The Importance of Proprietary Deal Flow in Early-Stage VC

Both Sides of the Table

What stage? I sorted out pretty early that lawyers were a great source of deal flow. Because entrepreneurs often went to lawyers at their earliest stages to get their company registration done. We are judging how well you are coached on stage.

Early-stage Regional Venture Funds–part 2 of 3 of Bigger in Bend

Steve Blank

Part 2: Early-stage Regional Venture Funds. as a distribution channel have vastly reduced the amount of capital a startup needs at the early stage when the risk is greatest. What’s Missing Is Early Stage Capital. Regions are missing early-stage capital.

Trending Sources

Why Early-Stage VCs Should Be Careful About Intros from Bankers

Both Sides of the Table

What stage? I sorted out pretty early that lawyers were a great source of deal flow. Because entrepreneurs often went to lawyers at their earliest stages to get their company registration done. We are judging how well you are coached on stage.

First Half of 2011 Showed Boost in Later Stage VC Deals in Israel

VC Cafe

Mid stage companies accounted for the highest rate of investments in Q2 2011, attracting 44% of all capital invested and later stage followed, with 27%. Mid stage companies led capital raising with $249 million or 44 percent of the total capital raised.

Startup Blog: Decisions, Decisions, Decisions ? Second Guessing

Taffy Williams

Sunday, May 8, 2011 Decisions, Decisions, Decisions – Second Guessing It does not matter whether you are in the early stages, later stages, or already a BigCo. Tips on getting a partnership for your early drug.

How Can This Be A Billion Dollar Company?

Feld Thoughts

I wish he had called it “This Unicorn Thing Is B t For Early Stage Investing” but I think he’s a little more restrained than I am. My original title for this post was “How Can This Be A Billion Dollar Company and other b t VCs ask early stage companies.”

Ten million users is the new one million users

Chris Dixon

Some observations: - Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months. A few breakout early-stage consumer hits (Instagram, Pinterest) have reached tens of millions of users in record time. Hence, many early-stage consumer startups are switching to transactional models. - VCs are increasingly focusing on B2B for early-stage investments.

Later-Stage Pivoting: Preemptive Turnaround Management?

Launching Tech Ventures

by Jesse Garcia The challenges of a later-stage pivot are BIGGER than thoseof an early-stage pivot. Chegg, the online textbook renting platform, is currentlyundergoing a late-stage pivot that builds on its core business into anexpanded market opportunity with a new business model. Length of the Runway Like in any change situation, the amount of time availableto execute a late-stage pivot is very important.

Early Stage Haven?

Will Price

Recent numbers suggest that early stage investing may yet prove to be a bastion of IRR and extraordinary returns. Apparently, not in the early stage. In later stage investing, winning is almost always a function of share price. I believe that smaller funds, specialized focus areas, and early stage investing are the way to go. Recent data provides interesting insights into industry dynamics.

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The State of Early Stage in March 2014

Dshen

They wanted me to talk to them about the state of startup investing, and I chose to present on the state of early stage investing, the area where I do most of my work. The going rate for seed stage startups is generally $5-6M cap on a note, or pre-money, with jumps up to $8-12M. In the section entitled, "Re-jiggering of deal stages and sizes", he states: Seed is not the first round of financing any more.

Foundry Group Next

Feld Thoughts

During these discussions, we reflected on the incredible collection of early stage VC firms we’ve invested in personally over the years. We were clear at that point that we wanted to continue to make early stage investments through a new Foundry Group fund, which we subsequently raised in the middle of 2015 and started investing at the end of the year. At the same time we discussed our later stage investment strategy.

What Are Pre-Seed Rounds and Why Do They Exist?

View from Seed

It’s become increasingly common for startups to raise several seed rounds, and this has led to a bifurcation in the seed stage between what are known as “pre-seed” (or “genesis”) and institutional seed rounds. The proliferation of seed-stage investors.

The Opportunity / Growth Fund Trend

Feld Thoughts

With yesterday’s announcement that early-stage VC Greycroft has raised a $200 million growth fund , this type of fund has officially become a trend. ” Prior to this, plenty of VC firms invested across the early stage to late stage spectrum from the same fund (e.g. Others had separate early stage funds and late stage funds, often with separate teams and economics (e.g.

