Feb 12, 2019 Mark Suster via Medium: Why Has Seed Investing Declined? And What Does this Mean for the Future?

With seed up massively between 2006–2014 and A and B rounds relatively flat what you see is a widening of the funnel going into traditional venture. This is why many VCs are waiting and letting deals mature a bit before leaning into rounds. Traditional VCs have raised larger funds that allow them to pay slightly higher prices and still hit preferred ownership sizes. (read more…)

Feb 7, 2019 Sahil Lavingia via Medium: Reflecting on My Failure to Build a Billion-Dollar Company

But we were venture-funded, which was like playing a game of double-or-nothing. It’s euphoric when things are going your way–and suffocating when they’re not. And we weren’t doubling fast enough to raise the $15M+ Series B (the second major round of funding) we looked for to grow the team. (read more…)

Jan 23, 2019 Recode: “Venture capital money kills more businesses than it helps,” says Basecamp CEO Jason Fried

Fried told Recode’s Kara Swisher that venture capital “kills more businesses than it helps” because the pressure to grow crazy-fast means companies keep raising money to keep their growth rate up. That, in turn, means they rarely have the opportunity to learn how to spend money in a disciplined, sustainable way. (read more…)

Jan 11, 2019 New York Times: More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost

The event had been organized by Frank Denbow, 33, a fixture of New York’s tech scene and the founder of T-shirt start-up, to bring together start-up founders who have begun to question the investment framework that has supercharged their field. By encouraging companies to expand too quickly, Mr. Denbow said, venture capital can make them “accelerate straight into the ground.” (read more…)

Nov 29, 2018 Pitchbook: Why this VC puts efficiency above unicorns

If you put too much money in too early, you’re going to destroy the cap table and possibly see the team losing focus because they are not ready and don’t know how to deploy it properly. You’re also going to artificially inflate its valuation, which in the short term might make the entrepreneur happy because of the paper wealth, but what happens if they don’t outperform an already-aggressive business plan? (read more…)

Nov 13, 2018 The Hustle: As funding rounds grow larger, fewer startups are able to raise money

Venture capital mega-funds have supercharged startup fundraising all the way down to the seed: Since 2013, the average seed round of funding has grown from $550k to more than $2m.

But, as the size of rounds has increased, The Wall Street Journal writes, the number of companies receiving that funding has decreased by more than 40%. (read more…)

Oct 16, 2018: Brendan Burns via Forbes: A Faster Path To Success: Alternatives To The Traditional Startup/VC Route

I have been an early-stage tech guy my whole career since graduating from Columbia Business School during height of the dotcom boom. At heart, I am little bit of a contrarian and very much a value investor. For that reason, I was looking for a shortcut when starting my last company—I think I found one, and it’s one you can use, too. (read more…)

Oct 11, 2018 Conor Grant: With 1/2 as many public companies as 20 years ago, normal investors are squeezed out

According to research from The Atlantic, there are half as many public companies listed on US stock exchanges today as there were in 1997.

In other words, despite a few widely publicized IPOs, most companies rely on private investment to grow — creating a system where VCs can profit from the startup economy, but average investors cannot. (read more…)

Oct 10, 2018 CNBC: Start-up economy is a ‘Ponzi scheme,’ says Chamath Palihapitiya

Chamath Palihapitiya, the outspoken Silicon Valley tech investor, called the start-up economy a charade on Wednesday, while also addressing the current the state of Social Capital, his embattled investment firm.

“We are, make no mistake … in the middle of an enormous multivariate kind of Ponzi scheme,” said Palihapitiya, at the Launch Scale conference in San Francisco. (read more…)

Aug 22, 2018 The Quantified VC: How to Win in Venture Capital: Focus on the Fat Tails

Since the track record of VCs is overwhelmingly skewed by a tiny handful of “unicorns,” entrepreneurs who try to assess the reputation of VCs by only looking at home-runs may get a skewed view.

