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Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist is the definitive guide to venture financings. This book is for anyone who wants the insider's guide to raising money, negotiating deals, and to know what really makes venture capitalists tick. Don't believe us? Check out these recommendations:
I've been reading and loving Brad Feld's blog for years. He's one of my favorite venture capitalists on the planet. I'm delighted Brad and Jason have written the definitive book for entrepreneurs seeking to learn about raising and going through the venture capital process.

- Bijan Sabet, Spark Capital
Feld and Mendelson pack a graduate level course into this energetic and accessible book. The authors. frank style and incisive insight make this a .must read. for high-growth company entrepreneurs, early stage investors, and graduate students. Start here if you want to understand venture capital deal structure and strategies. I enthusiastically recommend.

- Brad Bernthal, CU Boulder, Associate Clinical Professor of Law - Technology Policy, Entrepreneurial Law
The adventure of starting and growing a company can exhilarating or excruciating.or both. Feld and Mendelson have done a masterful job of shedding light on what can either become one of the most helpful or dreadful experiences for entrepreneurs.accepting venture capital into their firm. This book takes the lid off the black box and helps entrepreneurs understand the economics and control provisions of working with a venture partner.

- Lesa Mitchell, Vice President, Advancing Innovation, Kauffman Foundation
A must-read book for entrepreneurs. Brad and Jason demystify the overly complex world of term sheets and M&A, cutting through the legalese and focusing on what really matters. That.s a good thing not just for entrepreneurs, but also for venture capitalists, angels and lawyers. Having an educated entrepreneur on the other side of the table means you spend your time negotiating the important issues and ultimately get to the right deal faster.

- Greg Gottesman, Managing Director, Madrona Venture Group
In my entrepreneurship class at Stanford, the number one topic is venture financing -- how it works and how (or even whether) to get it. There are no two better people to coach an entrepreneur through the venture process than Brad Feld and Jason Mendelson, and next to in-person guidance this book is the next best thing. I am planning to make this required reading for my class at Stanford.

- Heidi Roizen, Fenwick and West Entrepreneurship Educator, Stanford University Technology Ventures Program
I would highly recommend .Venture Deals. to any entrepreneur, venture capitalist, student, or casual reader who wants to get the .true scoop. on how venture deals come together and what the venture capital landscape truly looks like. The authors are not only veterans of the industry, but are willing to share their unvarnished views of what venture is all about. The reader will not find the insights shared here anywhere else. And, perhaps best of all, the authors write in an easily readable, casual style that makes the book quite fun to read.

- Craig Dauchy, Cooley LLP
Venture Deals is a must read for any entrepreneur contemplating or currently leading a venture-backed company. Brad and Jason are highly respected investors who shoot straight from the hip and tell it like it is, bringing a level of transparency to a process that is rarely well understood. Its like having a venture capitalist as a best friend who is looking out for your best interest and happy to answer all of your questions.

- Emily Mendell, Vice President of Communications, National Venture Capital Association
My biggest nightmare is taking advantage of an entrepreneur without even realizing it. It happens because VCs are experts in financings and most entrepreneurs are not. Brad and Jason are out to fix that problem with Venture Deals. This book is long overdue and badly needed.

- Fred Wilson, Union Square Ventures

What Does A VC Mean When He Says Your Product Is “A Feature And Not A Company”?

Question: What does a VC mean when he says your product is “a feature and not a company”?

This (usually) means that the VC believes the opportunity you are pursuing isn’t a big enough opportunity for them to invest in.  In other words, what you are building should be a feature to something else already out there, instead of a stand-alone company that will generate the type of returns that the VC is looking for.  For instance, assume you are building something that fits inside an email client that does X.  (Perhaps “X” translates languages).  While super helpful to some folks, a VC may take the postion that this should be a feature or tool within the email client, but not an opportunity to build a large company with paying customers around it.  Of course, we can debate whether this is a correct statement, but in the eye of the VC this is how it is.

One thing always to consider with VC feedback to your company, however, is whether or not you are getting transparent and honest feedback.  In our experience, few VCs actually give feedback like this, so always have your skeptic brain alert.  One never knows what the real reason for investing might be.  Perhaps the VC is out of money and can’t even make an investment, but doesn’t want to admit that and thus the feedback.  This is just a general comment and not one particular to your question.

January 7th, 2012 by     Categories: Product     Tags: , ,

Wilson: Herky Jerky Investing

Fred Wilson (USV) has today’s VC Post of the day titled Herky Jerky Investing. In it he refers to a WSJ article where several very prominent VCs have recently said they are backing off investing at frothy valuations and now going and looking off the beaten path.