Our 2016 Foundry Group Fund and A Little History

Feld Thoughts

We subsequently raised a $225 million fund in 2010 , another one in 2013 , and a late stage fund in 2013. Except for our late stage fund, each of our funds has 30 investments (+/- 2) in it. Our late stage fund gave us flexibility to invest more money in our later stage companies.

Reserves

A VC : Venture Capital and Technology

They all are important at various stages of development. We know that early stage companies require a fair amount of capital to grow into profitable sustainable businesses and we work hard to make sure that we have the staying power that our portfolio companies require from us. We also use these Opportunity Funds to occasionally participate in later stage rounds of companies that we did not invest in at the early stage.

Top 100 venture VC investments each year average $100-150m gain

The Equity Kicker

One way of creating $100-150m is to invest early, take a lot of risk to get a meaningful stake and hope to get a massive multiple on a small investment. The dangerous thing for early stage investors is dilution by later stage investors.

European seed fund explosion – what does it mean?

The Equity Kicker

As you can see from the graphs below the number of seed funds is growing very fast whilst the number of later stage funds is flat. BrightSun have just published research on the number of seed funds in Europe.

Are True Early Stage Investors an Endangered Species?

VC Deal Lawyer

I think we can all agree that early stage investing has changed significantly over the past 10 years and I don’t see it reversing any time soon. And by “changed significantly&# I mean it is increasingly difficult to raise the $100K – $2M necessary to move from the pre-seed stage (where you likely raised $10-$100K from friends and family or your 401(k)) to raising institutional venture capital (~$2M +). Having angels invest at such an early stage was crucial.

Early stage boards work for stock options, not cash.

Berkonomics

Many early stage CEOs and board members have asked for some guidance regarding pay and time commitments for board members. Pay early stage board members of companies that are not lifestyle businesses one percent of the fully diluted equity in the form of an option that vests over four years of service. For lifestyle companies or later stage companies, board members should be paid on a per-meeting basis in cash.

How I Invest

Both Sides of the Table

During the Q&A I was asked about how I make investment decisions in early-stage businesses. I was asked again in an LP meeting later in the week and then again at a founder breakfast gathering we hosted yesterday. I know that sounds trite but it’s the best way I can describe my early-stage investments. I know now that investments will consume many hours including late nights / early mornings and weekends. Early stage.

Can’t attract VC money? Buy a business with private equity

The Next Web

Venture capital firms are typically growth-oriented, early-stage investors looking for these proof-of-concept points before cutting a check. Venture capital investors are looking for different things than private equity investors.

Some Thoughts On Seed Investing

A VC : Venture Capital and Technology

But it is a bit of a return to form for USV as half of the initial investments in our first fund (USV 2004) were made at the seed stage. In our core early stage funds (as opposed to our Opportunity Funds), we make initial investments at the seed, Series A, and Series B stages. In an ideal world for USV, there would be a normal distribution of these entry points with the highest percentage in the Series A stage.

A Five-Minute Tutorial On How To Value Your Startup

Startup Professionals Musings

Investors know that valuations at startup early stages are negotiable, but they do expect that smart entrepreneurs understand the top three elements of a startup valuation would include the following. Future revenue projections are not relevant at the pre-revenue stage.

Outsource things you don’t care about

Chris Dixon

At an early-stage technology company this means you do in house: product design, software and/or hardware development, PR, recruiting, and costumer relations/community management. You probably shouldn’t hire an investment banker during an acquisition unless your company is later stage. A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things that you don’t.

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A Great Discussion with @skupor @davemcclure @msuster on Changes in the VC Industry

Both Sides of the Table

We both agree that the later-stage valuations are being driven up to a point that feels irrationally priced [he uses b-round SaaS valuations as an example and I am willing to be even more broad based]. Video 1 is here : Late stage valuations are in a mini bubble.

Q316 State of Venture Capital Update With Cooley

Feld Thoughts

It continues to be highly dependent on company, stage, and location. At the early stages, raising the first $2m tends to be straightforward in most geographies that have meaningful startup communities. The stage in between – what used to be called a Series B or Series C – continues to be extremely hard to raise unless you are clearly on a very rapid growth trajectory. Since we are early stage investors, it simply doesn’t matter if we are a short term bull or bear.

Entrepreneurs, Your Funding Strategy will Change When You Start to Engage with Potential Investors

Robert Ochtel

This was a time when venture capitalists and angel investors alike were willing to invest in pre-revenue, early stage companies with a great concept and a first class team. In fact, it was considered later stage investing and investment groups or individual that invested in these types of companies were not “real” venture or angel investors. com) early-stage company investing fever, and invested in anything and everything related to the Internet.

