Hi everyone!
“Lead parachutes” is how my new AI buddy, ChatGPT of course, described VC board members who are not all that helpful when it comes to an exit sale of a startup. The other choice descriptions it had for them were “screen doors on a submarine,” “missing in action” and “sleeping at the wheel.” Oof! I had no idea ChatGPT had such empathy for entrepreneurs, but perhaps not surprising given that entrepreneurs are its creators after all…
What is shocking, however, is how prevalent such dysfunctional boards are:
In a LinkedIn poll I ran last week, I asked my network of founders with exits under their belt to weigh in on how useful their VC board members have been through that exit process. And the verdict, as you can see below, was truly disappointing, with only 16% proving to be very helpful! To put it mildly, looks like there is a TON of room for improvement in the wonderful world of startup board governance:
I do wonder—and I don’t mean this rhetorically at all—if a board fails to help the startup through an exit process, which is the most outcome-defining event for any startup, what is the board actually doing? Board membership is a serious responsibility with severe legal and financial consequences, as anyone who has ever looked at their D&O insurance fees understands. Furthermore, one of the key “value adds” that most venture investors pitch is their ability to provide support and guidance through key strategic inflection points in a startup’s life cycle. Are most of these pitches pure puffery that unsuspecting entrepreneurs end up taking seriously? Key takeaway here is to do reference checks on your future investors, especially proposed board members, to truly understand what you can and cannot expect from them.
Here are some deals you may have missed while driving around the San Francisco Bay Area to touch some historic snow:
1
Primeary Care:
After 8 nail-biting months for the thousands of employees involved, FTC did not block One Medical’s $3.9B acquisition by Amazon and the deal finally closed. Hopefully soon we can all find out whether our Prime membership will come with an annual physical exam. At the very least it should come with some discount on those Whole Foods vitamins, right? Amazon Completes $3.9bn One Medical Acquisition After FTC’s Antitrust Challenge Times Out
2
Joining the Stars:
Remember Soylent? They are now part of the Starco Brands constellation after an incredible 10-year journey, where many along the way thought they would not make it. Soy protein shake lovers and their 20 employees rejoice! Soylent acquired by Starco Brands as nutrition company shifts into its ‘natural next stage’
3
Crypto Rising:
One statistic in this acquisition announcement really stood out: 25 of the 100 largest hedge funds in the world hold crypto assets on Coinbase! One can either see that as a natural ceiling or a 75% upside opportunity. Coinbase has acquired One River Digital Asset Management
4
Pushing up that Hill:
This is the second incredible rags-to-exits story of a 10-year old startup this week. “It’s been a rollercoaster ride. We had our fair share of challenges. But I think those challenging times were actually helpful,” said the CEO of the revenue optimization platform Zelto (formerly known as AdPushup), whose startup just got acquired by the Japanese marketing tech firm Geniee, part of the SoftBank Group, for a reported $70 million (~40x investment return for some of its early backers). “After the launch, customers were leaving. Half of the team sort of left. But it forced us to look at the fundamental value we deliver to customers. And when we almost ran out of cash in 2014, we were forced to become frugal and profitable.” Nicely done! Japan’s Geniee acquires AdPushup-operator Zelto for $70 million
P.S. All’s quiet on the wellness front: Investors are gearing up for what appears to be an avalanche of M&A activity in the health and wellness space. That should be great news for the rest of us as industry consolidation will lead to more streamlined choices among the plethora of apps and devices in this sector.
PSA: Feedback is a gift: Please let me know your thoughts about this newsletter 🙏
Cheers,
Touraj