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The Coming Brick Wall in Venture Capital & Why This is Good for US Innovation

Both Sides of the Table

With more competition in early-stage many VCs are investing smaller amounts at earlier stages. Some are going later stage to not miss out on hot deals. I call this “stage drift.&#. We all know the result of the over-funding of the asset class – poor returns in aggregate for the industry.

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How to Scale Support of Portfolio Companies

David Teten

the “TOPSCAN” framework from my research study on value creation by VCs ): T eam-Building – We aggregate openings across our portfolio on our jobs page. Most importantly, we have regular meetings with later-stage VCs and enterprise clients both in the US and internationally to discuss our companies which fit their investment mandates.

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On Funding?—?Shots on Goal

Both Sides of the Table

If you’re a later-stage fund that comes in when there’s less upside but a lower “loss ratio” you might have only 8–12 investments in a fund. Another 3–5 could return in aggregate $300–500 million. Early-stage venture capital is about extreme winners. The right number of deals will depend on your strategy.

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How Private Equity and Venture Capital Investors Are Eating Their Own Dogfood

David Teten

Even for later-stage companies with predictable financials, the lack of liquidity, audited financials, and standardized metrics creates real challenges to scaling quantitative investing. Later stage investors are using private company marketplace services focused on more established companies, listed below under “Exit Investments”.

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Intellectual Property for Startups in the Real World

Gust

Later stage companies have some additional concerns: What favorable impact could IP have for PR, marketing and investor relations purposes, or as an attraction to potential acquirors? How much risk do IP issues in the aggregate pose to our business ? How much is it worth investing in cultivating and enforcing an IP portfolio ?

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What’s a Fair 409A Discount?

VC Adventure

It was a benefit to employees and a slight value transfer from equity holders to option holders (generally speaking in M&A transactions the value of the aggregate option exercise ends up allocated across the rest of the cap table). Similarly I assumed that later stage companies would also show a smaller gap. I was wrong.

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How Not to Get Your Time Wasted by VCs

This is going to be BIG.

Some later stage funds will take a meeting long before they ever plan on writing a check with the promise of “opportunistic” seed investments (to the guy or girl they went to grad school with). If deal flow is slow, a VC will take a meeting if you and your team seem mildly interesting even if your product isn’t.

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