In good times, investors will be supportive. But how will they behave during bad times? Even great companies go through ups and downs. If your startup is not one of the big winners (which is likely, based on probabilities), how will your VCs behave? Will they abandon ship?—?or worse, will they turn negative or downright hostile? (read more…)

Jul 17, 2018 Chris Savage & Brendan Schwartz: How an Offer to Sell Wistia Inspired Us to Take On $17M in Debt

Most founders dream of building a product that eventually becomes a household name and sells for a billion dollars, but chasing that goal comes with some downsides. We chose a different path. (read more…)

Jun 20, 2018 Ilya Strebulaev: Inside The Secret World of Venture Capital

If you think talking a venture capital firm into funding your startup is hard, try getting one to share its secrets with you.  That’s the challenge Stanford Graduate School of Business finance professor Ilya Strebulaev took on when he founded the Stanford Venture Capital Initiative, which has been steadily amassing a deep and unprecedented database designed to figure out how the VC world really works. (read more…)

Jun 13, 2018 Fred Wilson: The Valuation Obsession

There is an obsession with the values that are being placed on companies when they finance. There has always been one but it is worse than ever.  Every day, without fail, I read a headline that so and so company has raised, will raise, or is trying to raise capital at some eye popping valuation. (read more…)

Jun 10, 2018 Carl Fritjofsson: Do VCs really add value??—?Founders say sometimes.

As venture capitalists, we pride ourselves on being “value-added investors”. We not only provide financial means to scale a company, but it is often accompanied by advice, connections and professional services of various kinds. I always aspire to be the most trusted and helpful investor and advisor to any company I get involved with. But in all honesty, I’m fairly certain that VCs tend to oversell the impact we have at a company and the actual value-add we bring. (read more…)

May 16, 2018 Kevin Roose, New York Times: The Entire Economy Is MoviePass Now. Enjoy It While You Can

The new way to make it in business is to spend big, grow fast and use Kilimanjaro-size piles of investor cash to subsidize your losses, with a plan to become profitable somewhere down the road. (read more…)

Apr 16, 2018 Seth Levine: What’s the Optimal Portfolio Strategy for a Venture Fund?

Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. (read more…)

Mar 22, 2018 CB Insights: From Alibaba to Zynga: 28 Of The Best VC Bets Of All Time And What We Can Learn From Them

In venture capital, returns follow the power law — 80% of the wins come from 20% of the deals.  Great venture capitalists invest knowing they’re going to take a lot of losses in order to hit those wins.  Chris Dixon of top venture firm Andreessen Horowitz has referred to this as the “Babe Ruth effect,” in reference to the legendary 1920s-era baseball player. Babe Ruth would strike out a lot, but also made slugging records.  Likewise, VCs swing hard, and occasionally hit a home run. Those wins often make up for all the losses and then some — they “return the fund.” (read more…)

Mar 5, 2018 Eric Paley via Tech Crunch:
When venture capital becomes vanity capital

I’ve written a lot about the benefits of efficient entrepreneurship. I’ve explained my view conceptually, tried to illustrate the mechanics of how excess capital kills promising companies, and shared data from 71 IPOs that demonstrates that even in success, more capital raised is not correlated with better outcomes. Just in case all of that was too conceptual, this blog post is designed to appeal to another emotion—greed.  Raising less money or money later doesn’t just lead to better companies, it leads to richer founders. (read more…)

Feb 20, 2018 Alessandro Pluchino: Talent vs Luck: the role of randomness in success and failure

The largely dominant meritocratic paradigm of highly competitive Western cultures is rooted on the belief that success is due mainly, if not exclusively, to personal qualities such as talent, intelligence, skills, efforts or risk taking. Sometimes, we are willing to admit that a certain degree of luck could also play a role in achieving significant material success. But, as a matter of fact, it is rather common to underestimate the importance of external forces in individual successful stories. It is very well known that intelligence or talent exhibit a Gaussian distribution among the population, whereas the distribution of wealth – considered a proxy of success – follows typically a power law (Pareto law). (read more…)

Feb 05, 2018 Dave Hersh via Medium: Can This Company Be Turned Around?

