has helped firms realize the opportunity of having a diverse team of investors.
  • It is harder than ever to be a “generalist” investor. To succeed in today’s market you need a thesis.
  • Portfolio management near the peak is key to thriving in a down market.

  • Joanne Wilson is a blogger, businesswoman and angel investor with 130+ investments.
    • She mostly invests in women and underestimated founders.
  • Back in the 1990’s, Joanne was Jason’s top sales executive at Silicon Alley Reporter and taught him a very important lesson: sales solves everything. “If you have a great person who can sell, everything goes in the right direction.” – Jason Calacanis

“… we’ve seen it so many times over the past 20 years. (Founders) end up with a down round even though (they’ve) done a good job.”

“(After raising a down round) that company is damaged. And then institutional investors have moved on into something new and something else and you’re f****d.” – Joanne Wilson

  • How raising during a bubble can create downstream issues:
    • Founders raise at an inflated valuation, and then have to put up crazy numbers to justify a higher valuation in their next round of funding
    • So, even really good companies can “get ahead of their skis” and fail to justify their mid-bubble valuations
    • If a company then raises a down round, that puts a black mark on their resume that is hard to erase, especially if VC money starts drying up
      • or, as Joanne puts it: “You’re f****d.”
  • There is a direct correlation between media sales and the strength of the overall economy
    • According to Joanne, you can check the thickness of each issue of her four decade Vogue collection to see how the economy was doing that year
  • Ad-based companies should bank as much revenue as possible (and even create new inventory if necessary), because high demand won’t last forever

“There is a whole group of amazing black founders that no one who is a white investor has ever seen. It was the same thing when I started investing in women, there were all these amazing women out there but no one wanted to meet them…” – Joanne Wilson

  • More women and people of color are starting companies and becoming venture capitalists, so the industry is being changed from both sides
  • It’s been 15 years in the making, but the venture industry is finally starting to see real change with funding dollars moving in the right direction
  • Seeing a team page with a bunch of white males on it is an immediate red flag for some investors
  • Investors are funding and hiring people of color for different reasons:
    • some are doing it because they care about making real change
    • others are ashamed at the lack of diversity in their portfolio and on their team
      • both reasons are helping drive change

“…as an angel you need to take money off the table when it has gotten silly.” – Joanne Wilson

  • Being a generalist investor was great 15 years ago when there were fewer startups overall
  • To be a generalist investor in 2021 you need a team of people around you for market research, diligence, etc. since there are so many startups doing similar things
  • Portfolio management in a bubble:
    • Some greener VCs have never seen a down market
    • Selling a percentage of your winners at or near the peak is a great way to hedge against a rapid downturn
    • For example, Joanne’s husband Fred Wilson lived through this during the dot-com crash of 2000

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