Chris Dixon

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The Babe Ruth Effect in Venture Capital

Chris Dixon

One of the hardest concepts to internalize for those new to venture capital is what is known as the “Babe Ruth effect. Venture Capital

Shoehorning startups into the VC model

Chris Dixon

For some entrepreneurs, raising venture capital becomes a goal unto itself, instead of what it should be: a heavy burden that only makes sense in certain cases. The best source of capital is customers. Tech startups go in an out of fashion. If they raise VC, a wide range of outcomes that would otherwise be good become bad.

Notes on raising seed financing

Chris Dixon

sketched some notes for the class which I’m posting below. I’ve written ad nauseum on this blog (see  contents page) about venture financing so hadn’t planned to blog more on the topic. startups venture capitalBut since I wrote up these notes already, here they are. 1. Hence a sort of Catch-22. Join meetups.

Revenue exceptionalism vs margin exceptionalism

Chris Dixon

From the investor’s perspective: the history of venture capital shows that almost all the returns are generated from big hits like Amazon, eBay, Facebook and Google. (As Paul Graham once put it: “The difference between a bad VC fund and a great VC fund is one big hit”). The point he made was both simple and profound.

The TripAdvisor IPO

Chris Dixon

Raised a total of $4.2m in venture capital, sold to IAC/Expedia for $210M, and had some interesting adventures and pivots along the way. - Great startup story. They started out by trying to aggregate reviews from other websites and white label their product to Expedia and other large travel websites. Great for Boston. startups

IPO 31

Founder Stories

Chris Dixon

really like to hear “war stories&# (a term used in venture capital) but calling it that would have been disrespectful to military people who fight actual wars versus the inconsequential battles we have amongst startups and investors. love startups. probably make an ass out of myself a lot. startups

Converts versus equity deals

Chris Dixon

Having learned about venture investing as a junior employee at a VC firm I was shocked. Tags: founder collective startups venture capital There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts). You think legal documents will protect you?

Size markets using narratives, not numbers

Chris Dixon

Smaller, venture-style investors like angels and seed funds also prioritize market size but are usually more flexible – they’ll often invest when the market is “only&# ~$100M). Venture-style startups are bets on broad, secular trends. Tags: startups venture capital Good VCs understand this.

Money managers should pay the same tax rates as everyone else

Chris Dixon

This is the due to the fact that money managers’ “carry fees&# are treated as capital gains instead of ordinary income. As Fred Wilson says: Changing the taxation of the managers will not reduce the amount of capital going to productive areas. Tags: economics venture capital That seems like bad policy.

Builders and extractors

Chris Dixon

Given that there is a surplus of venture money, entrepreneurs and seed investors now have the luxury of choosing to work with builders and avoid extractors. Tags: founder collective startups venture capital Google makes billions of dollars in annual profits, but generates many times that in productivity gains for other people.

Howard Lindzon’s “Web is Dead” series

Chris Dixon

Tags: founder collective personal startups venture capital

The segmentation of the venture industry

Chris Dixon

The basis of competition shifted from price and basic functionality to &# style, power, and prestige “ General Motors surpassed Ford by capitalizing on this desire for segmentation. Today, the venture financing industry is going through a similar segmentation process.

Capitalism just like Adam Smith pictured it

Chris Dixon

When I worked in finance – first on Wall Street and then in venture capital – I saw that the reality was much more nuanced. Venture capital is a shining example of capitalism just like Adam Smith pictured it, where private vice really does lead to public virtue.

Old VC firms: get ready to be disrupted

Chris Dixon

Given the excess supply of venture dollars, top tier entrepreneurs are frequently selecting their investors, not vice versa. The VCs most sought after are mostly new firms:  big firms like Andreeson Horowitz, Union Square Ventures, Khosla Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.

Inside versus outside financings: the nightclub effect

Chris Dixon

At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing investors lead the new financing, or an outside round, where new investors lead the new financing. Tags: startups venture capital Here’s a typical situation.

It’s not East Coast vs West Coast, it’s about making more places like the Valley

Chris Dixon

As I said  last year : New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself. Tags: new york city startups venture capital California is a phenomenal place to start a tech company.

It’s not that seed investors are smarter – it’s that entrepreneurs are

Chris Dixon

Tags: founder collective startups venture capital

The importance of investor signaling in venture pricing

Chris Dixon

Suppose there is a pre-profitable company that is raising venture financing. Actual venture financings work nothing like this simple model would predict.  In practice, the equilibrium states for venture financings are: 1) significantly oversubscribed at too low a valuation, or 2) significantly undersubscribed at too high a valuation.

