Distilling Venture Capital

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use Opening Observations: In Today’s Episode I return to what I have termed Unicorn-mania, building on the subject of my first episode in March.  So, it will be a Unicorn-mania Redux. I’m returning to this topic b/c, well, we need to revisit it primarily b/c things seem to be sliding further toward the insane, literally with each passing week. And, I will talk about the continuation of this insanity in the context of some real-life examples:  The true poster-kids for “Unicorns are not real”…  Specifically, I’ll provide insights into WeWork and Uber, and the unmistakable role played by Softbank’s Vision Fund in helping to fuel the craziness. And, let me say from the outset, how disappointing it is to see the technology press and the data analytics firms like CB Insights and Pitchbook (a Morningstar Co.), continue to engage in this ridiculous charade.  I am going to get into some examples of that in a moment.  Suffice it to say, that if you have a subscription to one of these firms, my analysis may leave you questioning what value are getting for the money… To begin, let’s quickly review what I covered and highlight a few take-aways from Episode 1 of Unicorn-mania;   I outlined and highlighted the hype that characterizes VC and techland today with respect to overvalued, so-called Unicorns – companies alleged to be worth $1B+ I also highlighted the Stanford Univ. Study, Squaring Venture Capital Valuations with Reality, that reveals and proves that so-called Unicorn tech companies are substantially overvalued – and offers a valuation model that really works in valuing theses companies  The Study dissects and debunks the use of post-money valuation as nothing short of an illegitimate method for valuing any company, let alone VC-backed private tech companies. Before I go further into the topic, I am going to strongly encourage you to please refer to the Show Notes for this Episode to access links to the following: Link to Stanford University Study:   Squaring Venture Capital Valuations with Reality - Downloadable pdf found here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455 (Social Science Research Network – SSRN) Link to Video:   Presentation at SVOD (Sil. Valley Open Doors Conf.), June 2016 by Ilya Strebulav, author of the Study and Professor, Stanford Univ. Grad. School of Business:   https://youtu.be/k4OtGWZ3iYI Original Version of the Study was submitted and published April 19, 2017;  However, the findings were presented about a year earlier in June 2016 at SVOD Conf. (Silicon Valley Open Doors) Where Prof. Strebulav was the Keynote Speaker (I encourage you to got to the link and watch it.  It’s < 20 minutes) Summary of the Findings – From the Study Abstract: We develop a valuation model for venture capital--backed companies and apply it to 135 US unicorns, that is, private tech companies with reported valuations above $1 billion. We value unicorns using financial terms from legal filings and find that reported unicorn post--money valuations average 48% above fair value, with 14 being more than 100% above.  Every Company reviewed and valued, (100% of the Sample) was overvalued to some degree – that means not one company came in at the post-money valuation utilized by the VC industry Values were calculated for each share class, which yields lower valuations because most unicorns gave recent investors major protections such as initial public offering (IPO) return guarantees (15%), vetoes over down-IPOs (24%), or seniority to all other investors (30%).  According to the authors, “Overvaluation arises b/c the reported valuations assume all of a company’s shares have the same price as the most recently issued shares.”  Even though each new round of funding effectively sucks the value out of prior rounds through seniority and superior rights, among other preferences.  Common shares lack all such protections and are 56% overvalued. After adjusting for these valuation-inflating terms of the Preferred rounds, at the time of the Study, almost one-half (65 out of 135) of unicorns lose their unicorn status.   Stanford Study Pre-work:  In 2016, prior to publishing the Stanford Univ. Study, Strebulav and his team of researchers surveyed, as part of their work, more than 1,000 VCs regarding valuations.  It was the first survey of its kind:  Result; 92% of respondents of the VCs surveyed agreed unicorns are over-valued;  A whopping 75% believe unicorns are significantly over-valued AND, as I noted in Episode I, did you ever notice that the PE industry doesn’t have an equivalent designation (Unicorns) for its $1B+ value companies, even those that are in the tech category? Why this study’s findings are not a wake-up call to the industry is currently a mystery to me. Who Cares? To demonstrate that my concerns and the opinions I’ve expressed, that Unicorn-mania is a total distraction, a waste of time, as I stated in Episode I, are not just some overly-dramatic soap-box issue I am on… Turns out, I am in some pretty impressive company, actually – with respect to my criticisms of the mania.  Let’s take a look: All of the examples are from the 4th Quarter of 2015, when some rather prominent and accomplished investors and tech company leaders had begun calling BS on Unicorn valuations, even before the real Mania commenced in earnest over the last several years: Marc Benioff, Chmn and CEO of Salesforce, Dec. 2015 on Bloomberg TV stated,  “The unicorn mania that’s going on, that’s dangerous for our Silicon Valley economy,"   “this is just, you know, unheard of... It’s become a self-esteem issue for these entrepreneurs.”  Benioff states to the SF Bus. Times, also Dec. 2015:  “I’m not buying the unicorn theory…"  There's no reason [for] these companies who claim to be worth billions of dollars and making billions of dollars to stay in the private markets." Benioff asserted that some billion-dollar valuations are the result of "manipulation" of private tech markets and again called on founders to go public to "rationalize" their worth.   Suggesting, by implication, that these values are not rational! Legendary VC John Doerr, who joined Kleiner, Perkins, Caufield in 1980 – [did they even call it venture capital back then?]  – In the same 12/7/2015 SF Bus. Times article Doerr pointed out, “Google has acquired one company per week since 2010 but has only five times paid more than a billion dollars for a company,” Doerr said. “There are 150 companies considered unicorns, 93 are in the United States. How does that math work?”  Great Q indeed!  I suggest it doesn’t, b/c it’s not about the math but rather about the hype. Bill Gurley, another highly respected and accomplished VC veteran from the Valley and Founding partner of Benchmark Capital.  In Oct. 2015 at the WSJ Laguna Beach Tech Conf. stated,  "All these private valuations are fake. ... It's all on paper, it's all a myth,"    "Anyone that's raised $400 million is probably spending $100 million a year," he said. "Until you get liquid, you haven't really accomplished anything." And finally, Mark Suster, a voice I respect a lot in the industry.  He has been a Managing Partner at Upfront Ventures since 2007.  Suster puts out one of the better blogs in venture called “Both Sides of The Table” in which he dispenses and provides excellent, valuable, how-to and other advice for start-up entrepreneurs on a whole range of topics – you should check it out.    Well, back in a Sept. 2015 piece that he published on his blog, Mark does not hold back with his sentiments regarding Unicorns stating, “There’s no one sane I know any more who doesn’t privately say that things have gotten out of hand. Few like to say so publicly.    And I blame unicorns. Mark is very clear that he’s not referring to what he identifies as “successful” companies themselves but “the entire bullshit culture of swashbuckling startups who define themselves by hitting some magical $1 billion valuation number and the financiers who back them irrespective of metrics that justify it.  Unicorn has become part of our lexicon in a sickening way and will no doubt become part of the history we tell about how things got so out of control again. 10 years from now people will be embarrassed to say unicorn.” Well, we are about 5 years out from those highly critical assessments from some really smart people in the industry.  Unfortunately, the sane voices of these reputable tech titans from late 2015 have gone under-reported or unreported in recent years.  Which, I guess, is a primary symptom or characteristic of a “Mania” itself – delusional thinking…prone to exaggeration, denial and so on, but I’m no doctor…so I’ll leave that diagnosis for others to ascertain. I stated in Episode I in March, It Is a big distraction from what’s really important in evaluating and valuing venture-backed tech companies.  We’ve been completely DISTRACTED for nearly 5 consecutive years since the warnings and criticisms of this mania in 2015 by key, reputable industry players in VC and tech. And, that’s despite the publication and dissemination of the most conclusive, comprehensive accurate study ever regarding what the valuations of these companies really are. Here’s the central problem – The $1B+ valuations ascribed to so-called unicorn companies are not true market valuations at all.  They all utilize a metric called “post-money valuation” that inflates their value.  As stated, the Stanford Univ. Study found 100% of all unicorns are actually over-valued to some degree when applying proper market valuation metrics based upon the terms and conditions found in the Pref

