I just got back from a week in Tel Aviv, where my Gaingels Syndicate and I sponsored LGBTech's startups + gay pride panel with Joel Simkhai, Joel Spolsky, and Ben Ling and experienced the White City's unique and breathless mix of endless partying and startup energy.

In the wake of what tragically happened in Orlando, it reminds me all the more of how proud I am that so many people were able and willing to show their support for the community and for investing in its startups and enormous potential.

Flying home, that inspired me to think about all the reasons I am bullish on the worldwide startup economy in the coming years.

We have been hearing so much bearish commentary recently - and indeed there are reasons for caution: bubbling late-stage venture capital valuations are tumbling, fewer seed-stage startups are getting funding, and entrepreneurs are scared.

But, I have come away thinking this is the necessary and culling of the fat: far more startups received funding in 2014 and 2015 than came close to deserving it, and late-stage VC valuations stopped being grounded in reality years ago. A leaner, meaner, but exciting era of startups is coming, and here are 10 reasons why:

1)      We are entering a new era of groundbreaking tech: Peter Thiel is fond of saying, 'we wanted flying cars, and got 140 characters.' That was true of the last startup era but new advances in backend software tech and hardware are opening wide vast new industries.

2)      Its internationalizing: San Fran is still King, and New York is still Prince, but startups the world over are growing. Not just the usual suspects; take a look at some of what is going on in Amsterdam, for example, and you'll be impressed by the breadth of the startup world's reach.

3)      Its attracting more and more experienced talent: I am struck more than ever by the number of highly talented, established, experienced businesspeople who are taking a stab at the startup world. This is one of the most encouraging trends I see: while we glamorize the 19-year-old billionaire founder, far more success stories come from 27-55 year olds who know their s***.

4)      Capital is getting smarter: Bubbles feel nice, but one of the negative consequences is they siphon valuable money to terrible projects. Capital is coalescing more around the best startups that are actually performing.

5)      Founders are focusing on building real businesses: It's so refreshing to hear founders now using words like "profitability," "positive cost of customer acquisition" and "smart burn." Sometimes we forget 'startups' are not magic abstractions, it's just a fancy word for real companies.

6)      Real money for real problems: In 2016, I have heard far fewer pitches for new social products, and variation derivatives of old ideas, and fresh ideas for solving big issues. Sometimes we forget: if you want to make real money, you have to solve a real, big problem for people.

7)      Funds are flush: They may be paying more attention to the fine print, but most of the big funds I know have raised new funds for the next several years.

8)      Institutional money is smarting up: This is a good thing, people. Sure, it sounds awesome to have pension money coming into anything and everything, but nothing artificially heats the market faster.

9)      People want to use startup products more than ever: one of the most exciting consequences of social spread is that its easier than ever for mid-level penetration startups - those with real growth and an awesome product that are not household names, to build greater brand recognition with real people. You don't need to be Uber anymore.

10)   Networks are getting more sophisticated: Investors are getting better at building networks that enhance their startups' performance beyond monetary injections.


Published on: Jun 17, 2016
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