December 2010
11 posts
4 tags
Do seed-stage entrepreneurs need business plans?
As I answered on Quora, an angel investor who asks you for a business plan for a seed stage Internet start-up doesn’t know what they’re doing. An entrepreneur needs a clear vision, clear projections (18-24 months) of cash burn and an estimate of how the business model will work on the revenue side. There must also be a vision of how the business will scale both in terms of human...
2 tags
Elite quants: hedge fund vs. start-up?
I have personally spent a tremendous amount of time speaking to Ph.D candidates in Big Data disciplines about this trade-off. Clearly, it is a deeply personal decision that will plumb the depths of who you are, what you care about and what your risk profile looks like. Most of the time I’m speaking with “elite” stats/cs/machine learning gurus who have offers from Teza,...
1 tag
What are the steps to starting a VC/Angel fund?
This was the answer I gave on Quora:
Raising a fund is a complex and time-consuming process, with the legal aspects only one piece of the puzzle. 1. So you want to raise a fund, but can you raise a fund? Well before speaking to a lawyer, you’ve got to survey the market to get a sense of the reality and potential timing of your plan. Raising money for a new fund is akin to running a...
Thinking backward and looking forward: The year in...
2010 was a big year. Witnessing my kids’ meteoric growth. Coaching lots and lots of baseball games. Raising a venture fund. Building a terrific team. Creating a portfolio - and a partnership - with more than a dozen great founders and teams. Cementing my transition from Wall Street guy to angel investor to venture capitalist. Making lots of great new friends and acquaintances. Reaching...
2 tags
The Entrepreneur/Investor Covenant
Starting a company is really, really hard. Helping entrepreneurs start and build companies is really, really hard. Much has been written about the mechanics of entrepreneur/investor interaction, from how to pitch investors, structure the round, assemble board decks, undertake strategic planning, etc. But after more than six years of seed stage investing, perhaps the most important and least...
4 tags
How to close an Angel Round
When trying to get an angel round done, the key question is how much you need to have raised to hold a first close. Most rounds I’ve been involved with have lower and upper bounds, e.g., $400k first close, $750k maximum raise. The goal here is to get to $400k and a first close, and using the best tactics to get this done. Because once the first close is achieved, there is a strong...
2 tags
Is it Wise to take Strategic Investment as a...
There are pros and cons to taking investment from a strategic (who is also a logical acquirer), and it has less to do with the nature of the strategic itself than it does timing, size of investment and control provisions. As a general rule, it is a bad idea to take strategic investment early in a company’s development. While these opportunities often look smart and value-added, they...
3 tags
On Raising a Fund - the IA Ventures story
This past Thursday it was announced that my first fund, IA Ventures, had closed with $50 million in commitments from a group of fantastic investors. Brad, Ben, Justin and I couldn’t be more proud or excited, especially at the confidence and belief our investors have shown in us and in our approach to early-stage venture investing. We clearly have deep conviction in our mission and our strategy,...
Why I'm mad at Tumblr
As I publish this post on Tumblr, I am not at all happy with my blogging platform. The service went down for a mind-boggling 23 hours, shortly after I had put up a post Sunday evening. When I publish a post, it is an exciting moment. I have a sense of satisfaction for having gotten some thoughts and feelings out into the ether. I tell my Twitter followers and Facebook friends about the new post,...
3 tags
Pulling back the curtain - The Mess
If there is one consistent knock against the venture capital industry, it is the opacity of the fund-raising process. The rise of the highly-insightful, ethical and transparent venture investor blogger, e.g., Brad Feld, Mark Suster and Fred Wilson, has helped shed some light from the VC perspective, and the recent article by Mike Lazerow on the Buddy Media fund-raising experience is one example...
1 tag
Staying in the Game
The old investing adage “Cut losers short; let winners run” provides a valuable reminder of how to achieve superior returns, but misses one essential element: bet sizing. In venture investing there are really two key metrics: (1) mortality rate (batting average); and (2) average bet size of losers vs. winners. Assuming a common mortality rate, an investor will be more successful by...