How do you value an early stage startup?

“And we might. We've got some time. It's been my experience that the culture of a company is set really early. Like what's the bar of excellence for engineering, design, product and whatnot? That bar is set really early. And also like how people treat each other and everything, that's all set really early and determines who you can hire subsequently. And the first product you usually build at a company is a product you're still selling in 10 years. You might have built other products and add-ons and whatnot, But that first product is really the product that exists forever. And the positioning of the company initially really determines whether it, you know, succeeds or fails. As in, you either have good competitive positioning at the start or you don't. As in, you're either entering a super crowded market or you're entering a market that's sort of on the come and you're entering way before everyone else and you give yourself enough of a head start to truly, have a chance of succeeding. And all of those things are determined really early. And so I think like the fundamental decisions you make with a founder early on about where to go, what to build, who to hire are really, really important. They're decisions that have an outsized effect down the line. So that's why I've always liked being first and why I continue like being first if I can. And there's a nuance here. There's like first, first, first check or first institutional investor that like really sits on your board and makes stuff happen. There's investing enough money to let someone leave their job and go full-time on something or investing enough money so that someone can really, you know, incorporate the company, hire their first person and launch their first product. I think they're both important. You could say that both are first checks because they put someone into business, but either way, and I've done both, Either way, I like, I like doing both of those things and not later. Like, I don't like being the angel check that's coming in at the same time as a VC fund, because by then you're just marginal money. Um, and I don't like being a VC fund that's coming in, you know, at the Series B or C, because again, by then you're just, you're marginal money.”

“Like you de-risk that too much for me to get a good return. So no. Right. I think that, but that is the not obvious point, right? 'Cause if you are, especially in the Australian ecosystem, right? If you are out there operating, especially like early stage being, you know, everything really prior to product market fit, right? Prior to your Series A. Like so many people will tell you that's early, that's scary. That's, you know, that is early stage. But if you're talking to you and I, well, maybe me, you'll do seed and Series A, but like I won't. And, well, there's a lot of angels that won't do that. Right? They'll be like, sorry, it's too far along. Or it's not a good fit for me or something like that. And essentially what that means is they are assuming that your valuation is too high.”