Who is your vc?
John H turned me on to a post from Investments and More titled VC’s – Top Brass Solid, Others Not (“wow – someone taking the glam out of the VC world,” he writes). I actually found his post pretty amusing. While I think a lot of people at venture firms are fantastic (law of natural selection, I guess) there are, of course, some that are better than others. What Steve’s post did bring to mind was how important it is to recognize that when you take on an investor you’re taking on an individual more than you are taking on a firm. Some firms have more cache than others, but at the end of the day as an entrepreneur you work with a person, not a fund. Sure, individual partners get to call on the expertise (and rolodexes) of the other partners in their fund, but firms don’t attend board meetings or strategy sessions, give feedback or pick up the phone to talk with you – an person does. …
July 19, 2005· 1 min read
Some thoughts on better board meetings
I sit through a lot of board meetings and while they are a great time for a company to harness the expertise of the people sitting around the table, they need to be structured and managed in such a way to actually accomplish that (i.e., effective board meetings don’t just happen – they are the result of planning and careful management). I sometimes joke with my dad that it must be tuff to get a word in at his board meetings given the powerhouses around the table; he just laughs and tells me that they prepare for their board meetings carefully. In actuality, I think he get a huge benefit out of his board – as do many of the companies I’m involved with – by doing exactly that. Here are a couple of quick thoughts on what that kind of planning and preparation might look like. Send out the board package in advance (a week is great; minimum is a couple of days). This allows you to set up an expectation with your board that they will have all read your board package carefully (which they should do, but won’t always be possible if they get the board package at midnight the night before the meeting). The board package should be comprehensive and cover updates from each department. Include a CEO letter or overview at the beginning of the package. This gives you the chance to set the tone for the meeting – setting up topics that you plan to dig into deeper and asking people to think about certain areas of the business for further discussion at the meeting. Since the board package is also probably pretty thick and full of data this gives you the chance to set the lay of the land for the board (very helpful) and point out specific things that you’d like to highlight in the package. Do not review the entire board package at the meeting. If you are sending out your board package in advance of the meeting and the package is comprehensive by department you should not feel the need to review the entire package (since everyone will have read it). Pick the highlights you want to cover; point out specific items that you’d like to bring the board’s attention to (presumably you’ve done this in your CEO letter as well); ask if there are any questions about the material. But please – don’t spend hours at board meetings reading every page of the package; if you work up a separate presentation to guide the board meeting itself, don’t feel like you need to stop on every page. Many of our companies like to focus on one strategic area of the business at each meeting and prepare a separate presentation to guide that discussion. I think this is a great idea. Make the presentation no more than ½ hour and be sure to make it strategic rather than tactical in nature. …
July 18, 2005· 6 min read
Thinking of taking venture capital? Don’t!
Here’s a thought for those of you considering taking venture capital – don’t do it. Seriously. It’s not worth it. Ok – so I’m not 100% serious. I’m trying to make a living investing in companies and would therefore be out of business if everyone followed this advice, however I think that for the majority (50%? . . . 80%?) of entrepreneurs taking venture capital money is a mistake. As I explain why this is the case, please read from the perspective of someone who is actually trying to encourage people to go into the process with their eyes open more so than I’m truly trying to scare people off from raising venture money. The worst thing you can do when you take venture capital is to go into the relationship with a misunderstanding of what each party expects – an example of that in a minute. …
June 21, 2005· 5 min read
Sltashdotted for VCs
I got the VC equivalent of Slashdotted today when Daniel Primack of PE Week Wire referenced my “How to become a venture capitalist” post in his daily e-mail this morning. Traffic on my blog went crazy (it was already running a little high this week from that post – particularly after Brad and Fred each referenced it at my request). I’ve even had some publications ask me if they could reprint the article. Pretty cool stuff. …
May 24, 2005· 1 min read
Welcome Will Price to Blogging
I’m always encouraged when I see other non-partner VC’s blogging. As regular readers of this blog know, I’m using it in part to explore some of the differences between being a partner and being a non-partner in the venture industry. While there are a number of great VC partner blogs, there are many fewer non-partners writing (when I started VC Adventure there were almost none). We’ve added one more to the ranks recently – my friend Will Price from Pequot Ventures. I first met Will about 10 years ago when we were both analysts for Morgan Stanley. Like me, Will didn’t take well to banking and has traveled a somewhat circuitous path to his role at Pequot. He’s a smart guy (despite not yet linking to me in his blogroll ) and worth taking a look at. So Will Price – welcome to the blogosphere and to the world of VC blogging. I hope your posts are insightful and direct.