There are no shortage of companies in need of wholesale transformation, where the strategy or execution didn’t work and they are stuck between capital needs and market realities. (read more…)

Feb 03, 2018 Jonathan Lu via LinkedIn: Three profound truths I learned from Silicon Valley Startups

“The opposite of a correct statement is a false statement. But the opposite of a profound truth may well be another profound truth.” Niels Bohr (read more…)

Jan 16, 2018 1MBY1M: Death By Overfunding

Funding = Success, right? I wish it did. But entrepreneurial tracks are littered with carcasses of dead startups that were very well funded, some to the tune of hundreds of millions. (read more…)

Jan 11, 2018 Luke Kanies via Medium: Venture Capital Is Ripe For Disruption

The venture capital world that funds the technology ecosystem appears to be specially designed to back the best founders working on the economy’s most important problems. In reality, the financing structures we use were designed more than 150 years ago for whaling missions, and the funds and how they work have been constantly evolving since their inception around 1860. (read more…)

Jan 09, 2018 Pitchbook: A Dynamite Year for VC

In 2017, record-breaking fund sizes and unprecedented levels of dry powder gave rise to mega-deals and dramatic shifts in he exit market.  Outsized funds spark outsized deals.  Driven by strong VC fundraising and non-traditional investor activity, capital invested reached the highest levels in over a decade while deal volume dropped.  The result?  Fewer, but larger, deals.  (read more…)

Jan 04, 2018 Dave Hersh via Medium: Why Buying a Stalled Startup is Better than Starting From Scratch (Now)

After a long stretch in the venture-backed startup world, I eased out a few years ago to work on turnarounds?—?finding stalled companies and breathing new life into them.  If you’ve ever considered distressed companies as an investor, entrepreneur, operator or employee, this post outlines how I got to that decision and how the process has gone so far.  (read more…)

Dec 22, 2017 Bryce Roberts via Medium: Where There’s Smoke There’s Fire

The largest VCs have made their bets early, so funding slows for fast followers. Timelines for user growth take longer than anticipated. Revenue comes harder and less profitably than planned. New competition continues to get funded, albeit from less well known funding sources. Then, the category starts to feel and look and actually be overfunded.  Enter the next shiny thing.  (read more…)

Dec 20, 2017 Luke Kanies via Medium: Venture Capital Is Built on Serendipity

Venture investing is fundamentally uncertain. You’re making big bets on people, ideas, and markets that might never work out, and there are more ways to fail than succeed. As a result, investing has to take into account the likely failure of many efforts. If your financial model assumes each of your investments will be a success, you will have a short career indeed. (read more…)

Dec 06, 2017 First Round Capital: State of Startups 2017

At First Round, whenever we ask founders what data they most want and need, they almost always say the same thing: they want to know what other entrepreneurs are thinking and doing (and whether what they’re doing is normal or in line with their peers). To answer these questions, we’re pleased to publish the industry’s largest set of data specific to the founder and startup experience — we hope you find it informative and insightful. (read more…)

Dec 05, 2017 Luke Kanies via Medium: Unicorns Distract Us from a Graveyard

Venture investing is fundamentally uncertain. You’re making big bets on people, ideas, and markets that might never work out, and there are more ways to fail than succeed. As a result, investing has to take into account the likely failure of many efforts. If your financial model assumes each of your investments will be a success, you will have a short career indeed. (read more…)

Nov 29, 2017 Pitchbook: 16 charts showing current trends in US venture capital

As of the end of the third quarter, this year is set to reach a decade-high in terms of total VC investment—but deal activity is on pace to decline sharply for the second year in a row (read more…)

Nov 29, 2017 Hunter Walk: For VCs, “What Could Go Right” Is More Important Than “What Could Go Wrong”

VCs are in the business of backing companies that have a substantial chance of failing and the earlier you invest, the more likely you are to see a zero return on your capital. What offsets this is that the successes tend to be outsized, returning 20x, 50x, or even 100x+. The notion that tremendous value is created by a very small percentage of startups, and the financiers behind this businesses are counting on a few of these companies to make up for all the nonperforming investments is called a power law distribution. (read more…)

Nov 28, 2017 Pitchbook: Why unicorns are overvalued (and the industry knows it)

