startups · venture capital

What Does a Deal Memo Look Like?

I originally wrote this as a response to a comment. Long story short, when a vc firm is making a decision on whether to invest or not, and they’ve had meetings with your team. They normally make a deal memo to specify the opportunity and explain the pros and cons of the investment. This document helps partners and others on the investment team communicate clearly about the opportunity. 

  1. Executive Summary

10k view of the opportunity. Something I would read briefly the first time around to get good context but be definitely asking more.

a. Quick business summary: Background on the company, who they are…where they operate, etc

b. Investment analysis: To invest or not to invest… that is the question…more importantly, why on either side?

c. Risks: What are key challenges the company faces? Team…competition… technology risk?

d. Financing: Round, size, amount already invested

e. Post investment: Use of funds, milestones etc

2. Market Opportunity

Goal of this section is to better understand the market and figure out where the opportunity fits in the grand scheme of things.

a. Key Problem: what is the company trying to solve for?

b. UVP: What is the solution to the problem?

c. Market: How large is the market? Where is the market in its maturity?

d. Competition: Identify current competitors and how company fits into the mix.

  • ***I like to add information about current customers here. The positioning depends on which of the points the customer interviews support. Ref calls can also be added in product space as well

3. Product 

Goal here is to paint a picture of the product and the teams ability to defend and improve said product.

a. Product Description: What is the product and who does it serve?

b. Price and scale analysis: What are the cost drivers? What are the margins? How do they reach more customers.

c. Product Roadmap: What features are coming online in the next 18 months? Why?

d. Defense: What are the key deterrents to ward off competitors. (Good opportunity to talk about IP)

e. Challenges: What are some issues with the current product? How is the company dealing with those issues? (customer interviews are good here too)

4. Marketing/Sales Strategy

Goal of this section is to get the hard nums on how they plan to reach their customers.

a. Customer Story: (borrowed from ad world) I want to create representation of who the customer (person making the purchasing decision) so we normally create in depth stories (sometimes ends up being longer than it should but meh..) Who are they? Where does company go to reach them. What are their restraints, and what does the product empower them to do?

a1. What are the similarities of customers? For example, in b2b…Do the customers have the same size company in terms of people/revenue/geographic operation?

b. Nums: Cost of acquisition, variance between channels, sales cycle…etc

c. How do you scale the Sales and Marketing Strategy? (strategic partnerships, bd)

5. Team

a. Who is on the team? (everyone…including board of advisors)

b. What are their key strengths?

c. What are their key gaps?

d. What areas will need to be added as the company expands?

6. Operational Strategy

a.Use of Funds: Where is the investment going to? Which milestones/ goals will the investment be funding?

b. Historical financials (most early stage companies may not have this but still worth identifying.

c. Monthly Burn Rate: Some like quarterly but I like to identify monthly burn pre and post investment.

d. Revenue targets & Margins

7. Deal Structure

a. Current cap table pre investment — ->Cap table post investment

b. type of security

c. Any other information from previous rounds that might be pertinent

8. Exit

Gets into details of who the potential acquires are, what an IPO may look like, and who to compare it to.

9.Le Fin

*****Things normally added to the appendix are other supporting documents, due diligence findings, and full customer interviews.

 Pretty exhaustive, but I feel as if i’m forgetting something. This should get the job done for most seed stage deals.

product · startups · Technology · Why?

Design Thinking in the Nigerian Context

It’s 2 AM and the electricity goes out. Annoyed, you walk outside to turn the generator on. In the process of turning the generator on, you realize there’s no gas in the gen. In the pitch black of night, its not difficult to see the large red canister of gas a couple of steps away. You get the canister and start to attempt to fill the gen. You realize there’s too much gas in the canister and its difficult to control the amount that goes into the gen so you start to think… You go into the kitchen and get a used plastic bottle, cut it in half and now you’ve created a funnel and cup. You head back outside, put the makeshift funnel on the gen and begin to fill the cup with gas and pour it in the funnel. You fill the tank, turn the gen on, and go back to sleep.

That story is design thinking in action. I’d argue with anyone that design thinking is not a process that Nigerians are foreign to. In fact, it’s been at the ethos at most grassroots solutions. There are so many small inventions and quick fixes that I see everyday. Why don’t you see some of these solutions in the market? I believe the challenges are threefold:

  1. How do you get people to see their solution as valuable outside themselves?
  2. How do you provide the platform for people to producttize/ commercialize their already working prototypes?
  3. How do you protect ideas and create incentives for people to continue to create?

How do you get people to see their solution as valuable outside themselves? 

This is consequence of innovating to live vs innovating to thrive. People are brilliant problem solvers in developing markets because they have to in order to survive. Design thinking concepts tend to become a framework that most people operate in without knowing it.  The challenge is being able to think beyond the problem, which is challenging for the problem solvers. I would suggest getting up to the balcony like in this story below:

Let’s say you are dancing in a big ballroom. . . . Most of your attention focuses on your dance partner, and you reserve whatever is left to make sure you don’t collide with dancers close by. . . . When someone asks you later about the dance, you exclaim, “The band played great, and the place surged with dancers.”

But, if you had gone up to the balcony and looked down on the dance floor, you might have seen a very different picture. You would have noticed all sorts of patterns. . . you might have noticed that when slow music played, only some people danced; when the tempo increased, others stepped onto the floor; and some people never seemed to dance at all. . . . the dancers all clustered at one end of the floor, as far away from the band as possible. . . . You might have reported that participation was sporadic, the band played too loud, and you only danced to fast music.

