CB Insights - worthless startup equity

Hi there,

It's your last chance to apply for this year's AI 100 awards. Fill out the app here by tomorrow at midnight.

And now, here are some signs to look for that suggest your startup equity won't be worth isht.

(Note: there are probably exceptions but generally, these will steer you right.)

1) The company talks about innovation in HR and other functions more than it talks about innovating on the product.

Gimmicky isht like this is never a good sign.

2) It's a mid- to later-stage startup and the “about us” page is all about the investors.

That's perhaps ok at the early stages, but eventually you gotta build some isht for customers.

If you're bragging about your investors at Series B, C, etc., the actual biz model is fundraising.

3) Early-stage founders (seed/Series A) lecturing others on how to build a business vs. actually talking about their business.

Personal brand-building founders trying to be “gurus” are almost always a total dumpster fire.

Four more startup equity warning signs below. I tweeted about these and other warning signs here and others chimed in as well.

Safety in numbers

Google and Microsoft have pledged to spend $10B and $20B, respectively, on cybersecurity solutions over the next 5 years. 

See how big tech is battling to secure the cloud, grappling with consumer privacy, and developing their cybersecurity strategies in our free Big Tech in Cybersecurity report.

Behind the curtain

Get an inside look at the State of Fintech 2021 in our live webinar on March 3.

CB Insights Senior Analyst Anisha Kothapa will share extra analysis not in the report. 

Sign up here to get answers to your questions about fintech in 2021 and beyond. 

Your startup ain’t Google — FYI (continued)

Here are 4 more signs that your startup equity could be worthless:

4) The company has a billion-dollar valuation pre-product.

5) The revenue/raised ratio is totally f^cked (aka low).

This is the company’s revenue divided by total raised.

This is especially problematic as companies get more mature.

The best companies are machines at turning $ raised into revenue at some point.

6) Media articles where the co's revenue projections keep changing.

In 2020, it said it'd do $25M in revenue to a journalist.

In 2021, it tells another journo it did $15M in 2020 and is expecting $50M in 2021.

Beware of teams who are good at storytelling but who stink at actual delivery.

7) Founders that rush into raising $ to build a co in a hot space to become player no. 10.

These folks aren't actually motivated by the problem they're solving. They just see an opportunity for a quick flip.

They'll get bored when the momentum dies and then they'll pivot to Web3.

The nuclear option

Renewable energy funding nearly quadrupled in 2021 to reach $8.7B. 

Nuclear companies raised more than a quarter of last year’s funding ($2.4B). Factors like breakthroughs in nuclear fusion tech and investors' increased interest in sustainability spurred this jump.

Clients can dig into geographic trends, exit stats, and more for renewable energy startups in this report. 

New & improved

Funding to healthcare AI startups skyrocketed in 2021, with momentum growing for AI-powered tools in areas like telehealth, drug R&D, and back-office automation. 

We highlight 130+ healthcare AI vendors in this market map.

Fortune. Jessica Mathews (@jessicakmathews) quotes CB Insights SVP Brian Lee in the Term Sheet newsletter.

Wall Street Journal. Konrad Putzier (@KonradPutzier) covers real estate venture investment using CB Insights data. 

Morning Brew. Neal Freyman (@Neal_Freyman) and Matty Merritt (@mattynotmaddie) highlight the unicorn club’s 1,000th member and reference CB Insights research.
 

P.S. We are seeking an associate director to join our Research Products & Ops group. Check out the role here.