Tag Archives: venture capital

To VC or Not to VC, That is the Question

TMBA326: To VC or Not to VC, That is the Question
Date: 2016-03-03
Link: Tropical MBA
 
Tropical MBAVCs have the vast majority of the people that go through the accelerator or program lose and they still win.
Most people’s biggest dreams isn’t (starting a company and becoming a billionaire).
People that are running bootstrapped businesses aren’t incentivized to talk about their businesses.
One of the nice things about owning a private company is you don’t have to disclose your financial status.
Book: Maverick
Very, very few things last forever.
It is very hard to be passionate about something for a long period of time unless you are passionate about the cash flow it spits out.
Investors want moonshots.
Raising money doesn’t necessarily mean faster growth.

How to Raise Capital for Your Startup with Bill Glaser

SPI 118 : How to Raise Capital for Your Startup with Bill Glaser
Date: 2014-07-17
Link: Smart Passive Income
 
The more you help people the more you get back in return.
Hope is important because that is how you get people to take action.
When you serve your audience you will get paid back in one way or another.
There is always risks.
If you’re selling a percentage of your business you want to do it in a really fair way that is win-win.
Give your investors the opportunity to have upside.
Give up a percentage you feel comfortable giving up.
Target who the potential investors are.
Start thinking about raising money well before you need to raise money.
Provide value first and then sell.
Advisors can bring a lot of value and they can also become investors.
Start to form relationships with people.
Don’t start a business just because you want to sell it. Start a business because you are passionate about it.

When to Consider Outside Investment for Your Startup

Episode 211 | When to Consider Outside Investment for Your Startup
Date: 2014-11-18
Link: Startups for the Rest of Us
 
Startups for the Rest of UsBook: Zero to One
Book: Venture Deals: Be Smarter Than Your Lawyer
Problem/solution fit occurs before product/market fit.
Investors are looking for a way to accelerate the value of their money.
If you’re just coming on the scene and you want to solve a problem for a group of people you’re going to need traction to be taken seriously.
You typically want to take smart money (as opposed to dumb money).
Don’t take money from a first time angel investor.
Funding allows you to get somewhere faster.

How to Raise Money

Lecture 9: How to Raise Money

Link: How to Start a Startup

(You can find notes to the other lectures here.) 
 

Marc Andreessen (@pmarca)

Ron Conway (@RonConway)

Parker Conrad (@parkerconrad)

 
How to Start a StartupYou’ve got to be a communicator and a born leader. (Rob Conway)
The venture capital business is 100% a game of outliers. (Marc Andreessen)
There are 4,000 venture fundable companies a year. (Marc Andreessen)
Invest in strength rather than lack of weakness. (Marc Andreessen)
The companies that have really extreme strengths often have serious flaws. (Marc Andreessen)
When you first meet an investor you should be able to say in one compelling sentence what your product does so that the investor you are talking to can immediately picture the product in their own mind. (Ron Conway)
You have to be decisive. The only way to make progress is to make decisions. Procrastination is the devil in startups. (Ron Conway)
You can’t count on there being capital available to you. (Parker Conrad)
Bootstrap as long as you possibly can. (Ron Conway)
Steve Martin said, “The key to success is be so good they can’t ignore you.” (Marc Andreessen)
You’re almost always better off making your business better than making your pitch better. (Marc Andreessen)
Raising venture capital is the easiest thing a startup founder is ever going to do. (Marc Andreessen)
Raising money is not actually a success. It is not a milestone. (Marc Andreessen)
Calibrate the amount of money you raise with the risks. (Marc Andreessen)
Don’t ask people to sign an NDA. (Ron Conway)
The relationship between investors and founders involves a lot of trust. (Ron Conway)
Do the fundraising process as quickly and efficiently as you possibly can. (Ron Conway)
After you leave a meeting (with an investor that agrees to invest) sit in your car and type out an email to the investor. Put everything in writing. (Ron Conway)
SV Angel invests in one company out of every thirty they look at which is about one a week. (Ron Conway)
There is an enormous difference in the quality of an introduction. (Parker Conrad)
At the seed stage the best thing you can do is find the right investors. (Parker Conrad)
There seem to be (valuation) thresholds for seed stage companies. (Parker Conrad)
Get the money you need and don’t raise any more than you need. (Parker Conrad)
In a series A you’re going to sell between twenty and thirty percent of the company. (Parker Conrad)
Venture capitalists are more ownership focused (percentage of company) than price focused (amount of investment). (Parker Conrad)
Half of people grow into a big job and the other half swell into it. (Marc Andreessen)
Airbnb is such a great company because all three founders are as good as the other founders. That is very rare. (Ron Conway)
When you start a company you have to go find somebody as good or better than you to be the cofounder. If you do that your chances of success grow astronomically. (Ron Conway)
Raise as close to the exact amount of money as possible. (Marc Andreessen)
If you’re going to raise debt you need to be very precise in how you run the company. (Marc Andreessen)
If everything goes great it doesn’t matter who your investors are but hardly ever does everything go great. (Marc Andreessen)
Everybody on the team should have the same goals and be pulling the same direction. (Marc Andreessen)
Once an entrepreneur always an entrepreneur. (Ron Conway)
The big constraint on a top tier venture capital firm is opportunity cost (both from conflict policy and time). (Marc Andreessen)
Things almost never come to a board vote. And if they do they’re already broken anyway. (Parker Conrad)

