The Importance of Young People In Your Startup Community

From Chattanooga to Omaha to Las Vegas, many cities in the US – and around the world – are building startup communities. An important part of doing this to attract, retain, and mentor more young people.

Behind every successful startup community is a group of young people with their entire life ahead of them. These youngsters aren’t afraid to take on projects bigger than themselves and won’t take no for an answer. They come from all different walks of life, places around the globe, and with varied experiences and knowledge. And they all come with enthusiasm and a desire to learn. Over time, as they learn who they are as young adults, they grow the communities they are a part of into something unique.

A new book that just came out, 2 Billion Under 20: How Millennials Are Breaking Down Age Barriers and Changing the World, highlights the stories of young kids across the globe who are creating ripples in their own communities.One of the millennials highlighted in the book is Fletcher Richman, now the platform manager at Galvanize Ventures.

As a University of Colorado at Boulder student, Fletcher Richman co founded Spark Boulder, Colorado’s first student coworking space, which Amy and I have financially supported (check out the bathrooms the next time you are there.) In his junior year in college, he largely directed and oversaw the fundraising, construction, and day-to-day operations of Spark. Fletcher could always be found meeting student entrepreneurs and would regularly seek out and offer other promising students internships at growing Boulder startups. He also helped create a set of classes at Spark that help students learn iOS Development, growth hacking, and front end web development.

Fletcher is constantly thinking about new ways to grow our startup community and young people like him that have made an enormous contribution to Boulder’s growing startup scene. But they’ve also made contributions like Fletcher’s all over the world. The book 2 Billion Under 20 has great examples of millennials from Iowa to Israel doing things similar to what Fletcher does to make their startup communities more successful.

Young people have the opportunity to move and build their life anywhere they want. So how do growing communities retain them? When I asked Fletcher why he chose to stay in Boulder, he said “everyone is very supportive and wants to help mentor you, so you learn a lot and have the ability to grow without feeling like you’re in a rat race.” Young people want to constantly be learning, contribute in a meaningful way and have the work they do be personally relevant and important to them.

It’s easy to talk about attracting more talent to your city, growing your community and creating a new spot on the map for startup innovation. It’s easy to get caught up in the numbers of how many companies your community has launched, how many have raised capital, how many jobs they’ve created, and how many have exited. But to do any of this over a long period of time you need to pay attention to those young dreamers who are already in the community and engage and mentor them to reach their full potential.

Weekend Podcast – Investors Are Human Too

On my run this morning (yay – I’m running again) I listened to a wonderful podcast between Jerry Colonna and Bijan Sabet called Investors are Human Too – with Bijan Sabet.

If you follow me, you know that I’m incredibly close friends with Jerry (he’s one of the people on this planet that I comfortably say that I love). I’m also a huge fan of his company Reboot.io. If you want a taste of what they do, listen to a bunch of the Reboot podcasts (I’ve listened to them all and the least interesting one is still excellent.)

I’m also a big fan of Bijan. We’ve had a number of great conversations over the years. While we haven’t sat on a board together, I have deep respect for how he functions as a VC – and as a human.

At Foundry Group, we’ve done a number of investments with Bijan’s firm Spark Capital, including AdMeld (sold – very successful investment), Trigget (sold, but not a successful investment), and most recently Sourcepoint. We’ve also got another one in the works together that should close by the end of August.

Unlike so many podcasts with VCs where you get lots of personal history followed by advice, prognostications, bloviating, and predications, this one was all about being human. Bijan and Jerry explored things in the context of the relationship between a founder and a VC. They covered things generally, had some great examples (including Jerry and Mainspring, which was a blast from the past for me), and then Bijan went deep on his own journey to figure this out over the past ten years.

My favorite line came near then end when Bijan talked about encountering VCs who hide behind the phrase “fiduciary responsibility” to justify their actions, when in fact they should just say:

“I have a fiduciary responsibility to treat you like shit.”

Even though I was huffing and puffing on my run, I laughed out loud.

If you are a podcast listener, spend 45 minutes of your life on this. It’s worth it. Bijan and Jerry – thanks for the conversation and for brightening up my run.

Our 2016 Foundry Group Fund and A Little History

Yesterday we closed our fifth fund, Foundry Venture Capital 2016, L.P. As with all four of our other funds, it’s a $225 million fund.

In 2007 we raised our first fund – Foundry Venture Capital 2007. We subsequently raised a $225 million fund in 2010, another one in 2013, and a late stage fund in 2013. Our 2013 fund was originally raised in 2012, but we didn’t start investing it until 2013 so we renamed it 2013.

Except for our late stage fund, each of our funds has 30 investments (+/- 2) in it. Each is $225 million. Each is roughly invested 1/3rd into companies in Colorado, 1/3rd into companies in the bay area, and 1/3rd into companies in the rest of the US (Boston, NY, Seattle, LA, Portland, Austin, Minneapolis, Washington D.C., Burlington, and Phoenix.)

