5 days ago • Comments on a post

The key is that Mittelstand businesses are much less likely to fail. (This is why PEs on average outperform VCs. I go into these economics in my post.)

This can be the Goldilocks deal for founders where you raise <$5M from angels or PEs who are happy with consistent 5x returns and get to $10M+ revenue and $50M+ value with majority ownership. And there are orders of magnitude more of these opportunities available vs. VC-backed unicorns.

And being VC-backed is only great if you're one of the winners. If you're one of the >90% that's written off, you're back to zero.

I hit the wall at Series B with my startup Labdoor. We pivoted to profitability and are now headed to Mittelstand land, but this all would've been way easier if we just headed straight to middle class.

5 days ago • Comments on a post

I dig into the economics in the post. The data shows the median VC would get better net IRR returns with a Mittelstand PE strategy.

It works because Mittelstand revenue and profitability is much more predictable.

If you're on the Midas List, VC is still a better business. But many investors, especially solo GPs, should consider building a portfolio of middle class startups.

5 days ago • Comments on a post

I use my own "outline" style to make my posts easier to read fast.

The brighter highlights are intended to be the most important points.

Is that confusing? I can change the shade of the lighter highlights.

5 days ago • Comments on a post

The capital for Mittelstands is in mid market PE funds.

Making it "cool" means getting founders who'd otherwise take VC to target PE.

It also means convincing these PEs to invest earlier.

Thanks for the feedback. I'll try to center this more in my post.

5 days ago • Comments on a post

I think I actually learned this lesson from my failure to build a billion dollar startup with Labdoor (this story is in the post). We would've been better off raising less money and going for profitability earlier. Labdoor made it to the middle class the hard way, and I'm trying to help others avoid some of my pain.

5 days ago • Comments on a post

I'm trying to split SMB into two categories.

Lifestyle small businesses are great too, but I'm really talking about companies with $10M+ revenue potential.

You can get top-tier VC returns by building a portfolio of Mittelstand businesses ($10M-$1B in revenue).

5 days ago • Created a post

We need a middle class for startups

892 points • 305 comments

9 days ago • Created a post

Public Ventures: How Governments Can Run VC Funds

2 points • 0 comments

7 years ago • Comments on a post

It seems like the question is talking about large, zero-revenue startups. Ecomom definitely doesn't fit here, since they were collecting over $1M/month in gross revenues. Of course, they were discounting so much that each order had a negative margin, but that is a different story.

I think the most dramatic example of this (other than WhatsApp) is Snapchat.

8 years ago • Created a post

Tech startups: The worst get rich quick scheme ever

1 points • 0 comments