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world, including Fintech.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use. Episode Introduction: Today’s Episode is another in my Focus-on-Fintech Series where I bring you a close-up look into companies in the sector and the innovations they are bringing to the market Given that Fintech is global movement and phenomenon that is changing, for the better, the way we participate in and get finance done around the world, one of the hottest places on the globe for Fintech investment today is Brazil.   In today’s Episode, I delve into and distill down why Fintech is attracting such interest and investment in Brasil Fintech in Brasil: The Basement.io Story To help me do that, I am pleased to be joined today by Frederico Rizzo, Founder and CEO of Brazilian Fintech company, Basement, based in São Paulo, Brasil.  Basement is a fintech company leading the way in Brasil related to innovation in the investment sector, providing a platform for individuals to invest in SME private companies and other services.   Frederico, thank you very much for joining me today. Please tell us a bit about what Basement does, when and how you got started, and the reasons that motivated you to create the company.  What was the impetus, motivation for the formation of Basement? What is the story around the company name Basement? What is the opportunity or need for Basement to collaborate or partner with other major financial or investment institutions?  Is it necessary for success in your business model? Can you Provide a short history of the role of credit and equity in Brasil…Brasil has not historically had “deep” credit markets.  This access to financing is simply not available to well-managed SMEs.  You must be a big corporation and listed publicly to get access to credit at reasonable interest rates… Meaning, if you weren’t a large corporation with access to the public stock market, you really couldn’t raise capital – you had to grow your business with cash – which means limiting and constraining your growth. Fintech in Brasil, é Muito Quente (is super-hot) What is driving this?   One reason is a result of concerted effort by the key financial governmental regulatory bodies in Brasil over the last 1-2 years to move toward open, digital banking through open data sharing mandates… What does this mean? CVM – Comissão de Valores Mobiliários; Brazilian equivalent of the SEC The Brazilian Central Bank and the National Monetary Council set out open banking regulations earlier (May 2020).  The data-sharing framework aims to foster financial inclusion, drive competition in financial services and increase security. “The premise is that the personal data held by banks and other financial institutions do not belong to them, but to the respective holders, customers,” according to Marcelo Chiavassa, professor of digital law at Universidade Presbiteriana Mackenzie Campinas Financial institutions must begin adhering to new rules stipulating that data belongs to individuals, says Maristela Martins, country manager for Brazil at Backbase. That means that clients’ journeys will need to include explicit, simple, quick and secure consent agreements. Other Comments on Brasil Credit Markets: In recent posts you written, you have noted some delays in certain key regulatory initiatives on the private investment front.  Can you describe what those are and what, in your view, needs to be done to move forward? How important are these regulations for Brasil, in your view?  The Basement Business Model & Business Model Characteristics You offer several services, please elaborate on the services offerings of Basement Cap table management and valuation services Ultimately an alternative exchange, but it’s the early days and that will take time Growth Prospects for the Basement Business? Huge addressable market; Two main things: 1st, Regulation changes that are already in motion have to move forward.  We work closely with the regulators in this regard. 2nd big challenge is the go-to-market.  Learning a lot along with the market.  Education, product-market fit, channels.  We are testing all of this After 6 years in the market we know a lot of intermediaries – funds, angel groups, accelerators, lawyers – so we are trying to build the channels and go-to-market. We knew early we couldn’t have the type of venture model where we scale fast so we’ve spent 6 years developing.  That’s been the best approach – almost boot-strapping model We’ve raised about 4 rounds; have over 300 investors, the huge majority with no control.  A very healthy cap table in our perspective.  It’s all about execution now. Now for us, the next 12-18 months, we have what we need to execute and develop a great go-to-market strategy. Competitive Advantages Describe the competitive landscape, relative cost/pricing structure and how you leverage your expertise to bring a compelling value proposition to clients Other competitive advantages, differentiation… Closing Remarks: Frederico, thank you very much for joining me today.  I would love to do a follow up sometime as you progress and things are going. We will ultimately become a Delaware co. eventually to get closer to a bigger market – in terms of capital structure. Contact Information, Basement Frederico, How can those seeking additional information and wishing to learn more about Basement contact the firm?  Website:   www. basement.io Frederico Twitter:  @Frederico.rizzo Linkend also as Frederico Rizzo Thank you for joining me for this edition of DVC.  I hope you found the topic interesting and it gave you some things to think about regarding how to implement successful Fintech services.  I am currently working on the DVC website.  In the meantime, Please send questions and your comments regarding today’s Episode to:    bill@ccs.capital Stay tuned for my upcoming Episodes in which I am going to provide a follow-up to Episode 001, Unicorn-Mania.  We’ll do a Unicorn-mania-II Redux where I will dig into and discuss the sagas of WeWork and Uber in the context of Unicorn-mania.  And, I’ll be bringing more episodes highlighting the Fintech sector in Brasil with other innovative companies that are changing the financial services landscape in Brasil.  Thank you again and I look forward to joining you for my next Episode of Distilling VC.

