These days I am spending a lot of time trying to make sure that I understand what we have done right/ wrong at Kickstart in order to ensure that we are learning and improving as we move forward and try and scale up our efforts.  I had a few LPs also ask me if I could share lessons learned — hopefully these are helpful to entrepreneurs and investors alike.  Here is an early draft of some of these lessons learned – I would love to hear your thoughts and feedback as well.  Should be a number of follow-on posts about the topic as well.

Our involvement actually seems to matter.  3-5 years from now when most of the results for Kickstart I are obvious we are going to do a bit of regression analysis to really understand what factors made a difference or didn’t in the outcome of various companies.  One variable that clearly seems to stand out already is: deals that we have a significant investment in and are active with seem to be vastly out-performing those that we have a small, passive investment in.  This is consistent with Kauffman studies on the subject as well — showing that active involvement has a statistically significant impact on returns.  As basic as this sounds, I think this is an important insight for us.  I have always felt like investing at the seed-stage in UT is fundamentally different than the Bay Area etc…  One of the key differences (illustrated by the above) is that you can’t just take for granted that a company will have active, value-add board members.  In a way, I think a passive strategy can work well in more “dense” markets because you are essentially able to “free-ride” on the mentoring that other people will give your companies.  In UT and surrounding states we need to own that responsibility and give our companies they help that they need. One of the reasons that we all enjoy this type of investing so much is that our input really makes a difference at the seed stage.  Send me an email if you would like to be involved with mentoring startups. (more…)