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TAG: Venture Business

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Interesting Article From the Sunday Ny Times on Serial Entrepreneurs Sucess Rates

TheFunded.com Discussion

Posted by Anonymous on 2009-03-25

Tags: Venture Business Track Record

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Investors are Human

TheFunded.com Advice

Posted by RichieBlueEyes on 2007-12-14

Tags: Venture Business Personalities

PUBLIC:

Reminder Investors are Human too. They have emotions and generally like people. They don't like being pitched. Make friends with them, develop real relationships. Don't just go up to them after a panel event and say "Hi, I'm Joe, Can I have your wallet, I build social poop"

Build relationships, investors are people like you and me.

PRIVATE: Members Only (102 Characters)

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Israeli VC's

TheFunded.com Discussion

Posted by Anonymous on 2009-03-22

Tags: Venture Business Israel Fund Diligence

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Just Say No to a VC Bailout

TheFunded.com Discussion

Posted by Anonymous on 2009-02-25

Tags: Venture Business Crisis Economy

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The Value of VC's?

TheFunded.com Discussion

Posted by Anonymous on 2008-11-03

Tags: Venture Business

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Is Open Deals / Angel Soft Bad for Angel Investing? I Think So...

TheFunded.com Advice

Posted by J on 2008-09-13

Tags: Venture Business Angels AngelsSoft

PUBLIC:

I have been trying to pitch organized angel groups, more and more of whom are using Angelsoft. When I contact someone from the group, I normally get a response to put my deal into the Angelsoft system, which also apparently powers www.open-deals.com.

The problem is that nobody responds:

http://www.thefunded.com/funds/item/4157
http://www.thefunded.com/funds/item/3833

I have been an angel investor in the past, and it has always been more about coaching and personal relationships. It's not about scrutinizing a young financial model that arrives through email to evaluate hypothetical returns. It is about helping an entrepreneur to realize those hypothetical returns by sharing experiences and providing some capital.

With Angelsoft, all of the personal aspects of angel investing seem to be removed from the equation. My materials are submitted through Angelsoft forms, and then disappear into some system that encourages a group of busy angels evaluate the opportunity in a black box. Do they like it" Do they hate it" Do they even read it" I have no idea, since I have never heard anything!

My advice is for angel groups try to find a way to interact with the entrepreneurs that pitch, and entrepreneurs should try to get in front of angels if they really want to close a deal...

PRIVATE: Members Only

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The Game of Innocence

TheFunded.com Advice

Posted by MrJames on 2007-12-10

Tags: Preparation Strategy Venture Business

PUBLIC:

Aspiring entrepreneurs be warned. Venture capitalists will provide money for your idea, but they often walk away with most of the value, especially if you are not careful. Like an amateur sitting at a table of professionals, the cards are stacked against your success, so be prepared. Know the game.

Here are some anecdotal facts. There are five times as many people working in venture capital as there are CEO's that are funded each year (~16,500 vs ~3,000). The average venture funded CEO is fortunate to make 1/10th to 1/20th the return on exit as the venture capitalists. Just the legal fees on a later stage deal will run $50,000 or more per party involved, and the venture capitalists always flip the bill, directly or indirectly. Who do the lawyers work for again"

No matter how nice, no matter how fair, and no matter how genuine a venture capitalist appears, you are being out-smarted, out-lawyered, and out-maneuvered the second you sit down and ask for money. The first step in winning is to understand their motivations: (1) control, (2) risk, and (3) opportunity, in that order. Let's take a look at all three.

The entirety of a venture investment centers around control, and control takes many forms: control of the board, control of the voting, control of the investment capital, and, most importantly, control of the management. Venture capitalists are "control freaks," and the psychology of control is embedded in nearly every aspect of the deal legal structure. Assume that most financing terms, from Board meeting frequency to protective provisions have some origin in control, and analyze them as such. Ask yourself: in good times and in bad, how do these terms affect my behavior as a CEO" For example, did Google really need to have 14 Board meetings in one year... ever"

Venture capitalists are excellent at managing risk. It is assumed that at most venture investments fail, but approximately one in ten succeed. Following this simplistic logic, a venture capitalist would need to make at least $10 from every $1 invested in a success to recover from the 9 losses. Now, not every deal is a total loss, but a lot are. Complex protections are inevitably put in place. Let's look at a common scenario: a company receives $10 MM for 50% of the stock in a participating preferred with a 2x liquidation preference. The company sells for $25 MM right after the investment. How much does the founding team make" Nothing. The "50%" is legalese.

Venture capitalists are not very good at spotting opportunities, or they might have better odds than 1 in 10. However, they are very good at "managing" opportunities as a result. Here are some examples. Venture capitalists do not say "no" (for risk of losing an opportunity). They postpone meetings until you are achieving success, and they flock around markets with success stories. Ever wonder why a venture capitalist calls you out of the blue asking about your company" It's probably because a competitor is succeeding. Every wonder what "demonstrate traction" actually means" It means a nine figure IPO or liquidity event in your sector. Your dream is just potential, and you will be held on the sidelines until "the time is right" for the venture capitalists to make money.