The rise of private market unicorns is well known—rising from 40 in the US when the term was coined four years ago to more than 120 now. The cumulative unrealized value of current US unicorns is approaching $600 billion, per PitchBook data. Exit times are lengthening, giving rise to a dynamic I’ve dubbed the “zombiecorn” as VC-backed companies stay private for far longer than has been seen historically.  But what if it’s all built on a lie?  (read more…)

Nov 10, 2017 Bryce Roberts via Medium: How We Think About Returns

About 5yrs ago the team at Basecamp (fka 37Signals) stopped editorial work on a section of their site they called Bootstrapped, Profitable and Proud (BPP). The stated purpose of the site was to “profiles companies that have over one million dollars in revenues, didn’t take VC, and are profitable”.  Today, many view profitability as limiting or the acknowledgement that a founder has lost interest in hyper growth and has been lulled into the ease of running a mere “lifestyle business”. (read more…)

Nov 09, 2017 Luke Kanies via Medium: If You Take Venture Capital, You’re Forcing Your Company To Exit

Modern venture capital is obviously successful, as demonstrated by the fact that five of the world’s six largest companies were funded by it. But success is as much about what you say ‘no’ to as what you say ‘yes’ to, and venture capital is no different. In addition to delivering massive collateral damage in the course of its work (more on that later), the prevalent VC model rejects all ideas that do not fit within its narrow definition of a “suitable” investment. (read more…)

Oct 27, 2017 Pitchbook: First-time funds keep on rolling

Unless you’re Aaron Judge of the New York Yankees, rookies rarely perform better than veterans. But that’s not the case for private equity funds. In our latest PE analyst note, we analyzed first-time global PE fund returns against the broader PE landscape. Even with the disadvantages that come with rookie funds—less experienced staff, smaller infrastructure, fewer back-office resources, etc.—first-time funds have outperformed follow-on funds by a significant degree. (read more…)

Oct 26, 2017 Founders Collective: Toxic VC and the marginal-dollar problem

Venture capital should come with a warning label. In our experience, VC kills more startups than slow customer adoption, technical debt and co-founder infighting — combined. VC should be a catalyst for growing companies, but, more commonly, it’s a toxic substance that destroys them. VC often compels companies to prematurely scale, which is typically a death sentence for startups. (read more…)

Oct 22, 2017 Jonathan Lu via LinkedIn: Using Experimental Design to set sales strategy in a SaaS Startup

Tom Tunguz, a partner at Redpoint Ventures and author of Winning with Data, recently wrote an insightful article titled Monte Carlo Simulations Of Inside And Outside Sales Teams In A SaaS Startup about the value of a balanced inside/outside sales approach. He ran a simple Monte Carlo simulation to express in probabilistic terms the benefit of following a barbell portfolio approach a la Nassim Taleb: balance the high predictability / fast sales-cycle of your inside sales team with the slow sales-cycle / high upside of your field sales team. From one math nerd to another, I loved Tom’s analytical approach to quantify what is qualitatively intuitive, and found myself wanting more. (read more…)

Oct 16, 2017 Joe Lonsdale via Medium: In Defense of Private Equity

The only way to create prosperity is to do more with less. In economic terms, an increase in productivity is an increase in the amount or quality of output generated for each unit of input. Jobs do not make society wealthier – productivity does.  (read more…)

Oct 12, 2017 CRV via Medium: SaaS Waterfall Metrics 3–2–1

The calculations and definitions of SaaS businesses are fairly standardized, but the format of the data exchanged and reported on is all over the map. Having spent five years in the VC industry and seeing pretty much every variation of an up and to the right ARR chart out there (and down and to the right), I’ve decided to post my preferred format. Ideally this will prove helpful for startups and investors often juggling terminology and answering the question: “How did you do in Q1?” (read more…)

Oct 12, 2017 Jon Westenberg via Medium: No, Trello Didn’t “Fail To Build A Billion Dollar Business

I have no real interest in billion dollar companies. I’m interested in companies that serve their customers, build amazing products and make money. If they happen to reach a billion, that’s great. But getting to a billion is not a goal that keeps me up at night (read more…)