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world, including Fintech.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use. Episode Introduction: Today’s Episode is part of my Focus-on-Fintech Series As background, When we talk about Fintech, Financial Technology, many in the sector think of technologies being deployed by startups in the areas of payment solutions (Transferwise, Square, many international players), peer-to-peer lenders (Lending Club, FundingCircle, Prosper, SoFi), digital banking – neobanks (many by non-banks), wealth management – robo advisors (Robinhood), AND also insurance-tech and real estate-tech, where the processes in those industries are being automated with technology, blockchain, smart contracts, AI, etc.  There are many examples… I have the pleasure today to be joined by Federico Baradello, the Founder and CEO of Finalis.  Finalis is a visionary company that is revolutionizing the way private deal making and M&A gets done.  Thank you Federico for joining me today…   One of the things that intrigued me about your business model was when I read a post you published near the end of March I happened to see on Linkedin.  You brought into focus and pointed out statistics regarding the private M&A industry that I had not really paid attention to before as a huge Fintech opportunity… You drew the comparison and contrast of how there has been very little VC investment to bring technology and innovation to the enormous broker-dealer/M&A deal process, unlike what has occurred in Real Estate Tech and Insurance Tech, which are similar in size to private M&A from a commission/fee revenue perspective US Totals Invested in Fintech: 2019 US Fintech investment - $59.8B;  2018 was $58B 2019 Real Estate Tech ~ $15B 2019 InsureTech ~ $12.1B Federico explains and discusses the reasons why the Investment Banking-private M&A business has attracted so little investment dollars (< $50 million) compared to the large sums raised by InsureTech and Real Estate Tech. You’ve pointed out that private deal-making is broken, noting that $4T+ of M&A and private placements are transacted operating on 1990s technology I thought it would be useful for listeners, [in the context of this dearth of tech/innovation spending in priv. deal M&A,] to take a few minutes to talk about the idea for and creation of Finalis. The Finalis Business Model & Business Model Characteristics You’ve described the Finalis model as a “broker-in-a-box” solution… and, the first scalable BD that automates and brings together streamlined, efficient processes for Compliance (FINRA, SEC) as well as deal-flow technology solutions… Solution – “Lease a broker-dealer-instead” model Create technology to automate the process rails for priv. M&A transaction from beginning to end – Federico Explains… How did your prior experience as a Deal Attorney and your understanding of the existing incentives native to I-banking business provide you with the vision for creating Finalis? It’s an execution-driven business Paper the process – law firms get paid by the process I-Banks are in it for the commission %, so incentivized to reduce costs and get to the close Thus, not inclined, incentivized to leverage technology; there is a resistance to change that gets in way of the closing processes… In a prior conversation, you described Finalis’ Mission as, to “Empower Deal Makers” and your Vision as, to be the “world’s largest distributed I-bank.”   Also, to become the “first scalable broker-dealer” in the private M&A industry.  Can you elaborate on what this vision/mission means and how you arrived at it based on your direct experience doing and documenting deals? Growth Prospects for the Finalis Business? Huge addressable market;  How do you define the addressable portion you go after initially and strategies for executing? Private market deal-making was booming pre-pandemic and you’ve described the enormous size of the private deal M&A industry ($4T+).  Do you have a view or prediction regarding what is in store for this industry post-COVID19? Competitive Advantages Describe the competitive landscape, relative cost/pricing structure and how you leverage your expertise to bring a compelling value proposition to client firms Other competitive advantages, differentiation… Closing Remarks: Company Name, Finalis; Federico provides an interesting account and story around where the name Finalis originated. Contact Information, Finalis Those seeking additional information and wishing to learn more about Finalis can visit the firm’s website at, finalis.com Other ways to reach out and engage… Thank you for joining me for this edition of DVC.  I hope you found the topic interesting and it gave you things to think about.  I am currently working on the DVC website.  In the meantime, Please send questions and your comments regarding today’s Episode to:    bill@ccs.capital Stay tuned for my next Episode in the Focus-on-Fintech Series where I am going to provide insights and real examples of the extremely hot Fintech market in Brazil;  I’ll explore why it has been attracting record venture investment at a rapid pace.  I’ll be interviewing a São Paulo, Brasil-based Fintech company that is at the forefront of this rapid growth – that also happens to be focused on the private investment market.  Stay tuned.  Thank you again and I look forward to joining you for my next Episode of Distilling VC.

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use. Episode Introduction: I would like to introduce Today’s Episode topic as follows;   We hear a great deal about cryptocurrencies, mostly Bitcoin, and the impact they are having on the financial services and investing landscape, with respect to how we define money, e-commerce, make investments, and even what Central Banks are doing to authorize/issue their own digital currency or stable currency, etc. On the other hand, we don’t hear much or may understand very little about the derivation and creation of cryptocurrencies themselves.  Where do they come from?  What is their intrinsic value and utility?  How is all of this accomplished? So, today We’re going to get into what I consider a very interesting segment of the crypto-currency world – Crypto-Mining - that we don’t often hear that much about but yet is vitally important to our ability to be able to utilize these digital currencies, digital assets to conduct financial transactions:  Crypto-currency Mining To answer these questions and distill down our understanding of the crypto-mining industry, I am joined by JP Baric who is the Founder and CEO of an technology/energy company directly involved in multiple aspects of the crypto-mining industry, operating as Aurum Capital Ventures   Aurum Capital Ventures is leading the way not only in the development and deployment of turnkey crypto-mining technology in the field…but also efforts to bring much needed liquidity and financing to the mining and cryptocurrency markets themselves… So, we’ll dig into those topics…   Welcome JP and thanks for joining me today.  To kick off today’s conversation, JP, perhaps you can provide a little background about the origins around the formation of your Company and identify its core goals and objectives.    What you Will Learn in Today’s Episode: Define Cryptocurrency-Mining & How it Works   The Future of Crypto-Mining Crypto-Currency and Crypto-Mining are Fully Transparent Markets, by Design The Search for the Best Equipment and Cheapest Source of Energy  How Aurum Capital Ventures is Changing the Game and Mindset Regarding Crypto-Mining and the Production of Energy Aurum is Both a Buyer and Seller of Energy Aurum is Redefining How Energy is Consumed and Transmitted Aurum is Creating Unique Investment Vehicles to bring needed liquidity – both debt and equity capital – to the Crypto-Mining and Crypto-Currency  How Crypto-Miners are Rewarded What is a Halving Event and What does it Mean for Cryptocurrency Mining? And Much More…   Cryptocurrency Mining Explained Miners are, in effect, getting paid for their work as auditors.  They are doing the work of verifying previous bitcoin transactions.  It is said that, miners are, in effect, "minting" digital currency… By verifying transactions, miners are helping to prevent the "double-spending problem," a scenario in which a bitcoin owner illicitly spends the same bitcoin twice  In addition to rewarding miners and supporting the bitcoin ecosystem, mining serves another vital purpose:  It is the only way to release new cryptocurrency into circulation.  In other words, miners are basically "minting" digital currency The primary draw for most Bitcoin miners is the prospect of being rewarded with valuable bitcoin tokens To earn bitcoins through mining, you need to meet two conditions.  One is a matter of effort; one is a matter of luck: 1) You have to verify ~1MB worth of transactions. This is the easy part. 2) You have to be the first miner to arrive at the right answer to a numeric problem. This process is also known as, proof of work The integrity and value of crypto is predicated upon the ability of miners to confirm, validate a 1MB block   We just had a pre-designed reduction in the reward that miners can earn when mining, referred to as a Halving Event:  On May 12, 2020, Yesterday, the reward for mining Bitcoin just dropped from 12.5 BTC to 6.25 BTC, for validating a 1MB Block -   This is what crypto- miners face all over the world.  Block-halving is hardcoded into how Bitcoin operates.  Its business as usual and it means that Bitcoin is doing exactly what it is supposed to do according to the original design of Satoshi Nakamoto. Halving Event - So, when we talk about miners being motivated and incentivized by being rewarded with Bitcoin for successfully delivering a proof of work,  Describe what a “halving” event is and what it means – how it affects crypto-mining activity Why is There a Halving Event? There can only ever exist a maximum of 21 million bitcoins.  Therefore, the reward for making new ones needs to be reduced periodically in order to bring sustainability to its value.  That’s exactly what blockhalving accomplishes once every 210,000 blocks (roughly every four years). The creation of “mining pools” Business Problem that Aurum Capital Ventures is Solving Mining is a very capital and energy intensive business and is presently “oversupplied” globally Description of the main Business Problem Aurum solves – Its value proposition Where geographically are your major deployments? Discussion of Iowa, NY and other major installations Unique concept and approach to the energy component of operations Business Model Characteristics Your Bus. Model has Multiple Revenue Sources: Turnkey Mining Equip Deployments & hosting services;  Speed & Efficiency through repeatable process of Power procurement, infrastructure deployment, and remote management Running your own Mining servers Managed Services Selling used equipment to established network Defining and Solving the Capital Procurement Obstacles of the Crypto-Mining Industry: One of your firm’s stated GOALS: There exists a lack of liquidity in the space.  JP explains how Aurum is creating unique investment vehicles to enable institutional capital to enter the space to provide liquidity Launch Global Bitcoin Mining Fund to allow for better market liquidity and transparency in the sector;  JP Baric Explains Securitization of mining hash rate (hash rate tokens);  JP Baric Explains Launching vehicles like investment trusts and funds that offer investors exposure  Goal: Enables Liquidity Unique Financing Approach: Issuance of secured, insured bond to finance equipment and projects Attractive risk-adjusted return characteristics for investors Opportunities for arbitrage in power contracts Providing increase in credit and capital to Aurum and the entire market Providing investment banks Mining, b/c it’s an infrastructure investment is easier for institutions to get into to than Bitcoin purchasing Not currently in the prospectus of the major Energy Funds to invest in energy consumption products – they are only focused on energy generation - Bitcoin is not part of their investment thesis. Allows exposure to underlying Bitcoin asset and mine Bitcoins at a discount relative to the volatile Bitcoin market price itself.  JP Explains Competitive Advantages Modular, mobile equipment deployment – more efficient Rapid Payback/Utilization of “Stranded Energy” - Aurum’s mobile mining deployments profitably monetize any type of stranded energy anywhere in the world Situation where the value of the underlying collateral (mining equipment) can increase in value during life of the equip. and related financing, due to a halving event of Bitcoin Allows you to build inventory of equipment for deployment now, in advance of halving event that you know occurs approx. every four years JP Baric explains Aurum’s business model advantages relative to competitors such as Genesis Mining Closing Remarks JP provides an overview of where he sees things headed for crypto-mining industry in general… We’ve just had this Halving Event – what are some key things that happen next as it relates to Crypto-Mining? JP explains Aurum’s leverage, differentiation and its expertise to bring to market top equipment and energy sources required by Miners and the financial liquidity mechanism to make it happen – keeping with Aurum’s core mission Contact Information for Aurum Capital Ventures Those seeking additional information and wishing to learn more about Aurum Capital Ventures: JP’s Twitter Account – @JPBaric Sign up for Investor Newsletter at: Aurumcapitalventures.com Thank you for joining me for this edition of DVC.  I hope you found the topic interesting and useful.  I am currently working on the DVC website.  In the meantime, Please send questions and your comments regarding today’s episode to: bill@ccs.capital Stay tuned for my next Episode, coming very soon, where I will I am going to provide a follow-up to Episode 001, Unicorn-Mania, where I will dig into and discuss the sagas of WeWork and Uber in the context of Unicorn-mania.  Thank you again and I look forward to joining you for my next Episode of Distilling VC.

