From Failed Investments to 70+ Startups with Andrew Ackerman

In this episode of the DealQuest Podcast, I'm thrilled to welcome Andrew Ackerman, a serial entrepreneur turned early-stage investor who has invested in over 70 startups in the past two decades. Andrew is currently a strategic advisor and head of Reach Labs at Second Century Ventures, consults on corporate innovation strategies, CVC accelerators, and venture studios, and serves as an adjunct professor of entrepreneurship. He previously served as managing director at DreamIt Adventures, where he launched and built both their ed tech and urban tech verticals including prop tech and construction. He's written over 60 published articles for Forbes, Fortune, and other major publications, and his approach has been described as "lean startup meets The Alchemist."

What struck me about Andrew's journey was how he turned early failures into lasting wisdom. His grandfathers were both entrepreneurs, one running candy shops and moving to edgier neighborhoods to build and sell, the other creating insurance products from an office in the Empire State Building. That entrepreneurial DNA shaped Andrew's path even before he knew the word entrepreneur. Our conversation covered everything from the mechanics of accelerators and incubators to why he wrote his book as a novel instead of a traditional business book. Whether you're raising capital, considering angel investing, or building something from scratch, Andrew's perspective on testing assumptions and picking the right founders offers practical guidance for navigating the startup world.

FROM JOCKEY DREAMS TO STARTUP DEALS

Andrew's first career aspiration was to be a jockey. Unfortunately, he was too big. For most of us the concern is being too small for something, but Andrew hit that wall early. His second goal was astronaut, but growing up religious, he wasn't sure about kosher food on the space shuttle. So that got tabled as well.

His first "deal" came much earlier than his professional career. Andrew negotiated hard with his parents for the Millennium Falcon toy. "That took a lot of doing," he told me. "A little bit of reason, a little bit of moral suasion, little bit of blackmail." The negotiation was successful. And if you remember the original Star Wars toy line, that Millennium Falcon meant you had arrived.

That early instinct for deals shows up throughout his career. When I asked about entrepreneurial DNA, Andrew traced it back to both grandfathers. One would open candy shops and newspaper stands in edgy parts of town, build them up, and sell when the neighborhood improved. The other had been in the country for four generations and ended his career creating insurance products. Both passed when Andrew was young, but they left an impression that stuck.

THE CONSULTING DETOUR AND STARTUP REVELATION

Coming out of University of Chicago business school in the 90s, startups weren't really a thing. Andrew remembers exactly one person in his 600-person class who went into venture capital, and nobody understood what that guy did. The options were clear at Chicago. Right door was investment banking, left door was consulting, and if you were there for marketing, you were in the wrong school.

Andrew chose consulting, figuring he'd fall in love with an industry along the way. But what happened instead was the world caught up. On a project in London building an intranet system for two merging companies, something clicked. "That's what I want to do," he realized. "It didn't exist four years ago when I graduated, but now it does."

Within nine months of moving back to New York, he was in his first startup. The path wasn't linear, and Andrew is the first to admit it looks odd from the beginning but makes sense in retrospect. That willingness to pivot when the landscape changes has defined his approach ever since.

BUNK ONE AND THE BUSINESS OF SUMMER CAMP MEMORIES

Andrew's first startup was Bunk One, providing internet services for summer camps back in 2000. At that time, getting a website up was genuinely difficult, and password-protected photo galleries were even harder. Bunk One solved real problems for parents who wanted to see their kids at camp.

The business model worked. They sold four-by-six prints for four dollars each. Andrew admits to feeling a little guilty saying that now, but the early 2000s were a different world. They also offered one-way email systems where parents could send messages from their computers that would get printed and handed out to their kids. For reference, this was before cell phone cameras. Even today, most camps take phones away for the integrity of the camp experience.

The company didn't take venture funding. They had offers but passed on some and saw one opportunity literally disappear on 9/11. They had a chance to buy their competitor and passed, which Andrew now views as a mistake. When it came time to exit, Andrew thought it was a good deal but the CEO didn't love it. So Andrew negotiated with him directly. "Hey, if that's too little for you to sell at, you should be thrilled to buy me out at that price." That logic worked, and Andrew exited successfully.

DIGITAL MEMORIES AND THE LESSONS OF FAILURE

Andrew's second startup was Digital Memories for Parents, a venture with a grand vision for organizing all sorts of memories. Photos, voice notes, memos, wall marks tracking your kid's height, first lost tooth. A restaurateur recruited Andrew based on what he'd built at Bunk One. The vision was compelling, but the restaurateur didn't know how to execute in this space.

"It ultimately didn't work out," Andrew explained. "It was a little bit of founder drama, which is to say there were lawsuits and hurt feelings." The company ended up getting killed. But Andrew learned a lot from that experience.

There's an expression he shared with me. "Experience is what you get when you didn't get what you wanted." That second startup was a hell of an experience. It shaped how he evaluates founders today and reinforced that execution matters far more than vision.

THE ACCIDENTAL ANGEL INVESTOR

Andrew's entry into angel investing came about five years into his first startup. A friend from business school, Ira Weiss, who went on to found Hyde Park Ventures, was doing angel deals as a pickup gang. The model was soft commits to do a certain number of deals over a period of time.

