David Cohen visited Cincinnati and talked to a group of us about startups & fundraising. These are some insights.

First, a bit about David Cohen.

He is an entrepreneur and investor most famous for cofounding Techstars, a mentor-based business accelerator program with locations around the world. He is based in Boulder, CO where Techstars originated.

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Matt Damon said once, in Esquire or something, that Germany is like the United States except about 10% different, and that 10% makes all the difference.

Boulder is a different environment for startups and fundraising than Cincinnati is. That is a fact. Maybe 5%, but different nonetheless. It’s easy to get caught up in our own environment and the rules within it, something I’ve heard to recently as “eating your own dog food.” This inertia can hurt us. It runs counter to the idea of a startup: taking big risks, doing new and potentially unique (weird) things. See: Zero to One by Peter Thiel.

We need more folks with different perspectives and opinions to come and challenge this inertia. This is, I think, why I love to travel — immersing yourself into a completely new place with new people and new rules is both exhilirating and refreshing, and is guaranteed to change your perspective about the place that you call home.

Here are some random insights from David Cohen’s talk. He had lots of them.

1. “Reflective listening” — a good practice when pitching your idea to investors. This basically means continually asking questions like “Am I hearing you correctly about x?” and “What else?” This seems like a good rule for communicating with another human in general about anything. It cuts down on confusion and makes communicating more efficient and clear, essentially saving time. And time is our most valuable asset.
2. “Startups are learning machines.” I like this. As a startup cofounder I feel I am learning new things every day. The evolution is rapid and can be a whirlwind.
3. “Expect to give up 30% of your company every time you raise money.” This may be common knowledge to seasoned entrepreneurs but for newbies like me this is a very helpful framework.
4. “Seed rounds are about getting to product-market-fit, not as much about traction yet.” This sounds refreshing though does not seem consistent with the current investor environment in Cincinnati. Investing in a company and allowing them to simply get to product-market-fit riskier than investing once they already have traction.
5. A general insight, that has also been a slow hunch, is that so few investors in Cincinnati talk about product. David mentioned that an investor may be reluctant to invest because he wants to “play around with the product more.” I would love to hear an investor say this! I am a product guy and we are a product and design-driven company. That is what gets me out of bed in the morning and is keeping me on this startup journey that Elon Musk describes so eloquently as “chewing glass and staring into the abyss.” I often feel the need to apologize for being so product-focused and remind an investor that I am obsessively thinking about whether or not this company can create real, financial returns. If I had a nickel for every time I’ve heard someone remind me that a company is about making money I’d have about $3.85. Our company is trying to make amazing products and we are building a business model around that, one in which we believe we can make a lot of money and keep building more amazing products. The balance of focus between making great products and making great business plans seems off here in Cincinnati and I will keep pushing this city towards a more product-focused approach as long as I have the energy. You’ve done the same with me in terms of business models and market analysis and it’s made a world of difference for me as a business owner.
6. “If you want money ask for advice. If you want advice ask for money.” Apparently this is a popular saying but I’d never heard it and I was amused by it.
7. Lines not dots. Relationships develop over time, not from a single event.
8. Quality vs. Quantity when it comes to finding investors.

I enjoyed having David here in town. He talked about how a startup needs good momentum (as opposed to bad momentum) and that is also true for a startup community. I feel that happening in Cincinnati and OTR and it’s incredibly exciting.

I spoke briefly after the event with Connor Bowlan, who is founding a company called Cintric. He had a great insight:

Investors are reluctant to invest in Cincinnati because there just isn’t much competition yet.

There’s not as much incentive for investors here yet as there is in a place like Boulder or SF where FOMO is working much more in the favor of entrepreneurs.

That’s a call to action #StartupCincy. Let’s get going.