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startup hub = nerds + the rich
- nerds move to where rich people are, but not the other way around
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angels take more risk
- angels are more important to a startup’s survival at the beginning
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angels don’t like publicity
- angels don’t want random people pestering them with business plans
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VCs are not like hackers
- VCs don’t make things, but they are experts at reading people
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VCs invest in what other VCs invest in
- VCs don’t win by predicting what will go big but by noticing that something is going big a little sooner than others
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VCs want startups that can go public
- having an ambitious long-term plan to IPO appeals to both VCs and angels
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VCs want to invest a lot of money
- a board seat with a large stake or a small stake takes the same amount of VC time
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valuations are fictions
- the size of an investment determines the valuation, not the other way around
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investors look for star similarities
- they expect a confident Steve Balmer, thinking he is a Bill Gates; while the real Bill looks clueless at first
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investors give more than just money
- VCs provide not only advice, good investors give good advice
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VCs fear looking bad
- VCs don’t want to do anything that would sound bad to the kind of “audiences” who run pension funds
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being turned down by an investor doesn’t mean much
- investors are often wrong, they admit it, but they have too many great deals to choose from anyway
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investors are emotional
- investment negotiations easily turn personal: VCs, like high school girls, don’t want to be rejected first
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don’t stop negotiating until closing
- a term sheet is not a deal; keep pushing until you actually close
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investors like to co-invest
- a deal with multiple investors is more likely to close
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investors collude
- they are constantly trading little favors; their relationship with each other trumps getting the deal
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investors care about the portfolio above all
- large investors care about their portfolio more than about any individual company
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VCs are bigger risk-takers than founders
- VCs would rather take a 20% chance of $10M than a 100% chance of $1M
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investors vary greatly
- the smarter investors are calmer, more confident, and more honest
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investors don’t know about the cost of raising
- investors don’t realize that raising money costs founders time and effort
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investors don’t like to say no
- look down at your hands. Are you holding a term sheet? If not, the investor is saying no
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you need investors
- you need them because you will have competitors who will take investment
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investors like it when you don’t need them
- they like it when you have something safe. “The train is leaving the station, are you in or out?”