When I started investing in startups a long time ago, the labeling of financing rounds was as simple as the Sesame Street alphabet song – A is for Abbey, B is for Bert, C is for Cookie Monster; ok, you get it. The rounds were named for the purpose of identifying shareholder rights in a particular class of stock. The names weren’t used as a tool to avoid pigeonholing a startup into a particular stage of growth the way they are today.
The labeling of financing rounds has become silly: Seed. Pre-Seed. Early Seed. Gap. I’ve even seen a round classified as “Genesis” recently. To compound things, if you ask a dozen entrepreneurs or investors what each of these rounds mean, I guarantee you’ll get a dozen different answers.
I’ve come up with an idea to simplify this practice and ran it by a few friends. They all liked the logic and simplicity, so I’m throwing it out there. I propose that we start labeling rounds by the size & post-money valuation of the financing. Here’s a hypothetical financing history of a company using this method:
- $500K/20% Discount Note round.
- $750K/6.5M round.
- $3.2M/17.8 round.
- So on and so forth.
Using this process, when I look at the cap table as an investor, it tells me in an instant just about everything I need to know about a company’s financing history and eliminates all the nonsense about trying to properly name a financing round.
Four years ago Michelle Crosby sat down in my office and told me about her plan to completely disrupt the divorce industry. Her story was fascinating: A child who watched her parents go through a brutal divorce becomes a divorce lawyer and winds up going through a divorce herself. She certainly checked the box for domain expertise, didn’t she? The most compelling part of Michelle’s story for me though was the fact that when the law firm she was working for offered her a position as partner, she had an existential crisis and decided to resign instead and that’s when she set out on her mission.
I’ve always been drawn to mission driven entrepreneurs. Folks who lay awake night after night grinding away on how to solve a particular problem. It consumes them and they’re driven by something far greater than money or recognition. Michelle fit the bill to a T. She had grown so disillusioned with an industry extracting obscene amounts of money from people going through a great deal of pain with no other options, that she turned down the brass ring she had been working so hard to earn and set out with not much more than a burning desire to reinvent the very broken process of divorce.
Michelle and her team have built an elegant and easy to use platform designed specifically to keep lawyers from running up bills by playing the middleman and escalating drama instead of avoiding it. Even more importantly, the entire Wevorce experience focuses on the well-being of the children who almost always suffer the most during the divorce process, and it works. Over 98% of the hundreds of Wevorce customers have avoided court and the company’s customer satisfaction metrics are through the roof.
I stayed close with Michelle during the last four years and have enjoyed watching her grow into the amazing entrepreneur she’s become. We participated in the seed capital rounds and when Michelle told me that she was ready to raise her Series A, I didn’t waste any time in getting my partners to spend some time with her. They came away as enthusiastic as I’d hoped they would and we couldn’t be more excited to become the lead investor in such an important company.
Equally gratifying for me is the fact that Wevorce is based here in my hometown of Boise. I’ve been passionate about our startup community for a long time now and I’m thrilled to be joining the board of directors and help Wevorce reach its full potential and become one of Boise’s iconic companies. Michelle has been able to recruit some fantastic talent here and it’s yet another sign that Boise’s rising!
Englishman Phillip Astley is credited with creating the first circus in 1768 in England. A war-trained accomplished equestrian, he parlayed his advanced riding skills into a post Seven-Years War career when he opened a riding school where he rode his horses in a circle (a ring) rather than the traditional straight line which allowed him to use centrifugal force to perform advanced trick riding. He later added other riders, musicians, jugglers, clowns, tight rope walkers and acrobats and created the modern day circus. That format stayed largely unchanged for 200 years until contemporary circuses were created in the 1970’s. The most successful of those has been Cirque du Soleil which was created in 1984. 15 million people will see a Cirque show this year and they are approaching $1B in annual revenue.
While obviously wildly successful, it’s been more than thirty years since the Circus was disrupted. This summer, we met a couple of remarkable entrepreneurs who figure it’s time to change that. The moment we met Brent Bushnell and Eric Gradman, we knew instantly that we wanted to be a part of what they were up to and last week we co-led a $6.5M Series A investment (along with our friends at Foundry Group) in Two Bit Circus, the circus of the future. At Techstars, nothing excites us more than meeting mission-driven entrepreneurs and these two define that. It wouldn’t be hard to imagine Brent under the big-top with P.T. Barnum and Eric’s got both the imagination and roboticist chops to make Two Bit’s studio in LA the most amazing ideation lab we’ve ever seen. Most importantly, they’re both crazy enough to believe they can change the world.
Instead of sitting back and watching a circus, Brent and Eric believe that the experience should be completely participatory. Two Bit Circus is a modern tech-driven immersive circus encapsulating many components of the future of tech. Lasers, robots and virtual reality are just a taste of what they’re incorporating into their flagship STEAM Carnival this year which will be held at Pier 48 at AT&T Park in San Francisco next weekend (Nov 6-8). If you’re going to be in town, you don’t want to miss this! Use the coupon code “brent” for a few dollars off. You can get tickets here. I’m flying in for it and bringing my son. Hope to see you at STEAM!