Fred Wilson’s: Venture Capital Do’s and Don’t (via http://www.besttechie.com)
Fred Wilson is currently being interviewed on stage at TechCrunch Disrupt NY by Michael Arrington and a topic of discussion that came up was the “Best and Worst Things to do in VC Pitches.” If you’re not familiar with Fred Wilson, he is a managing partner and venture capitalist at Union Square…
On Tuesday at TechCrunch Disrupt, co-editor Alexia Tsotsis moderated a VC panel with Mike Abbott (Kleiner), Aaref Hilaly (Sequoia), Naval Ravikant (AngelList) and David Tisch (Former Techstars now Box Group). The panelists discussed everything from what they are looking for in startups, to who should pitch them. At the end of the panel they discussed the big discrepancy in women vs men in the venture backed world.
On Tuesday we showed off this clip of David Tisch, talking about one of his biggest pet peeves about VC’s and women entrepreneurs. He’s witnessed (and so have many of our followers), VC’s tell women entrepreneurs that they need to bounce the idea off their wives. Tisch, called it like he saw it saying this tactic was bullshit. You can see that video here.
Abbott basically said they’re looking for the best ideas from the best people and those people could be men, women, black, brown, white, green or polka dotted, it doesn’t matter. Which is a really good position to take.
What Hilaly pointed out was the fact that we need more women engineers and more women entrepreneurs. At one point he challenged everyone in the audience to learn how to code.
Hilaly cited a statistic that only 12% of computer science graduates are women and that number needs to be more like 50%. There are great programs out there empowering women, at the youngest ages, to learn how to code. Code Academy and Girls who code clubs are great. Hilaly challenged everyone in the audience to help launch a Girls Who Code club at their local high school. Obviously, computer science needs to be embedded in anyone at an early age.
“If you have a daughter ,niece or friend, encourage them” Hilaly told the audience that this gap in computer science fields is a problem that everyone can help with.
Check out the video clip below.
(photo NMI 2013)
Ashton Kutcher was back on the mainstage at TechCrunch Disrupt NY 2013 after taking a year off. We first saw him at Disrupt in 2011 when he was being interviewed by Charlie Rose. It seems like so long ago. It was right after the Charlie Sheen blow up and after Kutcher had taken Sheen’s place on Two & A Half Men (which was off limits at Disrupt).
On Wednesday, during a fireside chat with Mike Arrington, Kutcher along with investment partner Guy Oseary (Madonna’s manager and the founder of Maverick Records) they discussed everything from what their investment firm likes to invest in, what they see in the future, a new fund raised at $100 million dollar valuation and drugs, ammo,assholes and anonymity.
When Arrington asked Kutcher about what he technologies he was looking forward to in the future, Kutcher talked first about sensors, and products that incorporated them. Then, he started talking about decentralizing currency and decentralizing security. In this part of the conversation he talked a lot about BitCoin and what the attraction is.
In evaluating deals Kutcher sometimes turns to “Hacking Volume” which he described as the number of people that are hacking a solution to a problem. Kutcher says that the fact that people are so widely hacking Bitcoin validates the value of the service and the money.
“…The fact that people are hacking BitCoin really hard almost harkens back to when banks first started and they didn’t have safe-safes and people were going into the banks and just robbing the money out of the safes it actually validates the value of the money itself…”
Arrington re-confirmed what Kutcher had just said asking him “…The fact that BitCoin is being hacked at almost every point in the network is a good thing?”
From there Kutcher said yes and then talked about how the BitCoin infrastructure and anonymity could be used as a vehicle for people to police themselves and eliminate “Big Brother”. Obviously this speaks to anonymity and CISPA which was recently defeated in Congress.
To reiterate the value of BitCoin, Kutcher said “I think the fact that you can by drugs and ammo with it is actually a validator of the currency itself.
As to decentralizing security, Kutcher is looking forward to a time when we can “…civically monitor each other in anonymous way actually keeps the anonymity of the internet, we don’t have to worry about big brother, and that same infrastructure that built out BitCoin for mass good” Kutcher continued “it’s the old sort of, if everyone had a dart gun and we drove around, and shot darts at assholes driving, we’d know really quick who all the assholes are”
At that point Arrington started cracking up on stage and said he could just imagine how many darts he’d have in his car.
