Weekly Roundup: Moon Time 🌝

Happy Friday, DVC! This week I learned that NASA is creating a “Coordinated Lunar Time” (LTC) zone, since lower gravity means time literally moves faster on the Moon.

While this is the first time “LTC to the Moon! 🌝” has been said by government officials and not 15-year-old crypto traders in r/Litecoin, the real reason this is important is that a unified Moon time will help countries coordinate on the creation of projects like the “Lunar Railroad”.

This all seems far fetched, but I support it. As an avid train traveler, lower gravity and scientifically faster time may be the only hope Amtrak has to run on schedule.

Startup Discussion & Weekly Poll:

Last week we shared the working copy of our crowdsourced “Red Flag Checklist” and asked for your feedback!

We received a number of responses, but I wanted highlight some extremely insightful comments from Sonu Mirchandani - the legendary ETSU professor and Dean of Faculty at the Angel Capital Association!

On “the risk of startup investing”:

This is an incredibly important point that probably isn’t talked about enough.

To oversimplify: If a bank issues a loan to a company that ends up failing, it can recoup some/all of its money by seizing collateral (e.g. homes, cars, equipment, etc.).

That’s not the case with most true “startup investments”. Most Angel/VC/RegCF investors take on the risk of a 100% loss for the small chance of an outsized payback in the future. In the event of a failure, you’re unlikely to have a claim to any remaining assets.

If a founder doesn’t recognize this dynamic or takes investors for granted, it’s probably a red flag 🚩

On “Overpriced Valuations”:

In other words, the reality in Startup Land™️ is that many deals are going to feel overpriced on valuation alone.

If the founder is willing to negotiate the price down, great! If not, additional “downside protections” like Liquidation Preferences (I.e. getting your money back before other investors) and anti-dilution clauses (I.e. receiving more shares if the company has a down round in the future) can lower the risk of investing at high valuations.

And if you can’t negotiate on price or get adequate downside protections, don’t be afraid to… 👇️ 

Walk away from the deal!

This is beautifully simple advice for thinking about deals, or just life in general!

Uber was not the first company to make its investors rich, and it certainly won’t be the last. There will always be new technologies, companies, and investments to be made.

Don’t give in to FOMO or go chasing bad deals. Just wait 20 minutes for the next bus 🙂 

We’ve added Sonu’s full response to our running list of community insights, which you can find below!

Last Week’s Results:

Last week we asked you to share your “Red Flag Tolerance”… and 71% of you said “Medium - I can accept some if the pros outweigh the cons!” ⚖️ 

The other 29% say they have a strict zero tolerance policy (who hurt you? 💔)

This week we’d like to know…

Vote for New Deals:

Help select DVC's future deals! Please view the options, upvote your favorites, and suggest your own!

New companies suggested this week:

• Pirouette Medical, Zette

Deal Review Summary:

Deal #78 - KingsCrowd:

Over the past 2 weeks we were looking at KingsCrowd - a startup building a data and analysis platform to power the alternative investing revolution!