Rethinking My Startup Investment Strategy

Crains just published a piece on my new venture Southbox and how we’re experimenting with the early-stage investing and incubation model. An excerpt:

When you are an investor in tech startups, to a degree, you operate in a particular way, which is what I had been doing over the past three years. I was putting money into companies that were all at the early stages, where they were trying to get their first customers, build their product and make it sure it worked, and all that other fun stuff that happens when you are trying to start something from nothing.

The observation that I made towards the end of last year happened when I was working with a much larger fund that had probably 300 companies in its portfolio. As I was looking at all the companies that didn’t make it, I noticed that they all seemed to fail for the same reasons. They didn’t have the ability to share resources beyond capital, and were sort of left on their own to find their first customers, hire their first software developers — all of those early stage problems.

If you’re a VC, and are effectively funding all of these companies to solve for all the same problems, it’s way cheaper for you to allow the companies to share resources and collaborate. 

Read the full story at Crains