LaunchBit

Elizabeth Yin

San Francisco, California
Cofounder & CEO, LaunchBit (Acquired by BuySellAds)
Cofounder & General Partner, Hustle Fund

Hustle fund helps startup founders with capital, knowledge, and networks through pre-seed investment, advice, connections, and events and teaches people to become angel investors through Angel Squad.

I founded an advertising company called LaunchBit in the thick of the recession in 2008. I could raise no money at first, but, scarcity turned out to be a good thing, because we meandered a bit and at first had no idea what we were doing. Eventually, we learned a lot about growing a business. As part of that, we formed partnerships with other advertising companies and one of those, BuySellAds, eventually approached us about acquiring our company. As a first time entrepreneur, I was incredibly naive and although I knew that one day it would be nice to be acquired, I wasn’t really seeking it when they initially approached us. At first, we didn’t bite on their acquisition suggestions, but after several months of sussing it out, we decided it made sense. They made the process very simple—no handcuffs for the team with just a short transition period for us to hand the business over to them. It was a modest exit and they ended up running the company for several years.

One of the things I love about entrepreneurship is the autonomy and ability to work on things you truly care about. A small part of the decision (but not the primary one) to proceed with selling LaunchBit was the realization that ads were not my life’s work. Admittedly, though, on the day we closed the acquisition, I felt a sense of emptiness. I had just let go of “my baby” that I had worked on for so many years. Although it was also an opportunity to find the thing I absolutely loved working on—not just for five or ten years, but for thirty—that turned out to be a tall order. It really is hard to figure out what is the problem you want to work on for decades on end. I was working at a startup accelerator for a while and experimenting with different side projects to figure that out. And, one day, it dawned on me that what I really cared about was in front of me all along: startups
and founders. I enjoyed helping great founders access capital, knowledge, and networks—three things every startup needs to succeed. That’s why I started Hustle Fund.

When we started Hustle Fund, we initially launched a pre-seed VC fund to back very early stage founders. Our pre-seed fund invests in companies that basically have two people in a garage with half a prototype, no revenue, and a dream. A lot of people ask me how I knew I wanted to get into venture capital, but the truth is, I view Hustle Fund as a business—much like running a startup. Yes, in the truest sense, we are a VC fund—we invest in startups and hope to generate high returns from those investments. But, beyond investing, we also help with advice on building a business and connecting founders with other people who can help them succeed. To this end, beyond preseed VC funds, we’ve built conferences and events to help investors and founders connect and
build networks. We’ve built Angel Squad, which is our modern day angel investing club that has had 1500+ members to help even more founders than we can help w/ our funds. We produce a lot of content: videos, blog posts, and tweet storms to empower founders with knowledge that can help them on topics like fundraising and customer acquisition. And we’re just getting started. As a VC, you try to invest in great companies, and you’re looking for strong returns. We are looking for companies with 100x potential—companies that can potentially return 100x our initial investment. And the companies that will get there won’t get there until about a decade later. Acquisitions are really important for this liquidity, because the public markets have really tightened due to Sarbanes–Oxley. In the 1990s, a common way that investors got liquidity on big winners was through IPOs. In fact, Amazon went public in 1997 at approx $300m market cap, but today, companies typically can only go IPO if they can achieve market caps that are 10-50x higher than that. So, acquisitions are really the primary driver for liquidity for many companies, because IPOs are so much more rare.

Acquisitions help the startup ecosystem on multiple levels. It helps entrepreneurs build generational wealth and become angel investors to pour back into startup ecosystems. These founders and early employees go on to angel invest in the next generation of founders. VCs generate wealth for their LPs who can reinvest into more funds and thereby more startups. I believe in democratization of wealth through entrepreneurship, and this is really only possible through acquisitions. Many of these founders whose companies are acquired typically don’t come from loads of money, so this really is the American dream. If you start limiting who can acquire or what they can acquire, you’re actually limiting opportunities for generational wealth for everyday people. Acquisitions are not just about the money. They are also an integral part of the knowledge transfer that makes a successful startup ecosystem. Founders that have been through a full cycle from launch to exit know what good looks like and also what mistakes they’ve made that they won’t make again. Having experienced people on your team or experienced people coaching you, is the crux of what makes Silicon Valley successful, and perhaps why in other cities throughout the country, founders have a higher hill to climb without the institutional knowledge that is passed around as often in the San Francisco Bay Area. Acquisitions are good for startup ecosystems everywhere and reducing them would be a real detriment to the U.S.