DIY Venture Capital Fantasy League
As VC’s, we are privileged to speak and hear from founders' and their start-ups every day. One thing that we thought about was how closeted VC can be - there’s such mystique surrounding VC, and yet, it is fairly simple. We invest in start-ups because we believe in them and to ultimately generate an outsized return for our own investors (Limited Partners). We want to share this experience with our wider Aotearoa ecosystem so that we can grow the VC’s and investors of the future!
As VC’s, we are privileged to speak and hear from founders' and their start-ups every day. One thing that we thought about was how closeted VC can be - there’s such mystique surrounding VC. Although it is challenging, it is one of the most intellectually stimulating (in our opinion) career that we've come across and thankfully, is not rocket science. We invest in start-ups because we believe in people who are solving hard problems that matter, and to ultimately generate an outsized return for our own investors (Limited Partners). We want to share this experience with our wider Aotearoa ecosystem so that we can grow the VC’s and investors of the future!
First off, let’s start you off with the template
Below you can copy our free Airtable template for your fantasy team.
How do you use this template?
It’s simple, this Airtable template has four main tabs:
Pick your squad (Startups);
Individual Players (Founders); and
You startup database
Let’s start from the last point...
Your startup database
This is where you input information on the startups that you are looking at/on your watchlist. They are not yet investments of yours but are on your radar.
There are multiple ways you can view the information you have imputed by visiting the different “views” on the left-hand side of the database. These will automatically break down your information for you depending on what you wrote in the “Main view”.
You will primarily use this tab to keep track and build your growing database of startups. Think of it like a Customer Relationship Management System (CRM) where you constantly update information as you go.
Individual Players (Founders)
This tab allows you to keep track of founders and build up your network as an “investor”.
Pick your squad (Startups)
This is the meat and potatoes of this template and where you’ll be on the most (hopefully). This tab is where you display your portfolio (the companies that you have chosen to invest in), add in links to your investment memo for each startup and constantly update information about your startup’s current value compared with your initial investment.
On the left-hand side, there are also different views you can use to view your data. For example, you can segment your start-ups by the stage they're in, their sector, location or if they are fundraising or not.
The only caveat is that you will have to assume the pre-money valuation of the startup that you’re “investing” in. Pre-money valuations are usually never publicly available so you’ll need to do some creative thinking into what you think the startup is currently worth. You can use our qualitative valuation method to help you with this process.
For the example we used, you had 10 companies you needed to invest in and perhaps $10 million of funds to deploy. You’ll have to figure out how you will allocate that capital to each startup. Will you allocate more into Startup “A” because it seems to have more potential in your view, or will you invest equally across all ten? That’s up to you.
Please see "Part 1" to find out more about picking the start-ups within your squad.
Finally, this tab is the overview of your fund’s performance based on your total invested capital and the current value of each of your portfolio companies. There is no editing required on this tab as it’s all automated for you.
Part 1: Who's in your team?
Let’s say that you can only pick ten seed-stage start-ups to invest in. Who are you picking? To do this, you’ll first have to create a database for yourself on what start-ups are out there that pique your interest. If it’s technology and software start-ups in Aotearoa, you can use Scale-Up NZ. For global companies, we suggest using the likes of Crunchbase, Pitchbook, Techcrunch and CB Insights. From here, choose a couple that sounds interesting to you and note them down in your handy start-up database template. These could be in a specific industry of interest to you, or a country that you're interested in.
Part 2: Do your research
From Part 1, now it’s time for you to dive deeper into these startups and answer some very important, overarching questions:
Why are they the right people to be building this product/startup?
Why is now the right time to build this startup?
If some startups don’t stack up to these two questions, then is it really worth it having them in your portfolio?
For local start-ups, you can attend pitch nights and read funding announcements to see and hear from the current start-ups in the market. At these events such as pitch nights, you can ask the founder if they would be so kind as to share the details of their raise and then keep you updated on how it goes. This is an awesome way to build your network and keep updated on some of the most interesting start-ups that you'll come across.
After filtering from there, we’d suggest you write a little investment memo for each startup. We’ve found that writing a memo about a startup reinforces your understanding of them, but also allows you to think critically and objectively.
Below you will find an investment memo template for you to use to write these up.
Part 3: Investment decision and portfolio composition
After writing investment memos on each start-up, you’re well placed and certainly knowledgeable enough to now make a decision on which ones to invest in, and which ones do not.
Add those investments into your “Pick you Squad” Airtable tab and input all the necessary information. Be sure to take note of what the startup is and what market it operates in. If you want to diversify your portfolio more, it’s best to invest in companies that are operating in different markets and/or industries.
Part 4: See how you do!
As new announcements and news comes out about your portfolio companies, you just have to adjust and update the “current value of investment” cell for each of your stat-ups:
For example, if you invested $100,000 in Company 1 at a $5 million pre-money valuation and you read the news sometime in the future to learn that they had been acquired for $10 million, you have essentially doubled your money.
All in all, these templates are here to help you get started in your “investing” journey. Even if you are a startup founder, going through this process of writing an investment helps you to also fill the gaps in your thinking.
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