Watch this great video clip from that fireside chat below.
Tuesday morning at TechCrunch Disrupt NY 2013, Mike Abbott (Kleiner Perkins), Aaref Hilaly (Sequoia Capital), Naval Ravikant (Angellist) and David Tisch (Box Group) were part of a panel moderated by TechCrunch co-editor Alexia Tsotsis, called “Lot’s of Venture, but what’s to gain”.
With Venture Capital firms shrinking and the rumored “series A crunch” entrepreneurs and startup founders have a lot of questions. One of those is what are the different firms looking for, and even more than that, what are the individual partners at each firm looking for.
Each of the panelists fielded the question. Ravikant talked about how important it is to build a network when preparing to pitch VC’s.
Overall the VC’s and Angel (Tisch) on the panel agreed that they are looking for disruptive companies in technologies that they know. Where some entrepreneurs may believe that a certain firm is good for them because they invested in a competitor, the panelists think that can be a bad idea. Obviously the firm feels they already have the winner.
Abbott pointed out that in the case of this particular panel, all of the investors had actually started their own company. Ravikant is still currently running his. Having started their own companies gives this group of investors an advantage of being in the shoes of the entrepreneur.
Hilaly spoke later in the panel (not in the video) about the days of having to drive up and down Sand Hill Road and getting doors slammed in his face and dreams burned, “entrepreneurs have a lot ore resources available to them now”, of course one of those big resources is Ravikant’s Angel List.
Check out the video below to shed some light on what investors are looking for.
Alexia Tstotis sat down with a pretty powerful VC panel at TechCrunch Disrupt NYC 2013 on Tuesday morning. The panelists were Mike Abbott (Kleiner), Aaref Hilaly (Sequoia), Naval Ravikant (AngelList) and David Tisch (Box Group, former Techstars NY). Tstotis asked some great questions of the panelists and overall the panel shed a lot of light on the world of VC, especially for young entrepreneurs and startups.
Tstotsis final question revolved around women in technology, startups and entrepreneurship. Everyone wants to know what will help even out the amount of venture capital going to women founders, as their male counterparts.
Overall the number of women involved in VC and angel backed startups has been increasing. Lot’s of attention lately, has been focused on women run, and founded startups. We even feature a “Bad Ass Start Up Chick” on a regular basis here at nibletz.
At the panel though David Tisch, who’s known for speaking his mind and off the cuff, got applause from the audience when he talked about one of the biggest problems women face when in the meeting, pitching the VC.
“VC’s that tell a woman founder, let me ask my wife…It’s total bullshit” and he’s right. For years there have been women led companies, women focused brands, and women focused technologies, this is nothing new. Tisch felt it was off-putting and a total cop out for VC’s to say this, but as he points out, it happens all the time.
Check out the video clip from this morning’s panel below.
This is one match that’s certainly not made in heaven — you’ve got to toil and woo several partners to finally arrive at one that best understands you and your business, and is ready to commit to you in the long term.
I’m talking, of course, about your relationship with a venture capitalist. You’ve probably heard grieving entrepreneurs who, after signing the dotted line, are quite unhappy throughout the relationship with their investors.
But there’s nothing wrong with the venture capitalist (VC) per se. You just made the wrong decision. As an entrepreneur, you’ve got to choose the right VC to work with, because the right marriage can help define how successful your business will be and how happy you will be running it.
Here are 4 key points to consider for a happy and long-lasting marriage with a VC:
1. Expertise: Choosing a VC is just like a marriage — that is, it’s a long-term commitment. You need to court first to find out whether the VC is a right fit for you. Take the time out to research whether the VC has funded companies in the domain they are operating. Research to find out what companies they have invested in and what their level of involvement has been in each of those. Do they have potential conflicts (e.g., is the expertise a by-product of an investment in a potential competitor)?
