Silicon Valley, San Francisco, United States
By Mariett Ramm
Effective fundraising for startups isn’t about how many people and firms you can blast your opportunity out to. It’s about getting in front of the right investors, with a strong pitch deck. Once you know whom to pitch, it’s all about perfecting the pitch deck to close your next round of funding.
Daniel Curran is currently #7 on the “Angel Investors based on investment volume and successful exits,” according to unofficial Forbes’ list based on Crunchbase data, ranking ahead of famous Billionaires like Mark Cuban and Marc Benioff.
Over the last 35 years, Daniel has invested in 117+ Startups with 23 exited companies, founded many others, and turned around behemoth Western Digital as VP of Strategic Planning, a rare combination in the Valley. Those recent exits include ten cash exits and 13 shutdowns. His estimated ROI on paper is 6x in the last four years, or 150% per year. One of the Valley’s best VC is Sequoia Capital, the 46-year-old venture firm, but it has produced only 18.9 percent through 2018.
Daniel is an x-Rocket Scientist with 70+ LinkedIn Founder Recommendations and 300 decks a week deal flow. He’s invested in four unicorns ($1B+) companies before they became unicorns, and one decacorn ($10B+) now valued at $14.5B, a 201x return in the past four years. The total valuation of unicorn and decacorn investments alone made by Daniel exceeds $21B.
BC: There’s a lot of macroeconomic and startup cross currents right now. In the next couple of years, what needs to be done to avoid big mistakes? What would you advise to new Angels and Startups who are going through the exact cycles that you have been through by experience?
DC: Investing in startups is risky, but essential for all investors given the overpriced public equity alternatives that may decline for the next few years. Our target potential returns are 100x+, but 80%+ will go to zero, and the time horizon to liquidity is long (10+ years), so kiss the funds goodbye, invest like Warren Buffet, and hope for the best.
However, with the asymmetric positive returns inherent in a diverse (50+ startups), carefully-chosen portfolio, the odds for a life-changing return are much better than the lottery or that in public markets where it’s too late to get in.
If a new investor has the capital, pedigree, network, persistence, and time as we have had, they stand a 70 percent chance of matching my success in 4 years. However, if they lack any of the above, and given the coming global recession and bloated startup valuations, the investing is best left in experienced hands like ours.
We think it’s going to be good for especially new VCs and Angels in 2019 if they’re wise if they’re not going to deploy the capital right away, especially in overpriced deals in a declining macro environment. For investors, who haven’t “seen this movie” before, there’ll be turmoil and crushing losses. They’re not going to know how to react. These investors may have to wait two or three years until prices come way-way down before they should invest after the carnage.
There is an advancing risk of a global recession or worse. It will happen faster than anybody thought because of the way the central banks have propped up their economies over the last ten years. This means lowering valuations for venture capital, family office and other angel investors, which is healthy. We don’t think it’s going to mean the entire collapse of the on-demand internet or consumer internet economy. Reason being is because there is a whole generation of Millennials who have grown up with a smartphone, and they’re used to having what they want right now on demand. That is not going to change whether we are in a “good economy” or a “bad economy.” People still have to get from here to there and eat.
So, the risks of course or “bad economy” worldwide is going to provide more opportunities for investment where new disruptive values are created. The success of any investment, especially high-techinvestments, lies in a combination of luck, reasonable guesses, and evaluation of risk and uncertainty in opportunities.
BC. When it comes to growth potential in 2019, what are your thoughts?
DC: Growth potential is going to be in areas that have nothing to do with the economy. Technology is going to grow if it has all the supporting elements where the value is created. An excellent example of this in the early 2000s is Webvan that attempted to have grocery delivery to you. Now Amazon and many others deliver to your door. For Webvan, it turned out to be too early. Timing is the factor that often that fails a project. The millennials and smartphone were absent then.
