DVC Weekly Wrap-up: A Fish out of Water

Happy Friday Doriot Venture Community!

First, a quick shout out to all of the Dads out there! We hope you have a great weekend grilling and chilling!

And welcome to the 14 new subscribers this week 👋 Now, let’s get to it!

A video has surfaced showing a frozen fish seemingly coming back to life after being placed in water.

While the footage's authenticity might be questionable, Founders, take note: no matter how frozen your startup seems, a little persistence can thaw it out and get it moving! 🥶 > 😣 > 🚀 

Is the Wall Street Journal Gaslighting RegCF?

The Wall Street Journal published a not-to-flattering article about Regulation Crowdfunding (RegCF) including how startups are leveraging RegCF to hype their ambitious projects and attract significant investment from individual backers. Two companies specifically, Aptera Motors and Boxabl, are highlighted for their solar cars and foldable tiny houses, respectively. Despite raising substantial funds, both have struggled to deliver promised products and generate sales, raising concerns about misleading investors. Their conclusion is that RegCF lacks transparency and often targets novice investors, leaving them vulnerable to risky ventures.

Our Take:

Yes, Retail Venture is still a very young and evolving space but the potential for investing in overhyped startups exists for both retail investors and venture capitalists alike. One need look no further than Theranos or Juicero to see that even sophisticated investors can fall prey to flashy, shiny objects and "bigger-than-life" founders.

However, to the article’s point, we too are seeing a pattern emerge of companies in perpetual fundraising mode with little to show on the business front. We’re also observing companies moving off the public platforms (i.e., Wefunder, Republic, StartEngine) to run a private RegCF raise so they have 100% control over how the offering is packaged and presented (including making it difficult to see the critical information one needs to make a calculated investment decision).

The unfortunate reality is that some founders may determine it’s easier to raise capital from novice retail investors with the right marketing tactics than to build an actual business (see Qnetic and Lexi updates below). While this practice is 100% legal, it’s up to us as investors to distinguish between the two.

So here are a couple of DVC Pro investing tips:

Tip #1: If a company has raised capital previously via RegCF, look into what they accomplished with the capital. This doesn’t necessarily mean revenue or customers (as all businesses are different). But did they make progress, or is the narrative (and pitch deck) the exact same? If a Founder isn’t being forthright about how the business has progressed since the last raise (i.e. even a recent pivot), the answer should be an immediate PASS! 

Tip #2: Professional Grifters are experts at utilizing FOMO (Fear of Missing Out) in their marketing materials to lure people into making a quick decision. As an example, you might see “the deadline is today to earn 150% bonus shares”. If you ever feel pressured to part with your money, the answer should always be PASS!

Forward these tips to your family and friends. The key to wealth building is to first know when NOT to take risks with the money you currently have! 💰️ 

And when you’re ready:

Join DVC Pro where we professionally break down the performance potential of 20-25 RegCF investing opportunities each year, shipped to your inbox.

If you want to backtest your “gut instincts” as a venture investor, download Fantasy Startup, the #1 startup investing simulation in the world.

Finally, we’re running another cohort for QAI beginning the first week of August. Think of QAI as a “Venture MBA in a box” that elevates your understanding of the venture markets at a fraction of the cost compared to other programs. And, reply to this email for a special DVC price!

Across all products, our mission is to teach wealth builders how to invest in venture using first principles created by the Father of Venture Capital, Georges Doriot.

DVC Portfolio Updates:

Qnetic (Deal #39) - They delivered on their promise!

We analyzed and invested in Qnetic at a time when the company had a thesis and not much else. They set out to build a new way to store energy to move us away from fossil fuels. Fast forward to today, and the company just announced that their Vega prototype is now operational (along with three patent applications), meeting the milestone of their pre-seed round! Their next step is to raise a seed round to begin building and delivering storage units to customers. The energy storage market is expected to grow to $400 billion by 2030, so they have a tremendous market opportunity ahead of them if they continue to deliver results. It’s still a moonshot, but, hey folks, this is how pennies are turned into dollars. We’ll keep you posted on their next round.

Next Week’s Venture Deal Analysis

DVC analyzed Lexi (Deal #22), and many DVC investors participated in the round. Lexi originally set out as an Internet of Things (IoT) company to help businesses bring smart devices to the market. Fast forward to today, and they are forecasting $3.7 million in revenue this year and have announced a $3 million investment from a $50 billion publicly traded tech company (still confidential). They’re raising on StartEngine, and we’re going to analyze the new deal offering. Oftentimes, the best venture investment is to double down on an existing investment that’s winning.

DVC Mind Map #7:

A quick update on the conversation the community had on the DVC Discord channel: Members really opened up about some of the frustrations they’re currently experiencing with RegCF investing. While there wasn’t agreement on any one particular direction for giving DVC community members an investing advantage in the marketplace, enough ideas were generated to move to the next level of initiating a draft concept for consideration. Reply to this email if you’d like to join the next live discussion on Discord!

Thank you for reading & participating! Have a great weekend and see you for a new DVC Deal Review next week!

Sincerely,

Team Doriot

And when you’re ready, here’s how we can help you