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Myth Busters: Debunking Seven Conventional Wisdom Maxims of Venture Capital

Genuine VC

Compared to most other areas of finance, venture capital is practiced as more of an art, as opposed to a science. The art of venture capital also means that for entrepreneurs raising it, there isn’t one definitive playbook which can be used as a guide. MYTH: Venture capitalists are looking to replace founders with “their guys.” Even the most elementary venture capitalist has the privilege of serving on boards of a number of startups.

Fellow VCs: Here’s Where to Invest $1B+

Genuine VC

in capital. On the metric of capital raised, the rationale for the smaller figures is the same as the two points above, coupled with a more important fact that earlier in a company’s life-cycle it’s almost by definition likely to have raised smaller amounts.

The “Come-from-Behind” Lead Investor

Genuine VC

As an entrepreneur, if you’re running a venture capital fundraise effectively, you’re treating the process like a sale process: identifying a set of prospects to fill the top of the funnel, cultivating those relationships over a series of meetings, then narrowing down to a handful of contender firms who will ultimately make an offer to invest with a term sheet.

The VC Fundraising Timing Paradox

Genuine VC

Venture capital firms are comprised of people, which natural means that their idiosyncrasies seep into the process. The first venture firm at any one juncture progressing to the next step (first meeting, second meeting, diligence, partner meeting, term sheet, etc.) I’ve commonly heard entrepreneurs recite some version of “I don’t want to waste too much time fundraising because it will distract me from building my business, so I’ll only talk to a few potential funders.”

Beer Kegs and the Future of Venture Capital: What It Means for Entrepreneurs

Genuine VC

Last September I wrote a post outlining my view of the venture capital industry: increasingly evolving like the beer industry as it continues to mature. And much like the emergence of microbreweries specializing in craft beer, new Micro VCs (disclosure: like my own firm NextView Ventures ) are thriving by specializing along at least one or more of these three dimensions (geo, sector, stage) with a unique offering for a specific subset of entrepreneurs.

Our Newest NextView Team-Member: Jay Acunzo

Genuine VC

Although the idea of venture firms developing a platform (i.e. As Rob explained in his recent post on this new role, the venture capital industry is experiencing unprecedented change, with new funds emerging and new and better strategies focusing on the needs of founders and their companies. At the core of this shift is the need for firms to add real value to portfolio companies beyond just capital and boardroom advice.

Overly-Direct Feedback to VC Pitches

Genuine VC

His eventual conclusion is “I am not looking for a reason to say no; I am looking for a reason to say yes.” That statement is certainly the case for all venture investors. The more negative the feedback (even if genuinely constructive), the less likely an entrepreneur will return to a venture investor whenever his business and/or financing details have markedly progressed.

A New Dawn for Consumer Internet Acquisitions

Genuine VC

The exit markets, along with the overfunding of the VC asset-class, have significantly contributed to poor returns that venture capital experienced during the 2000’s.

Do Startup Location Matters Even Matter?

Genuine VC

So just as a thought-experiment, I plotted both NextView Ventures’ Boston-based and Manhattan-based companies on a map to see what the picture looked like. View NextView Ventures Portfolio Companies in a larger map In Manhattan, the map our portfolio company locations is similarly consistent. View NextView Ventures New York Portfolio Companies in a larger map So what’s the takeaway here?

VC Fundraising is Neither a Sprint nor a Marathon

Genuine VC

A lot has been written for entrepreneurs about optimizing a venture capital fundraising process, but one aspect which isn’t discussed very often is the pacing of it. Once one venture firm signals strong interest to move towards a term sheet, only then can an entrepreneur *credibly* use that move to accelerate his other discussions.

A Beer Drinker's View of the Venture Industry

Genuine VC

As the venture capital space matures, I see a similar pattern emerging. In many ways, the beer market of the 90’s is like the venture market today. Note that Micro VC isn’t the only way to play a niche strategy in the venture business. beer market is due to other forces like distribution laws and global consolidation, neither of which have much to do with the venture industry.) As the venture capital space matures, I see a similar pattern emerging.

Are We Entering 2013 in Crunch-Mode?

Genuine VC

The CB Insights report specifically which came out just before the holidays put a bright light on the supply-demand imbalance of the seed-stage companies searching for Series A capital. It is for those same reasons that it is capital efficient to start a software bits-based company that it is also now just as capital efficient to operate a software bits-based company. Then not every newspaper needed to be as large as the New York Times or required the capital to do so.

