A VC : Venture Capital and Technology

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When the going gets tough, the tough get going

A VC : Venture Capital and Technology

It sure feels like the long awaited headwinds have arrived and the tailwinds are behind us for now. friend sent me this chart today.

Understanding VCs

A VC : Venture Capital and Technology

I saw Joe Fernandez ‘ tweet a few days ago and thought “he is making an important point.” ” too many young entrepreneurs talk about vc’s like they’re heroes and their blog posts are scripture. — Joe Fernandez (@JoeFernandez) August 19, 2016. VCs are not heroes. We are just one part of the startup ecosystem.

What Happened In 2015

A VC : Venture Capital and Technology

Last year in my What Just Happened post, I said: the social media phase of the Internet ended. But it is not yet clear what that thing is.

Global Venture Capital Distribution

A VC : Venture Capital and Technology

Richard Florida published some stats on the distribution of global venture capital investment last week. London and Beijing crack the top ten.

Selling

A VC : Venture Capital and Technology

I think selling is the hardest part of investing. Buying is, of course, critical to generating strong investment performance. Figuring out what to buy and when to buy it is what most people think of when they think of investing. But your returns will have as much to do with selling as buying. And buying is a fairly rational decision.

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Experiment and Scandal

A VC : Venture Capital and Technology

We are living in a time of great experiments. They are not happening in the lab. They are happening in the real world. And they are being financed by real people. We are witnessing the de-institutionalization of experimentation. We are returning to a time when anyone can be an inventor and innovator. But by their nature experiments often fail.

The Second Smartphone Revolution

A VC : Venture Capital and Technology

Benedict Evans tweeted out this chart yesterday: We sometimes think of the shift to mobile as finished, or almost finished. It isn’t. pic.twitter.com/l5gaiMlaoU. Benedict Evans (@BenedictEvans) March 12, 2016. But the next 2.5bn people to adopt smartphones may turn out to be a different story. Benedict is right. Microsoft can copy Netscape.

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In Defense Of Bubbles

A VC : Venture Capital and Technology

There is nothing the tech media and the broader press likes to ask me about more than bubbles. “Is Snapchat a bubble?” ” “Is Uber a bubble?” ” “Is Facebook a bubble?” ” “Is seed investing a bubble?” ” “Is growth investing a bubble?” ” And on and on and on.

An AI First World

A VC : Venture Capital and Technology

Sundar Pichai said this last week on Alphabet’s earnings call: In the long run, I think we will evolve in computing from a mobile-first to an AI-first world. That statement got a lot of pickup and attention and deservedly so. What does an AI first world look like? It was easier to think about a mobile first world. That’s big.

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What Didn’t Happen

A VC : Venture Capital and Technology

said that the big companies that were started in the second half of the last decade (Uber, Airbnb, Dropbox, etc) would start going public in 2015.

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NYC’s FinTech Innovation Lab

A VC : Venture Capital and Technology

Applications are open for New York’s seventh annual FinTech Innovation Lab , a 12-week program that I have blogged about a bunch here on AVC. This proram is for early and growth stage companies that have developed cutting edge technology products targeted at financial services customers. For a complete list of focus areas , click here.

Video Of The Week: Mary Meeker’s Internet Trends

A VC : Venture Capital and Technology

You should too. mobile VC & Technology Web/Tech

Founder Dilution

A VC : Venture Capital and Technology

I saw a blog post this weekend that looked at the IPO filings of 79 tech companies and calculated the ownerships of the founders and the VCs at IPO. Employee Equity: Dilution. In both posts, I lay out how the equity gets shared with employees and investors as the company grows and scales. Raising round after round of venture capital is expensive.

The Dan Primack Interview

A VC : Venture Capital and Technology

Dan Primack and I did a fireside chat at the Upfront Summit this past week. It generated a few news stories that went a bit viral. It is about 25mins.

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What Is Going To Happen In 2016

A VC : Venture Capital and Technology

It’s easier to predict the medium to long term future. We will be able to tell our cars to take us home after a late night of new year’s partying within a decade. I sat next to a life sciences investor at a dinner a couple months ago who told me cancer will be a curable disease within the next decade. That’s a bit trickier.

The Emerging Architecture Of Internet Applications

A VC : Venture Capital and Technology

The bitcoin blockchain is not just going to change the way money works on the Internet (and off). It is the blockchain stack and it looks like this.

The Rich Get Richer

A VC : Venture Capital and Technology

The 2014 numbers for the VC category are out and it was a huge year, almost $50bn in total VC funding. year over year. The rich are getting richer.

Losing Money

A VC : Venture Capital and Technology

I remember back in the mid 90s, I used to say with some pride that I had not lost money on any of my VC investments. Then one day, someone told me “then you are not taking enough risk.” ” I ended that streak of not losing money on VC investments in the late 90s in a series of epic flameouts. But I learned a lot from them.

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Filling Out A Round: When It Matters, and When It Doesn’t

A VC : Venture Capital and Technology

Almost every financing I’ve been involved with over the years (seed, VC, growth, raising a VC fund) goes mostly like this: Struggle like hell to find a lead. Come to terms with the lead. Turn your attention to filling out the round. So how do you decide who to let into the round and who to say no to? Yes means try to let them in.