The irony is that the venture capital behavior is largely a response to other abuses by CEO's. At this point, however, the venture capitalists have gone too far. The opportunities in building a venture funded start-up are gone for the great entrepreneurs. It simply makes more sense to go it alone.

You can quote me without attribution.

PRIVATE: Members Only

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Can We as Entrepreneurs Change the VC Process? How about a VC Revolution?

TheFunded.com Discussion

Posted by Anonymous on 2009-04-28

Tags: Venture Business Market Conditions

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NYC Venture Funding or Lack Thereof...

TheFunded.com Advice

Posted by RichieBlueEyes on 2009-03-12

Tags: Venture Business Economy East Coast Bootstrapping

PUBLIC:

So the NYC investment climate is going through serious issues. The angel market has drastically changed as most angels are from the world of finance and no longer have disposable investable cash and the few angel deals that are getting done are at far lower valuations. On the venture side, 'risk' is not being funded. Unless you have revenue (and don't need money) or extreme traction it's probably not worth the time raising money. Sure people who have made money for that exact investor in the past can still raise some money but beyond that, unless you're 'perfect' you'll have a hard time. Even then expect 2-3X liquidity preference, restrictive employment agreements and flat to down rounds even for high growth companies. I saw a company that is trending towards $20MM in revenue in a high growth category doing a flat round at a 3X liquidity preference. Times are tough. Time to call on the old friends and family and Bootstrap. It will not be fun. Still talk to investors and get coverage so they know you so if you happen to hit a stroke of luck or genius and take off, you can create some competition and maybe get decent terms but don't expect to easily raise money. Sure, you can get meetings and maybe even some feedback, don't expect an easy check from angels or VC's in NYC. Seed Capital has been crushed, Angel money is crushed and Series A money is trending towards Series B money or to pump into existing companies or entrepreneurs proven to that investor.

With all that said, always keep pitching but Bootstrap your ass off.

PRIVATE: Members Only

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Private Equity, Venture Capital in China 2009 the Boom Continues. Read Report

TheFunded.com Discussion

Posted by Anonymous on 2009-03-07

Tags: Venture Business Asia

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The Obama Administration Has It All Wrong

TheFunded.com Discussion

Posted by Anonymous on 2009-03-06

Tags: Venture Business Economy Crisis

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Nyt's Friedman on Start Ups

TheFunded.com Discussion

Posted by Anonymous on 2009-02-22

Tags: Venture Business Economy Crisis

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Stereotypes

TheFunded.com Advice

Posted by fnazeeri on 2008-06-24

Tags: Venture Business Humor

PRIVATE: Members Only (270 Characters)

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Entrepreneur Wants to Become a VC Need a West Coast VC Partner

TheFunded.com Discussion

Posted by Anonymous on 2010-07-01

Tags: Venture Business Partners VC

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Do Entrepreneurs Treat Vendors Same/Better/Worse Than VC's Treat Entrepreneurs?

TheFunded.com Discussion

Posted by Anonymous on 2009-06-15

Tags: Venture Business Humor

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A Friendly Holiday Reminder: Be Nice!

TheFunded.com Discussion

Posted by Anonymous on 2009-11-22

Tags: Venture Business Humor

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Business Plan Study

TheFunded.com Advice

Posted by Rogue on 2009-05-14

Tags: Venture Business Busines Plan

PUBLIC:

The New York Times ran an article on the role of the business plan in venture funding. Seems to confirm the general wisdom, but interesting anyway.

http://www.nytimes.com/2009/05/14/bus...

PRIVATE: Members Only

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Say No to Giving Your Tax Dollars to VC's and Angels

TheFunded.com Discussion

Posted by Anonymous on 2009-04-21

Tags: Venture Business Early Stage Economy Government

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Silicon Valley the New Research Triangle Park (Rtp)

TheFunded.com Discussion

Posted by Anonymous on 2009-03-24

Tags: Venture Business Culture

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About "The Obama Administration Has It All Wrong"

TheFunded.com Discussion

Posted by Anonymous on 2009-03-17

Tags: Venture Business Government Debt

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National Venture Capital Association President Admits They are Going After Small Business Programs

TheFunded.com Discussion

Posted by Anonymous on 2009-02-09

Tags: Venture Business Debt Government

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Radically Reinventing Venture Capital

TheFunded.com Discussion

Posted by Anonymous on 2009-01-23

Tags: Venture Business Strategy Crisis

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A Round Valuations Down 25 50% While B and C Rounds Non Existent

TheFunded.com Advice

Posted by fnazeeri on 2008-12-10

Tags: Venture Business Valuation Venture Debt Convertible Debt

PUBLIC:

More here.

PRIVATE: Members Only (1627 Characters)

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Proof that VC's Don't Add Value

TheFunded.com Discussion

Posted by Anonymous on 2008-12-07

Tags: Venture Business

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Sequoia CEO Warning Letter: Irresponsible or Cunning?

TheFunded.com Discussion

Posted by Anonymous on 2008-11-14

Tags: Venture Business Crisis