Ask Venture Hacks

Sur le même thème que "Ask Venture Hacks"

Venture Hacks on Twitter

We’ve started a Venture Hacks page on Twitter: twitter.com/venturehacks (RSS). We’ll be posting interesting quotes, links, and other things we like. We’ve started with a few quotes: “Common stock is decorative.” – Anonymous Investor → “Valuation is temporary, control is forever.” – Venture Hacks → “You never ask board members what they think. You tell them what you’re going to do.” – Bill Watkins, CEO of Seagate (twitter) If you use Twitter, feel free to send us quotes, ideas, tips, suggestions @venturehacks. I also have a personal Twitter profile where I post aphorisms: twitter.com/nivi (RSS). Here’s a few to get you started: “Confidence in nonsense is required.” – Burt Rutan, Aircraft Designer (twitter) “None of us have a real understanding of where we are heading. [lien] [EN]

The top 3 hacks of the year

Happy New Year and here’s to an effective 2008. Here are the three most effective hacks of 2007. We maintain a Cheat Sheet of all the hacks, but try to apply these three if you don’t have time to apply them all. Create a market for your shares You need strong alternatives to hack a term sheet. Create alternatives with focus: pitch and negotiate with all your prospective investors at once. Focus compounds scarcity and social proof, which closes deals. Focus also yields a quick yes or no from investors—either way, you will soon get back to building your business. Related: You can’t clear the market in series. Create a board that reflects the ownership of the company Create a board of directors that reflects the ownership of the company and don’t let your investors control the board through an independent board seat. [lien] [EN]

Should I shop around?

“We took the approach of wanting to get to know the different partners and the different possibilities and to see where there was the best fit. Partnerships take a lot of work—you want to go out on a few dates before you get married. Yes, we dated a few people but didn’t get married… and so there were a few unhappy girlfriends out there. The choice wasn’t an economic choice, it was a customer choice.” — Steve Jobs Summary: A deal is only as good as its best alternative. Keep improving your alternatives until you have a signed term sheet. And keep developing your current offers or they will die. Finally, don’t say “shopping around”, it puts investors off their stroke. A reader asks: “I have spoken to only one person regarding an investment, and they immediately said they would back my company. [lien] [EN]

How much diligence should we do before signing a term sheet?

“Once the term sheet is signed, the power shifts away from the startup to the purchaser. The typical term sheet will give the purchaser the discretion to step away from the deal if due diligence is unsatisfactory, or if the necessary internal approvals are not obtained.” — Suzanne Dingwall Williams, on M&A “… there is a wide range of behavior among VCs—the group that doesn’t put a term sheet down until they are committed are at one end of the spectrum; the group that puts down a term sheet to try to lock up a deal while they think about whether or not they want to do it is at the other.” — Brad Feld Summary: Complete business diligence and prepare for legal diligence before you sign a term sheet. Signing a term sheet early is a recipe for a hostage negotiation. A reader asks. [lien] [EN]

What should I send investors? Part 1: The Elevator Pitch.

“Summarize the company’s business on the back of a business card.” — Sequoia Capital Summary: An introduction captures an investor’s attention, but a great elevator pitch gets a meeting. The major components of the pitch are traction, product, and team. If you’re building an interesting company, people will offer to introduce you to investors—it makes them looks good. In Hollywood, content is king; in Silicon Valley, dealflow is king. So, what should you send investors? Send an elevator pitch and a deck. We’ll cover the elevator pitch in this article. Get a first meeting with an elevator pitch. A great elevator pitch is more important than your deck and less important than the “introducer”. If you don’t have an introduction, the elevator pitch is critical to a cold call. [lien] [EN]

Ask VH: What’s dumb money?

Q: Everybody is telling us to raise smart money. What’s the difference between smart money and dumb money? “The best assumption to make is that your VC’s primary value add is the cash they are investing. Then you’ll always be surprised on the upside.” — Marc Andreessen Summary: Smart money is money plus the promise of help that’s worth paying for, dumb money is money plus hidden harm, and mostly money is mostly money. Weed out the dumb money with diligence. Evaluate supposedly smart money with the smart money test. Finally, assume your investors are mostly money: unbundle money and value-add to get money on the best terms possible and value-add on the best terms possible. If smart money is money plus the promise of help that’s worth paying for, then dumb money is money plus hidden harm. [lien] [EN]

10 questions to ask after getting a startup job offer [Silicon Valley Users Guide]

Twitter needs help staying up. Maybe that help is you! But before taking that job offer — or an offer from any startup — Venture Hacks has 10 questions you should ask. We've condensed their list down from 1,250 words to a version you can read comfortably on your iPhone 3G before your next interview, below. · Give me the offer in writing? Good answers: “Yes,” and “Let's work out the major points and we'll give you a written offer." · How does my compensation compare to my peers? Your peers: someone who joined at the same time and has the same title. · What are my options worth? Know how many options you have and how they vest. You will have to pay for your options — an option strike price. High strike prices are more common due to high-valuation rounds (Facebook). [lien] [EN]

What impact will the credit crunch have on venture financing for startups?