Beer Kegs and the Future of Venture Capital: What It Means for Entrepreneurs

Genuine VC

Last September I wrote a post outlining my view of the venture capital industry: increasingly evolving like the beer industry as it continues to mature. Large VC firms resemble Budweiser-type macrobrews, competing based on scale and brand with a standardized product across multiple geographies, sectors, and stages. And much like the emergence of microbreweries specializing in

Why VCs Invest in Startups with Gravity

Genuine VC

But the most meaningful of companies which are on the path towards an IPO invest in human capital ahead of the anticipation of enhanced resulting cash-flow. So when entrepreneurs begin a venture capital fundraising process, they don’t need to have a headquarters… yet… but they do need to share a story about the city where they’re going to build the locus of their company in the future.

Officially Launching NextView Ventures

Genuine VC

Last summer, I along with my partners announced that we were forming a new micro venture capital firm. Today we are officially launching our firm , NextView Ventures, announcing our first nine portfolio company investments , and recognizing the additional people who are working with us. At that point, Rob Go, Lee Hower, and I possessed a shared vision and a newly minted name, but were still in the process of forming our approach.

NextView's New Office View

Genuine VC

” I think all of the above is just as true for venture capitalists' offices as well. Entrepreneurs can learn a lot about venture firm by visiting its offices. So when we at NextView Ventures began to look for a new office space a few months ago, we weren’t just looking for a place for the three of us to work, but rather, we deliberately set out to find a space that spoke about us and our firm.

NextView Ethos – Tribe

Genuine VC

When we started NextView Ventures, we deliberately took time during our first offsite together to define a shared sense of “Ethos” which we are going to use as guiding principles in building our firm.

Director of Platform & Community

Genuine VC

My partner Rob wrote bit more on his blog about our motivations for adding our first new team member at NextView Ventures — a Director of Platform and Community. This two-year role is a unique opportunity to work full-time within a venture capital firm, setting and executing on a outward-facing strategy to interface with both its portfolio and the broader entrepreneurial community.

The Problem with Talking to VCs

Genuine VC

I had coffee with an entrepreneur friend the other day who is in the early stages of putting a company together, and he recounted how his informal conversations with a venture capitalist had quickly escalated into a full partner pitch in just a few weeks. That situation sounds very positive in theory, but the problem is that this founder wasn’t ready for this interest and is trying to play catch up in other capital raising discussions (with both angels and VCs).

Playbook for Incoming MBAs to Start a Company Out of School

Genuine VC

My own circuitous path graduating a couple years later intentionally without a job (see bullet #1) eventually led me onto the venture capital investing side of startups, but I still regret not fully taking advantage of the two years that only a business school environment (and calling card) can provide. Like a lot of students, I went into business school a decade ago with a set plan to start a company coming straight after graduation in co-founding an internet startup (… again ).

VC Paradox: The Best of Times & Worst of Times (Part I)

Genuine VC

In the past few weeks, we’ve seen extremely positive headlines about the surge in VC fundings like “ Venture Capital Hits Highest Level Since Dot-Com Bubble.” along “… with seed-round venture capital hit[ing] an all-time high ” [According to CB Insights ]. raised from LPs brought into the asset class this past quarter and the number of funds raising new capital its lowest in years.

Majority of both Drivers and VCs are Above Average

Genuine VC

The one other group which seems to exude this type of thinking is venture capitalists. Some are at large funds with the ability to put significant amounts of capital to work; some are at small funds which can benefit from smaller exits. At the end of the day, all venture capitalists will tell you that they’re above average. Naturally, not all venture capital returns can be above average (…or even good , but that’s the subject of another post.)

Introducing the NextView Talent Exchange: Connecting Top Talent to Startups

Genuine VC

One of my first mentors in venture capital explained to me that the key role of a VC is to “aggregate talent.” At NextView Ventures, we’re hyper-focused on the seed stage, and since starting the firm, we’ve heard repeatedly and consistently from founders that a primary challenge they face during that stage is hiring.

A New Dawn for Consumer Internet Acquisitions

Genuine VC

The exit markets, along with the overfunding of the VC asset-class, have significantly contributed to poor returns that venture capital experienced during the 2000’s.

