In this episode of The Negotiation, we chat with Bay McLaughlin, CoFounder, CEO and Board Member at Brinc.io, an IoT venture capital fund, and accelerator program that operates in developing countries. We discuss why Brinc chooses to operate outside the G8 intentionally, and how investors they approach to invest in Brinc typically respond to this thesis. We discuss fundraising pros and cons for IoT startups and where the use of funds typically go vs the more traditional SaaS or App startups. We also discuss the archetype of a successful IoT entrepreneur and juxtapose the Eastern European or APAC region founders against their North American counterparts. We also discuss the effect COVID-19 has had on their industry, and some really cool IOT tech we can look forward to landing into our lives in the next few years. Enjoy!
Today on The Negotiation, Todd speaks with Bay McLaughlin, Co-Founder, and COO at Brinc.io, an early-stage venture accelerator. He describes his partnership with fellow Co-Founder Manav Gupta as unorthodox in that they were not wholly familiar with each other’s backgrounds when they first met. What they did have individually, however, was the self-confidence needed to dive headfirst into a new venture. This attitude of purpose over profit drives many of Brinc’s thoughts on the IoT startup space.
The founding of Brinc goes against the grain of conventional startup journeys. For one, Bay and Manav invested their own money in the business, having had no institutional backers for their first three-and-a-half years. They also decided to focus on and establish bases exclusively in developing countries as they foresaw immense growth in these locations in the coming decades.
When it comes to the modern-day investor’s thought process, Bay notes that physical products that require longer and more complex R&D cycles will almost always receive more funding. Investors are also becoming more vertically-focused. That is, they will look at specific problems that businesses are looking to solve within specific industries.
Historically, traditional software companies take around 7 to 10 years to go public. IoT companies go through a long life cycle: around 10 to 12 years, according to Bay. However, he does not see a good reason for any business (IoT or otherwise), who is vying to be a market leader, to go public too quickly. The fork-in-the-road decision is whether a founder intends to grow on its own effort (i.e. via fundraising) or to seek outside corporate aid in solving its problems.
COVID-19 negatively impacted the IoT startup world from both the supply chain and investment perspectives. The least affected parties are those consumer IoT teams that strive to stay as lean as possible with their inventory. From an investment standpoint, companies now need to consider how wide their nets are with their LPs. This goes back to Bay’s previous point that businesses who play the long game—instead of looking only at their valuation—not only have the best chance for survival but may very well thrive in the new normal.
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