235 Posts Found

The U.S. venture-capital industry is envied throughout the world as an engine of economic growth. Although the collective imagination romanticizes the industry, separating the popular myths from the current realities is crucial to understanding how this important piece of the U.S. economy operates. For entrepreneurs (and would-be entrepreneurs), such an analysis may prove especially beneficial.

Content: Article | Author: Bob Zider | Source: Harvard Business Review | Subject: Venture Capital

As investors, we’re considering the total addressable market for a given product or service immediately upon hearing a vision for it: How many users and/or customers are there for this?

Slapping billions or tens of billions of dollars with a title and maybe an asterisk-attributed source on a slide will either be glossed over or, in some cases, actually be detrimental. Every VC has seen … [ Read more ]

Content: Article | Author: Tim Devane | Subjects: Entrepreneurship, Venture Capital

Two scholars measure the economic impact of VC-funded companies.

Content: Article | Authors: Ilya A. Strebulaev, Will Gornall | Source: Stanford University | Subjects: Economics, Entrepreneurship, Venture Capital

The initial capital raised by a company is typically called “seed” capital. This brief guide is a summary of what startup founders need to know about raising the seed funds critical to getting their company off the ground.

Content: Article | Author: Geoff Ralston | Subjects: Entrepreneurship, Venture Capital

Valuing any company can be difficult because it requires a degree of forecasting future growth & competition and ultimately the profits of the organization.

Editor’s Note: in a way this is a topical article centered on the dropping valuations of startup companies in early 2016, but much of the discussion is of long-term relevance for anyone interested in entrepreneurship and venture capital.

Content: Article | Author: Mark Suster | Subjects: Entrepreneurship, Venture Capital

VC funding. Our perspectives on the topic wax and wane with market cycles. We love capital efficiency until we love land grabs until we abhor “over funding” until we get huge distribution & ring the bell for more funding until we attract every non-VC on the planet to invest in startups until it crashes and we start the cycle all over again none the wiser. … [ Read more ]

Content: Article | Author: Mark Suster | Subjects: Entrepreneurship, Industry Specific, Venture Capital

DocSend, a startup that provides people with a secure and private way of sharing files like offer letters or legal agreements, studied more than 200 pitchdecks to figure out the right way to graduate from bootstrapped to seed-funded, or from angels to a Series A.

They partnered with Harvard Business School professor Tom Eisenmann to look at companies that had raised $360 million in total.

What did … [ Read more ]

Content: Article | Author: Kim-Mai Cutler | Source: TechCrunch | Subjects: Entrepreneurship, Venture Capital

To founders, the behavior of investors is often opaque—partly because their motivations are obscure, but partly because they deliberately mislead you. And the misleading ways of investors combine horribly with the wishful thinking of inexperienced founders.

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

The most important thing to understand about valuation is that it’s not that important.

Founders who raise money at high valuations tend to be unduly proud of it. Founders are often competitive people, and since valuation is usually the only visible number attached to a startup, they end up competing to raise money at the highest valuation. This is stupid, because fundraising is not the test … [ Read more ]

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

Be nice when investors reject you. The best investors are not wedded to their initial opinion of you. If they reject you in phase 2 and you end up doing well, they’ll often invest in phase 3. In fact investors who reject you are some of your warmest leads for future fundraising. Any investor who spent significant time deciding probably came close to saying yes. … [ Read more ]

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

Avoid investors till you decide to raise money, and then when you do, talk to them all in parallel, prioritized by expected value, and accept offers greedily. That’s fundraising in one sentence. Don’t introduce complicated optimizations, and don’t let investors introduce complications either.

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

Venture capital is in the midst of a structural sea change, evolving from a secretive old boys club into a much more accessible and transparent… well, new boys club. One thing that has generally remained guarded, however, is investment strategy. Not the broad strokes of sector and stage focus, but the nitty-gritty about how a firm makes its decisions on who to fund and … [ Read more ]

Content: Article | Author: Dan Primack | Source: FORTUNE | Subjects: Entrepreneurship, Venture Capital | Company: Bloomberg Beta

Paul Graham offers some very useful advice to entrepreneurs about trying to raise money. As he points out, most inexperienced founders try to convince with their pitch when they would be better off if they let their startup do the work—if they started by understanding why their startup is worth investing in, then simply explained this well to investors.

Content: Article | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

Investors are looking for startups that will be very successful. But that test is not as simple as it sounds. In startups, as in a lot of other domains, the distribution of outcomes follows a power law, but in startups the curve is startlingly steep. The big successes are so big they dwarf the rest. And since there are only a handful each year (the … [ Read more ]

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

The time to raise money is not when you need it, or when you reach some artificial deadline like a Demo Day. It’s when you can convince investors, and not before.

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

Raising money is not like applying to college, where you can assume that if you can get into MIT, you can also get into Foobar State. Because the best investors are much smarter than the rest, and the best startup ideas look initially like bad ideas, it’s not uncommon for a startup to be rejected by all the VCs except the best ones.

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

[Investors] think they’re trying to convince investors of something very uncertain—that their startup will be huge—and convincing anyone of something like that must obviously entail some wild feat of salesmanship. But in fact when you raise money you’re trying to convince investors of something so much less speculative—whether the company has all the elements of a good bet—that you can approach the problem in a … [ Read more ]

Content: Quotation | Author: Paul Graham | Subjects: Entrepreneurship, Venture Capital

New research offers insights into how venture capitalists make funding decisions. The Breakdown:
30.4% – Potential Return
27% – Founders’ Experience
26.4% – Market Readiness
6.6% – Regulatory Exposure
6.4% – Social Connection with Founders
3.2% – Lead investor

Content: Article | Author: Daniel McGinn | Source: Inc. Magazine | Subjects: Entrepreneurship, Venture Capital

While American venture capital firms are coated with an aura of glamor they are also shrouded by a cloud of mystery. Just how do they operate? How do they raise their money? Why do some VC firms succeed while others do not? The authors of this article, who were given unprecedented access to key executives of prominent VC firms, answer these and other questions that … [ Read more ]

Content: Article | Authors: Hatim Tyabji, Vijay Sathe | Source: Ivey Business Journal | Subjects: Industry Specific, Venture Capital

Venture-capital firms have been the engine of the United States’ innovation economy. At Google Ventures, the search giant’s investing arm, Google thinks it can build a better one.

Content: Article | Author: Farhad Manjoo | Source: Fast Company | Subjects: Entrepreneurship, Industry Specific, Venture Capital | Company: Google Ventures