Areas of tech advancement that are ready to go are AI, robotics, big data, AR, biotech (longevity), innovation (co-creation), and marketplaces, with the last 3 being where
we are already personally involved in and committed to for the next 10 years.
Endowed with a natural talent for seeing macro trends before the masses do, and the unfair access to other leading Silicon Valley Angels and exec’s at the Fortune 500, we can do distribution deals or sell and exit the startups.
BC: How do you spot successful Founders?
DC: We’ve been at large, funded companies as well as bootstrapping our ventures lately with an AARRR focus (see graphic), so we have a sharp eye for entrepreneurs who maximize ROI this way with minimal resources spent to grow big fast.
We frequently pass on ICO, overpriced, speculative, theoretical, high-risk pre- revenue deals with little transparency and loose budgets. However, we do swing for the fences proportionately on $B unicorn potential businesses that have traction. Rather than funding everything in sight as some Angels do, we have many years of wisdom, being in 14 startups as Founder or Executive, in investing in over 117+ startups from pre-seed to series A
BC: Where do Founders find you?
DC. Some via LinkedIn where we welcome free initial evaluations of investment proposal decks, and we never ignore decks that aren’t coming from people that are referred by someone we know. This is a big mistake that most investors make. They won’t look at a deck that doesn’t come from someone that they know. By seeing everything that’s coming in worldwide, I have a pulse of what entrepreneurs are proposing. It’s the best job in the world – to be able to determine what deals and startups get funded to improve humanity forever. 99% of decks are not high-qualityenough or not mature with enough traction. However, we tell them to come back when they have $20,000 monthly recurring revenue if they have no direct competition, or $40k+ MRR if they do
BC: What’s next for you?
DC. We may start a VC fund which is a complement to accelerator and incubator functions, like Y Combinator or Tech Stars, and 500 Startups. The 300 decks per week deal flow requires us to hire staff and use AI to manage and dissect the best deals efficiently. We could have the infrastructure in place with my innovation platform company CustEx, which no other VC firm would have.
CustEx would allow innovation both within the startups and within the corporations. We would have corporations as future buyers, and make investments only in startups where we have a buyer already
identified seven to ten years down the road. Also, hopefully, a much shorter timeframe of three to four years.
BC: You mentioned CustEx. Thousands of clients and customers experience inferior vendor product or service because these were built with partial or biased data. How will CustEx put an end to disappointments while allowing customers to generate income at the same time talking to vendors? Tell the readers about the system.
DC: What I wanted to create with CustEx was a platform, where the Customer masses decide what gets made, instead of IDEO gods determining what we have to put up with.
CustEx is purpose-built with opted-in passionate Customers who crowdsource discrete needs, called custexes, replacing the current 95%- unsuccessful new product development system.
Customer Insights and Brand Managers, and Ad Buyers crave accurate, total data on what Customers want today and tomorrow. Facebook, Pinterest, BazaarVoice, & Lithium don’t provide this with opt-in permission.
Vendors love our co-creation, competitors’ Customers access, and branding value-adds that no CustEx competitor has. We increase success, connecting Vendors with all opted-in Customers, not just current ones.
There is a massive need for a platform, where people can voice their opinion and have leverage in this Al- influenced world. CustEx customers may pit one vendor against another or one politician against another. By doing so, CustEx makes that information available to everyone. A politician or a vendor will be forced into delivering what the masses want. Otherwise, they lose market share or their election. That is what the CustEx platform does.
BC: How will CustEx help vendors via system integrators (SI’s)?
DC: We have relationships with Customer Insights and Brand Managers, and Ad Buyers at the Fortune 500 and will also work via SI’s like PrincewaterhouseCoopers and Ernst and Young to give their big corporate clients access to the grass- roots data our customers create on what they need.
These big companies are tied to thousands of startups via the CustEx platform that helps big companies avoid extinction. As an example – it is a Blockbuster versus Netflix thing. When there is writing on the wall saying, “There’s a new digital Netflix,” we want to get our foot in the door thereby making a minority investment in them.