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype and Silicon Valley pop-jargon that tends to dominate the tech landscape.  I seek to provide transparency and    Opening Observations: Given that this is my inaugural episode under the Distilling VC label, I thought it would be appropriate and useful to provide you with some brief background regarding the podcast and the type of content you can expect in the future and a little about me… First, the podcast;   The vast majority of episodes I will bring will take you inside the insights, challenges, successes and the journeys revealed and shared directly through the words and experiences of tech company entrepreneurs, sometimes from the VCs who back them and others in the tech and VC community…So, I’ll usually have very interesting guests.   Some brief background on me, your host:  I have spent a large part of my professional life (last 20 years) working in the Venture Finance business assisting VC-backed tech companies in procuring the capital they need to grow Over the years, I have had the opportunity and good fortune to meet and work with incredible, visionary management teams, many savvy investors and have had the privilege of underwriting and financing ground-breaking technology companies, many of which continue to have an impact on the technology landscape today (like Google; a $10M deal in 2001, for example).    With that as backdrop, today I want to focus on a topic that I believe signals something has gone awry in tech startup and VC land over the last 4-5 years.  And it concerns me greatly.   Have you noticed, Everyone seems to be fascinated with “unicorns?”  Venture capitalists, tech company founders and management teams, the tech press and the financial press and many others,   So, today’s episode will delve into and distill down, “Unicorn-mania” so we can make sense of what’s really going on. Let me state for the record, It Is a big distraction from what’s really important in evaluating and valuing venture-backed tech companies.  Furthermore, it really touches upon the issues of transparency and accuracy, and ultimately the credibility of the industry itself, in my view  The longer this mania continues, I believe it presents dangerous consequences for multiple players inside and outside the VC industry.     So, what am I talking about?   Let’s unpack this…  First, some definitional context:  What is a Unicorn company that we hear so much hype about today?  In tech and VC parlance, it is a private startup tech company that is valued at $1B or more, in theory, referred to as its “Post-money Valuation.”   Great, what does that mean?  Not what you may think it does, as I will explain… And for historical context, The term unicorn, in VC, originated…in late 2013 when Cowboy Ventures Partner, Aileen Lee, coined the term for what she described as a tech company with a $1B valuation – and noted it was a pretty rare thing, as she pointed out then – which was correct.  There were 39 companies identified then in the ‘Unicorn Club.’  27 of those were in the Bay Area!   So, it really was just a Silicon Valley phenomenon in the beginning…   Lee admitted the term probably wasn’t the best or most well-thought-out description but went with it nonetheless.   “Yes we know the term “unicorn” is not perfect – unicorns apparently don’t exist, and these companies do – but we like the term because to us, it means something extremely rare, and magical” Aileen Lee, Cowboy Ventures, Nov. 2013   The term was reinforced further in a 2015 interview with Crunchbase, and it has unfortunately, been with us ever since, to the detriment of the industry, in my view.   The Cowboy Ventures’ website, even contains, to this day, a link to what it calls its “Unicorn Handling Guide” or protocol insisting that anyone using the term give proper attribution to the firm.  No one actually adheres to this “guideline” today, of course – but there it is.        This is not to malign or denigrate Cowboy Ventures as a reputable VC firm in any way.  It is, by most measures, a successful venture firm boasting a number of impressive investments and it has had a substantial number of notable exits, which you can find on their website.  So, I’m sure their LPs and their portfolio companies alike are pleased… The real issue is not about Cowboy Ventures at all…but rather a group-think mentality that has gripped and permeated venture capital…with no discernable benefit…   How Many Unicorns Are There?  It depends on who you ask & upon whose data you rely: (Q2 2019), there were around 450 companies globally designated as ‘Unicorns’ Fast fwd to Feb. 2020 and it’s alleged to be 580! Valued at ~ $2T (From Recent Crunchbase Unicorn Leaderboard) Q4 2019 CB Insights states there are about 390  (CB Insights) Roughly 48% to 50% are in the US About 24%-25% are in China UK and India come in 3rd and 4th with roughly 5% each   Here’s the central problem – The $1B+ valuations ascribed to so-called unicorn companies are not true market valuations at all.  They all utilize a metric called “post-money valuation” that inflates their value.  In fact, based on a Stanford Univ. Study, which I will dig into in a moment, 100% of all unicorns are actually over-valued to some degree when applying proper market valuation metrics based upon the terms and conditions found in the Preferred Stock rounds.   There is both Good News and Bad News to report with respect to this phenomenon:   The Good News:  There is a solution, a remedy, if you will, for this self-inflicted malady of unicorn-mania.  It is The Stanford Graduate School of Business Study - And it has been readily available for several years.  Stanford GSB  (By Prof. Ilya Strebulaev and his colleague, Will Gornall) – which I’ll dig into in a moment Now, The Bad News:  Few are paying attention, and some are deliberately ignoring the solution that’s been made available.  Why?   The Study:  Squaring Venture Capital Valuations with Reality Downloadable pdf found here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455   So, let’s dig into the study.  The results are astounding and vitally important to EVERYONE connected to Venture Capital, tech startups, capital markets and even consumers – I’ll explain.    Released in April 2017 by the Stanford Univ. Graduate School of Business  The Authors:  Prof. Ilya Strebulaev, Prof. of Private Equity & Prof. of Finance, Graduate School of Bus., Stanford University Will Gornall, Sauder School of Bus., University of British Columbia, (Gornall earned his PhD from the Stanford Graduate School of Bus.)   Summary of Findings – From the Study Abstract: We develop a valuation model for venture capital--backed companies and apply it to 135 US unicorns, that is, private companies with reported valuations above $1 billion. We value unicorns using financial terms from legal filings and find that reported unicorn post--money valuations average 48% above fair value, with 14 being more than 100% above.  Reported valuations assume that 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 initial public offering (IPO) return guarantees (15%), vetoes over down-IPOs (24%), or seniority to all other investors (30%).  Common shares lack all such protections and are 56% overvalued. After adjusting for these valuation-inflating terms, almost one-half (65 out of 135) of unicorns lose their unicorn status.   Important takeaway regarding the findings of the Stanford Study:  The results and findings are not predicated upon some intricate mathematical or econometric model requiring reliance on multiple assumptions and conditions to arrive at its conclusions.  On the contrary, the Stanford Study valuations are derived directly from the legal, contractual terms and conditions negotiated between the venture investors and the companies.  Therefore, the study utilizes the actual economic terms of each Preferred round as it was negotiated – No assumptions or conjecture about the values in the Study are necessary.  This is a critical point.   It’s a Consumer Protection Issue: A number of the largest US mutual fund companies (Fidelity, JH, T. Rowe Price and Vanguard) have invested directly in private co. unicorns In 2015, Fidelity > $1.3B into unicorns!  That’s more than any US-based VC fund invested that year.  Including $235M in WeWork, $129M in Zenefits – A company that hired too many people, grew too fast, and the company culture spiraled out of control, and $118M in Blue Apron, the food delivery startup that IPOd in June 2017 and is now looking for a buyer… What is the common thread on all these investments by major mutual fund companies?  They all used the meaningless post-money valuation to value these private tech company assets in their portfolios.  Let that sink in for a moment.  It’s Mind-boggling Incredibly, they have accepted and used these meaningless valuations to mark their holdings of these private tech companies w/o further analysis – a completely irresponsible methodology.  It surely doesn’t inspire confidence in their ability to perform proper valuation analytics  Where’s the adherence to the fiduciary responsibility of these investment firms to their clients?  There are real financial implications for any retail investor in a mutual fund (401k or directly) related to this high-risk category.  How about institutions?  Univ. endowments, public pension funds, etc.? Are mutual fund companies fully disclosing real risk of this asset class to their retail investors?  Accurately?  How so, if at all?  (e.g. – Fidelity had to recently write

