We've got this awesome team and we're doing <insert-cool-stuff-here>. None of <insert-public-companies-here> can do that. We're light years ahead of them! I love great teams. Which investor doesn't. But just because you have not heard of any group within <insert-public-companies-here> doesn't mean they can't do it. In fact, any pitch about a unique technical skill … Continue reading Pitch Clinic: “Noone else is doing it!”
After the last blog post (Startups: Don't compete on "nimble" and "cash burn.") I got a lot of questions on how to look at these public companies with negative EBITDA or negative Net Income. Here are some ideas. Dataset 1: Public Companies with Negative EBITDA Some companies have a negative EBITDA, but massive revenue growth, … Continue reading Datasets for Public Companies with Negative EBITDA or Net Income
Fifteen years ago I was sitting on a panel with senior executives of large enterprises. We were discussing how startups, with their limited resources, are competing against established, well-funded public enterprises. A Corporate R&D executive of a public company quipped: Publicly traded companies usually can't afford to lose money. Internet companies and startups can, at … Continue reading Startups: Don’t compete on “nimble” and “cash burn”.
Thorsten,We are raising our Series B now. We have a great lead investor. One of our strategic partners and suppliers also wants to invest: they want to participate with $4.5 million, almost 30% of the round. I'm not so much concerned about the signaling effect, but about the alignment of investor interest: assures me they … Continue reading CVCs and Financial Returns.
2018 felt like CVCs were in almost every deal. So what do the numbers say? [Below graphs are based on Pitchbook data. Early tracking of data, before 2008, is not that reliable. After that, not every transaction is reported accurately. But the data is reasonably good at showing trends. I'll try and point out some problems along the way] CVCs Participate in More Deals Than Before. While the number of reported number of venture capital rounds in … Continue reading Corporate Venture Capital: 2018 In Numbers.
I often ask entrepreneurs during pitches "What's hard to make this a successful company?" I am particular about this one. I am not asking "what's difficult." Difficult is fundraising, hiring great people, finding customers, making customers pay on time, getting renewals, opening a new office, etc. "What's Hard" is something that hopefully the entrepreneurs are better … Continue reading What’s Hard and What’s Not as a VC.
Reactions to my last blog post, Cap Table Changes over Time and Founder Dilution (Excel Worksheet Included), were interesting: There were some founders and entrepreneurs who said that this was a great example how venture capital investors squeeze out founders and CEOs who actually have the idea and are actually executing (versus VCs who just … Continue reading Venture Capital Financing and Investor Dilution (Excel Worksheet Included).
I recently got some questions from first-time founders on dilution, what is a typical A round, what does a typical cap table look like (not the format, but the progression over time). My answer is always the same: It depends. Here's an Excel worksheet that lets you play around with different round sizes and investors: … Continue reading Cap Table Changes over Time and Founder Dilution (Excel Worksheet Included)
If you believe you have a great startup, then I hope you have a great product. And, naturally, you will have competition. Gartner is not going to create a magic quadrant for a new huge market with only a single company in it. Your product should be awesome. You should strive to find product-market-fit fast. … Continue reading Your fiercest Competition is your VCs’ Other Portfolio Companies.
[This post appeared first as a comment on Blue Dot Partners' blog, Perspectives. Philippe Bouissou wrote a post that resonated with me about The Two Types of Businesses. There are two very different types of businesses. The motivations that drive entrepreneurs behind them are quite orthogonal. Both types of businesses are critical to creating a … Continue reading The Flipside of Venture Capital.