The first deal Ira brought to Andrew was a pharmaceutical compound that would bind with amyloid plaque in the brain so it would show up on scans. This mattered because amyloid plaque correlates with Alzheimer's, and at that point the only way to confirm Alzheimer's was through autopsy. Not exactly helpful while someone's alive.

Andrew invested and did well. But he's honest about it. "I had no business investing in pharma. I didn't know the science. I didn't know any of that. I barely knew the industry. But I got lucky."

Getting lucky on an early investment can be dangerous. It hooks you. Andrew managed to get better at what he was doing before his luck totally ran out. Eventually he joined DreamIt Adventures, one of the top five accelerator programs at the time and the third oldest accelerator in the world, where he ran their New York office.

THE ACCELERATOR MODEL EXPLAINED

I asked Andrew to break down the accelerator and incubator world for listeners who might not fully understand it. He put it on a spectrum. Startups start with money from their own pockets, then maybe friends and family, then angel investors who are in it for the money rather than just filling awkward silences at Thanksgiving with "okay, I'll give you 20 grand."

Between friends and family and proper VCs, there's a gray area where accelerators live. What they look for classically is a startup that's probably pre-revenue with a product done or close to done. They're okay with gaps on the team. They want entrepreneurs who are coachable.

The accelerator dives in over a period of time, usually three months, working with the entrepreneur every week, sometimes multiple times a week. Then they introduce the startup to potential investors, often at an event called demo day. In exchange for all that heavy lifting, accelerators usually get 5 to 10 percent of the startup for not a lot of money but a lot of sweat.

Andrew loves that stage. "Infinite possibility. Zero money, but infinite possibility." If you pick your people right, you're dealing with stuff that's never been done before. There's a phrase about nothing new under the sun, but Andrew sees it differently. "Totally new, except it's kind of like what we had before, just different."

WHAT ANDREW REALLY LOOKS FOR IN FOUNDERS

When Andrew evaluates entrepreneurs, he's looking for one thing above all else. Do they have, either instinctively or through training, the ability to hustle for a deal? To hold the pen out until somebody signs?

He shared a vivid example. A founder interviewing for an accelerator was asked about his first entrepreneurial experience. Most people say paper routes, which Andrew doesn't quite buy. This guy said something different. In fifth grade, he noticed male classmates showing up without pencils. So he bought a box and rented them out for a nickel a day. Not sold. Rented. Pencils as a service.

"I don't really care for his current startup," Andrew told his colleague, "but I'm going to back one of his next startups."

That instinct to see the world differently, to find the angle others miss, that's what separates entrepreneurs from everyone else. Andrew can teach frameworks and introduce people to investors. He can't teach that fundamental orientation toward finding deals where others see nothing.

THE SAFE VERSUS CONVERTIBLE NOTE DEBATE

I've noticed people get surprisingly passionate about SAFE notes versus convertible notes. Andrew teaches entrepreneurship and was literally covering this topic in class, so I asked for his take.

The fundamental problem is valuing a company with zero revenue. Discounted cash flow doesn't work because there's no money coming in. Comps don't work because there are no comps. Most of the time, Andrew half-joked, we just make it up.

One solution is to punt on valuation. You give money now, and when a VC comes in with more data, you peg your investment to their valuation minus a discount of 20 to 30 percent. You might also add a cap to protect yourself if the startup knocks it out of the park and that first round comes in at $100 million.

Convertible notes frame this as debt. You're lending money with interest that converts to equity when the next round is raised. Some founders get scared about what happens if they can't pay back in two years. Andrew points out that if in two years you haven't raised money, he doesn't want your company anyway. It's probably a zero. He'll extend the note because on the outside chance you turn it around, that's fine.

Y Combinator created the SAFE as an alternative. Simple Agreement for Future Equity. Instead of debt that converts, it's a contract that obligates equity when you raise. Basically the same thing with some nuances around bankruptcy, interest, and duration.

Andrew's position? "I really don't care either way." If founders want a convertible note, fine. If they want a SAFE, fine. If they want a price round, fine. It's a matter of preference.

WHY THE BOOK HAD TO BE A NOVEL

Andrew wrote The Entrepreneur's Odyssey as a fictionalized story, not a traditional business book. There's a reason for that, and it goes back to his business school days.

The only textbook he remembers from that time is The Goal, a book about a fictionalized manager turning around a fictionalized plant. It was written as a novel with lessons embedded in stories. "Not great literature," Andrew admitted, "but a hell of a lot more interesting than a textbook."

The other factor is how he actually gives advice to startups. He can explain that with a freemium model, you live and die on conversion rates. Or he can tell the story of a company that came through his program with a freemium model, figured they needed 2% conversion, and planned to just keep building until they released two weeks before demo day. Andrew pushed them to test earlier. Put up a page, put a buy button, count clicks. They got a 0.1% conversion rate. Completely screwed.

But because they learned early, they pivoted. Totally different company built in the remaining seven weeks. That company was SeatGeek, now worth over a billion dollars.

Which version of that advice sticks with founders? The abstract principle or the story? Andrew knows the answer, and that's why his book reads like a novel rather than a collection of frameworks.