For detailed show notes and links go to MarkWKing.com/6 In this episode, I distill some positive and negative lessons about why a startup might need multiple attorneys. The short answer…lawyers are like doctors, they specialize. One size does not fit all situations. Equally important, entrepreneurs need to be careful about who an attorney has a duty of loyalty to. A lawyer that represents a company's best interest does not by default represent the founder. Also in this episode, I reintroduce the Venture Capital Coroner's Report. Previously, I did an entire podcast focused on lessons from failed, VC backed companies. The show failed (I know, ironic, right?). I just couldn't get enough interviews. However, there's more than enough material for an occasional segment of this show. The autopsy of VATLER provides an important lesson about disrupting entrenched players (and a resurrection story in the founding of SpotAngels). Lawyers or Insurance Salesmen? Naval Ravikant - Angel List In a very short post Naval lays out six important lessons he learned about hiring lawyers. He learned these the hard, expensive way. A Startup Lawyer is Not a Founder's Lawyer Jose Ancer -  Miller, Egan, Molter & Nelson Often lawyers are like that coach in the corner of a boxing ring. They're an experienced, voice of reason in a life or death struggle. Jose Ancer points out, however, that you need to be sure the lawyer in your corner owes his highest allegiance to you. It's not always obvious. Jose does a great job explaining how attorney loyalty works. Inside Story of VATLER's Shut Down Hamza Ouazzani Chahdi - Now at SpotAngels.com Founders ran head first into a wall called entrenched city government. Follow @HamzaOuazzaniC to track the story of SpotAngels, Hamza's new attempt to disrupt urban parking by helping you avoid parking tickets. Bonus Material – More About Naval Ravikant Naval says this about himself: "I am the CEO and co-founder of AngelList. I previously co-founded Epinions (which went public as part of Shopping.com) and Vast.com. I'm an active Angel investor, and have invested in dozens of companies, including Twitter, Uber, Docverse and Jambool (both sold to Google), and Mixer Labs and Fluther (both sold to Twitter)." Background article from PE Hub on why Naval feels so strongly about lawyers: His Brand Burnished, Naval Ravikant Plans New Fund with Babak Nivi Blog StartUp Boy Web Site Angel.co Twitter @Naval LinkedIn Naval Ravikant (little dated)  I'd love to connect at any of the following: Twitter: @TheMarkWKing LinkedIn: Mark W King Facebook: The Mark W King Old School Email: MarkWKing.com/social

When you read about startups or startup accelerators, you almost hear about teams of co-founders. That’s because there most often, having co-founders is the right way to go. But can a solo founder succeed? What’s a poor startup founder to do if s/he can’t find the right co-founders? Just hang-out and wait? In this episode of Distilling Venture Capital, I look at these questions. Below are some of the articles and resources that I mention. For the detailed show notes and bonus information about Nic Brisbourn go to MarkWKing.com/5 Startups Are Hard. Don't Go It Alone - Satay Patel, Homebrew Ventures Building The Right Founding Team - Nic Brisbourne, Forward Partners How Solo Founders Beat The Odds and Got Into Top Accelerators - Lora Kolodny for the Wall Street Journal I'd love to connect at any of the following: Twitter: @TheMarkWKing LinkedIn: Mark W King Facebook: The Mark W King Old School Email: MarkWKing.com/social  

VC decision making is one of the great mysteries of the business world. In this episode we look at the range of decision making models used by VC funds.  Elizabeth Yin of 500 Startups wrote a great blog post on the topic.  She was also generous enough to record some follow-up thoughts for this episode. The secret behind VC partnerships… The take home point is that venture capital funds fall on a spectrum with champion based decision making on one end and consensus models at the other.  The key is doing your homework. Bonus Info On Elizabeth Yin Here's how Elizabeth describes herself:  Partner at 500 Startups; Investor in seed stage companies and run the Mtn View accelerator. Formerly CEO / Co-founder of LaunchBit (acq '14) and marketer at Google. BSEE from Stanford, MBA from MIT Sloan. Twitter LinkedIn Blog 500 Startups I can't thank Elizabeth enough for calling and leaving some answers to follow-up questions.  She has a great blog and is very active on Twitter.