Oct 12, 2017 YCombinator: The Hidden Forces Behind Toutiao: China’s Content King

Using Machine and Deep Learning to Create and Serve Content, China’s Toutiao Created a Product with Engagement Similar to that of Social Networks – All without a Social Graph (read more…)

Oct 09, 2017 Bryce Roberts via Medium: “Venture Scale”

In my experience as an investor over the last 15yrs, this is far and away the most used reason for investors to pass on making an investment. The idea, the product, the market, the team is simply not “venture scale”. (read more…)

Oct 04, 2017 Homan Yuen via Medium: VC Math

As a former entrepreneur — I often thought about the “how” and “why” of venture capitalists. I also wondered if their job was really that hard or if they were just riding the money train. (read more…)

Oct 02, 2017 Luke Kanies via Medium: Moving Beyond Silicon Valley Software Companies

Like the general financial industry, the world of venture capital has become adept at using money to create more money, but it does not consider of the wisdom of its actions. It chooses easy answers, thus leaving harder but better questions unexplored, and accepts high collateral damage to the employees, customers, and industry that at best is painful and at worst is pure exploitation. (read more…)

Sep 20, 2017 Pitchbook: 2017 PE & VC Fund Performance Report

2016 marked the fifth consecutive year of positive net cashflows for both private equity and venture capital; however, net cashflows decreased significantly from 2015 to 2016. With investment activity remaining robust in 2017 while the pace of exits continues to decelerate, we expect the downward trend in net cashflows to persist. (read more…)

Aug 10, 2017 Fenwick & West: Silicon Valley Venture Capital Survey – Second Quarter 2017

This report analyzes the valuations and terms of venture financings for 208 companies headquartered in the Silicon Valley that raised capital in the second quarter of 2017.  Following a decline in 2016, venture valuations continued the improvement that began in Q1 2017. Valuation metrics are now marginally higher than their 13-year averages. (read more…)

Jul 21, 2017 World Economic Forum: A computer was asked to predict which start-ups would be successful. The results were astonishing

In 2009, Ira Sager of Businessweek magazine set a challenge for Quid AI’s CEO Bob Goodson: programme a computer to pick 50 unheard of companies that are set to rock the world. (read more…)

Jul 20, 2017 Jonathan Lu via LinkedIn: What climbing taught me about Venture Capital

More than a decade ago I was privileged to meet Jim Collins who spoke at an Access Fund event. As a lifelong climber, Jim spoke about his provocative article that I re-ready yearly, relating lessons from climbing to business: the concept of “fallure” vs. “failure” (read more…)

Jul 14, 2017 Antoine Buteau via Medium: How Do Venture Capitalists Make Decisions?  How Do Venture Capitalists Make Decisions by Gompers P., Gornall W., Kaplan S. & Strebulaev (2016)

Even though only 0.25% of companies receive venture financing, venture capital is an important source of financing that result in an outsized impact on the economy. Some studies estimate that 50% of U.S. IPOs are VC-backed and that these companies account for 20% of the U.S. market capitalization and 44% of R&D spending. (read more…)

Jun 28, 2017 Jonathan Lu via LinkedIn: Is there a new beginning for distressed VC-backed companies?

“New beginnings are often disguised as painful endings” – Lao Tzu (read more…)

Jun 01, 2017 Bryce Roberts via Medium: Real Businesses

Lifestyle Business: Companies whose primary purpose is to provide the owners with a comfortable lifestyle outside of the business. These companies can’t grow beyond a certain size without undermining their reason for being. (read more…)

Apr 22, 2017 Will Gornall and Ilya Strebulaev: Squaring Venture Capital Valuations with Reality

We develop a valuation model for venture capital-backed companies and apply it to 135 U.S. unicorns — private companies with reported valuations above $1 billion. We value unicorns using financial terms from legal filings and find reported unicorn post-money valuation average 50% above fair value, with 15 being more than 100% above. Reported valuations assume all shares are as valuable as the most recently issued preferred shares. We calculate values for each share class, which yields lower valuations because most unicorns gave recent investors major protections such as a IPO return guarantees (14%), vetoes over down-IPOs (24%), or seniority to all other investors (32%). Common shares lack all such protections and are 58% overvalued. After adjusting for these valuation-inflating terms, almost one-half (65 out of 135) of unicorns lose their unicorn status. (read more…)