THE LAWYER PROBLEM WITH STARTUP ADVICE

Andrew raised something I've talked about for years. Lawyers often make terrible angel investors and even worse advisors to startups. And I say this as a lawyer myself.

The problem is incentives. Lawyers bill by the hour, so speed isn't rewarded. They spend their careers focused on not screwing things up. You paper over every eventuality even if you know in your heart 99.99% it's never an issue. There's no incentive to close a deal. If you kill a deal, you protected your client's interests. The deal could have made lots of money, but your job isn't to make the deal happen.

Then these lawyers meet a startup they love. The founder asks for advice. The smart response would be to say "I've never done what you do, my entire incentive structure is the opposite of what you need, let me find you someone better."

What actually happens? "Hey, he's asking for advice. This is fun. I'm going to give advice." Andrew compared it to your Aunt Frida giving medical advice when we all know she's not a doctor.

My perspective is even more pointed. Lawyers tend to be conservative by personality before they even get to law school. Then they spend three years reading cases, none of which are about things that went well. You get trained to be over-indexed on risk. The best thing a lawyer can do for entrepreneurs is identify risks so they can make informed decisions, then help balance risk with upside and opportunity. Most lawyers are terrible at that second part.

THE RAINBOW CALENDAR OF OPPORTUNITY

I asked Andrew what he's focused on these days. His answer revealed a calendar that looks like a pride flag with seven different colors for seven different activities.

He teaches entrepreneurship Tuesday and Thursday mornings. That's golden yellow. His family calendar is light blue. He works with Second Century Ventures, the VC arm of the National Association of Realtors, through a platform he built called Reach Labs. That's light yellow.

He also works with a group called Thunder, former founders with multiple exits who now operate as a boutique investment bank for founders at Series A and Series B. They help founders think through whether to look for an early sale or double down for four more years. Whether to raise pure equity or consider venture debt and asset-based financing. Whether to consolidate an industry by acquiring competitors. That's blue on his calendar.

Then there's a startup he's still working on, because who isn't working on a startup? That's purple. Consulting with corporates on setting up corporate venture funds or venture studios is a darker green. And podcasts and book promotion are red.

Nothing takes more than 20 to 25 percent of his calendar. He doesn't know what he wants to be when he grows up, and that seems to suit him just fine.

TEST QUICKLY, TEST CHEAPLY

The single biggest mistake Andrew sees founders make applies whether you're a small business, tech startup, or a company doing $5 to $10 million in revenue. They stay in their minds too long. They don't get out into the world.

You have a great vision. You want to build this website or app or device. You go into a sweat lodge and just do it. Or you hire someone to manufacture it. Boom. That's the absolute worst approach.

What you need instead is constant testing of your assumptions. Well-reasoned beliefs held loosely. Everything framed as a cheap experiment. Define what success looks like before you run the test.

Andrew shared a technique from his book. Sketch your entire app on index cards. Go to people and say, here's my app, interact with it the way you would. Don't ask me questions, just verbalize what you're thinking so I can follow along. Click that button? Here's the next screen.

You'll learn what nobody uses. Why would you build that? You'll see where people get confused. For the cost of a five-dollar package of index cards, you can save months of development time.

"Don't just do something, stand there a moment," Andrew suggested. Think about how to test quickly and cheaply. That mindset is what separates successful founders from the ones who run out of money before they learn what matters.

FREEDOM AS A FOUNDER

When I asked Andrew about freedom, he described the paradox of startup life. On one hand, you have total autonomy. What am I working on today? You choose. Want to be there at 8 AM or 9 PM? Your call. No moron taking forever on an obvious idea.

On the other hand, when things go wrong, you are that moron. You're the boss who has to come down on yourself. A bad quarter in corporate means we'll do better next quarter. A bad quarter as an entrepreneur means your bank account goes down.

That combination of freedom and pressure isn't for everyone. Andrew is clear about that. "If that's not your thing, that's okay. You find your freedom and it's a different kind of freedom for you."

But for Andrew, being a startup founder has ruined him for everything else.

Tune in to this episode to hear Andrew Ackerman share his journey from failed investments to backing over 70 startups, and discover why testing assumptions cheaply might be the most important skill any entrepreneur can develop.

Listen to the full episode of DealQuest Podcast with Andrew Ackerman

FOR MORE ON ANDREW ACKERMAN 
https://www.andrewbackerman.com
https://www.amazon.com/Entrepreneurs-Odyssey-Approach-Startup-Success/dp/1032883545/ref=tmm_pap_swatch_0
http://www.linkedin.com/in/andrewbackerman
https://x.com/andrewackerman
https://www.instagram.com/andrewbackerman/

FOR MORE ON COREY KUPFER
https://www.linkedin.com/in/coreykupfer/
https://www.coreykupfer.com/

Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

Get deal-ready with the DealQuest Podcast with Corey Kupfer, where like-minded entrepreneurs and business leaders converge, share insights and challenges, and success stories. Equip yourself with the tools, resources, and support necessary to navigate the complex yet rewarding world of dealmaking. Dive into the world of deal-driven growth today!