. . .The only way you can gain both a clearer view of reality and some perspective on the bigger picture is by distancing yourself from the fray. . . .

If you want to affect what is happening, you must return to the dance floor.*-Ronald Heifetz

That often the most challenging place for problem solvers to get to but is central to seeing the value in an idea or a new process.

How do you provide the platform for people to producttize/ commercialize their already working prototypes?

This a more systemic and structural problem. With a lack of manufacturing and capital in developing markets, it’s often impossible to scale a new idea. I believe the improvement of technologies like 3D printing hold a tremendous opportunity to decrease the cost and increase the accessibility of manufacturing to the masses.

How do you protect ideas and create incentives for people to continue to create?  

This is an interesting challenge that all countries face now. How do you protect people who create, while encouraging the free exchange of ideas so people can build upon them? Legal spaces like IP and copyright may not be as developed in a place like Nigeria but it presents a great opportunity to re-imagine what IP/Copyright law can look like in the information sharing age.

music · Politics

Flying to Nigeria with my Woes

I’ve been getting a lot of emails, texts, tweets from my friends asking me to explain what’s going on in Nigeria. I don’t really have all the answers but I think I have an okay understanding. Here’s my response to one of my friends about the recent growth adjustment discussed here.

A couple of things…..
  1. It’s bad but it isn’t as bad as this guy makes it sound
  2. It’s a mix of history and current situations biting Nigeria in the butt
  3. This is probably the best situation Nigeria can be in.
It’s bad but it isn’t as bad as this guy makes it sound… A lot of things aren’t happening right now because of the currency restrictions the Nigerian government has put on commerce and consumers. The policy is in place as ant-corruption +  protection driven strategy to prevent rapid inflation. I need to find some articles to better explain it but that’s one major part of whats going on. There are things still happening but the industries that aren’t driven by import and currency arbitrage seem to be doing okay. Totally forgot to mention the fuel scarcity… maybe its pretty bad, but Nigerians always make the pretty bad seem bearable for some reason.
It’s a mix of history and current situations biting Nigeria in the butt.  The major challenge with the Nigerian economy was that it was so dependent on oil revenues as a government. As supply increased, the Nigerian government was over exposed to the decreased prices and it ruined the 2015 and 2016 budget. Now everyone internally is screaming diversification but its a tad late. If you look at Angola, Saudi Arabia, Libya….They all have ridiculous sovereign wealth funds that have been at work to invest oil profit in other industries and other areas of the world. Nigeria has been squandering its oil profits through corruption and living the high life.
This is probably the best situation Nigeria can be in.. I think this is forcing a lot of difficult conversations that should have been had 20 or 30 years ago. It could be severely worst…. Imagine a currency diving into a tail spin. That would suck. Nigeria still has a things going for it… a ton of natural resources, low labor costs, improving infrastructure…. There’s still a lot of work to do but  I think Nigeria is still in a decent position…
#MentalNote · Self-Revelation

28 Things I've Learned In 28 Years

So I got a year older last week. Upon some reflection, I’d like to share some life lessons I’ve learned in 28 years of existence. Hope you’ll enjoy. 🙂

  1. Eat before you go out for a drink with a good friend. Its called being prepared for whatever the night might throw at you.
  2. Have a hard reset on how you feel about people everyday when you go sleep. Don’t bring negativity into the next day.
  3. Drink for taste.
  4. This might sound counter intuitive, but enjoy the dark moments in your life. It will make the bright ones feel even better.
  5. Sometimes you accidentally burn bridges. Just take the L but don’t lose the lesson.
  6. You are not immortal. The faster you come to terms with your mortality, the better off you’ll be.
  7. Eat for taste.
  8. The size of your audience doesn’t matter. Keep up the good work.
  9. Bad things happen to good people, and good things happen to bad people. This is life. Life really doesn’t owe you anything so don’t expect karma to work for or against you.
  10. It’s hard but think ahead of the game. Most people are thinking about how they are going to get through the day. Think about five, ten, twenty years from now and how you’re going to get there.
  11. Appreciate people when you can. They won’t be around forever
  12. Sounds pretty cliche but fill your cup before you try to fill the cup of others.
  13. Get really good at something outside of your profession. I should have never quit the saxophone.
  14. Stay in your lane. Run your own race.
  15. Most problems in life can be prevented from communicating expectations early on.
  16. Your parents are people.
  17. Your bosses are people.
  18. You are a person not a machine.
  19. Give back to those that came before you.
  20. Fall in love with the process not the outcome.***** (MAJOR KEY ALERT)
  21. Find a mentor.
  22. Mentor someone
  23. Don’t get mad at people that aren’t in your life anymore. People have their seasons.
  24. Age does not always equal adulthood. I would say adulthood = the amount of responsibilities you take on successfully.
  25. Try to get better everyday. You’ll be surprised what 365 days of getting better can do.
  26. Take a walk in another persons shoes every now and then. Just make sure to wear socks.
  27. Have something that helps you anchor the past. I have a ton of vinyls…it helps me remember the past but also how far we’ve come.
  28. Call instead of text. It always works out better.
business · Kanye West · Leadership · Politics · Uncategorized

How the FBI Hacked Into the Iphone

This took a lot to post, but I’m not afraid anymore.

For a long time, our government has tried to stay ahead of us. What we’ve seen in reality is the people always catch up.

A couple of my colleagues and I have taken the last couple of weeks to identify the vulnerability the FBI is using to hack the Iphone.

We made a video about it here. We believe it should be shared with the world.

Cheers.