Archives / July, 2008

How Can I Invest In A Venture Capital Firm?

Q: Your site talks a lot about VCs investing into companies but I can’t find any information online (even on the VCs websites) about how VCs solicit investors to their funds. I want to invest with a VC but I don’t know what is the minimum VCs accept. Who in the firm should I contact…

Am I In Trouble If I Don’t Raise Money From Kleiner?

Q: It seems that the venture community is dominated by a very few large names (Kleiner, Sequoia, etc.).  If I don’t get funded from one of those firms, is my company toast? A: (Jason)  Nope!  While Kleiner and Sequoia deserve their great reputations, the list of successful venture backed companies that had syndicates that didn’t…

Should I Pay My Venture Capitalist To Consult For My Company?

Q:  My company is backed by VC firm to whom we also pay a $2k/month "consulting fee." We have raised approximately $2MM from them in a Series A. Is that type of consulting payment typical in an early stage venture? A:  (Jason)  I want to vomit again.  We received this question just a  few short…

What Is The Purpose of Venture Debt At The Series A Round?

Q: From my limited perspective, venture debt in proximity to an A round seems awfully premature — restrictive debt coverage ratios, warrant coverage on preferred terms, etc — yet there seems to be an awful lot of venture debt investors out there who essentially have no response to these concerns but want me to take…

Should I Pay My Lawyer A Success Fee For Venture Capital Intros?

Q: My lawyer is asking for a "success fee" for a referral to a potential investor in my business. Since he’ll be doing the legal work, he’s offered to charge only 3% on the amount funded (solely from this one contact) as opposed to a 5% that a typical investment banker would charge (even though…

Are Eyeballs Good Enough?

Q: In the era of "free" software, would a mobile software startup be committing short-sighted suicide by attempting to price their product at all? These days, it seems that "eyeballs" are considerably more valued than short-term monetization.  Facebook being a prime example:  they avg a mere $3.00 in gross revs per active user annually, but…

Intent, Term Sheets, and Off Limit Questions

Rick Segal has three great blog posts up this 4th of July weekend.  He’s Canadian so I expect he is still working – maybe we’ll see a fourth from him. Term Sheets vs. Intent 3 VC Questions You Should Not Answer Dancing With the One Who Brung Ya Happy 4th Rick.  Keep writing.