A note from our editor, Elizabeth MacBride:
Venture Feedback Loops
It’s hard not to take investors’ or accelerators’ rejections personally. The rejections often come with no explanation – and often, rudely, in the shape of non-responses.
I thought of this after I had a conversation with a woman entrepreneur who’d been personally invited to apply to an accelerator, and then rejected with no explanation. She was understandably hurt and confused with nowhere to turn for an answer.
It’s helpful to remember a key fact about the investment markets today: Signal plays a big and growing role. By signal I mean the clues we have from our environment about what the future will look like.
Signal comes from two places: the human tendency to reference the past and our tendency to feel safer following the herd. Signal is one reason smarter investors are concerned about inflation right now. Most people will make pricing decisions for next year based on what happened this year and what their industry peers are doing – not based on what smart people in Washington, D.C., say.
Some people believe the only thing that moves public markets anymore are the collective signals about which direction it’s going. Algorithms designed by brains shaped by a herd mentality merely replicate the effect.
How does signal work in the private equity market – i.e. seed investments, venture capital and growth equity? Private investors look closely at the team and the market. But they’re human. They keep a close eye on what other investors are doing, and on ideas that are hot (Can you say Web3). Their work is intensely competitive, so when they find anything remotely resembling a pattern in the signal, it’s a huge relief: AI company? Great! Another take on a winning biotech idea? Fantastic!
Signal is different, obviously, from real value created for the end customers, and from innovation, which comes from insight.
Many investors will tell you all day long it’s about seeking value or innovation, when in fact it’s equally or more about finding investments that somehow make sense within the norms, trends and networks of their peer group(s).
Accelerators exist to help entrepreneurs, and often to source deals for investors. If they see their ultimate customers as the investors, they are as prone to be affected by trends and networks as any other part of the investing ecosystem.
That leaves women and people of color with a handful of choices. You’re not likely to be close enough to the “in” group to figure out what the latest hot trend and thinking is. How will you package yourself to fit the signal in the VC space? For now, you could seek a sponsor (it’ll probably have to be someone in an inner circle, not another woman or POC) to help with introductions and to clue you in on the right language.
Or you could relentlessly emphasize your value or your innovation, seeking the relatively few investors who genuinely emphasize those criteria.
Whatever you do, don’t take the fact that your company doesn’t fit today’s venture feedback loops as a judgment on your company’s worth. They’re not designed to give you a chance – but to protect the power and capital of the people who already have it.
Times of Entrepreneurship Stories of the Week
30-Year Veterans of Entrepreneurship Share 9 Keys To Success
Brian and Jamey Elrod Founded Text Request in Chattanooga, Tenn., in 2014. It’s a Bootstrapped, High-Growth Firm.
Will Smith Gave this Activist Owner’s Philadelphia Bookshop a Boost
Named For Harriett Tubman and Ida B. Wells, These Businesses Survived the Pandemic Because They Spread Authentic Hope.
How Much Nature do You Need? A Data Company from University of Oregon has an Answer
As ‘Technostress, Grows, People Seek a Return to Nature to Slow Down and Embrace the Calm and Quiet.
A Man From Silicon Valley Moved To Colorado’s Front Range, And Found A Place To Heal
In a recent article for Forbes, Times of Entrepreneurship editor and Founder, Elizabeth MacBride shares how rural America is the future of social innovation.
You may have missed
‘It’s a Lonely Experience.’ How This Black Woman Founder Stays Determined Black women offer new windows into their experiences raising funds — and offer potential solutions. Read it here.
In Tanzania, a Two-Year Program for Young Women is Showing Results. It Starts Early, Lasts Long and Thrives on Connections with Mentors. 24-year-old Ruth Shayo joins Kisa accelerator, aiding women entrepreneurs in an emerging market. Read it here.
Q&A: Quantum Dice Aims to Mitigate Hardware Attacks by Changing Security Key Generation Quantum Dice won Oxford University Innovation’s inaugural Student Entrepreneurs’ Programme in 2019 and has since raised £2m pre-seed. Read it here.