2. Adding Value: Look for investors who can add value to your business and not just give you funds. The best marriages between entrepreneurs and VCs happen when the latter can contribute to the growth of the former and when it isn’t purely transactional. Entrepreneurs need to ask, when things get tough in my venture, will this VC be a part of the solution?
3. Term Sheets: This is where you really find out what the intentions are of the person putting in the money. Look out for exit clauses; if not clearly defined, ask for them to be. Although they are not cast in stone (I know of one venture where the exit was clearly defined, but deferred as the company entered a new vertical and that added to their top line immensely, adding to a bigger valuation), it helps to know what the person with the money is really looking for.
Term sheets are very carefully crafted to fool even the best of people into believing that they’ve struck a great deal, but in reality, for the entrepreneur, that’s not always the case. So if you’re at this stage, it wouldn’t hurt to have your term sheets validated by experienced entrepreneurs who’ve gone down this road and/or a lawyer who has the relevant experience.
4. Set Expectations: Many deals are left to ambiguity, either because of lack of clarity at the stage of getting into a deal or because of assumptions made by either party. It is very important to set expectations from both ends and be clear about it. Entrepreneurs need to build trust with their VCs and vice versa. If you don’t have trust at the beginning of the relationship, it is bound to cause heartaches at the later stage.
Whatever you do, do not take this relationship for granted. You are in it for the long haul, and giving up because of a failed marriage is the last thing that you want to do with your venture. So take caution before you enter into a contract.
That said, all the best with your pitch! If it has worked out well for you, I’d like to hear your experiences and what makes your marriage successful.
This post originally appeared on the author’s blog.
Rahul Varshneya is a startup coach and the co-founder of Arkenea, an enterprise mobility and cloud solutions provider. He writes on starting up and mobile strategy at http://rahulvarshneya.com/blog.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.
(Photo: César Salazar of 500Startups)
Teams are great. A lot of people look at founders and teams, but of course the product has to be great too. That is unless you’re a founder with a track record for success, but all of that will be covered later.
Greg Kumparak is evidently back at TechCrunch. Kumparak was one of my favorite TechCrunch writers while I was “thedroidguy” we’d bump into each other all the time while I was on the mobile beat, Berlin, Barcelona and of course here at home. He left last year after the Arrington fiasco and apparently he’s back, writing about startups.
So let’s dive into the meat and potatoes of this post here, because that’s why you clicked on the link. We try and share whatever startup tips we can and one of the biggest things people want to know about is raising money. Specifically, startups in their earliest stages want to know how to raise millions of dollars so they can just “work” and not have to worry about where their next meal is coming from or how the rent will get paid.
Somewhere along the way though, $100,000 or even $500,000 was not enough. Everyone seems to be looking for that million dollar Series A round, or even more presumptuously they are looking for a million dollar seed round, or angel round. Regardless of the round, Ash Fontana, a venture hacker at AngelList, came up with the bullet points above when talking about raising a good million dollar round.
Like me, one of the first things Kumparak noticed in the slide is that product and team are crossed out. Traction is clearly circled. So now traction is the most important?
Perhaps this is right, but of course from the perspective of an AngelList venture hacker it’s absolutely right. AngelList thrives off traction. We actually learned that 500 Startups, startups, actually plan one startup a week that they will all follow on AngelList in unison. This way a 500 Startups, startup, is always trending on AngelList.
This real need for startup traction actually goes well beyond AngelList and can be a key performance indicator when your deal is being reviewed by investors.
In case you can’t clearly read the slide here are the key take-aways, things that your startup should already have before approaching that investor for your million dollar round:
– Enterprise startups need to have 1,000 seats at $10/seat/month
– Big enterprise startups need to have 2 pilot contracts with some $
– Social startups need 100,000 downloads and signups
– e-commerce “market place” startups need to have $50,000 in revenue per month
Fontana did disclose to Kumparak that these numbers are just rough estimates based on his insight and not actual numbers directly from the AngelList database.
While many investors talk about the importance of product and team it seems that when you get to the stage where you’re ready for a $1 million dollar investment (or more) the product and the team should already speak for themselves and the traction should tell their story.
Tell us what you think in the comments.
