20VC: Techstars Founder David Cohen on Why Seed Investing Is A Different Asset Class To Venture, What Makes The Best And The Worst Board Members & Why Every Company Has To Have A Pessimist In The Room
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC
4.4 • 637 Ratings
🗓️ 11 February 2019
⏱️ 31 minutes
🔗️ Recording | iTunes | RSS
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Summary
David Cohen is the Founder and co-CEO of Techstars, the worldwide network that helps entrepreneurs succeed. To date, David has backed hundreds of startups including the likes of Uber, SendGrid, Twilio, ClassPass, PillPack and more. In total, these investments have gone on to create more than $80B in value. Prior to Techstars, David was a co-founder of Pinpoint Technologies which was acquired by ZOLL Medical Corporation in 1999. Later, David was the founder and CEO of earFeeder, a music service that was sold to SonicSwap. If that was not enough, David is also theco-author (with Brad Feld) of Do More Faster; Techstars Lessons to Accelerate Your Startup.
In Today’s Episode You Will Learn:
1.) How David made his way from, his words "geeky hacker" to the founder of one of the world's largest accelerators, Techstars and investor in multiple unicorns?
2.) What does David mean when he says that when assessing founders he studies "the moment of integrity"? What does he want to see from founders in those moments? What are some potential red flags? If a negative response, what are the subsequent actions an investor must take in this situation?
3.) How does David think about the right time to establish a board? What are the benefits of establishing your board with the seed round? What does David believe is the key to highly efficient boards? How has David changed as a board member over the years? Why does David believe, when building a company, "you always have to have a pessimist in the room"?
4.) When negotiating deals, what does David mean when he says "the terms must match the story"? How does David determine between a bridge and a bridge to nowhere? What can investors do to protect themselves if the targets of the business are not met and they have an uncapped note in place? How should they communicate this?
5.) Techstars today invests in over 500 companies per year, how does David think about reserve allocation across the portfolio? How does David feel about stack ranking portfolio co's quarterly and concentrating capital accordingly? Why is this not effective? Why should seed and angel investing be an entirely different asset class to VC?
Items Mentioned In Today’s Show:
David’s Fave Book: The Soul of Money: Transforming Your Relationship with Money and Life
David’s Most Recent Investment: Ordermark
As always you can follow Harry, The Twenty Minute VC and David on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
Transcript
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| 0:00.0 | We are back for another week here on the 20-minute VC with me, Harry Stebbings, and I need your help. |
| 0:04.3 | I would love to make the show better in any way. |
| 0:06.3 | So whatever your thoughts are on changes, improvements, let me know on Instagram at H. |
| 0:11.0 | Stebbing's 1996 with 2Bs. |
| 0:13.0 | I really would so appreciate that. |
| 0:14.8 | But to our guest today, and I had him on the show over two years ago for the first time, since he's enjoyed IPOs, billion dollar exits, |
| 0:21.7 | and I could not be happier to welcome back David Cohen, found and co-CEO of tech stars, the worldwide |
| 0:27.0 | network that helps entrepreneurs succeed. To date, David has backed hundreds of startups, |
| 0:31.7 | including the lights of check this out, Uber, Sendgrid, Twilio, Class Pass, Pillpack, and many more. In total, these investments have |
| 0:38.9 | gone on to create more than $80 billion in value. And prior to TechStars, David was a co-founder |
| 0:43.6 | of Pinpoint Technologies, which was acquired by Zol Medical Corporation in 1999. Later, David was |
| 0:49.1 | the founder and CEO of Ear Feeder, a music service that was sold to Sonic Swap. And if that |
| 0:53.6 | wasn't enough, David's also the co-author with Bradfeld of Do More Faster, a music service that was sold to Sonic Swap. And if that wasn't enough, David's |
| 0:54.5 | also the co-author with Bradfeld of Do More Faster, Techstar's Lessons to Accelerate Your Startup. And I do |
| 1:00.3 | have to say a huge thank you to the wonderful Mr Bradfeld. For the intro, David, now over two years ago, |
| 1:05.2 | I so appreciate that, Brad, and it really means a lot. And we mentioned some incredible companies in the intro there, and I want to spend a minute to talk about Brex. The first corporate card for startups, Brex founders Henrique and |
| 1:15.5 | Pedro built a payments business in Brazil, but found themselves rejected for a corporate card |
| 1:19.7 | when they were in Y Combinator. They decided to build Brex. With instant online sign up, |
| 1:24.4 | no founder liability required, and limits 10 to 20 times higher than standard cards. |
| 1:29.2 | Yes, pretty incredible, I know. And you can sign up for Brex today and get card fees waived by |
| 1:33.9 | entering the code Harry during sign-up. Honestly, it really is such a special service. |
| 1:38.5 | And speaking of special, did you know that there are five job openings for every one developer |
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