The Road to IPO

Title: The Road to IPO
Date: 2014-05-14
Speaker: Geoff Donaker (Yelp)
Link: Entrepreneurial Thought Leaders
 
Venture capitalists have a ten year time horizon.
Two ingredients for you to not sale (when receiving an offer for your company) are that your investors and board have deep enough pockets that they don’t need to sell and that they believe enough in the story and that it is going to be worth more two or five years from now.
When you have a sustainable $100 million in revenue and positive cash flow you’re ready to start thinking about going public.
The roadshow is a two or three week marketing period.
Hot deals are always going to be oversubscribed.
Having a stock price can be distracting.
If you’re going to an earlier stage company you’re going to get a lower cash salary and in exchange for that you get options.
Having a distribution strategy that is cost effective and can scale is harder than it looks.

White Space is Everywhere

Title: White Space is Everywhere
Date: 2013-01-30
Speaker: John Lilly (Greylock)
Link: Entrepreneurial Thought Leaders
 
Everything is in play right now.You need to figure out the people you want to be on your team.
Find your tribe. Invest in the people that are in your tribe always.
Do what makes your soul sing.
People mostly don’t want change.
Being an entrepreneur is super hard.
It is important to do things that speak to you, feed your soul, and help you grow over time.
Growth is human and growth is key.
The job of a leader is to create other leaders.
Software needs architects just like buildings need architects.
You really tend to take the lessons from the first place you work through your whole career.
You learn more from successful companies than from failures.
Being a founder is a complex set of things.
You have to be successful enough that people see promise yet fragile enough that people think you need their help.
Nobody wants to join a thing where they don’t need you.
All venture capitalists do all day is try to find the best entrepreneurs they can and respond to as many entrepreneurs as they can.
Time is everything.
You need to understand the person you’re talking to. We all do things differently.
Anybody can be a great product person as long as you have the passion and the ability to follow up on the details of the product to make them great.
Everything is in play right now.
Almost every meeting you can learn something from.
The Internet is driving down costs to start.
Try hard to put yourself in situations that are hard.
Every VC responds best to the people they work with (in regards to pitches).

Understanding Venture Capital

Title: Understanding Venture Capital
Date: 2011-11-16
Speaker: Dana Mead (KPCB)
Link: Entrepreneurial Thought Leaders
 
Venture capitalists love logos.
There are only 7,000 to 8,000 venture capitalists.
If you want to be a venture capitalist one of the things you want to do is network.
They invest in a very small percent.
You have to be very efficient about your time.
You want to show the passion, the idea, and the vision. That is contagious.The people are obviously the most important part of any business.
We have technical and clinical risk in life sciences.
Try to put boundaries around risk.
Focus on big ideas and moving things forward. If that happens then the exit will take care of itself.
Don’t be afraid to talk about the risks.
To be a great entrepreneur you can’t be rational.
Passion is what is going to make the company happen.
You want to show the passion, the idea, and the vision. That is contagious.
People rarely say no when you ask them for help.
Don’t focus on the exit.
You have to be persistent.
Get the best people you can possibly find.
Proximity of interface is extremely powerful.
Create your own innovation ecosystem.
Team with people with other backgrounds.
There are plenty of smart people that are positive and optimistic. Put those people around you.
The venture capitalist’s job is to mitigate risk.
Funds are ten years long.
A public servant is often limited on how he or she can interface with private industry.
The entrepreneur’s role is to pass on and transmit the excitement about what the company can become.
The healthcare consumer is a fickle consumer.

The Gospel of a Lean VC

Title: The Gospel of a Lean VC
Date: 2014-01-22
Speaker: Dave McClure (500 Startups)
Link: Entrepreneurial Thought Leaders
 
Experience is what you get when you don’t get what you want.
Microfunds are less than $100 million.
Less than $10 million funds are typically angel funds.
Product development and marketing development are pretty inexpensive.
Now is the best of times but it will probably keep getting better.
There is really high friction in payments and web capable devices in some geographies.
First stage ($25k-$100k) enough to cycle for six months for 2-3 founders.
Your job is to minimally solve the worst case problem.
Be functional where there are no competitors.
With competitors you need to be great. Much better than the nearest incumbent.
When you are doing product development you need as tight a use case as possible.
Product is the mirror to the soul of the team.
Most innovative companies are small. Most global GDP is produced by small companies.
Fun is mission number one.
A lot of venture capital is over-glorified.
The economics of international startups are going to be as good as the U.S. in the next five to ten years.

