Fri, 13 May 2022
Powerball vs. Moneyball
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
There are two approaches to venture investing: Powerball and Moneyball.
Powerball looks for startups that will be unicorns and pay outsized returns upon an exit.
These are called home runs.
Moneyball looks for startups that will return a decent amount to the investor but not outsized returns.
These are called singles and doubles.
Powerball takes outsized risks for outsized returns.
Startups in this category must be working in a large market that is growing fast and under disruption.
The startup must have a compelling technology, recurring revenue, and a platform-based business.
This category is ‘winner takes all.’
Moneyball takes smaller risks for smaller returns that are more obtainable.
Startups in this category should also be working in a large market that has some growth and is undergoing transition.
The startup must have a strong team, healthy margins, and a clear path to an exit.
This category has multiple winners.
Know which type of startup you are building as it greatly impacts the amount and timing of funding you will need.
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