Today we are talking with Anastasia Green, a partner in Koalition Group and the founder of Aware Mind. She lives and works in Los Angeles. Over the last four years, her company launched startups and brought a lot of money from Silicon Valley for herself and her clients. As a result, the Koalition Group was formed with the expertise of innovation in the American market. The group also has an investment bank, a law firm, and a consulting organization.
Now the company helps corporations that are forming and growing their corporate venture subdivisions to build their expertise and find strategically interesting deals.
Bank.ua: Tell us about your first startup. Is it true that it served as the basis of how you understand what a project should be and how to attract investors? Also, what’s the fate of that startup?
If we’re speaking of the very first startup, that was about six years ago, and I would say that it brought me 1 step out of 10000 closer to the understanding of how the business world is built in the USA and how investors work. More often than not, the first startup, especially those of young founders, is made out of daydreams. On hypotheses and illusions that are entirely unfounded, other than the faith of the team itself, that they are building the next unicorn will kill Facebook. That’s about how it was for us. We created an app for sharing short video messages and had no idea how we would attract users, how many resources we would need, and what metrics we needed to pay attention to. We sent our CTO to San Francisco to walk along Dolores Park and make a customer-interviews, which now seems to me a courageous and smart strategy that we came to unconsciously. But we didn’t know what to do with the results of the interviews after. We chased after angels on conferences and meetups, counting on romantic stories of how they’d write us a check right then and there. Overall, there was much fun, endless enthusiasm, little understanding, and lots of new experiences and learning.
We shut down the startup after a year of development when we realized it wasn’t growing. There were many reasons, but one of them was the absence of our experience and the possibility to receive quality business-advice. But as they say, “A journey of 1000 miles begins with one step.” That startup was our first step.
Bank.ua: How much time did you need to determine if the startup was making money or not? And one more question. Can you identify projects that will be quickly financed, but will quickly fall apart and now provide a product?
I would say that the “speed” comes with the number of startups and deals that we see. My advisors and partners who have been making venture deals for decades, have seen and passed hundreds and sometimes thousands of cases and tens of thousands of pitches. When you reach a certain level, you gain the skill to quickly see “red flags,” criteria, and factors that can affect the success or failure of a startup.
For example, if a team in Ukraine that only has an idea and has never launched a product in America, is planning to get a round of 1 million dollars after going to San Francisco just once. With 99% certainty, I can say it won’t work. Although, of course, there are exceptions, but as the founder of a company, I wouldn’t count on them. This is the first screening for red flags. Then, a more in-depth analysis begins if the startup looks good on paper, launched a product, and gathered its first metrics. Then there’s the analysis of the founders, the history of their interactions, and finally, the analysis of the history of similar deals in the past.
Bank.ua: Are the American and Ukrainian venture funds similar in choosing relevant themes and ideas that can change the future?
It’s tough to say about Ukrainian funds since you can count them on fingers. The strategy of the majority of the funds that aren’t in the top tier in Silicon Valley is to just try to follow the deals of large and successful funds. Financially, this is the best strategy on the market. I’ve also seen that Ukrainian VC sometimes invest in Ukrainian projects, but this happens more often if there’s a possibility of the strategic partnership between partners of funds and the decision to make a startup. For example, the fund gives money and resources to the developers and absorbing the investment budget.
Or the fund invests in the later stages, like AVentures, for example. In general, the themes and ideas are similar all over the world. Everyone wants to invest in what will give them a 20X return, global trends like AI, ML, VR, AR, autonomous vehicles, etc. But in cases with Ukrainian VC, it’s sometimes worth investing in technology that works successfully on the American market, but, for example, is still not in the local market and the American competitor will never be in Europe, and potentially can become a buyer of this startup in the future.
Bank.ua: Often, startups focus on tricks to win over western VC. For example, they try to dilute a list of Slavic family names with foreign ones. While this “foreign names” can be found on sites that offer acting services. What other methods are there for startups (that include dishonest startups)?
Wow! Hiring actors is something new! Such behavior in the American market is entirely unacceptable. Reputation is everything in the Californian ecosystem, and everyone knows it. When you start working with someone, you always do your “due-diligence”, and compare reviews and the connections with people that this person worked with. The market can forget and understand failures and mistakes, but lies and deception are remembered forever.
An appropriate strategy is calling a board of American advisors with expertise in breaking into the American market and strengthening your team in that way.
Often, startups show fake (exaggerated) numbers and metrics. All the investors know this, so the analysts check if the numbers are real. And you can often see a discrepancy when checking just a couple of formulas.
Bank.ua: By the way, how is working in the USA? You don’t want to come back and develop the Ukrainian economy?
First, I want to say that the US and California are different. I quite like the innovative, opportunistic mentality of California. The business environment pulls the smartest people and more money into the market than assets that can be invested. For now, I consider working in California like business-school and, I’ll go back to Ukraine with this knowledge and experience. I genuinely believe that Ukrainians are some of the smartest and entrepreneurial people in the world, and our culture adds depth and a unique perspective on the world.
Bank.ua: By the way, in continuation of our notorious affair with entrepreneurs. How do taxes and profits relate to the States? Are there not small entrepreneurs with tax discounts? But for some reason, high-tech companies don’t give their workers these discounts?
The tax system in America is relatively complex. There are many discounts and bonuses that you need to know about. Large tech companies consider the amount of taxes. For example, in California, about 40% of the income is taxed, that’s why we see annual salaries of $200-250K. Also, the company itself often gives bonuses like free transport, a gym, food in the office, and of course, yearly bonuses. Likewise, you need to take into account, that taxes in the USA actually improve the quality of life, from fast roads that you can get anywhere in the country on to clean and free toilets in the desert. You get used to such trivial things and stop noticing them, but when you leave the USA, you quickly feel the difference. It could be the reason why the people here protest against tax levels less. I would instead bring attention from personal taxes to the corporations that often don’t pay taxes on profits at all, like recent Amazon case.
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