The VC Market – 2015 and 2016

Rob Go

From the seed stage perspective, what we’ve seen this year is that the definition of a seed round has broadened considerably. While we continue to focus on companies that are very early, usually well before PMF, we also hear of more and more seed funds that “want to see more traction” before investing. There is greater variability in the size, valuation, and stage of companies that raise seed rounds, and often, companies raise 2 or 3 seed rounds before a series A.

Corporate Acquisitions of Startups: Why Do They Fail?

Steve Blank

Not all new ventures are at the same stage of maturity. Ventures that are further along and now executing their business model are no longer startups, they are now early-stage companies. For decades large companies have gone shopping in Silicon Valley for startups.

How Do VCs Mitigate Risk In Their Investment Portfolios?

Ask The VC

Are VCs simply looking to diversify the type and stage of companies in which they invest, or do they employ other financial hedging strategies? The primary ways VCs mitigate risk are (1) time diversification, (2) stage diversification, (3), sector diversification, (4) pro-rata or over pro-rata investing over time, and (5) number of investments in the portfolio. Stage diversification: Some funds have an early stage and late stage investing approach.

4 Dirty Secrets VCs Won’t Admit

View from Seed

Dirty Secret #1: An early-stage startup’s design actually does matter. It probably shouldn’t be the case, but the look and feel and polish of your materials makes a big difference for early-stage investors. Almost all VCs say they like to invest really early.

Fund Raising is a Means Not an End

Steve Blank

And at this early stage you’ll be giving up a larger percentage of your firm to investors. A seed round can come from friends, family, Kickstarter, angels – and most importantly, early customers. Not all that glitters is gold. William Shakespeare.

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Bigger in Bend, Part 2: Early-Stage Regional Venture Funds

Inc Startups

Part 1: Bend, Oregon Ecosystem and Entrepreneurs Part 2: Early-stage Regional Venture Funds Part 3: Engineering a Regional Tech Cluster Here’s Part 2 of Dino’s story… Tech investing is risky. Focus on early-stage investments.

Pre-seed investments work best when there’s a clear plan for short term value creation

The Equity Kicker

Different investors place different weights on the three elements but as a rule earlier stage investors place more emphasis on the team and later stage investors place more emphasis on the market. That’s because early stage companies find it easier to change their market than their team whilst later stage companies find it easier to change their team than their market.

The Authoritative Guide to Prorata Rights

Both Sides of the Table

They often create the biggest tensions between investors who are investing at different stages in the business. These tensions seep out in some angels or seed funds publicly or semi-privately deriding later-stage VCs for their “bad” behavior. I have seen bad behavior from later-stage VCs, believe me. But I have seen equally bad behavior from super early stage investors. Do investors always take up their prorata rights in later rounds?

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Chegg is in the process of pivoting—seemingly long after achieving product-market fit in its core business. What are the challenges of managing a later-stage pivot??

Launching Tech Ventures

by Jesse Garcia LATER-STAGE PIVOTING = PRE-EMPTIVE TURNAROUND MANAGEMENT? The challenges of a later-stage pivot are BIGGER than those of an early-stage pivot. Chegg, the online textbook renting platform, is currently undergoing a major late-stage pivot away from its core business and into an expanded market opportunity. Length of the Runway Like in any change situation, the amount of time available to execute a late-stage pivot is very important.

How Smart Entrepreneurs Select VC / Angel Investors

Startup Professionals Musings

Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds.

7 Criteria To Help Startups Find The Right Investor

Startup Professionals Musings

Angels are more likely to fund new entrepreneurs, and early-stage or seed rounds, while VCs tend to focus on entrepreneurs with a successful track record, and later stage rounds.

Some Thoughts about Selling at Startups

Both Sides of the Table

Erin’s main points: “As a former tech sales executive, I agree with many of [Mark's] lessons — when applied to later-stage, post-traction point startups. However, I advocate a more nuanced approach for early-stage startup teams” 1.

Making Sense of the Stock Market Drops in Relation to Venture Financing

Both Sides of the Table

So why invest in that period of uncertainty unless it’s early-stage and thus valuation matters less. At least later stage investors. This could have an impact on later-stage valuations.

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