Our investment strategy has been unchanged since we raised our first fund in 2007. We are thematic investors, an approach we pioneered with a few other firms that today is trendy (and often mislabeled). We invest $5 million to $15 million in a company over its lifetime. We are early stage investors – if you’ve raised more than $3 million you are too late for us. We only invest in the US, but will invest anywhere in the US. We are syndication agnostic – we’ll invest with other VCs or invest by ourselves.

Our late stage fund gave us flexibility to invest more money in our later stage companies. We aren’t a growth investor, but rather interested in investing more money in our winners. This fund has already seen two big exits – Gnip and Fitbit.

We view our jobs as taking a box full of money that our investors give us and giving them back a bigger box full of more money over time. It’s pretty straightforward. We try to do this our own special way while having a lot of fun doing it. We have a small number of investors (around 20) who we appreciate deeply for supporting us in our journey.

And we couldn’t do any of this without the founders we get to work with. We appreciate them more than anything. Well, other than Jason’s musical abilities. For example:

Unicorns Without The Magic

I got the following email recently, titled “Unicorns Without The Magic.”

“With the rise in venture capitalism it’s hard to say the word “start up” and not be offered an abundance of accelerator programmes, free office space, free apartments & a free bible of connections. I myself have felt the pressures of the world of start up wonders & the prospects of investment. Whilst finishing my finals at university, I created my own algorithm for a business model to achieve a sustainable competitive advantage in a digital space. Through this I’m now building my first digital ecosystem, but along with it I’ve been offered numerous places in accelerator programmes, numerous loans and a wave of unicorn magic dust that seems to be collecting in my inbox. I’m not complaining, but what happens if the purpose of a business is greater than ones own self interest and certainly greater than a VCs interest? Our purpose is to give other people the tools to create their own opportunities, which is not necessarily in line with most VCs sentiments. I know in the next five years my company will make a lot of money, but what I don’t know is how as a 23 year old entrepreneur to says yes to the right VC and no to all the magic dust.”

My short answer was:

“My advice is simple – if it doesn’t feel good / right, say no. Keep focusing on building your business. Don’t avoid the interactions, but use your filter – which seems well tuned and appropriate – to make sure you are only spending time with people who you want to spend time with.”

I was reminded of this by Fred Wilson’s post this morning Go East Young Man (or Woman). He tells Henry Ward’s story of the financing for eShares.

“We were 0 for 21 with Silicon Valley VCs. I never got close. Most of the big firms wouldn’t even meet. A few had an associate do a Skype call even though we were 20 minutes away.

After 21 meetings in SV, I took a Hail Mary trip to the east coast and met with 3 funds. All 3 invested.”

We see this all the time. Founders who are entranced with Silicon Valley VCs. They pursue them with no focus on anyone outside of the bay area, get rejected right and left, often by associates, and end up feeling like they’ve failed. Fred’s post – and Henry’s at eShares Series A – has a great punch line that reinforces the importance of a founder having an effective filter.

“Fundraising is simple: find investors that get excited about your company. It is a filtering exercise. Too many founders believe they have the wrong pitch instead of realizing they have the wrong audience.”

Special bonus points (and some 1990s nostalgia for you): Do you remember the other company named eShares which Fred previously invested in via Flatiron Partners? I sat on the board of with Fred’s partner at the time Jerry Colonna. (a) What did they do? (b) Who acquired them? (c) How much where they acquired for? (d) Who did they compete with and what happened to their competitor?

Book: Armada

Ernest Cline’s second book, Armada, is almost as wonderful as his first book, Ready Player One. While plenty of folks on Amazon are giving it mediocre ratings, I think it’s because they don’t understand what Cline really did here.

Both books are scifi. Both books are heavily gamer influenced. Each moves fast. However RPO is complicated while Armada is straightforward. And that’s important, since RPO is missing the majority of self-referential human subtext – ala Lost – that Armada is filled with. The DHARMA Initiative has nothing on the Earth Defense Alliance. I mean, c’mon, even the EDA logo kicks DHARMA’s logo lameness.

I was born in 1965. Ernest Cline was born in 1972. The ten year period starting in the late 1970s made an indelible impression on each of us. We were too young for free love and Vietnam. But we were perfectly timed for the arc that started with Star Wars and drifted into adulthood with Star Trek: The Next Generation. And video games. And Memorex and cheesy 1980s TV and commercials (go to 25:45 in the video below for the Doublemint Twin Montage.)

It was simply awesome how many ways Cline could weave my late adolescence and early adulthood into a fast paced book about the potential end of humanity which takes place almost in real time as you are reading it (I think the book took place over – at most – a few days.) While I read the first 25 pages last Sunday, I read the rest of it this weekend. I finished it today, after an epic afternoon nap, in time to go to dinner. I should have timed things a little better so I could have watched Avengers: Age of Ultron with Amy this afternoon (somehow I’ve convinced her to watch it with me.)

If you haven’t read Ready Player One, do yourself a favor and grab it. If you have, grab Armada. Ignore the “I’m disappointed the second book wasn’t as good as the first book” reviews. It’s different – and revel in the difference.