So you aren't an "ai company", back for seconds and false positives. Parents, the ride to school matters as does diet and exercise

Portfolio:

We are seeing some phenomenal growth right now. Especially in the agtech portions of Divergent's portfolio.   Especially Conduit Ag , ConnectedFi and Aanika Biosciences, Inc. seem to be taking off.   These are all very proprietary companies with great management and entrepreneurs with very specialized expertise.  Specialization and deep domain knowledge are not to be underestimated including in technical disciplines like fintech.

Healthtech is seeing some traction as well as I saw a few deserving companies seemingly get over the hump on critical fundraises this week.   To revisit this point about specialization- investing in an entrepreneur who really knows their sector is bound to pay off.

I am seeing that across sectors now- expertise should bring a premium. 

Entrepreneurs Corner:  So, you aren't an "ai" company. Take note.  Second time around fundraising, after a pass. Don't cheat yourself with false positives.  

Topic 1: You aren't an "ai" business... yes,you can still have value 

The current market situation in technology is very reminiscent of 25 years ago in the .com boom.  The fact was, back then, you couldn't hope to get funding or recognized as a valuable company without being a .com.   In today's world I am seeing and hearing this same dynamic about those that aren't "ai".   

Similar to 25 years ago, every company was claiming they were .com.   There is this incessant need to jump on bandwagons.   Most companies were not really .com companies they were just manual commerce masked by a website.  Today, I am seeing that same trend-- I have often said you can't trust "ai" in the name.  Its a marketing ploy but in many cases it isn't a real ai company.  

So as an entrepreneur what are you to do if you are NOT an ai business?  Simple, just ignore the noise and keep growing. People may gloss over you and yes you may feel undervalued- but you likely are not.  It's more that others are overvalued.   Its hard to watch hype cycles and not be a part of them.  But back to my point about specialization- you started your company with a unique insight and perhaps unique expertise.  No need to pivot to hype cycles just because one exists.  Keep playing your long game and things will pay off.  Get frivolous or add ".ai" to your name and prepare for people to discover the emperor has no clothes. 

Topic 2:  Someone passed on you, now you have traction, will they come around next time? 

I am curious if people can provide some stories around this to disprove my thinking.   My general rule of thumb is, outside of cases of familiarity (an investment fund really knows an entrepreneur or syndicate) it is unlikely that they will invest if they have previously passed on an investment.   

After many years on both sides of the table, I have rarely seen situations where you get passed on by a firm in an A round and then come back and do it in the seed round.  Why is that?  Its human nature - if you have struggled or been tepid in growth, they will simply revist their non-investment thesis and pass again.   If you have had significant progress, they will likely be unwilling to admit their mistakes.   Its very hard for a firm to say "I missed this at a $30M valuation but I am going to do it now at $200M".   

So save yourself some time.  When you go back out for your next round, deprioritize the people who quickly passed on you.  If someone took a close look maybe you consider going back because they were serious.  But those that didn't likely aren't going to come around. 

Topic 3:   False positives.  Wait for real proof. 

Entrepreneurs with seed funding will do just about anything to demonstrate so-called traction.   In many cases that means going to the mat to convince customers and keeping them engaged even as you get through product rollout issues.   Its funny because many entrepreneurs can will themselves to a position of an up and to the right chart.   Is that good?  It is entrepreneurial grit.  But its not good because when you lull yourself into thinking something is actually working but you just hacked it together or used brute force to keep customers engaged or found a small niche that works without proof of bigger market, you set yourself up for failure.   Take the time to really have true performance metrics.  It isn't just selling the customer.  Its seeing their engagement and then repeat purchasing.  Its showing how their interest is growing with new product releases.  Its delivering real ROI.   Your skills as an entrepreneur and suspending reality will come in handy.   When it comes to your core products, wait for the proof.  

Parents Corner:  The ride to school and diet and exercise

Topic 1: The ride to school

I take my older son to school almost every day- certainly when I am in town. As he has turned 13 he tells me less and less. He wanted to start taking ubers himself so he could have his "privacy" so once in a while we let him do that. I have found the routine of taking him is something I like though and whether he admits it or not, I think he does too.

He is a doing very well in school and loves it but its hard to get information out of him about friends or friendships and other random middle school matters- much like most kids that age. What I have found is there is something about that time of morning and the routine of taking kids to school that is key for their day. With a neurodiverse kid its a little harder still to get them to ask for help, engage or just share. Sometimes that small window of time, 15 minutes on the ride to school, can you be you window into how to be helpful. Not to pry, but to be helpful.

BTW, as the picture above shows sometimes we have an extra visitor. Raven loves taking that ride and her day care is on the way to his school. Its pretty funny scene to see us cruising down the road in denver..

Topic 2: Diet and Exercise- incentives can work

I really wish my parents had instilled better eating habits in me as a young person.  I dont blame them, but it took well into my adulthood for me to really commit to healthy eating and even to exercise.   The positive mental and physical impacts of these changes in my own life have made me realize how much I want my kids to have this knowledge and commitment at a young age.  It isn't easy because as busy parents with kids that have busy schedules, we are sometimes need to improvise.   I have started now providing incentives for my kids to be in shape- especially my older son whose diet is more restrictive.  Monetary incentives that is.  I see no issue with this.  Our health plans offer us incentives- low cost gym memberships, other benefits if we exercise and some offer incentives for eating healthy.   So why not do the same to kids?  I gave my son a goal of losing 10 lbs by christmas.  I told him I would give him $500 which he could spend on anything he wants.  This has really worked from what I can see.   I will report back soon to let you know if we meet our goal, but observing his focus and intent, I am satisfied this has been a good experiment.