Mar 29, 2017 CB Insights: The Venture Capital Funnel

The venture capital funnel highlights the natural selection inherent in the venture capital process.  Anecdotally, it’s known that most startups fail. But looking at the data, we can see the hard truth in the numbers and better understand where in the funding lifecycle startups begin to lose traction. (read more…)

Mar 04, 2017 National Venture Capital Association: NVCA 2017 Yearbook: The Go-To Resource on the Venture Ecosystem

In 2016, data shows 898 venture firms in existence, managing 1,562 active venture funds and translating to approximately $333 billion in U.S. venture capital assets under management. (read more…)

Feb 07. 2017 Industry Ventures: The Venture Capital Risk and Return Matrix

One of our venture fund managers recently asked, “When you invest, what is a good expected return?” After thinking about the question, we concluded that the answer depends on the type of investment – is it a company or fund, and is it early-stage or late-stage? (read more…)

Jan 31, 2017 CB Insights: 2016 Global Tech Exits Report

TOTAL TECH EXITS DROPPED IN 2016, BUT IPOs UP.  Globally, there were 3260 M&A exits and 98 IPOs in 2016. Total tech exits saw a 4% decline over 2015, which saw 3421 M&A exits and 90 IPOs. Overall, exit activity was up in the second half of 2016 with 1726 exits compared to 1632 exits in the first half of 2016. (read more…)

Jan 19, 2017 Pitchbook: 2016 Annual US PE Breakdown

If 2014 was a record-setting year for PE, and 2015 a turning point, then 2016 can be characterized as the first step toward normalcy. Buyout activity receded amidst the growing concerns about global trade, rising populism and central bank policies that we know all too well. It must be noted, however, that PE transactions occur on a deal-by-deal basis, not a global basis. As such, managers have continued to find pockets of growth and opportunity, particularly in the tech and energy sectors. (read more…)

Dec 22, 2016 Bryce Roberts via Medium: Meaningful Exits For Founders

For an industry that doesn’t do it for the money, we sure talk about money an awful lot in the world of startups.  A few posts were written this past week diving deeper into the numbers that drive VC returns which, in turn, drive behavior in startups who’ve raised money from VCs. (read more…)

Nov 29, 2016 First Round Capital: State of Startups 2016

The bubble is deflating. We asked 700+ founders to answer one of the most frequently asked questions we receive: are we in a bubble? Last year 73% said we were. While this year the majority still say yes, it’s closer to a coin flip (57%), down 22% from 2015. (read more…)

Oct 15, 2016 Founder Collective: Overdosing on VC: Lessons from 71 IPOs

Venture capital is a hell of a drug. Used properly, it’s like adrenaline energizing many of the greatest companies of the past fifty years. Used incorrectly, it creates toxic dependencies. (read more…)

Sep 20, 2016 Industry Ventures: A Graceful Exit – Managing Shareholder and Limited Partner Liquidity

“There’s a trick to the ‘graceful exit,’” Washington Post columnist Ellen Goodman once said. “It begins with the vision to recognize when a job, a life stage, or a relationship is over – and let it go.” For the venture capital industry, such wisdom could not apply more. In our view, founders, management, and partners should manage the end of an investment or relationship as carefully as they do the beginning. (read more…)

Aug 11, 2016 Wall Street Journal: In Tough Climate, New Investors Scoop Up Startups and Revamp for Sale

After trying for four years and not generating enough growth, Walter Chen decided to sell his work productivity startup, iDoneThis.  The Las Vegas company couldn’t raise new funding or find a suitable strategic buyer after initially raising $900,000 in seed funding.  So in November Mr. Chen and his co-founder sold to an unconventional hybrid venture capital-private equity investor (read more…)

Oct 08, 2016 Scaleworks: Company Valuations

Valuing a company is typically done based on either Value Pricing or Market Pricing. Value Pricing is what mature, stable, normally profitable businesses are bought on, and how Private Equity evaluate companies. Market Pricing is VC’s (and founders) set a price using external factors. (read more…)