Many of The Top Entrepreneurship Programs Are In the Midwest, According To Princeton Review Ranking University of Houston leads for undergrad while Rice is at the top for graduate programs. Read it here.
Living the dream
Best Practices: Take the time to analyze your business’ data. Ria Graham, the co-owner of Brooklyn-based restaurant Kokomo looks at customer reviews and selling data to understand exactly how her business is doing, she told Business Insider. That way she knows whether certain drinks are underperforming or if a server is struggling.
Buzzworthy: In her new book, Atlas of the Heart, Brené Brown navigates readers through expressing the eighty-seven human emotions and how to use stories to build connections with others. The book is her sixth that dives into the findings of a seven-year study on courage and leadership. Brown has studied human emotions for over two decades and is currently a visiting professor in management at the University of Texas at Austin McCombs School of Business.
The 4.5 hour workweek: A productivity hack
Want to get the most from your morning cup of Joe? Wait an hour before taking the first sip, management and behavioral science expert Daniel Pink told CNBC. Caffeine interferes with your body’s production of cortisol, which peaks around 8:30 a.m., he said.
Wanderlust : a restaurant or activity from our Top Ecosystems list
When you’re in Bend, Ore. checking out its entrepreneurial scene, catch a beer after your meetings at one of the city’s famous breweries. Try Crux Fermentation Project, which offers more than two dozen brews on tap. In warmer months, enjoy your IPA or lager outside on its lawn and catch the view of the nearby Cascade peaks.
Made in the USA
Relax this holiday season with some soothing bath products – or gift to someone you care about! Consider this set of a lavender bar soap, bath bomb, hand soap and salt, from Pacha Soap Co. in Hastings, Nebraska. The box costs $25.
Upcoming Opportunities ⭐
To list an opportunity in our newsletter, check out our rates here. We cover the emerging economy of diverse founders:
1. The Times of E’s first event: Challenges Met, Opportunities Ahead
Gather with other university entrepreneurship professionals, professors and students to hear from NPR’s Planet Money co-host Stacey Vanek Smith, Foundry Group Managing Director Seth Levine, George Washington University’s Associate Director of Student Entrepreneurship Programs Scott Stein, The Ask author Laura Fredericks and Times of E founder and editor Elizabeth MacBride. Levine and MacBride are co-authors of The New Builders.
Date: Jan. 26-Jan. 28, 2021
2. StichCrew’s New Accelerator for Women
StitchCrew has re-launched to focus on women and non-binary founders. The ideal applicant has already achieved some revenue, can show demand through paying customers and are ready to take their company to the next level. You don’t need to have a venture-backable idea. Companies who have raised or are making more than $1,000,000 in revenue do not qualify. We are not trying to exclude anyone but would rather focus on those who can’t afford to join private networks and coaching. StichCrew is based in Oklahoma City but the accelerator is mostly virtual (some meetings could be in-person). See Times of E’s coverage of one of the founders of the new accelerator: A Bad-Ass Woman in Oklahoma City Gets the Credit She Deserves.
Date: Feb. 2022 – Feb. 2023
Location: Mostly virtual
3. Blue Forest Conservation is looking for an Investment Associate to join its team
Applicants interested in the position, which offers a salary expected to be in the $75,000 to $85,000 range, should send a cover letter and resume. This small, innovative climate finance non-profit firm develops financial tools to address pressing environmental challenges.
Date: Posting will run until filled.
Location: Remote; Northern California preferred.
INSTRUCTIONS FOR ADDING US TO YOUR EMAILS
For Gmail users (desktop instructions)
Move us to the Primary Tab:
Click into the Inbox Tab where our email shows (possibly “Promotions”)
Drag and drop our email into the “Primary” tab
OR add our email address to your Google Contacts
Hover over our sender name on the email
Click “Add to Contacts”
Mail for iPhone users – add us to VIP
1. Open the email
2. Click our email address at the top of this email
3. Click “Add to VIP”
For other email users, add us to your contact list.
This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.