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A SAFE may feel safer to founders but will feel less safe to Aussie investors. Photo by Jason Dent on Unsplash

A common question from Aussie tech startup founders is whether they should raise their investment with a convertible note, priced equity, or a SAFE note.

The short answer is that you can raise investment with a SAFE note or convertible note in Australia, but you may find it harder to raise your round.

Here’s the longer answer (nothing that this advice pertains to Australian tech start- ups in 2020, that the future may be different and that other markets—like San Francisco—definitely are different).

In a priced equity round, you and the investors must first agree on a dollar figure amount for the value of the company (called “the pre-money valuation” or sometimes just “the pre-money” or “the pre”).

You and the investors must then agree…

If you’re certain you understand the business, and you are confident your investment in it will succeed, what you’re doing is not venture capital, it’s banking.

Venture capital must have a high degree of risk in order to have a chance of earning the high returns venture capital investors expect from this asset class.

Anytime you think you understand the business and the market in which it operates, consider whether you might be mistaken. That happens; you wouldn’t be the first.

Or, you might be investing too late in the company, or too late in what has previously been an…

As an early-stage tech startup founder you will often have to write your own startup’s marketing copy, and you may find it difficult if the brand’s tag line is the first line of marketing copy you’ve ever written.

Because you spend so much time with your head focused on how to solve the customer problem using technology, when someone asks you what your product or service is, you’re likely to describe it in terms of features and functionality. When trying to write marketing copy, you’ll usually do the same.

It seems logical, and that’s why it’s a mistake.

Marketing (and…

I’ve been wondering if maybe we have the death penalty all wrong.

Maybe instead of using the death penalty to deter people from committing crimes for which the death penalty probably isn’t a sufficient deterrent, we should use it to very effectively deter people from committing minor offences.

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I’m proposing we make labelling fruit with useless labels like this one an offence punishable by death – who’s with me? (Photo: author. Lime: Tropical North Queensland).

For example, someone may still risk a death penalty for flying to Singapore with drugs up their bum, if their family is being held hostage by a drug gang. Whereas I don’t think anybody is going to risk the death penalty for not properly sorting their recyclables.

I’m against any form of death penalty, but it also drives me nuts when people don’t put…

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Photo by Ryan Quintal on Unsplash

Some investors want to stay investors in portfolio startups for the whole life of the company, others are looking for a quicker return on an investment and will be happy to accept a smaller return along with that.

You can get penalised by either kind of an investor if you raise the topic of an exit strategy without being asked.

If in your pitch to a long-term investor you mention an exit strategy, you might not seem ambitious enough or long-term enough to them.

When pitching to a short-term investor they may have their own ideas about what your exit…

You might end up damaging the perceived value of your product, or the market price for it, or both.

It’s very common for the startup founders I meet to want to offer the earliest versions of their product or service to early customers for free, or at a significant discount. I encourage them (and you) to not do that.

Discounts work best when the customer already has an expectation of what the price should be and is already convinced that they need your product (or a competitor’s similar product) to solve the problem they have.

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Photo by Artem Beliaikin on Unsplash

If I offered you a half-price coffee, that’s a discount that has a high likelihood of converting you as a customer. Assuming the quality…

Part of my success as an angel investor has been to have a “No Dickheads” policy when it comes to choosing founders to back.

Photo of a young man putting his hand over his face in frustration or fatigue.
Photo of a young man putting his hand over his face in frustration or fatigue.
Photo by Adrian Swancar on Unsplash

Don’t be tempted by the $$$

Even if you’re certain a dickhead founder is going to make you lots of money, don’t invest in the company. Karma catches up with all dickheads eventually, but usually it catches up with those around the dickhead first. So long before the dickhead who caused all the problems gets what’s coming to them, you’ll be taken down by the karma wave. I’ve learned this lesson the hard way.

What will people think?

People judge you by the company you keep. Trying to help the dickheads in your investment portfolio is going to make you look like a dickhead. Whereas helping good people makes you…

Can I do 10,000 steps a day for 30 days this month, to raise money for charity, come rain, riot or firestorm?

If I were smarter, I’d realise that skipping is halving my potential number of steps per hour. Doh!
If I were smarter, I’d realise that skipping is halving my potential number of steps per hour. Doh!

I want my life to always be challenging — no challenge, no growth.

If you’re lucky, life’s mostly challenges you choose for yourself. But sometimes, you’re faced with challenges you didn’t choose, weren’t ready for now, or ever.

My step goals are only with me until the end of this month, but maybe some of the challenges you haven’t chosen them will be with you for life.

Through work and friendships I’ve come to know people whose challenges are far bigger than mine, the kind they weren’t lucky enough to choose for themselves, that might be with them for…

Time you could be spending sewing face masks, baking sourdough, looting stores or waiting for Q’s next cryptic instruction

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Let’s consider whether adding another connection to another stranger is actually going to help you achieve anything, or whether the value of your time is actually all going to Microsoft (which owns LinkedIn).

LinkedIn says I’m connected to 7,881 people. If they all just post an update once a month (some of them post once a day, some of them once a year) and I spend on average about a minute reading each update and choosing a reaction emoji, that’s 94,572 minutes a year.

That’s impossible, of course. We simply can’t do what LinkedIn says it wants us to do…

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At Pollenizer we built great MVPs for great startups which gradually migrated over to their own product development teams when revenue or investment made it possible to hire a team.

If your startup is a tech startup, at some point it will need to take charge of its own intellectual property — the advantages against competitors which give you the ability to grow faster, operate leaner, service a bigger market, and surprise and delight customers.

If somebody’s going to buy shares in your company on a public stock market one day, if a larger company is going to be interested in acquiring you, if you’re going to build a resilient, profitable business that provides long-term employment security and fulfilling careers for employees (or some combination of all three) the unique…

Alan Jones

I’m Alan Jones, an EiR for startup accelerators, GP at M8 Ventures. Previously investor, founder, and early Yahoo PM. Opinions mine (but should also be yours).

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