Risk Mitigation in the Venture Trade (Part 3): Markowitz does not Work

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Markowitz does not work in the venture trade

I guess (in the course of my two most recent blogs) I have made my basic stance clear that standard portfolio theory fails as far as start-up portfolios are concerned. Let us, just for the sake of the argument 😉, assume Markowitz’s paradigm could somehow be applied, or rather, transferred onto the start-up stage. What would it look like? I … Read More

Risk Mitigation in the Venture Trade (Part 2)

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Table with types of different intrinsic and extrinsic start-up success factors

Last week I expanded on the conventional venture capital wisdom related to the avoidance of too many bad lots (investment targets) in the bucket. The standard recipe to avoid these odds (apart from engaging in thorough due diligences) is to invest in a sufficient number of start-ups. Conventional VC wisdom has it that one needs to invest in at least … Read More

Risk Mitigation in the Venture Trade (Part 1)

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Risk Mitigation in Venture Capital

Like in conventional asset management theory, the credo for the need of a “distribution of risk” or “risk diversification” is generally also considered to be inviolable in the venture business. In my opinion, the imperative is fairly nonsensical – at least when it is based on the number or the type of targets to be chosen. Within the asset class … Read More

Wrong Tests and Ill Fitting KPIs Should not be Held Against A/B Testing

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Ill Fitting KPIs are no Argument against A/B-Tests

This time @AndrewChen ’s Newsletter was somewhat weird. Under the heading “Conservation of Intent: The hidden reason why A/B tests aren’t as effective as they look, Andrew argues that measures which result from A/B testing and aim at improving conversion rates do not take into account that normal users among those who churn are statistically dominated by “low intent” minnows, … Read More

Merkel on German IIoT – Why Germany is on a Dangerous Path

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I think Germany is lucky to have a physicist with some respectable track record as head of government. She is intrinsically motivated to push the country’s sadly lagging digital transformation and she does not like empty blab. Despite that she needs to tread very carefully. One “wrong” word might result in disastrous political or industrial effects. In last Friday’s first … Read More

On Quality and Quantity in Start-up Processes

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From Quality to Quantity

The issue how to quantify quality is an old one. In antediluvian times it used to be a common place that you cannot e.g. map quality on straight lines, because quality is a multi-dimensional category whereas quantity is one-dimensional. In business such philosophical qualms are generally perceived as academic and irrelevant: In HR and marketing for instance, where the “quality” … Read More

“Sharing is Caring”? Why Rifkin is Wrong

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Picture depicting two open hands with a heart lying in them which is covered by coins

In his much-acclaimed book The Zero Marginal Cost Society, The Internet of Things, the Collaborative Commons and the Eclipse of Capitalism, palgrave mcmillan 2014, Jeremy Rifkin declares the internet economy and its key ambassadors the millennials to having dethroned capitalism for the sake of the new “World Wide Web” – inspired economic model.  According to Rifkin, “openness”, “universal access for … Read More

Smart Tech VCs do not Invest in Brands

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Smart VCs do not invest in brands

There are times when you really wonder
 Four days ago, I read an article on hackernoon.com on “The Value of a Brand for Tech Companies” by some Cameron McLain, principal at Hummingbird Ventures. The gist of this article is that tech start-ups and VCs alike should embrace the idea, that brands constitute an important value for tech start-ups worth of … Read More

Tech-(R)evolution IIoT?

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Pic of French Revolution with Pic symbolising IIoT instead of French flag

Being a historian of science by education, it amazes me to find most of my contemporaries in the venture business so at ease with detecting with an abundance of certainty “next big things”. How they manage to identify “tech revolutions” within their immediate vicinity or forecast the lives of the generation to come remains a mystery to me. I wish … Read More

ICO Instead of Series A?

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Picture showing a black frog and tited: When Joke Coins Win

Emitting publicly listed shares instead of diluting ownership by a series A financing round sounds like a very tempting way for founders to get going at early stages: Instead of having to “prove” their company’s worth to notoriously sceptical VCs and angels they would simply have to pimp their equity story and promise things that need not come to fruition. … Read More