Apr 21, 2016 Bill Gurley: On the Road to Recap

Why the Unicorn financing marketing just became dangerous… for all involved (read more…)

Mar 24, 2016 Bloomberg: Hedge Funds Pumped Up Silicon Valley. Now They’re Pulling Out

In recent months, venture capital firms and mutual funds have become choosier about which technology startups they’re prepared to back. Now hedge funds, after helping push valuations to dot-com-era heights, are getting more picky, too. (read more…)

Feb 18, 2016 Techcrunch: Secondary Shops Flooded With Unicorn Sellers

Until recently, shares of some of the highest-flying unicorn companies have been so hard to come by that secondary buyers have battled each other, not to mention other investors, to acquire some of the startups’ common shares. (read more…)

Jan 15, 2016 National Venture Capital Association: $58.8 Billion in Venture Capital Invested Across U.S. in 2015, According to the MoneyTree Report

$11.3 Billion in Venture Capital Deployed to Startup Ecosystem in Fourth Quarter 2015 Makes Second Highest Full Year Total Since 1995 (read more…)

Nov 1, 2015 Will Gornall and Ilya Strebulaev: The Economic Impact of Venture Capital: Evidence from Public Companies

Over the past 30 years, venture capital has become a dominant force in the financing of innovative American companies. From Google to Intel to FedEx, companies supported by venture capital have profoundly changed the U.S. economy. (read more…)

Sep 27, 2015 Mark Suster via Medium: Why I Fucking Hate Unicorns and the Culture They Breed

Something is rotten in tech startup land. Don’t call me a hater for saying so. It’s not that I’m anti innovation or a disbeliever in disruption or calling it a full-scale bubble or saying every darling startup is going to fail. None of those. (read more…)

Apr 14, 2015 Saints Capital: A Guide to Secondary Transactions: Alternative Paths to Liquidity in Private Companies

The sale of private company shares on the secondary market is becoming increasingly prevalent as the timeline to reach a liquidity event has lengthened over the last decade. In order to proactively manage secondary transactions, the boards, management teams, and investors of these companies need to be aware of the relevant issues, challenges and considerations (read more…)

Nov 12, 2014 Fenwick & West: Silicon Valley Venture Survey – Third Quarter 2014

Distribution of Venture Returns.  It is well known that venture investing is a very risky business, with the key to success often being the one investment that provides a huge return to offset the numerous money losing or small return investments in a fund. (read more…)

Jun 20, 2014 Capital Dynamics: White Paper – Private Equity Secondaries

The secondary market is a relatively young, yet maturing segment of the overall private equity marketplace. By virtue of various advantages over other private equity strategies and its remarkable growth over the last 10 to 15 years, this segment has attracted a broad spectrum of investors (read more…)

Feb 19, 2014 Devin Mathews via Fortune: How to avoid the venture capital trap

Over the last 20 years working with technology entrepreneurs, I have seen a dramatic increase in the influence of what I like to call the Venture Industrial Complex (VIC) — a loose group of venture capitalists, bloggers, mentors, advisors, seed funds, accelerators, and conferences that feed the American fascination with all-or-nothing entrepreneurship for personal gain. (read more…)

Sep 18, 2013 Todd Hixon via Forbes: Spring In Venture Capital

Last spring Mark Suster posted “Morning In Venture Capital”, where he spoke of good times returning. Alas, the venture spring that Mark evoked seems to be New England spring: cold and rainy, taking longer than we had hoped. (read more…)

Dec 03, 2010 Harvard Business Review: Risk & Reward in Venture Capital

This note describes the payoff structure of investment in individual venture capital-backed companies and in venture capital portfolios. Venture Capital investments are characterized by high failure rate (0ver 50%) and a small number of given successes (greater than 10% returns). (read more…)

Jan 25, 2008 Millennium Technology Value Partners: Inside the Growing Secondary Market for Venture Capital Assets 

For the last decade, secondary market activity involving all types of private
equity investments has been a booming and increasingly efficient aspect of the far
larger overall private equity market. Total secondary private equity transactions
have grown 14-fold over the last ten years, from approximately $600 million in
1998 to well over $8 billion in 2007. (read more…)