American Enterprise is In Danger from Recent Court Ruling
This article is cross-posted from The New Builders Dispatch, a publication founded and run by my New Builders co-author, Elizabeth MacBride. A few weeks ago, the American Alliance for Equal Rights won a legal victory in Atlanta when the 11th U.S. Circuit Court of Appeals temporarily blocked a small venture capital fund, Fearless Fund, from running a grant contest that awards $20,000 grants to small businesses led by women of color. The victory may or may not be temporary (this was a temporary stay, not a full adjudication), but the point has been made – there are those like the Alliance who live in fear of a changing world and far too many who support them. …
November 1, 2023· 5 min read
SVB and The Tyranny of the Commons
Like many of you, I’ve been reflecting on the implosion of Silicon Valley Bank quite a bit this past week, now that the initial panic has faded into a dulled sense of disbelief. Certainly, there were warnings that SVB was in trouble (most notably from Seeking Alpha – in December – asking if SVB was a blow-up risk and, as if time traveling, describing almost exactly what would come to pass just a few months later). Many others have commented on how and why SVB (and soon after Signature, and nearly First Republic Bank and Credit Suisse) imploded. If you’re interested, I think Matt Levine from Bloomberg has the best overviews of what led to the crisis of last Thursday and Friday (see here, here, and here on SVB; here for an overview of what happend with CSFB, and for those paying close attention, here for what, at the time, we thought was an isolated “crypto thing” in the failure of crypto bank Silvergate, but perhaps was a harbinger for the weeks ahead). …
March 19, 2023· 7 min read
Techstars Foundation and EforAll
EforAll is a community organization that helps under-represented individuals successfully start and grow their businesses through business training, mentorship, and an extensive support network. If you’ve read my book, The New Builders, you likely know quite a bit about them (and my fondness for what they’re doing). Our systems to support diverse entrepreneurs are lagging, which is why EforAll plays such a critical role in helping foster the next generation of entrepreneurs in our community – taking both a broad view of entrepreneurship and long view for creating impact. They’ve worked with hundreds of companies across the US and continue to expand their reach and the markets in which they are working. I’m both grateful for the work they do and heartened by the stories of their program participants. It’s truly inspiring. …
August 16, 2022· 2 min read
Startup Boards Second Edition
Effectively building and working with a board is a critical part of building any successful business. But there is a lot of nuance in doing both of these things effectively. Enter the second edition of Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors by a trio of authors including my partner, Brad Feld; CEO of Foundry portfolio company Bolster, Matt Blumberg; and co-author of the original edition of Startup Boards, Mehendra Ramsinghani. …
June 15, 2022· 2 min read
Investors Think They’re More Impactful Than They Actually Are
Companies looking to raise money turn to venture capital for a variety of reasons. Top among them is generally access to capital, but often on the list is the hope that raising capital from experienced (and well-networked) investors will have other positive impacts on their business. Certainly from the venture perspective, VCs (Foundry included) pitch themselves to companies, co-investors, and LPs as more than just capital. Indeed, many firms even institutionalize the practice of providing help to portfolio companies through extensive platforms that may include PR, talent, marketing, technical, and other help (sometimes offered for free, sometimes offered ads a pay-for-service, but often at below-market rates for those services). There are venture firms that have dozens of people employed in the service of their portfolios. …
June 14, 2022· 4 min read
IRR is a vanity metric
I’m observing that IRR is a metric that is becoming an increasing focus in venture, replacing fund return multiple as the key metric of success. I understand the draw of IRR, and – as a fund draws to a close – there’s no question it’s an important metric. LPs have plenty of options for where to put their money and IRR is an easy way for them to compare how their money grows across various investment options and a convenient way to determine whether they believe they’ve been adequately compensated for the relative risk and varying degrees of liquidity available to them across different asset classes. …
May 5, 2022· 5 min read
Money in the Bank vs Burn
With the markets down significantly, financings (at least at the later stages) slowing down, and inflation and interest rates on the rise, perhaps now is a good time to talk about your burn rate. Hopefully, you took advantage of the robust financing markets of the past few years to put some money on your balance sheet. Perhaps you raised at what historically have been very attractive valuations (we certainly have companies in our portfolio that have raised well, well above the historical averages). …
March 17, 2022· 3 min read
Building and Compensating Your Board
For frequent readers of this blog, you know I’ve written a lot about startup boards including the importance of diversity and being deliberate about how many investors you have on your board (hint: likely too many). Last month I joined Bolster and compensation consulting firm J.Thelander for a conversation on building and compensating boards in the most effective way possible. This is an important topic, and I wanted to share and emphasize a few insights from the conversation. If you’re interested in watching the full session you can do that here. Much of the data shared by Bolster can also be found in their Board Benchmark report that I wrote about earlier this year. …
October 4, 2021· 4 min read
Downsides of a white hot economy
A few quick market observations from dicussions I’ve had with portfolio companies over the past few weeks. All relate to just how a white hot economy has some downside effects on certain types of businesses. Certainly some early warning signs – curious if others out there are seeing the same. My take-away is that in many sectors of the economy companies quite literally don’t need more customers. They can’t handle the additional load because they can’t hire fast enough and their supply chains are stretched thin. We’ve seen this in digital advertising for sure (and not just in travel and other segments that might be reacting to the Delta variant). Interestingly we’ve also seen a couple of companies – especially those that work with small businesses – whose message typically is: “We help you find and engage with customers more effectively.” The small businesses they target are pushing back and saying that they need more staff, not more customers. Currently, they’re running one, two, or even three-month waiting lists to provide services to their customers. We’ve all seen signs on restaurants that they’re closed or have reduced hours because of the unavailability of staffing. It’s interesting to consider the ramifications across the economy when many industries are at such capacity. …
September 7, 2021· 2 min read
Pledge 1% – Boardroom Allies
One thing I’m particularly proud of in my career is founding Pledge 1%, an organization that encourages companies to give back to their communities by donating a portion of equity, profit, time, or product to nonprofits in its community. It was bold idea from the beginning and I’m happy to see that more and more companies are taking the pledge (we’re around 20,000 strong now and growing quickly). Recently, Pledge launched a new initiative, Boardroom Allies, to broaden their network and reach. The Allies program is comprised of an alliance of VCs who have committed to unlocking $5 billion in new philanthropy over the next five years by helping their portfolio companies set aside equity for social impact prior to liquidity events. You can read the full announcement on Business Wire here. What’s particularly exciting about this initiative is the fundraising goal and timeframe. It’s an aggressive approach and I’m both proud and heartened by the resolve of the VCs who have made this commitment. These including my partners, Brad Feld and Ryan McIntyre, as well as many other VCs from around the country and the world. Pledge 1% has outlined their resources, strategy, outcomes in this blog post about Boardroom Allies. …
July 15, 2021· 2 min read