Fred – as usual – has very a very focused reaction to this:

“I am not a fan of this start and stop style of investing. Nobody can time markets. You can’t deliver great returns to your investors by being a momentum investor during some periods and a value investor in others.

I believe the only way to be a top performing investor in any asset class is to have a disciplined investment strategy and approach and apply it consistently and actively in all markets all the time.”

I (Brad) strongly agree and weighed in with my own comment with a cynical view:

“I had the same reaction to the WSJ article. Actually, I had a stronger reaction: “what a load of bullshit – why does the WSJ publish stuff like this and why do VCs say things like this?”

The only thing I could come up with is that it’s actually a head fake from the people saying it with the goal of getting some of their fast followers – VCs who are investing with them, competing with them on “hot deals”, and driving prices up to “slow down and blink” so there’s less competition.”

The comment thread on Fred’s post is very interesting – I encourage you to go take a look and form your own opinion.

January 5th, 2012 by     Categories: Venture Capital     Tags: , , , ,

O’Donnell: The Race Is Long

There’s a beautiful post up today by Charlie O’Donnell (First Round) titled The Race is Long. It starts out:

“Jordan Williamson, the Stanford kicker who missed three field goals in the Fiesta Bowl, will wake up today and feel like crap. Tomorrow, he’ll wake up and still feel like crap, but a little less… and a little less the day after that, and less the day after that.

His Stanford e-mail is undoubtedly filled with two things… love and hate. If there ever was a moment in someone’s life where you get to find out who your real friends are, this will be it.”

As we start a new year, Charlie riffs nicely on important lessons that come out of a failure. Powerful stuff – and a great way to start the day.

January 3rd, 2012 by     Categories: VC Post of the Day     Tags: , , ,

Suster: Spend 2012 on the Right Side of the Haimish Line

Today’s VC Post of the day is from Mark Suster (GRP) titled Spend 2012 on the Right Side of the Haimish Line. In it he references a really great OpEd by David Brooks titled The Hamish Line.

Brooks describes the Haimish line through a description “I know only one word to describe what the simpler camps had and the more luxurious camps lacked: haimish. It’s a Yiddish word that suggests warmth, domesticity and unpretentious conviviality. It occurred to me that when we moved from a simple camp to a more luxurious camp, we crossed an invisible Haimish Line. The simpler camps had it, the more comfortable ones did not.”

I spend a lot of time on both sides of the Haimish line and – as Mark says – much prefer being on the same side that Brooks describes as “the simpler camps.” Mark gives a ton of examples of how he does this as a VC, including going to SxSW, visiting companies at their offices (rather than having them come to him), participating in TechStars, having dinner with entrepreneurs, and his accelerator LaunchPad LA.

This philosophy is at the core of my passion for Startup Communities. It’s also part of the beauty of the Startup Community in Boulder.

Mark – stay haimish!

January 2nd, 2012 by     Categories: VC Post of the Day     Tags: , ,

Raouf: What Made Alex Ferguson a Great Manager

Oopsie – we forgot to do the “best VC post of the day” for the last month or two. You might have thought there weren’t any great VC posts, but you’d be wrong. We were just being lazy. As with all good things that start up again on January 1st, we’ll try to get back in the “best VC post of the day” groove.

There weren’t many on 1/1/12 so Firas Raouf’s (Openview) titled What Made Alex Ferguson a Great Manager stood out amidst the silence of the morning of the new year. I didn’t know who Alex Ferguson was until I read the post; he’s the “manager” (CEO) of Manchester United and has been since 1986. Firas summarizes Ferguson’s management principles, as they apply to a CEO of an early stage company.

  • Identify yourself with your company brand
  • Cultivate every interest group in your company
  • Gather information everywhere
  • Seek total control, but recognize when you cannot have it
  • Don’t let others cause you stress
  • Remember that crises blow over
  • Always be unsatisfied

Go read What Made Alex Ferguson a Great Manager to get the bullet points for what’s behind this post. Happy new year Firas!

January 1st, 2012 by     Categories: Management     Tags: , , , , , ,

What Are VC Firm’s Efforts To Connect Firms In Their Portfolio With Fresh MBA Grads?

