vc - Gary Edwards on Diigo

10 Dec 09

Clearwell expanding as legal discovery fuels fast document search | VentureBeat

Clearwell has hit its stride as a provider of eDiscovery services. The company provides a way to search through terabytes of emails, company records, and other data to narrow down a legal search to whatever documents are most relevant to its case.

The Mountain View, Calif.-based company first launched its service in 2006, but now has released its fifth version and is hiring a bunch of engineers to expand its offerings. Clearwell plans to expand from 100 employees to more than 200 in the coming year.

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04 Nov 09

4 ways to get automatically rejected by an angel investor | VentureBeat

(Editor’s note: Jason Cohen is founder of Smart Bear Software. He contributed this column to VentureBeat.)I’ve started three companies, and now I’m an angel investor. So I’ve been on both sides of the table.

There are lots of good articles out there about pitching, and surely everyone who pitches me has read some of them. Still, a few problems appear over and over again. If you’ve ever had to sort through resumes and cover letters, you’ve seen this effect: People tend to have the same misconceptions and therefore make the same mistakes.

What follows are four problems I see all the time, each of which makes me roll my eyes and sometimes even terminate the conversation early:
... Be dismissive of the competition. (Don't!!)
..... Have five-year projections. (Forget it!)
..... Gloss over your strategy for customer acquisition. (Don't!, this is important)
....... Do what you think you “should” do instead of what feels right. (Stick with your gut!)

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(Editor’s note: Jason Cohen is founder of Smart Bear Software. He contributed this column to VentureBeat.)

I’ve started three companies, and now I’m an angel investor. So I’ve been on both sides of the table.
Be dismissive of the competition.
3 more annotations...
- Have five-year projections.
- Gloss over your strategy for customer acquisition.
- Do what you think you “should” do instead of what feels right.

01 Sep 09

3 drivers of growth for your business model. Choose one. | VentureBeat

Excerpt: Every startup needs to “pick a major” among three drivers of growth. It’s simply too hard to focus on more than one. This choice has to be made at the level of strategy, because the tactics between involved in each driver are quite similar. Startups may pivot from one driver to another as they experiment. But failure to identify a clear driver of growth leads many entrepreneurs into dangerous territory.

There are a number of models that you can use to understand any business in an abstract way. For most service startups, I recommend Dave McClure’s AARRR framework.

This model (required reading in startups all over Silicon Valley) is an elegant way to build any service-oriented business. It is based around five key metrics:

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19 Jun 09

How Not to Get Screwed by VCs - ReadWriteStart

This is one post/chapter in a serialized book called Startup 101. For the introduction and table of contents, please click here.

Fear of VCs is a common problem for first time entrepreneurs. It is a natural fear. You are going to be negotiating with somebody who is older, richer, and way more experienced in this than you are. You have heard a bunch of horror stories. They have the one thing you need to turn your dream into reality.

But chill out. Read this eight-step guide, and keep going.

Note: the term "VC" is used here to include the professional angel investors who do this for a living. They may just invest their own money, but they are in the venture investing business. This does not apply to friends and family who loan you money because they like and trust you.

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13 Apr 09

An Innovation Conundrum - Sramana Mitra Forbes.com

We need a few more Internets.

Easy to say, extraordinarily hard to do. Especially within a system that has created a fundamental problem compensating speculators way above creators. (See "Capitalism 2.0: Speculator vs. Creator.") Besides that, we have systemic challenges of risk-aversion rampant at the moment, with venture capitalists behaving like bankers, and Wall Street's obsession with quarterly results that discourages long term R&D.

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06 Apr 09

Silicon Alley VC: Only Two Weeks Left To Apply For Startup 2009!

June 3, 2009, NYC: .... Entering the Startup 2009 competition is free .... Our expert panel will choose 10 winners from the pool of applicants ..... There's also the Entrepreneur-Appreciation conference-and-promotion package for $295. .....

Log-in to <a href="http://angelsoft.net/business-plan-competition/silicon-alley-insider-startup2009">Angelsoft</a>, a web site that connects entrepreneurs and investors, which we have modified for Startup 2009. http://angelsoft.net/business-plan-competition/silicon-alley-insider-startup2009

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25 Nov 08

What Chrome means for Web start-ups | Webware - CNET - Bob Walsh

Many stories focus on what Google Chrome means for Microsoft, Firefox, and the fate of the current online world. But what does it mean for up-and-coming Web start-ups? Here are six implications for the start-up world that I can see. These assume that Chrome lives up to its hype. T

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21 Oct 08

Why to Start a Startup in a Bad Economy

If we've learned one thing from funding so many startups, it's that they succeed or fail based on the qualities of the founders. The economy has some effect, certainly, but as a predictor of success it's rounding error compared to the founders.

Which means that what matters is who you are, not when you do it. If you're the right sort of person, you'll win even in a bad economy. And if you're not, a good economy won't save you. Someone who thinks "I better not start a startup now, because the economy is so bad" is making the same mistake as the people who thought during the Bubble "all I have to do is start a startup, and I'll be rich."

So if you want to improve your chances, you should think far more about who you can recruit as a cofounder than the state of the economy. And if you're worried about threats to the survival of your company, don't look for them in the news. Look in the mirror.

www.paulgraham.com/badeconomy.html - Preview

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Y Combinator Startup Investor Paul Graham: Go Ahead And Start That Startup

Paul Graham, whose Y Combinator is the best-known incubator of the Bubble 2.0 era, sends out a hopeful message to would-be startups: Now's a fine time to launch. Or at least it's as good as it two years ago, when the bubble was still inflating.