Source: TC
(image: policymed.com)
Success stories, like the one of Memphis’ medical device accelerator Zeroto510, where 80% of their first class received follow on funding, seem to be growing scarce on a national scale. In their first class of six startups at the ZeroTo510 program 5 of the startups received follow on funding, with one, Restore Medical Solutions, going straight to a $2.5 million dollar series A round.
Well national medical startup publication MedCity News, released two graphs this morning that may be alarming to early stage medical startups, who often need a lot more seed money than your social, mobile, webtech startups.
The data, published by CB Insights, shows a significant number of VCs are skipping over earlier stage “seed round” deals for healthcare startups. Conversely, the same data set shows that the “series A crunch” may not be as prevalent in healthcare startups.
As you can see clearly from the data set Series A and Series B seem to be the preferred stage for a VC firm to get into a startup business, at least over the last five quarters.
According to MedCity News VC Funding in healtcare was up over the last year, in fact reaching a “multi year high”. Also worthy to note is that the medical device category is eating up the most VC funds. That should be good for the next round of ZeroTo510, Rock Health and Health Box.
You may be shocked at the amount of startup founders and entrepreneurs that are too afraid to ask the question in the headline, “I know we want venture capital, but what is it”.
Well almost three years ago Silicon Valley Bank did a round table discussion led by Michael Hanewich, the East Coast Head Of Life Sciences/Venture Capital for Silicon Valley Bank.
The panelists were:
In a six part video series they explain exactly what venture capital is, where it comes from, how it gets to entrepreneurs and how an entrepreneur can benefit, not only from the funding but from a long term commitment as well.
Roberts explains the venture capital process early on. Venture capital firms raise funds every 3 or 4 years from limited partners. Limited partners can come in a variety of forms. Wealthy families, foundation partners, insurance companies, funds of funds and other can be partners in VC firms. Now keep in mind we’re talking about Venture Capital here, not an “angel” round which is something totally different.
Partners in a venture capital firm have a “very long horizon” on dollars. They want to make money,but are fine, and perhaps better off, doing it over a long period of time.
Now, granted, this video series was produced three years ago before super exits like Instagram. However, Instagram is the exception, not the rule.
The purpose of the VC dollars is to get a company’s product developed and to market, and eventually to liquidity. Venture capitalists will then make money on their initial investment commonly through the company going public or a merger or acquisition of some sort. In rare instances the venture capitalists can make their money back through the company generating revenue.
Here’s the first video in the series:
Ashley Arenson working the phones at the Obama headquarters (photo: claytonhauck.com)
Tech bloggers, political bloggers and journalists alike have been praising the 2012 Obama campaign team. Countless articles have reiterated the fact that the Obama tech team was more prepared, thorough and ready to win than their counterparts at the Romney campaign. To win this election technologists and politicos alike needed precise coordination and to remain on the same page at all times. Ashley Arenson was one of those Obama staffers that did just that.
According to Allthings D, Arenson served as a conduit between the technologists and the veteran politicos. “Day in and day out, the job was to identify challenges, and identify people who could help me solve them” Arenson told AllThings D. Obviously she played in important role in the grand scheme of things.
In most positions when you’ve achieved your work place objectives you’re promoted, praised or given a raise. For Obama 2012 staffers, a win (or a loss for that matter), meant they needed to find another job. Arenson was able to do that with Lerer Ventures.
Lerer Ventures is the seed stage venture capital firm based in New York City and founded by Ken Lerer who’s credits include being a co-founder of The Huffington Post. Lerer’s son Ben is a partner in the firm and is the cofounder of his own successful startup, Thrillist.
Lerer Ventures has tapped Arenson to serve as the General Manager at their in-house incubator, Soho Tech Labs. Arenson is going from her position at the campaign as “Director of Integration and Innovation” to a position that’s actually somewhat similar at Soho Labs.
In her role at Soho Labs Arenson told AllThings D that her task is to help would-be entrepreneurs get their projects ready to ship and ready to raise a seed round. She’ll also connect entrepreneurs to Lerer Ventures network of resources which include some of the biggest names in the New York tech and startup scene.