Question: How would you describe VC firm’s efforts to connect firms in their portfolio with fresh MBA grads? Typical? Rare? Never? Im just curious because here in Philadelphia, First Round Capital is posting a lot of job offers for firms in its portfolio on their website, and I’m not seeing any other Philly VC firms doing this (at the moment). Im an MBA applicant at this point, and Im trying to size up my (realistic) career goals via an MBA in Entrepreneurial Management or some similar track.

This varies dramatically by firm and by school. Some venture firms do a good job of having dynamically updated job boards on their websites that list all open jobs by portfolio company. Some examples are us (Foundry Group), Union Square Ventures, First Round Capital (as you indicated), and Spark Capital. These job listings tend to be by company, role, and location – not by educational background.

Some firms actively engage with the nearby MBA programs through their entrepreneurship programs. This is especially true of places like MIT and Stanford, but equally likely at schools like University of Colorado and University of Michigan. While a lot of this is locally driven, some of this is alumni oriented (for example, see the trip that my partner Jason Mendelson and I made recently to University of Michigan, where’s he’s an alum.)

While I think MBA Entrepreneurship programs are fine, the bigger opportunity is to spend two years at business school actively engaging in the entrepreneurial community around the school you are going to. One of the big mistakes a lot of MBA students make is that they hang out at their business school waiting for all the entrepreneurial opportunities to come to them. The industrious (and entrepreneurial) students go out into the community and find the interesting stuff that’s actually going on.

I’d encourage you to ask the question directly to the school you are applying to. They should be in recruiting mode (for you as a student) and should be clear and effective about talking about entrepreneurial opportunities for you if you go through their program.

November 26th, 2011 by     Categories: Jobs     Tags: , , ,

Levine: Trends in M&A Deal Terms

Today’s post of the day is from my partner Seth Levine (Foundry Group) and is titled Trends in M&A Deal Terms. Seth has been involved in several significant acquisitions recently, including Google’s acquisition of AdMeld and Federated Media’s acquisition of Lijit, so he’s been deep in the contemporary negotiating dynamics. He also includes a great link to an M&A deal terms report from Shareholder Representative Services.

November 4th, 2011 by     Categories: Mergers and Acquisitions     Tags: , ,

Are VCs Interested in Funding a Services Agency?

Question: I have a startup concept for a services agency (not a software or online business). I have previously helped launch PR agencies, one of which was subsequently acquired by a national agency. Are there angels/VCs that would be interested in my services concept?

Typically not. While there are some VCs that like services businesses, especially consolidations or rollups of services companies, most VCs aren’t interested in funding services business, especially around PR or marketing.

While there was a rash of VC financings for web agencies in the late 1990′s, when the Internet bubble burst VCs were reminded that these are companies that – at best – end up being valued at 1x revenue based on the underlying economic characteristics of the businesses. This tends not to create risk / return investment dynamics that are interesting for most VCs.

Of course, what VCs fund cycles in and out of favor, so there might be a point in the future where there is a particular type of “next generation services agency” that appeals to so VCs. But for now, most of these companies will have to rely on bootstrapping or angel financings.

November 4th, 2011 by     Categories: Fundraising     Tags: , ,

Suster: Why You Should Ban Laptops & iPads at Board Meetings

Mark Suster (GRP) reminds all of us to check our laptops, iPhones, Blackberries, and other electronic devices at the door at board meetings. CEOs should enforce this, as should the other VCs and board members in the room.

No “full partial attention” – just full attention.

 

 

 

 

November 1st, 2011 by     Categories: VC Post of the Day     Tags: , ,

Wilson: What’s The Difference Between A CTO And A VP Engineering?

Today’s VC Post of the Day is from Fred Wilson (Union Square Ventures) titled VP Engineering Vs CTO. This is a topic near and dear to our hearts, especially since I (Brad) have been a CTO but never been a VP Engineering (nor would I ever want to be one – I’d suck at that.)

I’ve written about this on Feld Thoughts before in a post titled CTO vs. VP Engineering (I wonder how Google is going to deal with that SEO – eh, not really, Fred has more Google juice than me) and our friend Todd Vernon (Raindance co-founder / CTO; Lijit founder / CEO) has also written several really good posts about this titled CTO vs. VP Engineering (another take) and CTO vs VP Engineering (reprise). It’s worth noting that people who write about the difference between CTO’s and VP Engineering’s don’t seem to be very creative in the Title category.

I just noticed a late breaking post from Werner Vogels, the CTO of Amazon, referenced in the comments on Fred’s blog. It’s titled The Different CTO Roles and is a nice addition to the mix.

October 31st, 2011 by     Categories: VC Post of the Day     Tags: , , ,