Honest Advice on Starting a Company

Title: Honest Advice on Starting a Company
Date: 2010-10-13
Speaker: Mark Suster (Serial Entrepreneur)
Link: Entrepreneurial Thought Leaders
 
There is not a right answer for everybody.
People get crippled by the idea phase.
99.9% of successful startups are not Google.
You have to get started.
Being an entrepreneur is not sexy. It is not for everybody.
Have the conviction to see it through.
Choose something you are passionate about.
Assemble a diverse team.
We tend to hang out with people that are kind of like us.
Get outside of your box.
You are paid a premium to take the first leap.
Just because a model has worked does not mean the model does work.
Make sure you have founder vesting.
You need to have tech in your DNA if you want to build a tech company.
You give up options if you raise too much too quickly.
There are times when fat (company size) is okay.
Your name should be your URL.
If you’re building a product you need multiple channels.
Be careful about words that mean something else.
Avoid the three F’s (friends, family, and fools) when raising money.
Raise V.C. money when you really think you want to go on a rocket ship.
Raising venture capital is worst than marriage. You can’t get divorced from your venture capitalist.
Spend time getting to know your V.C. before taking investment from them.
The best way to get access (to V.C.s) is other entrepreneurs.
You need to get an anchor investor (to raise V.C.).
No matter how rich you are you like a deal.
Get your product out the door. Show you can ship.
Test monetization early.
Fail fast does not produce big results.
Whatever it is that you want to do–make it a part of your life.

Own Your Own Success

Title: Own Your Own Success
Date: 2013-05-01
Speaker: Kate Mitchell (Scale Venture)
Link: Entrepreneurial Thought Leaders
 
Stanford is not a trade school. It is a school that teaches you how to think.
The Internet thing worked out.
If you are interested in building a startup the Silicon Valley Bank has some incredible resources. They have a program called the Entrepreneur Services Group. (http://www.svb.com/esg/)
Am I a horizontal or vertical person? Do I build cathedrals or hit golf balls? Neither is good or bad. Vertical is a speciality (engineering or Google’s search engine). Horizontally is bringing things together, conscious, pattern recognition, judgement, moving things forward. Knowing that about yourself early in is really helpful.
Understand not just what your strengths and weaknesses are. Embrace that you can’t be everything. The best people in any function figure out how to complement themselves with others whose strengths are the same as your weaknesses.
Your mentor can be a composite of people.
Mentors help you understand what you’re doing well and what you’re not.
Having champions for your career is really important–particularly early on.
Make it easy for somebody to give you feedback. It is incredibly valuable. Ask for it repeatedly. It is usually helpful.
Keep as wide an aperture as possible. You don’t know what is going to happen to you or around you. To become too narrow too early is a negative.
When you are interviewing for your first job the opportunity to learn is important. Think about whether you’re going to learn from the people you’re talking to. Look for an opportunity where you can distinguish yourself. Choose something where you’ll earn a little bit less if you think you can learn more.
Two phases of an investment: one, can you get the product to work? Two, can you get the product to market?
First investment decision is which markets do they think is ready to take off.
To make the returns they need they need to invest in not just a company that is dominant in a sector but a sector that has a tailwind behind it.
The initial tests of sales and marketing doesn’t take a lot of capital. You can do it online.
Scaling takes a lot of capital.
V.C.s want a company that can be one, two, or three in its sector. That is how you build a big company.
Venture capital is small. It is 0.2% of assets invested in the markets.
Venture backed companies generate 21% of GDP and 61,000,000 private sector jobs.
Venture capital is shrinking. Venture industry is down eighty percent from the peak in 2000.
Venture capitalists like exits just doesn’t like it when it is their own.
Not every successful company needs to be venture backed.
Entrepreneurs need thick skin to pitch.
The biggest challenge to get venture backing is if your opportunity is big enough. Is the market large enough? Is it a winning solution (doesn’t mean it has to be the best technology)? The best technology doesn’t always win.
The user and the buyer are sometimes two different people.
To get in front of a venture capitalist you need an introduction.
Be optimistic but realistic. Confident–not cocky.
You don’t need to start out as an entrepreneur.
Think about whether you’re an entrepreneur or a wantrepreneur. You have to decide if you really have it in you.
You have to own your own success.
Aim high and aim wide.
Speaking up matters.
Make a deposit into the karma bank. They best way to get help is to give it.
Making investments is a very hard thing to do. It is a high risk business.