May 23, 2005· 1 min read
How to become a venture capitalist
I get asked this question a lot and while the real answer is “I have absolutely no idea,” I thought I’d make something up here so I at least have a place to send people who ask me this question (as well as anyone else who happens to stumble upon this blog searching for ‘getting a job at a venture capital firm’). This post is for aspiring analysts, associates and principals and has little to do withgetting a job as a partner (which I hope to figure out one day too . . .) …
May 20, 2005· 5 min read
A day in the life of a VC
One of the most common questions I get asked from people outside the VC industry is “what’s a typical day like?” It’s a good question, but a hard one to answer – my days are extremely varied (this is one of the things I really like about my job, in fact). The type of work I do on any given day is very dependant on what’s going on with the companies that I work with (financing, m&a, planning, putting in place a bank line, rolling out new products, etc.), and every day (or hour) seems to bring something different. I’ve tried a few approaches to answering this question – typically some variant of “on average I spend x% of my time on sourcing new deals; y% on financings; z% working with portfolio companies on operations; etc.). The problem with this is that, while it may provide some insight into how I spend my time in a typical month (or quarter), it doesn’t really answer the question, nor give much of a real flavor of what Ido day to day. Since one of my goals with this blog is to write about the experience of being a VC I thought I’d try to do a better job of answering this question by writing about a couple of different days that I think typify the VC experience. The idea here is not to generalize, but rather to report on a couple of days that feel are ‘typical’. I had one recently (that inspired me to try to tackle this question) – it went something like this: Early Morning: Spent the morning working up a term sheet for an investment that had recently been approved by the firm. It actually wasn’t my deal, but the principal who had sponsored it was on a business trip and I was helping out by pulling the term sheet together. To do this I had to work up a version of the company’s cap table that I could play around with (I had one from the company, but the structure of it didn’t allow me to manipulate it in the way that I wanted to). I also spent quite a bit of time with the financing docs from their last round – Series A term sheets are much easier to write than term sheets for follow-on financings where I need to account for the existing cap structure as well as understand what terms I want to keep the same vs. change from previous rounds. The whole process took several hours, after which I sent it off to the partner involved in the deal and our general counsel to take a quick look before sending it to the company. …
March 31, 2005· 5 min read
On VC Suckage
Only hours away from posting a link to this great article by Paul Graham on why VCs suck (A Unified Theory of VC Suckage), when both Brad and Fred beat me to it. That didn’t keep me from sending the link directly to a couple of people who I thought would get a kick out of it (and wouldn’t necessarily see those blog entries). This list included my father – Randy Levine – who is the founder, initial CEO and now a director of a venture-backed start-up. Dad and I regularly trade stories about the relationships between VCs and their investors – comparing notes on our experiences from different sides of the table. Dad and I had the following exchange about this story which I found extremely amusing and worth sharing: seth: dad – I think you’ll find this amusing [link to story]dad: Everybody’s situation is different, but he captures a lot of common experience. seth: I thought it was pretty funny dad: That’s the difference between dealing with VCs and being a VC. seth: which is to say that you didn’t find it amusing ? just scary . . . ? dad: I guess it depends on which end of the cavity search you’re on . . . So I guess one’s amusement at the post varies based on where you sit; which in itself is pretty amusing . . . …
March 24, 2005· 2 min read
Steppin’ Up
I took an important step in my life as a venture capitalist today when I attended my first board meeting as an actual board member (rather than a board observer – see my post on this distinction from last month). While the earth didn’t exactly shake off its axis, I can’t help but feel that today was a real milestone in my life as a venture capitalist. I’ve worked with a lot of companies since joining Mobius, but this is the first deal that is really my ultimate responsibility. Today’s board meeting wasn’t unlike the hundreds of other board meetings I’ve participated in over the past 3 years, but there was no question that there was something a little different about it for me. I don’t want to make more out of this than there really is – I work very closely with all of the companies I’m involved in at Mobius and am for the most part treated by all of them as if I were on the board. Still, there was something different about my meeting today – maybe just in knowing that Mobius (and our investors) need look no further than me when judging this investment . . .
February 15, 2005· 1 min read
Venture Capital in the Rockies
I spent the much of last week attending the annual venture conference sponsored by the Colorado Venture Capital Association. The purpose of the event is to attract out of state VCs to take a look at Colorado venture deals that are in the market (click here for a link to the companies that presented this year). I’ll talk about Colorado’s venture capital market in a separate post, but suffice it to say, it’s important to the local VC community to have financial support (at least on some deals) broader than the local community can provide. While each of us has relationships with firms out of state that we syndicate deals with, as a group this is our one annual chance to put our best foot forward to out of state investors. …
February 14, 2005· 5 min read