An entrepreneur asked me recently if I was concerned about the impact the credit crunch will have on venture financing for startups. I responded: For high quality companies, the short answer is no. The more nuanced answer is that (i) The credit crunch will impact venture debt (already has) so people can’t count on that to extend their runway, so should raise a bit more than they would have done (ii) If the economy indeed slips into recession (as a second order effect of the credit crunch), then this will impact sales growth for many startups, whether selling to enterprises or consumers. This will also impact timelines to profitability, and hence amount raised. It will also likely cause some angels and some venture firms (especially corporate venture firms and firms with a shorter time horizon) to become less active investors. [lien] [EN]

Grockit’s founder on raising money

Brian Norgard (Newroo founder and Venture Hacks investor) recently interviewed my brother, Farbood Nivi, about his experience raising money for Grockit from Benchmark et al: Brian: Tell me about the funding process. Farbood: I think raising money is great fun. The bottom line is that the money has to be spent. VCs are not in the business of holding their Limited Partner’s investment in a 5% security. They have to spend the money on startups. So, either your startup gets the money or someone else’s startup gets the money. No VC has a perfect track record, nor do they pretend to. So, (1) either your idea or business sucks and the VCs knows it (despite their imperfect record, they are not bad at telling) or (2) you suck at explaining it. There is literally more money to invest than the world’s VCs know what to do with. [lien] [EN]

It will be harder to raise Venture Debt for a while.

Many startups use venture debt to extend their runway beyond the capital that they raised from venture capital investments directly into the company. David Hornik wrote a good overview of venture debt a few years ago, all of which is still relevant today. Some things have changed since then however. The WSJ reports today on how tightening credit markets are hitting venture debt firms Providers of loans to start-up and other venture-backed companies are feeling the pinch of the credit problems plaguing Wall Street. venturewireThe latest is publicly traded venture debt provider Hercules Technology Growth Capital, which on Monday said it secured a $50 million line of credit from Wells Fargo–much smaller than the $250 million in available credit it secured from Citigroup and Deutsche Bank last year. [lien] [EN]

It Can’t Hurt To Ask

Some of the most important advice I can give you in dealing with credit card companies, or just about any company, is “It can’t hurt to ask”.    There are millions of dollars paid in fees and late charges every month that companies are willing to waive, but only if you ask. Balances Are Now In Play It used to be that annual fees, late fees, and even interest were the most people could ever hope to recover from a friendly customer service agent.    Now, the game has expanded to include the actual balance.   Thanks to millions of people defaulting on their debts, credit card companies are now willing to negotiate down part of the original balance in their effort to get payment.   This article in the New York Times has generated a lot of interest in those concerned with negotiating their credit card debt. [lien] [EN]

Credit Hacking and More United Cards (Groan)

I am always on the lookout for new idea in the world of credit and reward cards.    Sometimes they appear in the most unlikely places. Wired Magazine Discovers “Credit Hacking” Wired Magazine is a cutting edge publication that discusses the latest innovations in computers and technology.   That is why I was surprised that they had published an article on not just “credit hacking” but “legal” credit hacking. The idea is not that you would gain unauthorized access to your credit score, but that you can use what is known about the credit scoring process to legally manipulate it. To be sure, I do not advocate or practice these methods, I am merely fascinated that they exist. The article points out that this is the same person who popularized a known loophole in the whole “show me your boarding pass” operation that you go through at airport security. [lien] [EN]

Should I pay my investor’s legal fees?

“C’mon—you have $500M and I am raising $1.5M and you want me to take the first $25K to pay your legal expenses for doing the deal? That’s like your dad giving you your allowance and then asking you to buy him a hot dog. When we were raising money for Flixster I thought that must be a trick—like if I agreed to that term they would pull the term sheet at the last second and say I failed the secret fiscal responsibility test.” — Joe Greenstein, Founder of Flixster Summary: Venture capitalists don’t want to pay their legal fees for financings. Don’t fight this term—that’s a “big move on a little issue.” Instead, cap your contribution to the investor’s legal bill. And watch the legal bills in small financings: don’t spend a large portion of the investment on lawyers or give up a lot of equity for the privilege of paying your investor’s legal bill. [lien] [EN]

What should I send investors? Part 3: Business Plans, NDAs, and Traction.

Summary: Don’t send long business plans to investors. Don’t ask for NDAs. Don’t share information that must remain confidential. Understand that investors care about traction over everything else. In Parts 1 and 2 of ‘What should I send investors?’, we covered the elevator pitch and deck. In this article, we present a few dos and don’ts of sending collateral to investors. Don’t send a business plan. “Nothing slows down a VC as much as a comprehensive business plan.” — David Cowan, Bessemer Venture Partners Don’t send a 50-page business plan to investors. Nobody reads them and nobody executes them. Investors who want a long plan look bad—so do companies that generate them. The milestones slide of your deck summarizes the company’s plan for the next 1. [lien] [EN]