Q&A: Practical Advice on Secondaries, Valuations, and Building Strong Investor Relations

First Cheque

Episode Summary:

In this episode of the First Cheque podcast, Cheryl Mack and Maxine Minter delve into the intricacies of early-stage investing, focusing on the importance of secondaries, the value of strong founder-investor relationships, and how to navigate high valuations. This episode is a milestone as it's entirely driven by audience questions, providing targeted insights and practical advice for investors and founders alike.

Cheryl and Maxine kick off by discussing the significance of secondaries in the investment ecosystem. They explore how secondaries can provide liquidity options for founders, early employees, and initial investors, comparing the maturity of secondary markets in the US versus Australia. They touch on the role of secondary funds, the impact of early liquidity on the ecosystem, and how this federal flow of funds can encourage re-investment into new startups.

Next, the duo dives into their anti-portfolios, sharing insights from companies they passed on and reflecting on biases and lessons learned. They also address gender diversity in the investment landscape, critiquing the current state of gender equity in the Australian startup ecosystem. Furthermore, Cheryl and Maxine share their strategies for balancing valuations, particularly in the context of owning small equity stakes as angel investors.

Key Takeaways:

• Secondary Transactions: Understanding the role and impact of secondary transactions can provide essential liquidity to founders and early investors, fostering a healthier investment ecosystem.
• Anti-Portfolio Learnings: Reflecting on missed investment opportunities reveals biases and allows investors to refine their criteria and improve decision-making.
• Gender Diversity: There is a significant need to address the gender gap at all levels of the investment ecosystem, from founders to fund managers and LPs.
• Valuation Strategy: Evaluating whether a company can significantly grow its valuation by the next funding round is crucial in assessing high valuations.
• Founder-Investor Relationships: Strong relationships between founders and investors are imperative for successful fundraising and long-term collaboration.

Resources:

• Scale Investors: led by Samar, focusing on women-led companies.
• EQUITY DIRECTORY: A data-focused initiative to improve reporting on gender metrics in the investment community.
• AirTree Pioneers Program: Supporting diverse early-stage founders.
• First Cheque Podcast Voicemail: Submit a question

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Mentioned in this episode:

June 2024 – Vanta First Cheque

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