Nikhil Namburi’s Post

No Distance Left to Run. A couple of weeks ago I made the decision to close N2 . But not without sharing the full story and the insights gained about Startup Investor ecosystem along the way. My aim is to tell this story with as much intellectual honesty and emotional intelligence as possible. ➡️ Why I closed it down ➡️ What I learnt ➡️ How it makes me feel Drawing on deep introspection and attempting to remove any personal bias so it may serve to help all. For a deep dive into my experiences check out the complete story here 👇 Your insights and feedback would be greatly appreciated as they help us all learn and grow 🙏🏼 for the ❤️ of startups 
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What first time founders should not do : Series 2 Cutting corners will return to bite later There’s a strong temptation to put out a good-enough version of the product as quickly as possible to generate revenue that will attract investors. To not bother putting a proprietary rights agreement in place, or filing for patents because lawyers are expensive. Code can be patched, but the architecture needs to be right from the start or it will soon turn into a mess. Legal, accounting, and tax issues if not set up properly from the start can be hard to fix later. Patents have to be filed within a year of product release, if not sooner. Experienced founders know that doing everything right from the start is well worth the cost of cleaning up messes later. It’s a long, tough slog. Enjoy it. All founders tell investors they expect an acquisition in 3–5 years. Inexperienced founders actually believe it. Experienced founders know building a startup is a long, tough slog that may take 10 years. They’ve been on this roller coaster ride before and are doing it not for the promise of riches but because there’s absolutely nothing they’d rather be doing. What happens when a brilliant but inexperienced founder raises $1 billion to develop teleportation? When one of the scientists disappears, his hacker friend has to find out before more people disappear. Ha ha ! It is always wise to be prepared for the worst. #Firsttimefounders #startupmistakes

Ok, I'll say it out loud, folks are thinking it and saying it quietly offline, but I'll say it in public: we're at risk of a DefTech VC Winter (VC money running away from the Pentagon), here's why imho: 1. Some of the big DefTech startups have great brands and sub-par products/product-market fit. So they may look good at trade shows, work the hill, get some token development contracts, but when the rubber meets the road in OT&E, they fall short and lose the work. btw, this is why we have OT&E. 2. Interest rates are coming down in the next two years, the stock market will start going up as leverage starts going back up, the IPO window will reopen, so the prospect of higher-risk bets in the commercial sector and other products will make more sense again, so the entry-barrier-laden defense market will look like less of a safe/appetizing bet. 3. Entreaties to Congress and The Building to change the way we acquire so that startups can better compete will move slowly, if at all - the rate of awards to startups for production contracts is not likely to change dramatically unless the way that startups approach The Building changes dramatically. 4. It only takes one or two dead unicorns to scare the capital away. VC's are currently working on an untested investment thesis: there's money to be made from The Building. If that thesis turns out to be wrong to the tune of Billions of dollars - if any of 10 or so DefTech unicorns/darlings die, then the bulk of the capital will go elsewhere for the next couple decades. I could be wrong, I don't have a dog in the fight, I welcome disagreements, I think this is a conversation worth having.

This is an excellent post by John Ferry (make sure to read the discussion in the comments to his post too) about whether or not we are on the cusp of a nuclear winter at the intersection of national security and venture capital. I think you can make arguments that we're just now seeing acceleration in the space and that it will continue for the foreseeable future but John's arguments are strong as well. I think we're somewhere between the poles. A ton of new entrants in defense tech are going to wash out very soon but the more successful new entrants will stick and some may double down. A handful of interesting anecdotes from the last 2 weeks... 1) The Apollo Defense tech hackathon in El Segundo dominated the conversation for a few days and brought together hundreds of people wanting to build in the space. Clearly there is momentum in the founder community. 2) An experience founder friend who has been thinking about building a new company in the defense space just pivoted because the DoD is moving money to non-traditional defense contractors too slowly. 3) A fund that added dual-use as a sector/thesis last year told me last week that they were pausing their defense tech investments until they see more momentum. 4) A prospective LP told me last week that they are having trouble getting comfortable with the defense tech space because of the inability for Congress to move money or get things done on a time scale that matters. The continuing resolution isn't helping and they're worried that whatever happens int the 24' election cycle it isn't likely to bring back bipartisanship or effective governance. 5) Skepticism amongst co-investors regarding the Department of Defense's new innovation efforts. (A book can be written here) If you assume all of the above are representative and can be generalized, we have a highly energized, young base of engineers who want to work on hard national security problems but almost all other parts of the ecosystem are concerned. It's a weird time in the national security vc space, I think we are at a pivotal moment and things can break hard in either direction right now. We need to make sure we don't squander the opportunity.

