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Good morning friends! I hope everyone has been doing well. I am excited to continue on this journey with you all. If you find this content engaging, please feel free to share it with others who might also enjoy it. As always, I welcome your thoughts and suggestions, so don't hesitate to reply to this email with your feedback!

Fishing in Venture 🎣

This week I read an article by Crunchbase about the overview of 2023’s rough M&A (mergers and acquisitions) market  for startups - marking a significant downturn. The decline in M&A, hitting an eight-year low (down 31% YoY), serves as a stark reminder of the cautious approach adopted by many in the face of uncertain valuations and a stalled IPO market. The year 2023 was belabored with the words “economic downturn”, but what does that actually mean? 

Most of us felt the impact through higher gas, grocery, and electric bills. When the Fed raises interest rates, it generally aims to cool down inflation by making borrowing more expensive. This move can have a broad impact across the economy, trickling down to affect both individuals and businesses. For startups and venture capital, higher interest rates can lead to tightened spending and a drop in investment dollars as the cost of borrowing increases. This slows down venture investments and startup growth, as both investors and companies become more cautious with their finances, prioritizing stability and cash flow management in a higher-cost capital environment. This creates a perfect storm as companies slow down spending and investors hold onto their cash. The economy starts to slow down therefore driving up prices for products and services. Corporations are less likely to acquire startups because of their restricted spending measures. In turn, early-stage funds aren’t realizing the returns.

This year looms with its own set of challenges and uncertainties. With the Federal Reserve holding rates steady, consumers can’t optimally spend and invest at a growing rate. We also are at the start of an impending election which historically adds to economic unpredictability.  Consumer spending has been trending up the past few months, indicating 2024 will be brighter than 2023. That being said, I’m an optimist. Sectors like artificial intelligence, however, have proven to not only be resilient, but to thrive, capitalizing on the accelerated digital transformation across all industries.

As we float deeper into 2024 (how are we already in February?), it's crucial to write our own stories. Times like these are where people reinvent themselves and change culture. My pastor this week put it nicely — “Find  friends to go change the world together”(Source). The journey that we are on  is never without its storms, but I believe that the storms and failures are catalysts for success if we make them.

Fish of the Week 🐟

This week I’m sharing the story of an investor. Every week I want to showcase lenses from people with different backgrounds and bespoke expertise. Instead of an entrepreneur, I  got to catch up with Brandon Maier, an early-stage investor and managing director of LvlUp Ventures. Brandon has navigated startups and early-stage investing for over 10 years. He is a 2-time fund founder, has made 250+ investments, realized 9 exits, and generated a 3.11 MOIC (Multiple On Invested Capital) at Quake Capital.  His story, from the early days of organizing baseball leagues in Michigan to the helm of his latest venture, is a testament to the power of vision, determination, and the spirit of disruption.

Brandon's journey has been driven by a deep-rooted passion for entrepreneurs, who dare to step beyond the known boundaries and take the risks that shape our future. It's a narrative that starts with the simplicity of community sports and weaves its way through various ventures, each marked by an unwavering commitment to add value and foster genuine connections. At the core of Brandon's approach to venture capital and startups is an insight that seems almost too simple yet is profoundly impactful: truly understanding people. He lives by emphasizing the significance of fostering meaningful connections and contributing positively to others' success. He sticks with Kobe Bryant’s mantra "Job’s Not Done.” Beyond the allure of business plans and the pitch's excitement, he knows that the essence of success lies in navigating the complexities of human interactions. This philosophy has become the bedrock of his professional ethos, emphasizing mutual benefit and collaboration over mere transactional relationships.

Brandon is now at the helm of LvlUp, his second fund, which has been a labor of love and determination. Developing a multi-stage venture ecosystem and a direct investment fund during one of the venture capital landscape's most challenging periods has required creativity and resilience. In facing the hurdles of inflation and fees, they’ve  innovated LvlUp Ventures, to become a venture ecosystem that starts with community building and extends through an expansive scout network of over 800 individuals. This approach not only enhances the value we offer to founders but also to investors stepping into the fund. LvlUp also has a strong network of venture scouts. As venture scouts, individuals have the chance to curate their own portfolios, all while enjoying the benefits of equity compensation. Whenever the organization or one of LvlUp’s  partners invests in the companies sourced by the scouts, they are rewarded with equity in return. It's an incredible opportunity to not only scout promising ventures but also become a part of their growth journey.

LvlUp’s first year has been a testament to the strength of this model, with a portfolio growing to encompass 20 companies and experiencing a staggering 40% month-over-month growth. It's a clear signal that the path ahead of LvlUp Ventures is promising. Though Brandon hasn’t experienced fishing firsthand, the principles of patience, persistence, and the thrill of the catch resonate deeply with the venture capital journey. 

If you desire to learn about venture capital, meet with founders, and honing skills in assessing early-stage startups, I would highly recommend joining LvlUp’s scout program. I was a scout for a long time and it significantly helped me grow my network and understand what investors look for in founders. If you want to learn more about the scout program, my experience, or get connected to Brandon, please reply to this email.

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Ebbs & Flows 🌊

A big part of why I wanted to break into VC was because of the active board positions that VC’s serve on. I saw many principals and managing directors on multiple boards of their investments with the goal to strategically grow the startup towards an exit. So, this week we're diving into the pivotal world of Boards of Directors and their instrumental role in steering startups towards success. While the concept of a board might evoke images of formal meetings and corporate governance, their impact on startups is both profound and multifaceted.

The Role of Boards in Startups

At its core, a Board of Directors serves as the governing body for a company, providing oversight, strategic guidance, and support to the management team. In the startup ecosystem, where the waters are often uncharted and the tides unpredictable, a well-constituted board can be the compass that guides a venture to safe harbor.

Boards are particularly valuable for startups in several key areas:

1. Strategic Direction: The board helps in setting the company’s strategic direction, ensuring that the startup remains aligned with its long-term goals while navigating short-term challenges. A startup has to stay focused and keep in line with the core business focus so they don’t lose focus and get off track with where they have succeeded.

2. Networking and Partnerships: Board members often bring extensive networks of industry contacts, management hires, potential partners/acquirers, and customers, which can be invaluable for a growing startup.

3. Credibility and Trust: Having established industry leaders on the board lends credibility to the startup, making it more attractive to investors, acquirers, customers, and potential employees.

4. Financial Oversight: Boards play a critical role in financial oversight, from fundraising strategies to budget management, helping startups maintain financial health and accountability. A startup's main goal should be to create an exit (return on investment) for its investors. If you don’t want to exit, then don’t raise VC dollars!

Constructing a High-Impact Board

Building a board that adds value requires careful consideration. Diversity in expertise, industry experience, and networks can enrich a board’s effectiveness. It’s also vital to ensure alignment on the vision for the company, clear expectations around roles, and a culture of open, constructive dialogue.

Challenges and Considerations

While the benefits are clear, managing a board comes with its challenges. Balancing the input and expectations of board members with the founders’ vision requires gritty and transparent leadership. Additionally, as startups evolve, the composition of the board may need to adapt to reflect the company’s changing needs and strategic focus. Boards of Directors are not just a corporate formality; they are a critical asset for startups, offering strategic guidance, industry insight, and operational oversight. Assembling and effectively engaging with a board can significantly enhance a startup’s trajectory, helping it navigate the ebbs and flows of the business world.

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