With over 400 startup investments and 150 plus exits Fabrice Grinda is unquestionably one of the most experienced entrepreneurs and investors on the planet today. If anyone knows what it takes to build a scrappy and scalable startup, and how to cash in on one, it’s got to be Fabrice. In a new episode of the DealMakers podcast he pulled back the curtain on his biggest mistakes and how to hit home runs, again and again as an entrepreneur and also as an investor.
Super angel, and startup entrepreneur Fabrice Grinda has built and sold multiple companies, as well as investing in some of the most successful ventures you wish you had been in earlier. Those include Palantir, Airbnb and Alibaba Group. Joining the world’s top M&A experts, startup fundraisers, and angels, Fabrice gave an exclusive interview with the DealMakers podcast detailing how he got started, what he’d do differently now, and how he picks the entrepreneurs that receive his investment.
Scrappy Startups, $300M Exits & Impactful Marketplaces
After finding his passion for tech with his first PC at ten years old, Grinda got his feet wet in entrepreneurship with an import/export business to pay his way through college. That company moved high end computers from the US to Europe. After finishing Princeton he went to McKinsey to hone his skill and business acumen.
That first venture put $50k in Fabrice’s pocket. $25k went to a down payment on a one bedroom apartment. He sold it for $70k more than he bought it for 18 months later. The other half he invested into 4 stocks: Microsoft, Intel, Amazon and Yahoo. Those investments soon grew to $300k. He put all of it into his own startup.
That company went on to raise $60 million in capital, before getting a $300M cash buyout offer from eBay. Unfortunately, his lead investor at the time didn’t want to sell. He let his partner buy him out at a much lower price after the bubble burst.
Then there was Zingy. Launched in 2001, there wasn’t much in the way of capital in the market for a mobile game and ringtone startup. Fabrice told DealMakers listeners “I ended up living in New York essentially at $2 a day, slept at the office in the couch. I showered in the office. I couldn’t even afford coffee. I was living off ramen noodles. We missed payroll 27 times in the course of two and a half years. I was raising money but I would raise it in 5k or 10k increments.” There was a point where money ran dry and the company missed payroll four and a half months in a row. Staff shrank from 27 to just 7. Over several years he still managed to raise $1.4M, but in $5k to $10k increments.
Despite the challenges Zingy became a huge success. Owning over 53% of the company, Grinda sold it in 2004, for $80M in cash. The investors pocketed a 20x return.
Out of that windfall of money he bought himself a TV, Xbox and two tennis rackets. He stayed living in a studio apartment, too busy building a larger company to really get sidetracked by the money.
Despite hiring an investment banker who turned an initial $40M unsolicited offer for that company into an auction which yielded double that, and completing the sale, he stayed on as CEO for 18 months. Of course, as most entrepreneurs realize at this stage, things just don’t work like they used to after a sale. He decided “if you’re not going to let me conquer the world, this is not interesting to me,” and left to start a new venture.
After offering to fix Craigslist for free, and finding the founders were uninterested in improving the platform, Grinda cofounded OLX with Alec Oxenford. They received $10M in startup capital from Jeremy Levine (Bessemer Venture Partners), the Founders Fund, and General Catalyst.
OLX launched in 100 countries, testing each market with $50k to see where they could gain traction. Of course, when you build something with 350M users that consumers love, you get a lot of competition and people who want to buy you. That led to another large exit.
The Most Meaningful Moment in the Life of an Entrepreneur
You’d think some of these big exits, notable investments or the millions and millions of dollars would be the big life changers someone like this would point to as their big successes. Yet, Fabrice says “What’s interesting though, was most meaningful moment in my life at that point was actually not the day of the exit or the day that we got the $80M. It’s the day we became profitable. The day we became profitable and I paid back my credit card debt of $100,000. We made payroll and we paid the rent, etc. We were saved, and I knew we had become the masters of our own destiny. We no longer depended on third parties.“
The 4 Biggest Lessons Learned from 400 plus Startups
On the mistakes and things Grinda says he would tell his younger self, he points out:
Picking a VC who understood him better, and had aligned interests
Understanding the benefits of having ‘drag’ rights in shareholder agreements
Consider taking more liquidity earlier
The importance of your direct relationship with the partner at a VC firm
Hitting Home Runs
Together with Jose Marin, Fabrice now operates FJ Labs. A VC firm that invests in around 75 companies a year, as well as launching one or two new startups of their own.
FJ Labs invests around the globe in all stages of startups. In terms of picking founding entrepreneurs to bet on, Fabrice says “over everything else, if you have a great storyteller, you have someone who is going to be able to raise money, attract talent and sell the company to partners and potential buyers.”
Find out why these entrepreneurs have an edge, how much he has given them over a simple Skype call, and all of the other secrets revealed in the full podcast episode (listen to the full episode here-http://alejandrocremades.com/fabrice-grinda-from-debt-to-hundreds-of-millions-in-exits/.
From Forbers Online by Alejandro Cremades, Oct 30, 2018