How can VCs reduce the risk of every single investment?

I remember these two quotes that Grandpa used to repeat to me:

• The more taxes you pay, the better.
• Never put all your eggs in the same basket.

He was a successful investor in the stock market, so I guess the same recommendations are good to other type of investors like VCs.

The first one is pretty obvious: paying more taxes means generating more revenue. So, focusing on companies with a consolidated business model that already make money looks like a good deal.

The second one looks obvious too. However most people just stay on the surface. Most investors think that their eggs are the companies in their portfolio and industries are baskets. They put their money in different verticals: adtech, SaaS, healthcare, IoT, VR, etc. If some of those industries fail, other investments might be safe and balance out the global ROI.

Well, I guess that’s an intelligent move. But, is it possible to go deeper in that quote? Is it possible to reduce the risk on every single investment?

What if we consider one single company as a set of baskets? I know how important it is for a company to stay focused. Having several goals can make the company lose the north and fail. But, if a company can have 2 or more revenue streams working in harmony and pursuing the same goal, it’ll never lose the focus and will definitely have a more stable and safe growth.

Let’s explain this with one good example: Mobincube, a DIY platform for non programmers to create mobile apps and earn money.

Mobincube has a solid business model that combines 2 different revenue sources perfectly: AD revenue + SaaS. Nothing to do with other companies’ freemium models.

With Mobincube people build apps for free and earn money. From the moment they publish their first app on the App Store, they start earning money and so does Mobincube. Then people go premium (SaaS), so they can benefit from some additional services that will help them increase their earnings. So now the same user becomes a double stream of revenue to Mobincube. Even the second revenue stream helps strengthening the first one. There’s only one focus: help people build amazing apps. But our 2 revenue sources work together to help us grow a solid business and reduce the risk.

Mobincube has a team of 25 people and is almost profitable. Well, being profitable was not funny, so we decided to re-invest our revenue and go for a bigger goal. It is now on the $1M yearly revenue range, and it is ready to scale. And having these 2 revenue streams working in harmony is what turns Mobincube into a great investment opportunity these days.

Investors are reluctant to invest on AdTech now, they are afraid of the big players like Facebook taking the big share, because they generate their own huge amount of traffic. The same investors used to like to invest on SaaS companies too, but they found that some of those companies were overvalued.

As I wanted to prove, one single company can represent several baskets to put your eggs in and keep the investment safe. So, if you have some eggs (I bet you do!), you should consider investing in these type of companies.

Mobincube is a great investment for investors interested on AdTech, since, as Facebook, we don’t need external traffic to fill with ads; our users generate it. At the same time Mobincube is a good opportunity for those interested in SaaS companies but don’t want to make their investment rely on one single revenue stream.

Oh, BTW… and Mobincube is now looking for series A, so don’t hesitate if you’re interested.