IPO 2

NextView Ethos – Tribe

Genuine VC

When we started NextView Ventures, we deliberately took time during our first offsite together to define a shared sense of “Ethos” which we are going to use as guiding principles in building our firm.

How to Evaluate Firms for a Seed VC Syndicate

Genuine VC

There are essentially two distinct basic strategies for startup entrepreneurs to raise a seed round of capital: Subscription approach – An entrepreneur sets a structure (usually a convertible note) and recruits individual angel investors who subscribe to the round, all without a term-driving lead investor. Sometimes the subscription approach works to include venture capital firms, but only for very “hot” company or in a competitive environment, like at a Y-combinator demo day.

Why VCs Invest in Startups with Gravity

Genuine VC

But the most meaningful of companies which are on the path towards an IPO invest in human capital ahead of the anticipation of enhanced resulting cash-flow. So when entrepreneurs begin a venture capital fundraising process, they don’t need to have a headquarters… yet… but they do need to share a story about the city where they’re going to build the locus of their company in the future.

Overly-Direct Feedback to VC Pitches

Genuine VC

His eventual conclusion is “I am not looking for a reason to say no; I am looking for a reason to say yes.” That statement is certainly the case for all venture investors. The more negative the feedback (even if genuinely constructive), the less likely an entrepreneur will return to a venture investor whenever his business and/or financing details have markedly progressed.

Excited to Co-Found a New Micro VC Firm

Genuine VC

My new partners, Rob Go and Lee Hower , and I are very enthusiastic about starting our new firm, NextView Ventures. The three of us believe that there is a compelling market opportunity on the east coast for a new seed-stage venture capital firm for founders starting internet-enabled businesses. I thought I would share a quick update on my blog about my professional plans.

The Problem with Talking to VCs

Genuine VC

I had coffee with an entrepreneur friend the other day who is in the early stages of putting a company together, and he recounted how his informal conversations with a venture capitalist had quickly escalated into a full partner pitch in just a few weeks. That situation sounds very positive in theory, but the problem is that this founder wasn’t ready for this interest and is trying to play catch up in other capital raising discussions (with both angels and VCs).

Majority of both Drivers and VCs are Above Average

Genuine VC

The one other group which seems to exude this type of thinking is venture capitalists. Some are at large funds with the ability to put significant amounts of capital to work; some are at small funds which can benefit from smaller exits. At the end of the day, all venture capitalists will tell you that they’re above average. Naturally, not all venture capital returns can be above average (…or even good , but that’s the subject of another post.)

Seven Coming Digital Uber-trends which Are Ripe for Startup Opportunities

Genuine VC

Being in the venture capital industry, I find that sometimes it is worthwhile to take a step back from the day-to-day to take a look at the large impending trends which are just beginning to affect us. Fifteen years from now, I would be surprised looking back if many of these above categories don’t have enduring successful companies which were borne out of capitalizing on them.

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. SF proper and the broader bay area make up 25% of the global venture capital investment activity (~$10bn out of $42bn).

Venture Capital Returns

A VC : Venture Capital and Technology

This post is for everyone who thinks venture capital is an easy business. Here are short term and long term returns for the venture capital business over the past ten years compared to the public equity markets in the US. Venture Capital and Technology

Venture Capital is About Human Capital

Both Sides of the Table

Most VCs did well academically and had enough career success that a venture firm was willing to give them an investment role or they were able to raise their own fund. Fundamentally venture capital is about human capital. Venture Capital is a people business.

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. And Richard acknowledges this: “I’ll continue to track the evolving geography of start-ups and venture capital in future posts.

Pioneering Women in Venture Capital: Kathryn Gould

Steve Blank

Kathryn has been the founding VP of Marketing of Oracle , a successful recruiter, a world class Venture Capitalist, a co-founder of a Venture Capital firm, a great board member, one of my mentors and most importantly a wonderful friend. So I started Foundation Capital in 1995.

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? How To Fundraise Starting Your Company accelerators angel funding incubators venture capital

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

How to Build a Startup & Understanding Venture Capital

Both Sides of the Table

And if you do happen to be lucky and find the right mountain to climb, if you find that you’ve started ascending the peak before others have found the right trail — then venture capital is for you. But you need to understand venture economics.