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Books You Should Be Reading as a Startup Investor

Venture DealsThere are a myriad of books written for entrepreneurs who desire to make their startup a success, but not quite as many for investors looking to put their money behind the right ones. With that said, books written with entrepreneurs in mind can provide a plethora of information for the investors looking to back them, especially if the investor seeks to assume a board position or other leadership role.

With so much information instantly and freely available online, startup thought leaders have an immense amount of pressure to write books worthy of your time and money. If you’re looking for concise, targeted answers to specific questions you have about investing, blogs may provide the best information. However, those who desire an in-depth and well-rounded read will benefit from reading any or all of the following books.

The following authors were chosen because they and their writings have been widely read and mentioned by thought leaders in the startup industry. Additionally, they cover a variety of topics current and future investors will find helpful, from business models to creative inspiration.

“Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist” by Brad Feld and Jason Mendelson

In this book, Feld and Mendelson give entrepreneurs tips to think smarter than their venture capitalist counterparts by sharing what they’ve learned over the course of hundreds of venture capitalist financings. From deal structure and strategies to diving into venture capital term sheets, this book offers plenty of information for entrepreneurs, as well as investors.

Disrupt” by Luke Williams

Williams believes the only path to success involves transforming the game. His book, “Disrupt” explains a five-stage process to successfully disrupt any market. Although the process itself is best utilized by entrepreneurs, learning about a startup’s potential to cause market disruption can help you decide whether or not it has a real shot at winning market space. If you’re interested, but not yet sold, you can download the book’s introduction and first chapter here.

Start with Why” by Simon Sinek

In “Start with Why”, Sinek explains why some people and organizations are more innovative, more profitable, and command greater loyalties from their customers and employees. Understanding the cause of greater innovation and profitability may give you insight into the future of a company on your investment radar. You can download a free chapter of “Start with Why” and Sinek’s latest book, “Leaders Eat Last” on his site, here.

The Four Steps to the Epiphany” by Steve Blank

In the book claiming to have launched the lean startup revolution, Blank describes a four-step Customer Development Process that helps uncover problems with startups and fix them before they become detrimental. The multitude of examples in “The Four Steps to the Epiphany” can help you relate to the challenges currently or soon-to-be faced by a startup you’re considering backing. Deciding which existing and potential future problems are preventable, solvable, or unavoidable can be vital to deciding whether or not you’ll invest.  Here are some thoughts about the book from Eric Ries, who, by the way, comes next in our list.

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses” by Eric Ries

Whether you’re new to startup investing or you were working with lean startups before the term was coined, “The Lean Startup” offers a wealth of information. The book is organized into three sections titled Vision, Steer, and Accelerate, and aims to help entrepreneurs overcome the extreme uncertainty of today’s startup landscape by maximizing innovation. From increasing capital efficiency to avoiding the use of vanity metrics, Ries’ advice is well heeded by both entrepreneurs and investors.

The Wisdom of Failure: How to Learn the Tough Leadership Lessons Without Paying the Price” by Laurence G. Weinzimmer and Jim McConoughey

Focused on a seven-year study of individuals and companies from 21 different industries, “The Wisdom of Failure” is a how-not-to guide for entrepreneurs. Although initially written to help entrepreneurs avoid mistakes in all various stages of their startup, taking a deeper look into the successes and shortcomings of these ideas and products before you pull the trigger on your next startup investment can help you predict the problems it may face.

Open Data Now: The Secret to Hot Startups, Smart Investing, Savvy Marketing, and Fast Innovation” by Joel Gurin

For those who prefer tools to interpret data over stories and examples, “Open Data Now” will most likely be the most appreciated book on this list. From using data to determine the sustainability of green businesses to the latest tools for business analysis, this book runs the gamut on data utilization methods that can help you make the right investment.

You can supplement the above books by reading the blogs and other works of their authors while or after you read them. Many thought leaders in the startup industry actively promote the work of others, so take a look at who an author is talking about if you like their work. These reads may not answer every question you have, but they provide a great starting place to learn about the startup topics you are most interested in.