To date Soho Labs has launched Rebel Mouse, CasaHop and Emogo with plenty more in the pipeline.
Google’s venture arm, Google Ventures, is the proud recipient of $1.5 billion dollars in capital to invest in startups through 2017. Google Ventures has been the venture arm of the search and web giant since 2009. A mix of great entrepreneurs are involved with Google Ventures including Rich Miner one of the co-founders of Android and Kevin Rose (or is he).
While Google is known for their acquihires to bring talent from strategically related startups into the Google umbrella, Google Ventures is investing in startups for financial reasons and not necessarily for strategic partnerships. Some of their investments to date include HomeAway, Nest Labs and 23andMe.
The $1.5 billion dollar commitment is $100 million dollars more per year than Google Ventures has had in the past. Traditionally they’ve had $200 million a year to invest. That brings 2012 to $300 million, along with 2013 and the remaining years after that through 2014.
Google Ventures managing partner Bill Maris told the Wall Street Journal’s, Venture Capital Dispatch, that it took about 30 minutes to convince the powers that be at Google to up the ante. Maris is also very confident in the fund, telling the Journal “We will not invest in any company that tanks”
In addition to the investment Google Ventures now offers their portfolio companies a whole suite of services like design, marketing and technical recruiting. Of course all of these are resources that Google is very good at already.
The increase in funding was announced via a tweet last Thursday at a gathering in Mountain View of 100 Google Ventures portfolio companies.
Linkage:
Source: WSJ Venture Capital Dispatch
Make sure you come to this startup conference
Josh Kopelman is the managing partner at Philadelphia based First Round Capital. While based in Philadelphia, First Round Capital, invests in companies across the country.
Kopelman got his start as an entrepreneur with his company Infonautics which he founded in his dorm room as a junior at Penn. By the time he graduated the company had 20 employees. Kopelman believes that colleges and universities house some of the best ecosystems for innovation.
That’s why he’s started the “Dorm Room Fund”. This new fund is set up to become a fund that is for students, and eventually run by students. While First Round Capital is injecting $500,000 in seed money to the fund, Kopelman is hopeful that the initial first investments will then select the next round, and the next and so on and so forth. Kopelman is looking forward to being an advisor to those companies selected to the fund.
This new student fund will:
1. Be run by a students – not suits. A student investment team would know the entire student and campus ecosystem – allowing them to find, screen and invest in the best ideas
2. Be located on campus, so that it constantly has a feel for the vibe on campus
3. Students are engineers, marketers, financers, writers, doctors, lawyers and researchers… Allow them to focus on investing in companies that disrupt big markets that they (students) have expertise in.
4. Finance students based on their needs. Students are scrappy and often just need that first $10,000 – $20,000 in order to build their product and ship a minimum viable product – let’s call their current stage the dorm room stage…
First Round Capital and Kopelman hope to introduce the Dorm Room Fund in college cities across the country. This first round of investments is concentrated to Philadelphia and students that are either enrolled in, or just recently graduated from Philadelphia area schools like the University of Pennsylvania and Drexel.
Kopelman is currently on the prowl looking for the first 8 students who will serve on the investment committee, which will oversee which student run startups get investments from the fund. If you’re interested in being considered for the investment committee you need to be a student in the Philadelphia area and hit the link below.
Linkage:
Join the committee or submit your startup here
Nibletz is the voice of startups “everywhere else” here are more startup stories from “everywhere else”
A Y-Combinator graduate and California startup, Double Robotics, is the first startup to receive an investment from New York based Grishin Robotics. Grishin was started by Dimitry Grishin who’s been dubbed the “Russian Mark Zuckerberg” by the fine folks at BetaBeat and others.
The investment into Double Robotics marks the first investment made by Grishin Robotics with more on the way. Grishin invested $250,000 into the startup.
Double Robotics has already sold 600 units ($1.2 million) of their first robotic product. The product, called Double, is a robot that puts an iPad on wheels and then gives you a mobile telecommunications device. Think that robot that Sheldon used on Big Bang Theory in the episode where he wanted Steve Wozniak’s autograph, but much more refined.
