After about 50 deals in 5 years, I have my principal back and about 40 active companies.
This is them: Sarva.co
This is my original formula statement.
It is pretty much based on Fabrice’s excellent system.
What have I learned?
1. You have to wait. These things take years. 7-10 years to ripen.
2. They create other bigger opportunities like A rounds and Pro Rata follow-ons. If you don’t keep 2x available for that, you miss out.
3. Early liquidity is rare. I suspect that founders who invent an early exit door will raise better and faster. But the system has not yet provided this.
Refining the original framework further, a good deal is four things:
A: people.
B: market
C: product
D: financing.
In that order. But it’s a checklist. You do need a company with acceptable financing risk (they can raise, the market doesn’t hate them, they are raising enough now…) to go for it. Else too risky.
For example I saw a deal today with OK A but very weak D. Which means I am biased against. If I’m in for 25-50k, a small check, I would be half the round. And you can’t accomplish much in so short a runway. Namely you can’t change the D landscape, or the A.