In this episode we look at advice from Hyde Park Angels and Rob Go of NextView Ventures about how to best pitch your startup to VCs or angel investors. We also look at what you can learn from a story Fred Wilson of Union Square Ventures tells about an entrepreneur who successfully convinced Fred to invest without a pitch deck at all. Building The Perfect Pitch Hyde Park Angels As part of their educational series Hyde Park's team created a great outline for the story your pitch should tell. The flow they suggest may be different than you would expect. But, it syncs with the way most venture capitalists and angel investors evaluate opportunities. A Simple Approach To Startup Pitch Decks Rob Go - NextView Ventures Rob Go and the NextView team have created two amazingly helpful templates for startup pitches: one for email and smaller meetings and a second for larger group settings (e.g. a demo day).  I focus on the individual or small group format. Their format has tremendous versatility and does for startup pitches what responsive design and HTML 5 did for web sites. You can use content once and then adapt literally in the middle of a pitch to tailor it to your unique audience. Here's the PowerPoint template It's hosted on DropBox.  If you don't want to sign in there to get it you can go to SlideShare.net (just to manage expectations, they released it on SlideShare as a single PDF, not in an editable format for PowerPoint or Keynote) As a little extra bonus here are some early pitches from companies you probably know. (yes...I know. Some are probably bootlegged and incomplete, but they're interesting none the less.) LinkedIn Buffer YouTube FourSquare Best Seed Pitch Ever Fred Wilson - Union Square Ventures Do you even need a pitch? Sounds like heresy. No self-respecting entrepreneur would pitch a startup without a deck. Fred says you can and has the story to prove it. Bonus Information about Rob Go Rob describes himself this way: "Here’s a quick background on who I am: 1. My name is Rob, I live in Lexington, MA 2. I’m married and have two young daughters. My wife and I met in college at Duke University - Go Blue Devils! 3. We really love our church in Arlington, MA. It’s called Highrock and it’s a wonderful and vibrant community. Email me if you want to visit! 4. I grew up in the Philippines (ages 0-9) and Hong Kong (ages 9-17). 5. I am a cofounder of NextView Ventures, a seed stage investment firm focused on internet enabled innovation. I try to spend as much time as possible working with entrepreneurs and investing in businesses that are trying to solve important problems for everyday people. 6. The best way to reach me is by email: rob at nextviewventures dot com" Blog NextView Ventures Twitter @RobGO LinkedIn  

Satya Patel of Homebrew, Steve Blank of lean startup fame and Aaron Harris of Y-Combinator wrote three amazing posts about founders, co-founders, founding teams and founding CEOs. In this episode, Mark W King explores their best thinking and explains what you need to know. Start-ups Are Hard. Don't Go It Alone by Satya Patel, Partner at seed fund Homebrew Ventures Satya does a great job explaining why founders need co-founders both for their own sake and the sake of their start-ups. Building Great Founding Teams by Steve Blank, author of The Start-up Owners Manual Lean start-up pioneer Steve Blank provides useful definitions for founder, co-founders and the founding CEO. Co-founder Management by Aaron K Harris, Partner at start-up accelerator Y-Combinator Small teams working in close quarters in high pressure situations always creates challenges. Aaron offers practical advice for how teams can be successful working together. Bonus Material - More About Satay Patel How he describes himself:  "Currently Partner at Homebrew and guilty of tweeting food porn. Previously, VP Product at Twitter leading product management and support. Co-led seed and early stage Internet and digital media investing as Partner at Battery Ventures. Joined Google in 2003, working on various product management and partnership initiatives for AdSense. Senior product manager at DoubleClick, VC with two NY-based venture capital firms and a strategy consultant. Penn educated. Vegas raised. Married with children. Optimizing for happiness."  Blog: Venture Generated Content Website: Homebrew Ventures Twitter LinkedIn

If you really want to understand a business figure out how it makes money. That's true for every kind of business.  It's especially true in venture capital.  Most people think about venture capital in terms of single deals.  A VC's job is to essentially buy low and sell high.  That takes a ton of work. In future episodes we'll take a look at how an individual VC deal makes money. Ultimately, however, venture capitalists make their money by managing a fund of venture investments for other people.  So that begs the question: How do venture capital funds make money?  VCs get paid with a management fee (1-3%) that should cover the costs of keeping the lights on.  It's a nice living, but not the reason someone becomes a venture capitalist.  Venture capital funds get "carry" which is a share of the upside, usually 20% of profits.  Carry is the brass ring. The lion's share of the money. The economic motive for VCs is to make a huge amount of money for other people and share in that success. In this episode we look at three articles by venture capitalists that explain how the math works for a VC fund to be successful.  The math is somewhat non-obvious.  Take a listen and find out how it works. Cem Sertoglu, Early Bird Venture Capital - VC Fund Economics Cem Sertoglu provides a brief Cliff Notes style guide to venture capital fund economics.  (HUGE apology to Cem for butchering the pronunciation of his name. My Turkish is non-existent and I couldn't find any pronunciations on the web.  Sorry!) Mark Suster, Upfront Ventures - How to Build a Startup & Understanding Venture Capital Mark Suster goes more in-depth than Sertoglu.  As part of his pitch at venture conference, Suster explained three things: the right mindset for founders, understanding how venture capital works and how to build a great team. His slides on how venture funds make money summarize beautifully. He's also very clear about why this matters to founders raising capital. Benedict Evans, A16Z - In Praise of Failure Evans lays out a PhD level class for understanding how venture capital funds really make money, and don't.  The data he presents from Horsely Bridge blew me away.  Not because of any surprise outcome, but because of the vast data set.  There's not a lot of arguing about the conclusion: "Go way way beyond big or go home."  I could not love this post more, unless we got to see the names of the 50%, (yes half!) of the funds in the data that failed to return 1X their investors capital.  Bonus Content - More About Mark Suster How he describes himself:  2x entrepreneur. Sold both companies (last to @salesforce). Now @UpfrontVC looking to invest in passionate entrepreneurs. Blog Company Website LinkedIn Twitter

My interviews with venture capital's most successful failures have proven that the sage old advice from Kenny Rogers still applies: "Ya gotta know when to hold 'em, know when to fold 'em, know when to walk away and know when to run." It's not time to run, but it is time to fold up the Venture Capital Coroner's Report. I just can't get a steady enough supply of guests to keep going. If you want to hear the three reasons people declined to come on the show, listen to this six minute episode. You might be surprised. I'm going to leave the shows up on iTunes and move them to my new website markwking.com You can share them with a friend or catch-up if you missed any episodes. You'll also find my new blog and podcast about impact investing and how lessons from the venture capital industry can change the world for better. Lastly and most importantly, I want to again thank all my guests. The difficulty in getting people to say yes greatly heightened by appreciation of the people who did. You were gracious with your time, patient with the interview process and honest about your experience. THANK YOU!! Mark W King The post Know When To Fold ‘Em appeared first on Venture Capital Coroner's Report.

As a serial entrepreneur Jeff Novich could spot a problem that meant opportunity.  His Dad had one of those problems in his medical practice.  Doctors' offices were drowning in paper and inefficient communication.  Jeff and his dad saw an opportunity to disrupt how medical offices operate and at the same time improve patient care and satisfaction.  It was a massive home run for Jeff's dad.  But in less than a year Jeff walked away in frustration. Listen to this episode to find out who made him fail fast. My Guest Jeff Novich describes himself as a "product manager who codes."  He's worked on a variety of digital products including VocabSushi.com, FareShare, GroundLink and Grocket.  He's applied his product expertise to educational technology, early ride sharing apps, medical communications and his current role is with ClassPass.com in the fitness space.  He's also has the unique experience of having been through not one, but two, accelerator programs. Jeff's credentials have that entrepreneurial quirkiness that lead to success.  He started out with a degree in Physics and Computer Science from Johns Hopkins and then moved to the softer side of academics and got a Masters in Broadcast Journalism.  For fun and relaxation, he's a regular hackathon participant. The Take Home Lessons Jeff and I had a wide-ranging conversation about product market fit and product market timing (the distinction is a key lesson), incubators and co-founders. Jeff's a classic product guy who learned a lot about the difference between a great product and a great company. Fortunately, he was able to fail fast and learn some valuable lessons. He also shares candidly about what worked and didn't work in his two different Tech Stars accelerator experiences.  Finally, the need for and value of a co-founder was crystal clear to Jeff and he shares his perspective on why the relationship worked so well at Patient Communicator. Resources & Links JeffNovich.com Jeff on Twitter - @JeffNovich Jeff on LinkedIn Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you've always heard the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post Fail Fast! Jeff Novich On What Made His Start-up Fail At Launch appeared first on Venture Capital Coroner's Report.