Grishin’s investment will be spent primarily on scaling, manufacturing and hiring for further development. Double Robotics plans on shipping the 600 pre-orders in the first part of 2013.
“We are thrilled to have Grishin Robotics and Dmitry Grishin, in particular, as our largest investor to date,” said David Cann, Co-founder of Double Robotics. “We read about the new investment firm and Dmitry’s experience in the field of robotics in June 2012 when the fund was announced. The timing was perfect, as we were just beginning the Y Combinator program with our prototype robot. After our public launch in August, we met with Grishin Robotics and were immediately impressed with their mission and deep knowledge of the robotics industry’s past mistakes and potential future. We look forward to working with Grishin Robotics in the years to come as we build our business.”
Grishin is the Chairman of the Board and CEO of Russian firm mail.ru who holds major investments in players like Facebook and Zynga. He became Chairman of mail.ru after global venture capitalist Yuri Milner stepped down. Grishin Robotics is Grishin’s own venture capital firm, which as you can tell from the name, invests in robotics startups.
“Investment in Double Robotics perfectly fits our strategy,” said Dmitry Grishin, founder of Grishin Robotics. “It is a consumer-oriented product with potential to fit a broad range of applications and has already generated strong consumer demand. It’s also important that the price of the product makes it accessible to the wide audience. In addition, the team has creative approach to design and is keen to build user-friendly products — both are very important focus areas for next-generation personal robotics companies. Double Robotics is well positioned to leverage the unique potential of the prominent telepresence robotics market. We have a great belief in Double Robotics team and its product.”
Linkage:
Check out Double Robotics Here
Check out Grishin Robotics Here
and check out the biggest startup event everywhere else, here
This week seems to be a good week for fundraising outside of the valley. Tuesday we brought you the story about Philadelphia startup Perceptual Networks and the A-List seed round they recently closed. Today the news comes to us by way of Boston and TechStars Boston 2012 graduate, UbserSense.
UbserSense is a sports app thats designed for athletes and coaches at any level to help the athlete with coaching and training. This can be achieved at anytime and anywhere using UberSense’s signature feature, a mobile video collaboration platform that makes it easy to tape, train, and coach.
Aside from participating in the TechStars Boston 2012 program, UberSense saw a huge uptick when it was discovered that the USA Gymnastics and USA Volleyball teams used UberSense to train for the 2012 Olympic Games.
Using an iPhone or iPad with the Ubersense app, coaches or athletes can video-tape and analyze their technique, compare themselves with pros, track their progress; coaches and peers can provide feedback not only in-person, but remotely.The Ubersense app’s main feature and most powerful asset is its innovative video-based feedback experience, called Uberview. An Uberview can contain a coach’s audio feedback, instructive drawings, alterations to video playback, and even comparisons; all are easily captured into an Uberview video that they can easily be shared with an athlete, parent, or peer in-person or remotely.
While UberSense is a sports coaching app, you can read between the lines and see how the UberView technology could be used for anything from coaching and training soccer techniques, basketball, swimming, track and field, even ballet dancing, and public speaking. The ability to not only train and coach from afar but to do it mobile makes the startup even more attractive.
.“Video feedback is an important tool in skill development”, says Jamie Morrison, Assistant Coach of the USA women’s national volleyball team. “It has allowed us to connect how an athlete feels they are performing a skill with what it actually looks like as well as what it should look like. Through ease of use and a low cost, Ubersense puts that valuable tool into the hands of all coaches, parents and athletes.”
“Ubersense helps you raise your game”, says Krishna Ramchandran, co-founder and CEO of Ubersense. “Our investors have contributed to building some of the most successful consumer companies and we are thrilled to have them on our team as we build out the product and company.”
UberSense has raised $1.1 million dollars from Google Ventures, Atlas Ventures, Boston Seed Capital and an undisclosed group of angel investors.
Linkage:
Nibletz is the voice of startups “everywhere else” here’s more startup news from “everywhere else”
If you’re an entrepreneur, VC or startup you need to put this on your calendar.
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