At least, we can acquire that company before it gets too big and threatens our current business.
BC: How is CustEx more useful to Vendors than Facebook?
DC. CustEx is also an innovation platform and a customer social network for the startups and corporations that we link together with the added co-creation element Facebook didn’t have and wasn’t purpose-built for.
BC: How does CustEx benefit a VC firm’s startups?
DC: We hyper-actively network our CustEx large businesses with all of our startups to get more CAGR traction fast to deliver what customers need mutually.
CustEx, in combination with a potential VC firm that we may put together, would bridge the gap of old big fortune 100-companies from going out of business. These companies traditionally have been ineffective at innovation. All of their talented smartest people have left and started smaller startups. These startups then get acquired by the big companies and then once their acquired the restless founders leave again and start something else. That is the innovation cycle.
BC: You see Longevity Biotech, where there are efforts to stopping and reversing aging, as extremely important. Can we stop all human beings from aging when someone is twenty or thirty years old?
DC: We are already working with and looking for more startups and scientists who are doing work with the goal of stopping or reversing aging.
We don’t want to copy what anyone else is doing but to follow what will work ASAP. There’s been a substantial unwise deployment of cash into symptoms instead of looking at the source all age-related diseases, such as diabetes, dementia, heart disease, cancer, Parkinson’s, most of which could all be prevented entirely before the human senescence cells start to degrade with age and telomeres shorten.
There has been massive funding into these areas in the last few years. Startup Neuralink, founded by Elon Musk, is a neurotechnology company founded by Elon Musk, reported to be developing implantable brain-computer interfaces, critical to downloading brain data and an emulation map that can go into a droid or computer that emulates humans before they die if we aren’t able to stop aging in them in time.,
Then, there’s Kernel, a neurotechnology company developing an interface to help researchers and clinicians better understand neurological diseases and dysfunctions such as Alzheimer’s and Parkinson’s diseases, depression and anxiety, in which VC Bryan Johnson himself invested $100M personally. They are helping our vision of preserving humans whom we must not let slip away into death as we know it. Should we have let Stephen Hawking slip away? What if he’s the only person whom we could ask how to avoid an asteroid coming at the earth in 10 years, and he’s no longer available? Not acceptable.
BC: Do you think the innovation and Unicorn hotspot will migrate to China in 2019?
DC: Not for at least 10 years if we don’t work harder than they are. We are aware that China is the number one threat. We don’t wait for governments to approve the aforementioned. We will invest in Chinese companies just like the Chinese come over to invest in us. But we have an eye out to secure our IP. We cannot ignore a friend who might be an enemy in some ways. We have to know the way how to embrace our frenemy by finding a mutually acceptable business.
There is always a potential for misunderstandings and miscommunication. Communication is important. The more you talk, the more you understand each other. A leader, whether a political leader, a VC or a prominent angel investor is most successful when they are open to dialogue and mutual agreement. In the VC world, there’s always room. Sharing and cooperation are essential, and it’s never wise to make any enemies anywhere because you may need them for your next deal.
BC: What is the Midas Touch of A Super Angel or a VC?
DC: I don’t think any investor knows for sure in advance whether a company is going to be a success. Even the people, who invested in Uber in the beginning, did not know whether the timing was right. It was right because the Millennials and smartphones were there.
GM’s Cruise Automation, in which I invested in, is a 201x return right now and valued at $14.5B. I got in when the valuation was about $70M. I did not know since we were given almost no data, only that the twenty-something founder previously exited a $970M sale to Amazon, which was a plus.
One thing about VCs and investors is that they never fund something on their own. And not because of the financial restraints. We all share knowledge and deals. Also, because I share with you, you share with me next and spread out our risk. The reason behind sharing is because we never know in advance whether one thing could succeed or go to zero. I’ve had that happen several times.