What were you doing when you were 18? Nikki Durkin was finding co-founders, doing the Y-Combinator thing, raising venture capital, dealing with reporters, replacing co-founders, raising more venture capital and otherwise trying to grow her start-up. Listen in to find out what she learned when it all collapsed. My Guest Nikki Durkin hails from Sydney, Australia.  At the ripe old age of 18 she launched 99Dresses, an online exchange for used fashion. After starting in Sydney, she moved to Silicon Valley to participate in Y Combinator.  While 99Dresses got its fair share of press, Nikki attracted more press than most entrepreneurs both because of her age and her gender.  When 99Dresses ultimately failed, Nikki took the courageous step of posting two long articles on Medium.com, one about being a woman in the tech industry and the other about the emotions of failing.  She discusses both with me on this episode of the podcast. The Take Home Lessons Unlike a lot of my conversations, Nikki and I spent less time on the lessons she learned about raising venture capital and managing and growing a start-up.  She spoke candidly about her relationships with her co-founders and her family.  She also offers a very balanced and candid perspective on being a young woman in the start-up tech game.  Lessons she learned about these things in her late teens and early 20's are often missed or ignored by people twice or three times that age.  Nikki's story reminds us that the people in our lives are ultimately what make any start-up story a success or failure. Resources & Links Nikki on Twitter Nikki's article about closing down 99Dresses Nikki's post about Why I'm Sick To Death of Being A 'Woman In Tech' Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you've always heard the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post Co-founders, Paparazzi & Family…Oh My! Nikki Durkin on Start-up Relationships appeared first on Venture Capital Coroner's Report.

Gard Mayer's path as an entrepreneur has more twists & turns than a back road through the mountains. In this venture capital podcast he talks about huge success, complete failure & everything in between, pivoting his start-ups when reality set in My Guest Gard leads Invodo’s sales team, driving growth through expanding the client base and revenue while also growing relationships with existing clients. As one of the original founders of Invodo, Gard brings over 14 years of entrepreneurial experience to the company. Previously, Gard founded and operated SmartHockey Inc., where he established the initial manufacturing and distribution relationships as well as the management team. Gard earned a BA in English from Cornell University. SmartHockey transformed off-ice hockey training with the introduction of the C|Saw Chassis (a.k.a. Bauer TUUK Rocker Chassis), SmartHockey Training Ball and a series of DVDs and Training Guides. SmartHockey products are used throughout the world by top professional teams and universities as a way for ice hockey players to train when they don't have access to ice. The Take Home Lessons Gard's path as an entrepreneur twists and turns as ideas succeed, fail and morph into new ones.  Whether working as a solo inventor or as part of a venture capital backed team, Gard's story demonstrates that a large part of entrepreneurial success comes from responding to what's not working in a creative way and from seeing your start-up's pain points as opportunity. Don't let early success give you a false confidence. Understand what external resources, relationships and market factors your start-up is dependent on.  Two of Gard's products failed because they depended entirely on Google and Apple. Test your ideas, but use data and deadlines to make help decisions to avoid analysis paralysis. As start-ups evolve, don't underestimate the challenge of evolving the team.  As Invodo evolved, numerous team members had to leave, including Gard's two co-founders. The perspective of new team members, in Gard's case a new CEO brought in by his venture capital investors, can seem radical.  But that fresh, alternative perspective may be the key to success. Resources & Links Invodo SmartHockey Gard on LinkedIn Gard on Twitter Gard's 1st Patent for a "Roller skate with brake" Gard's hockey ball patent Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you've always heard the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post When Should You Pivot? Gard Mayer On Making Critical Decisions appeared first on Venture Capital Coroner's Report.

Peter Vilsholm Therkildsen Schlegel had a path. Get seed capital. Launch start-up. Join incubator. Finish program. Get capital from incubator's loan fund to build start-up. Sounded good to everyone...except one person at the loan fund. And did I mention the letter from the Danish immigration authority? I'm Moving! Well sort of...just a new Twitter handle. I'm phasing out @VCCoroner and focusing on my personal handle @Mark_W_King. Click here for tweets about the podcast and other insights from venture capital's most successful. My Guest Peter has founded several companies, raising money from international venture capital funds and leading companies to international expansion and growth.  As a consultant, he worked as a strategic adviser in four consulting firms, aiding clients grow their businesses globally. He led teams across domains and geographies, hiring and growing people of more than 15 different nationalities. From 2008 to 2011 he was Chief Commercial and Strategy Officer for Agillic, a digital marketing agency.  Then in June 2011 he left to launch Admazely.  Admazely had an innovative technology that allowed small and medium businesses to take advantage of digital ad retargeting in a cost effective way. After Admazely closed, Peter moved on to work with Magnetix, a digital marketing agency in Copenhagen for about two years.  Recently, Peter began working with Responsive, an agency that specializes in creating digital experiences for its clients' customers. The Take Home Lessons Need for plan B - Peter notes that while he'd carefully nurtured relationships with Accelerace's loan committee, he still got blind sided by their decision. No matter what people are telling you, you must have multiple alternatives for venture capital. Need for speed - During the very early product development phase, a rapid feedback loop is crucial. Peter believes hiring people with a somewhat longer time frame in mind, slowed Admazely just enough to cause problems. Need for clear view of personal trade-offs - Realize that blending being a start-up founder with family life can be super challenging. Need for a start-up founder's management skills - Peter has found that the value of entrepreneurial drive and vision in more mature companies is huge.  Driving vision and momentum in a mature company can reap huge benefits. Resources & Links Peter's email PTS [AT] responsive [DOT] dk Peters new company www.responsive.dk Peter on Twitter @pschlegel The blog post that led me to Peter Peter on LinkedIn Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you always hear the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post Did The Check Clear? Peter Schlegel on Needing Multiple Plan B’s appeared first on Venture Capital Coroner's Report.