Negative Gross Margins

A VC : Venture Capital and Technology

There’s been a lot of talk coming out of silicon valley lately about fast growing companies with high valuations that are going to face problems in the coming year(s). ” But how is this going to happen? The most likely scenario is the thing that has been driving growth (and valuations) for these companies ultimately comes home  to roost.

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The No Hands Syndrome

A VC : Venture Capital and Technology

Zero hands. FortuneTech. — Dan Primack (@danprimack) July 14, 2015. replied to it and I also mentioned it in a comment thread here at AVC recently.

Software Is The New Oil

A VC : Venture Capital and Technology

I was with some friends this weekend and one of them was talking about an investment committee meeting he attended and there was a discussion at that meeting about some of the threats out there in the macro investment landscape. One of them was “vanishing liquidity” and the significant change in net cash flows from the global oil sector.

Care and Feeding

A VC : Venture Capital and Technology

Young companies are a bit like children. They require care and feeding. The feeding part comes naturally to investors. Because that is what we do. We invest capital into young companies in hope of generating large returns on those investments. The caring part comes harder to investors. At least it did to this investor. Giving a s**t.

The Carlota Perez Framework

A VC : Venture Capital and Technology

I was reading William’s post on the potential crash in the Bitcoin sector this morning and I thought of Carlota Perez. VC & Technology

What’s Next In Computing

A VC : Venture Capital and Technology

Chris Dixon posted an excellent roadmap for thinking about what is next in computing. We are due for one soon. VC & Technology

Technology In Istanbul

A VC : Venture Capital and Technology

The Gotham Gal and I are winding up a four day weekend in Istanbul. expect the posts on her blog will be all about Istanbul for the next few days.

Two Charts

A VC : Venture Capital and Technology

What is the capital markets environment for startup tech companies? Series B is getting overheated. Series C and beyond has gone crazy.

Active vs Passive Investing

A VC : Venture Capital and Technology

When you buy a stock in the public markets, that is passive investing. When you buy 10% of that public company in the open market and then seek to obtain board seats, that is active investing. When you buy a REIT, that is passive investing. When you buy vacant land, build an apartment building, and lease it up, that is active investing.

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Profits vs Growth

A VC : Venture Capital and Technology

One of the things I’ve always struggled with as an investor in high growth tech companies is the tension between getting profitable vs growing more quickly. Meaning you can grow at 100% per year and have operating margins of -60%. Or you can have flat growth and have 40% operating margins. It doesn’t have to be that way. And I do mean sustainable.

Second and Third Tier Markets And Beyond

A VC : Venture Capital and Technology

I am in Nashville for a couple days with The Gotham Gal  who is giving a keynote at a startup conference today. mostly came along for a chance to spend a couple days in Nashville. But I will also be at the conference later today to see her do her thing. The way I think about the startup sector in the US is that the first tier is Silicon Valley.

App Constellations

A VC : Venture Capital and Technology

If you made a list of all the non-game mobile apps that have more than 10mm MAUs, it would be a pretty short list. So that got me thinking. Dropbox).

A discussion about creating startup hubs

A VC : Venture Capital and Technology

Andrew Ross Sorkin and I talked about creating startup hubs yesterday at the New York Times’ Cities For Tomorrow conference.

The Blurring Of The Public And Private Markets

A VC : Venture Capital and Technology

Five or six years ago, as the USV team was discussing the evolution of late stage financings and secondaries on the venture landscape, our partner Albert described something to us that was, in hindsight, very prescient. His point was that the only thing that really matters is how much information a company is willing to disclose. Well guess what?

Fund Level Vs Deal By Deal Carry

A VC : Venture Capital and Technology

In a venture fund, the general partners will make something like twenty or twenty five investments. There are outliers for sure. A few venture funds will make less investments than that. And there are seed funds that will make significantly more investments than that. But that’s not the point of this post. At USV we take a 20% carry.

Loyalists vs Mercenaries

A VC : Venture Capital and Technology

One of the things that entrepreneurs, founders, and CEOs obsess over is holding onto their team. When I propose some sort of difficult decision to a CEO, I am often met with the response “the team will freak out and we will lose them.” ” And I understand where this emotion comes from. Neither can I to be honest.

Ageism

A VC : Venture Capital and Technology

There has been a lot of chatter recently about ageism and the old vs young debate in tech. The New Republic has a post up today on the topic.

The Analog To Digital Move

A VC : Venture Capital and Technology

One of my favorite business moves over the past twenty years was the one Netflix pulled off. They started out as a subscription DVD rental business and evolved into the leader in subscription streaming video. I’ve never seen anything written about whether that was intentional all along or whether they figured it out as the business evolved.

Nailing It

A VC : Venture Capital and Technology

I saw dozens of pitches for what was essentially YouTube between 1998 and 2005. PokemonGO. Liad Shababo (@L1AD) July 11, 2016. You are not alone LIAD.

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From The Investor’s Perspective

A VC : Venture Capital and Technology

I’m still not feeling great. They discuss the challenges of operating in an environment with rising valuations and decreasing liquidity.

The 40% Rule

A VC : Venture Capital and Technology

I was catching up on Brad Feld’s blog this morning and saw that he had posted about the “40% rule” for SAAS companies. I was at the same board meeting as Brad and came away similarly impressed by the simplicity of the rule and the logic behind it. If you are growing 40% year over year, you should be breaking even.