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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:
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
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
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
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
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
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

Horowitz: Lead Bullets

The VC post of the day is from Ben Horowitz (A16Z) and is titled Lead Bullets. Ben tells a story from his time at Netscape when he discovered Microsoft’s IIS was about to ship, was 5x faster than the Netscape Server product, and was free. He went searching for a bunch of silver bullets to solve the competitive issue (e.g. different market segment, acquire someone, scale back and re-segment the product). Ultimately, the solution was simply to use lead bullets – make the Netscape Server product better than the IIS product. Sure – they still addressed the other things but if they hadn’t taken on the product issues and made a superior product, the rest probably wouldn’t have mattered much.

Ben ends with a strong call to action for any entrepreneur:

There comes a time in every company’s life where it must fight for its life. If you find yourself running when you should be fighting, you need to ask yourself: “If our company isn’t good enough to win, then do we need to exist at all?”

October 27th, 2011 by     Categories: VC Post of the Day     Tags: ,

Skok: Multi-axis Pricing: A Key Tool for Increasing SaaS Revenue

David Skok (Matrix) has today’s great post up titled Multi-axis Pricing: a key tool for increasing SaaS revenue. If your business uses a subscription pricing model, this is a must read post. While David positions it as SaaS related post, it applies to any subscription model, including consumer and add-ons to hardware products.

October 26th, 2011 by     Categories: VC Post of the Day     Tags: , , , ,

Mentors, Revenue Based Financing, and Misperceptions About Venture Capital

It’s Monday and our friendly neighborhood VCs stored up their posts over the weekend and launched a few with a vengeance. Today, we have three great ones.

Roger Ehrenberg (IA) writes about mentors in his post Mentors: an essential engine for growth. While he wrote it on Saturday, it’s still applicable on Monday.

Fred Wilson (USV) has his normal MBA Mondays series with a guest post from Andy Sack titled Revenue Based FinancingIt’s an advertorial for Andy’s firm Lighter Capital but is a really good explanation of how revenue based financing works.

Charlie O’Donnell (First Round Capital) wraps up our posts of the day with a dynamite one titled 10 Misperceptions About Venture Capital.

October 17th, 2011 by     Categories: VC Post of the Day     Tags: , , , , ,

Roberts: You’re Doing It All Wrong

I love this post from Bryce Roberts (OATV) titled You’re Doing It All Wrong.

Every great company I’ve ever worked with has its own style, personality, approach, strengths, weaknesses, and quirks. Experience – and inexperience – when combined with an amazing new opportunity, creates really unique characteristics that – over time – mix with other company DNA to create new characteristics. Funny – just like humans.

October 13th, 2011 by     Categories: VC Post of the Day     Tags: ,

Go: Startup Jargon Series: DISRUPTION

This is going to be fun. Rob Go (NextView) is taking on “Startup Jargon” with a new series. His first post is about Disruption, a word I never manage to type correctly the first time (I always type it as distruption.)

Many moons ago Fred Wilson wrote a great blog series on VC Cliches. It’s timeless. Let’s hope Rob lives up to Fred’s standard with the Startup Jargon series. Go Rob Go (sorry – couldn’t help myself on that one.)

October 12th, 2011 by     Categories: VC Post of the Day     Tags: , , , ,

Wenger: Tech Tuesdays

We’ve got Fred Wilson blogging the incredible MBA Mondays series. I (Brad Feld) have started a Finance Friday series. And now Fred’s partner Albert Wenger has started a Tech Tuesday series.

Albert is a hard core developer turned VC. He’s started five companies, has an undergrad degree in Computer Science from Harvard and has a Ph.D. in Information Technology from MIT. Yes – he codes. His first post in the new series, Tech Tuesdays: Computing’s Building Blocks (Overview), is up.

Wednesday and Thursday are still available? Anyone out there ready to take them on?

October 11th, 2011 by     Categories: VC Post of the Day     Tags: , , ,

Convertible Debt – Wrap Up

And there you have it. We’ve completed our series on convertible debt and hope that you enjoyed it. If we ever get around to writing a second edition of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist we’ll be sure to include this as well.

If you go to the resources section of Ask the VC we’ve included standard forms used in a variety of venture deals. As of this posting, we’ll include some standard convertible debt documents subject to the disclaimer that we aren’t you lawyers and make no reps or warranties with respect to these documents, so use at your own risk.

October 11th, 2011 by     Categories: Convertible Debt     Tags:

Weiss: Looking Bigger

The post of the day is from Scott Weiss (Andreesseen Horowitz) titled Looking Bigger.

Scott’s a new VC blogger – I’ve gotten to know him over the past few years on the Return Path board and he’s a dynamite thinker. He’s got amazingly useful experience (and stories) from his last company – IronPort – and this post is a good example of his insights which are backed up with real experience.

I expect to see Scott, as well as his partners Ben Horowitz, Marc Andreessen, John O’Farrell, and Jeff Jordan at A16Z who are all blogging, show up in the VC Post of the Day on a regular basis.

October 6th, 2011 by     Categories: VC Post of the Day     Tags: , , ,

Convertible Debt – Early Versus Late Stage Dynamics

Once again we continue our series on convertible debt deals. Today’s subject is early versus late stage dynamics.

Traditionally, convertible debt was issued by mid to late stage startups that needed a financing to get them to a place where they believed they could raise more money. Thus, these deals were called “bridge financings.”

The terms were basically the same unless the company was fairing poorly and there was doubt about the ability to raise new capital and / or the bridge was to get the company to an acquisition or even orderly shutdown. In these cases, one saw terms like liquidations preferences and in some cases changes to board and / or voting control come into play. Some of these bridge loans also contained terms like pay to play.

Given the traditional complexity and cost of legal fees associated with preferred stock financings, however, convertible debt became a common way to make seed stage investments as it tended to be simpler and less expensive from a legal perspective. Over time, equity rounds have become cheaper to consummate and the legal fees argument doesn’t hold much weight these days. In the end, the main force driving the use of convertible debt in early stage companies is the parties’ desire to avoid setting a valuation.

October 6th, 2011 by     Categories: Convertible Debt     Tags: , ,

Brisbourne: The Math Behind Anti-Dilution (With Examples)

Well – I fell off that particular horse. That would be the “I’ll blog daily about the best VC blog post of the past 24 hours.” I could make some snarky comment about how there weren’t any for the last few weeks, but that wouldn’t be true. I just fell of the horse. But yesterday, when I was at an SVB event talking to a bunch of SVB people, a long time friend said “thanks so much for writing the VC Post of the Day – it saves me a ton of time looking through all the VC blog posts.” So I got back on the horse.

Today’s post of the day is from Nic Brisbourne (DFJ Esprit) and it titled What is anti-dilution/downround protection? Nic covers narrow-based, broad-based, and full ratchet anti-dilution with real examples using real math.

Note to self: that was easy – five minutes, done.