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24 Sep 08

iFundVC » Blog Archive » Launching the iFund Blog….

Insights Into the iPhone, iFund, and iFund Companies

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Launching the iFund Blog….

Posted by Matt Murphy, September 15th, 2008 at 3:54 am

Today we’re launching the iFund blog. The purpose is to share (and hear) perspectives around the iPhone and emerging open mobile ecosystem. We’ve been blown away by the amount of entrepreneurial activity in mobile since launching the iFund on March 6th. In 6 months, we’ve received over 2700 plans. To put it in context, that’s about 20x what we received in a similar period last year. Out of that group, we’ve funded five companies totaling more than $30M of investment

Worth Reading? VC iFund for iPhone Has a Blog | InternetNews Realtime IT News

The group behind the $100 million iPhone developers fund, has some thoughts about where mobile is headed.

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15 Sep 08

How to Fund a Startup

Venture funding works like gears. A typical startup goes through several rounds of funding, and at each round you want to take just enough money to reach the speed where you can shift into the next gear. .... Y Combination founder Paul Graham explains the many issues and considerations involved with funding a startup.

Few startups get it quite right. Many are underfunded. A few are overfunded, which is like trying to start driving in third gear.

I think it would help founders to understand funding better—not just the mechanics of it, but what investors are thinking.

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two reasons: they understand your situation, and they're a
source of contacts and advice.
The contacts and advice can be more important than the money.
34 more annotations...
- the concept of exit strategy
- Another concept we need to introduce now is valuation.
- Some angel investors join together in syndicates.
- One of the dangers of taking investment from individual angels,
  rather than through an angel group or investment firm, is that they
  have less reputation to protect.
- What
  kind of anti-dilution protection do they want?
- Fair or not, investors do it if you let them. Even VCs do it. And
  funding delays are a big distraction for founders, who ought to be
  working on their company, not worrying about investors. What's a
  startup to do?
- The key to closing deals is never to stop pursuing alternatives
- Seed Funding Firms
- Seed firms differ from angels and VCs in that they invest exclusively
  in the earliest phases—often when the company is still just an
  idea.
- seed investors usually care less
  about the idea than the people. This is true of all venture funding,
  but especially so in the seed stage.
- Seed firms and angel investors generally want to invest in the
  initial phases of a startup, then hand them off to VC firms for the
  next round. Occasionally startups go from seed funding direct to
  acquisition, however, and I expect this to become increasingly
  common.
- Venture Capital Funds
- In a sense, the lower-tier VC firms are a bargain for founders
- Better how? The most obvious is valuation: they'll take less of
  your company.
- Another danger of less known firms is that, like angels, they have
  less reputation to protect.
- lower-tier firms are much more likely to pretend to
  want to do a deal with you just to lock you up while they decide
  if they really want to.
- It's the partners who decide, and they view things with
  a colder eye.
- Because VCs invest large amounts, the money comes with more
  restrictions.
- Another difference with large investments is that the founders are
  usually required to accept "vesting"—to surrender their stock and
  earn it back over the next 4-5 years.
- Every startup's rule should be: spend little, and work fast.
- prototype
- skeleton business plan, addressing
  the five fundamental questions
- An angel investing $200k would probably expect a seat on the board
  of directors. He might also want preferred stock, meaning a special
  class of stock that has some additional rights over the common stock
  everyone else has. Typically these rights include vetoes over major
  strategic decisions, protection against being diluted in future
  rounds, and the right to get one's investment back first if the
  company is sold.
- vesting is also a way for founders to protect
  themselves against one another. It solves the problem of what to
  do if one of the founders quits. So some founders impose it on
  themselves when they start the company.
- The one universal rule is that the amount of stock
  an employee gets decreases polynomially with the age of the company.
  In other words, you get rich as a power of how early you were.
- Step 3: Series A Round
- Due diligence is the corporate
  equivalent of a background check: the purpose is to uncover any
  hidden bombs that might sink the company later, like serious design
  flaws in the product, pending lawsuits against the company,
  intellectual property issues, and so on. VCs' legal and financial
  due diligence is pretty thorough, but the technical due diligence
  is generally a joke.
- Deals Fall Through
- But the most unrealistic thing about the series of deals I've
  described is that they all closed. In the startup world, closing
  is not what deals do. What deals do is fall through.
- Partly the reason deals seem to fall through so often is that
  you lie to yourself.
- The reason is that it's such a risky environment.
- Consulting is where product companies go to die. IBM is the
  most famous example.
- full ratchet
  anti-dilution
- So it's worth negotiating
  anti-dilution provisions, even though you don't think you need to,
  and VCs will try to make you feel that you're being gratuitously
  troublesome.

Y Combinator

Y Combinator is a new kind of venture firm specializing in funding early stage startups. We help startups through what is for many the hardest step, from idea to company.

We invest mostly in software and web services. And because we are ourselves technology people, we prefer groups with a lot of technical depth. We care more about how smart you are than how old you are, and more about the quality of your ideas than whether you have a formal business plan.

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F|R: 5 Hacks For Closing an Angel Round - GigaOM

“The reality is that our deal terms are going to be the same as a VCs,” says Ian Sobieski of the Silicon Valley-based Band of Angels. “We also want five to 15X returns, it’s just that since we’re only investing $500,000, we can get it at a much lower exit than a VC.”

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13 Aug 08