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. Outside of the U.S.,

Venture Capital Returns

A VC : Venture Capital and Technology

This post is for everyone who thinks venture capital is an easy business. I'd like to dispel that notion. You lose more than you win.

Entrepreneurial Density and Venture Capital

Feld Thoughts

Two of his latest articles talk about entrepreneurial density and venture capital. The Connection Between Venture Capital and Diverse, Dense Communities. In it, he looked at Venture Capital financing (total dollars and number of deals) on a per-capital basis. High-Tech Challengers to Silicon Valley.

Pioneering Women in Venture Capital: Kathryn Gould

Steve Blank

During her career she made a big point of not telling you: she was one of the first women Venture Capitalist’s in Silicon Valley (along with M.J.

Love and Venture Capital

Feld Thoughts

The post Love and Venture Capital appeared first on Feld Thoughts. Venture Capital fred wilson Jerry Colonna podcast rebootIf you’ve missed me, it’s because I spent a week in Australia. This has easily been the sickest I’ve ever been. first met Fred in the suburbs of Boston at Yoyodyne  in 1996.

How to Build a Startup & Understanding Venture Capital

Both Sides of the Table

But you need to understand venture economics. There are very few ideas that are obviously a billion-dollar idea from the start. And Lyft?

A Venture Capital History Perspective From Jack Tankersley

Feld Thoughts

In January, Jerry Neumann wrote a long and detailed analysis of his view of the VC industry in the 1980’s titled Heat Death:  Venture Capital in the 1980’s. So contrary to the piece, it wasn’t VC were good at early stage technology, it was that they had newfound capital and a big exit window. Total. 1,250,000.     Total.

Bad Notes on Venture Capital

Both Sides of the Table

On the phone … Me: So, you raised venture capital? have never come across a sophisticated A, B or C round venture capitalist who thinks convertible notes are a smart move for entrepreneur or investor. This week. Him: Yeah. We raised a seed round. About $1 million. Me: At what price? Him: It wasn’t priced. Him: Huh?

From Accelerators to Venture Capital: What is best for your startup?

Gust

The post From Accelerators to Venture Capital: What is best for your startup? billion in funding and created over 6,500 jobs.

Changes in the Venture Capital Funding Environment

Both Sides of the Table

There was an explosion in number of startups both because it was cheap and there was tons of available capital. Rise of Seed. Rise of Angels.

Something Ventured: The Founding of the Venture Capital Industry

Feld Thoughts

Last night Amy and I watched the movie Something Ventured: Risk, Reward, and the Original Venture Capitalists.

17 Venture Capital Blogs You Should Be Reading

Up and Running

Whether or not you’re raising money for your business, getting advice from venture capitalists can be invaluable. andrewchen.co. Feld Thoughts.

Forecasting in venture capital

The Equity Kicker

Good VCs need to be good forecasters. We need to predict which companies are going to succeed and second guess future trends so we can develop our firms to stay ahead of the curve. The main and most surprising insight is that deep expertise doesn’t produce more accurate predictions. open minded. sceptical of deterministic theories. reflective.

Where Do Venture Capital Dollars Actually Come From? This Visual Explains

Agile VC

Most folks reading this will know that many startups were built in part with the help of venture capital. Endowments. Foundation s.

It’s Morning in Venture Capital

Both Sides of the Table

Many observers of the venture capital industry have questioned whether its best days are behind it.  Thank you, Aaron Sorkin!

Venture Capital Market Analysis

Design Staff

Owlchemy Labs Nabs $5 Million in Venture Capital

SiliconHills

Owlchemy Labs, an independent virtual reality game developer, announced this week the company has closed on $5 million in venture capital.

It’s Not Easy applied to Venture Capital

K9 Ventures

Pattern matching in venture capital may work for figuring out how to build companies, but it is less likely to work for ideas. ”  .

What Do LPs Think of the Venture Capital Markets for 2016?

Both Sides of the Table

In fact, if you add the capital flows of the past ten years, there have been just shy of $50 billion in net cash outlays. Sorry! Summary.

Forbes Reveals the 2013 Venture Capital Midas List

VC Cafe

Forbes released the 2013 Midas List for Venture Capital today, proving that to be successful in VC, all you need is one big hit.

Learn Everything You Need To Know About Venture Capital in 90 Minutes

Feld Thoughts

The post Learn Everything You Need To Know About Venture Capital in 90 Minutes appeared first on Feld Thoughts.

6 Steps to Raising Venture Capital in 6 Months

Gust

A woman you don’t know tells you that she’s going to run a marathon of 7-minute miles. She’s never run a long distance race before. And so you do.