Adam Ruins Venture Capitalists

Some Rage-Plaining on How Craptastic VCs are at Life, their Job, and Everything

“If you’d have spent that much time selling, instead of asking for money, you’d probably still have 100% of your company for the same effort.” — ShitMyStartupSays

Whenever the topic of “How to Get Investment” is raised there is generally more BS flying than at an old fashion Wisconsin cow chip throw. I’ve been an entrepreneur for 3 years and now I’m on track to raise a seed round, and it is because I did 1 little thing and ignored everything else. In this article I will share some of my personal experience, hopefully clear the air a bit, and orient entrepreneurs towards what actually helps them raise money from investors: Traction. But first you’ll have to wade through a bunch of rage about how backwards, egotistical and fart-smellorific investors and their organizations are, or just scroll to the end and I’ll tell you some constructive stuff.

“We Invest in the Team”

  1. Getting the jollies off of all the founders they have invested in.
  2. Nothing makes you feel more superior than being an “excellent judge of character”.
  3. Continuing the messianic complex of all founders and investors. Investors believe they have the preordained power to make divine kings the rest of us schlubs will bow down to. Founders think their dicks are magic flesh wands.
  4. This sentence is code for: “I don’t have to think, I can just invest in Stanford and MIT Grads.” I guess investors did not get the memo from Google who now no longer cares where you went to school.

If investors truly invested in the team, then they would just start “innovation companies” and hire “the best” through intelligence and personality tests. But they don’t. There just has to be a team (for some reason it is absolutely necessary there be two founders) and these two have to have a pulse and keep showing up to meetings.

VCs Can’t Even Beat the S&P500

Investors are Not Innovative

  1. Get referrals from a trusted, personal network.
  2. If they have traction in a big market,
  3. Invest

Isn’t there a part of that that could be disrupted? Shouldn’t explosive, disruptive VC investing make just a smidgen more than the S&P 500? Maybe a nice AI could do the job better?

*pant* *pant* *pant* . . . and I’ll tell you what else is crapola . . .

. . . whatever. . .

OK STOP SCROLLING

Rich folks and capitalism aren’t going anywhere. So how do we make the process of getting investment less like getting raped in the ass and more like a colonoscopy: as quick, painless, and clinical as possible.

Traction, Traction, Traction

Why? Because Traction is REAL and MEASURABLE SUCCESS. Not ideas, not theories, not prototypes, not positioning, not potential, not blah blah blah. Its the goddamn cat’s pajamas.

So what constitutes the famed Traction? Just one thing:

>7% Net New Active Users per Week

>7% Net New Active Users per Week

That adds up to about 33% Net New Active User growth per month. If you are hitting this you can walk into any meeting with your dick (or vulva) wrapped in a goddamn black satin ribbon and no one will blink.

Remember:

>7% Net New Active Users per Week

What is an active user?

If you are doing ecommerce or a marketplace, an active user is someone who transacts more than once in some period of time. Lyft and Uber probably aim for about once a week. Ebay and Amazon probably once a month. Airbnb probably once a quarter.

If you are doing a game its how many people actually open the game and play it more than once within a week.

If you are a media site like videos, pictures, or news, an active user is just the number of return visitors from the same IP addresses per week.

If you are bootstrapping your company right now and feel like investors should start innovating, stop investing in their friends, and start beating the S&P500, please recommend this article and share it as widely as possible.

Thanks.

Adam Braus

Educator, Founder, Engineer. Interested in Evidence Based Education and Solving BIG Problems.

Educator, Founder, Engineer. Interested in Evidence Based Education and Solving BIG Problems.