Powerball vs. Moneyball

There are two approaches to venture investing: Powerball and Moneyball.

Powerball looks for startups that will be unicorns and pay outsized returns upon an exit.

These are called home runs.

Moneyball looks for startups that will return a decent amount to the investor but not outsized returns.

These are called singles and doubles.

Powerball takes outsized risks for outsized returns.  

Startups in this category must be working in a large market that is growing fast and under disruption.

The startup must have a compelling technology, recurring revenue, and a platform-based business.

This category is ‘winner takes all.’

Moneyball takes smaller risks for smaller returns that are more obtainable.

Startups in this category should also be working in a large market that has some growth and is undergoing transition.

The startup must have a strong team, healthy margins, and a clear path to an exit.

This category has multiple winners.

Know which type of startup you are building as it greatly impacts the amount and timing of funding you will need. 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.