Great post by John Ferry on whether all the venture capital momentum we see in defense/government market is at risk of drying up quickly. While I generally agree, I would say we need more data and a set of hypotheses to test. A few to start: - Does the amount of non-dilutive capital available in this market (SBIRs, Grants, SBA loans, other new loan programs such as from Office of Strategic Capital) reduce/defer some of the investment risk? If so, is there a threshold in terms of amount of non-dilutive capital that is an optimal number? - Is the path to a Program of Record longer than the typical payout from an investment in startups (Yes, and many fewer reach it I believe)? If so, how much longer? - Is the longer-term payoff much larger, given the nature of government contracts (long-term, essentially recurring revenue even for services)? - Are there ways to diversify the customer concentration risk by going after programs/govt agencies with different buying profiles? We are willing to jump in and test these hypotheses (or others). But let's go beyond hyperbole and put some real data behind all of this. Thanks John for always pushing our buttons :) #defensetech #barriers2entry #emergingtech Jason Rathje Bailey DeVries Michael B. Raj S. Chris Bollinger Shelly Kapoor Collins Ryan Micheletti Kevin Landtroop Joey Arora Michael Harrison Ty Smith Rob Handfield Thomas Kull Tim Laseter Matt MacGregor Dr. Marina Theodotou Jesse Levin Dolores Kuchina-Musina, Ph.D. BENJAMIN MCMARTIN Jerry McGinn, Ph.D.

A Better Mousetrap tech newsletter - Opportunities that support your startup. Did you catch this week’s Better Mousetrap newsletter for funding opportunities and cool happenings? Here’s a sample of what you missed. * Greenlight Innovation Fund * Fantom Foundation's Sonic Lab Accelerator * The Sephora Beauty $100,000 Grant  * Ganas Ventures | Community-driven founders: Apply for $100K * Lattitude (US Latino founders) Match-Up Competition that will offer up to $1M of equity-free capital * Forum Ventures $100,000 Pitch Competition Subscribe now and you won’t miss more of these opportunities that I find every week. https://lnkd.in/eS-XZhZV In full, here’s what you missed this week https://lnkd.in/edY8BDN3 #startupfunding #founders #pitchcompetition #grants #businessgrants #web3 #accelerator #research

We analyzed the biggest challenges that founders consistently cited as the biggest thing on their mind over the last 9 months. During that time, we worked closely with 60+ early stage tech startup founders, going deep with them on their biggest issues, and connecting them with each other and outside resources to help get them the support they need. Over that time, we’ve seen a lot of common themes in the problems that founders face. Unsurprisingly, the biggest concerns tend to boil down to either having enough resources or finding product-market fit (PMF). Then there are the related corollaries of having enough resources to get to PMF, or, getting enough traction to be able to raise funding. When we looked closer at the data, however, we found some additional insights and nuances, especially when our founders are grouped by stage. Read more in this week's post https://lnkd.in/eAK9y5Ta

There are emotional and strategic complexities founders face when considering selling their tech startups, emphasizing the need to evaluate all stakeholders' benefits, explore alternatives, understand post-acquisition roles, and plan future endeavors amid potential M&A market revival. https://lnkd.in/eG8dubQw

💰 $3000 usd to $15.000 usd of expenses per month, in #tech infrastructure, having between 10,000 to 30,000 users or items in database. some do not store photos, files or videos, only text, only “string” of data. usually with a user activity of less than 200 per day. I observe this pattern in early stage #startup founders. when i tell him that with a balance of less than $300 usd per month, you can have the same amount of users and much more, he is surprised. be careful who you choose as #CTO or Technical Leader. we at Freekee Labs, help prevent such financial bleeding, if you have a similar situation, feel free to contact me. #Fractional #sales #entrepreneur #fintech #fullstack

When I first entered the primary market and build my first primary market intelligence software, I kept wondering why there has been no shorting mechanism, especially when there are SO MANY opportunities there!!!!! Thinking how we could legally invent a way to make this game. Regardless, I have come up with the punchline: introducing Primary Market Shorting: Bet against the hype! Bringing balance to startup valuations by rewarding insight over excitement. 📉🎉 #InnovationInFinance #StartupBubble