Rachel Chalmers knows your Achilles heel. After two plus decades sitting in Silicon Valley's front row watching start-up technology companies, she has a very clear idea of the single biggest cause of start-up failure.  Rachel was kind enough to sit down for a few minutes at the Montgomery Summit and talk about it. Listen in to hear what she sees as most critical for entrepreneurial success. My Guest Rachel Chalmers has been a long time observer and analyst in the world of technology.  She describes herself as a failed English teacher.  She received a BA degree in English from the University of Sydney and a master’s in philosophy, with a focus on Anglo-Irish literature, from Trinity College, Dublin.  But her time hanging out with engineering students pointed her towards technology writing. She started her career writing for MIS Magazine and Computerwire during the mid-late 90's.  In 2000 she moved to the 451 Group and focused infrastructure computing for the enterprise.  As she puts it she covered: "tools for programmers, power systems administrators and data center operators...and virtualization. Lots and lots and lots of virtualization." Then in mid-2013 Rachel joined Ignition Partners as a principal investing in enterprise software companies such as BlueData, Carmelo Systems, StreamSets, StrongLoop and Wit.ai Since 201 Rachel has been an adviser to the Ada Initiative, a non-profit that supports women in open technology and culture. Resources & Links Rachel's email:  Rachel [AT] ignitionpartners [DOT] com LinkedIn Twitter: @rachelchalmers Ignition Partners website The Ada Initiative I also mentioned a presentation by Bill Gross of IdeaLab from the Montgomery Summit.  Here's his slides for the same presentation at a different conference. The whole thing is good, but slide 20 is the key factors in failure. There's also a 15 minute video of his presentation from a conference in Europe. Bill Gross CEO of Idealab from Vator Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you always hear the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea. Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post Shut-up and Listen! Rachel Chalmers Explains the Biggest Mistake You Can Make appeared first on Venture Capital Coroner's Report.

Can you raise venture capital too easily? Nagarjun "Nag" Palavalli, my guest on this episode, thinks you can.  Nag's journey from dropping out of college in India to the fast paced start-up culture at the Alchemist Accelerator in Silicon Valley illustrates the pitfalls of quick success.  Nag also discusses why the romantic notion of the lone entrepreneur building a start-up can actually kill a great idea.  And Nag identifies the one person he wishes he'd talked to before launching. My Guest Nag Palavalli is that guy in your dorm that not only talks about dropping out and starting a tech company, but actually goes through with it.  As a student Nag was frustrated that his school lacked a decent learning management platform.  So he quit and started Eduora. After doing initial development work in his hometown of Bangalore, India, Nag moved to Silicon Valley to participate in the Alchemist Accelerator.  Nag shares his experiences launching on a shoe string and then swimming in deep end of the venture capital pool. The Take Home Lessons Raising capital quickly and easily isn’t necessarily the best thing for a start-up. Nag believes pretty strongly that he would have benefited from the objective feedback off experienced investors. Getting critiques from investors with very broad experience would have helped Nag avoid a number of mistakes. Talk to customers before you design a product. The urge to build something based on your assumptions must be suppressed. Nag was selling to large universities without understanding how they made decisions about purchasing. Never underestimate how complicated sales is when there’s a group decision involved. “Be a frolicking deer.” Don’t hunt the venture capitalists, make them hunt you. The solo entrepreneur is a myth.  “When you’re on your own your mind will let you agree with whatever you want to agree to.” Resources & Links Nag's email:  me AT nagarjun DOT co Nag's Blog:  Nagarjun.co Twitter - @Palavalli Linkedin Facebook Alchemist Accelerator Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you've always heard the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post Not So Fast! Nag Palavalli on the Perils of Easy Capital Raising appeared first on Venture Capital Coroner's Report.

Nigel Grierson has been investing in start-ups for quite awhile, first by launching Intel Capital Europe and then as co-founder of Doughty Hanson Technology Ventures.  To say he's learned a few things about venture capital success from failure is an understatement. In this episode he shares three of those lessons that apply to any start-up. My Guest Nigel Grierson co-founded the Doughty Hanson Technology Fund in 2000 and currently serves as co-Managing Director. His specific areas of expertise include financial venture investment, high technology marketing and organisation development. Previously, Nigel was the Group Director for Intel Capital Europe, managing a team responsible for making strategic equity investments and developing new business opportunities throughout Europe. He and the team together originated and invested in over 35 technology start-up companies and had a number of notable exits.  Nigel started his career as a chip engineer and worked at AT&T in the Communications Product Division leading a team developing high performance silicon processors. Nigel actively participates in the European Venture Capital Association. In this episode he shares some of the things he teaches other venture capitalists about healthy boards of directors in his EVCA seminar. The Take Home Lessons Nigel talks about three major factors that can make or break a venture capital  backed start-up.  These apply to any start-up regardless off business model. You are pioneering a future that doesn't exist.  So entrepreneurs need to create the best decision making processes possible.  In Nigel's experience team decision making is superior to the Lone Ranger model of entrepreneurial leadership. Two heads are better than one.  Or as Nigel puts it, two in a box is the key to success.  Start-ups need a leader who can provide a vision of the future and a second leader who doesn't visualize the future, but can get you there. You must make time for the important issues because the urgent ones will always find a way onto your desk.  Venture capital investors need to consciously spend board time on longer term issues and not get pulled into the day to day grind. Resources & Links Nigel on the Doughty Hanson web site LinkedIn Doughty Hanson on Twitter Nigel mentioned David G. Thomson's book Blueprint to a Billion: 7 Essentials To Achieve Exponential Growth Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you've always heard the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post 3 Strikes You’re Out: Nigel Grierson on 3 Fatal Mistakes Your Venture Backed Start-up Must Avoid appeared first on Venture Capital Coroner's Report.

Nobody was better prepared for leading a start-up than Jeanette Cajide.  She had a solid academic foundations in public relations, communications, business and finance.  She'd done technology consulting and turn around management.  When a friend pulled her into launching a start-up app company, she was primed and ready.  Listen in as Jeanette shares the struggles of getting Blurtt off the ground, pivoting and most importantly get the right people on board. My Guest Jeanette Cajide currently works at Dialexa, a technology design and engineering firm and leads their Northeast business development efforts out of Cambridge, MA. Jeanette serves in a multitude of capacities at Dialexa working across business development, strategy, product and finance.Most recently she has been helping the company launch Dialexa Labs, Dialexa's internal start-up incubator. The first company to launch in September 2014 is called Vinli, an Internet of Things platform for your car. Prior to Dialexa, Jeanette co-founded Blurtt, an iPhone app that let people create and share anonymous visual statements. Blurtt was featured in TechCrunch and named Mashable's named Top 6 Apps to Download for the Week. Jeanette also spent several years on Wall Street in the investment banking program at Merrill Lynch where she closed over $4 billion in municipal finance, M&A and LBO transactions. She also worked at Goldman Sachs, investing the firm’s capital in software and digital companies. She has a MPA from Harvard, an MBA from Northwestern University’s Kellogg School and a Bachelor of Journalism in Public Relations from the Univ. of Texas at Austin. The Take Home Lessons Jeanette talks about her journey from the world of business school, Accenture and Goldman Sachs to moving back home with her folks and crashing on friends' couches.  Along the way she found out a few lessons that every aspiring entrepreneur should keep in mind. Team is paramount.  If you remember nothing else from this conversation, remember that teams get funded more often than ideas get funded. You can have the right idea...or not.  A couple of Blurtt's product iterations have since been launched by other start-ups and established tech companies.  Facebook couldn't even pull off a couple of Blurtt's concepts.  On the other hand, the idea of anonymous image sharing has taken off with several start-ups. Jeanette points to her experience in turn around consulting as some of her most valuable for the start-up environment.  Knowing how to make hard decisions about what to do when resources are scarce proved essential on a daily basis. Keep telling your story.  Jeanette shares some funny examples of angel investors who just "didn't get it."  And also points to one critical conversation with someone who did get it. Lastly, she talks about the emotional issue of letting go and moving on.  An excellent reminder that you can't let your last failure torpedo your next success. Resources & Links "Shutting Down Blurtt" - TechCrunch.com article by Jeanette Dialexa, Jeanette's new firm Vinli - Dialexa's connected car company Jeanette on LinkedIn, Twitter, and about.me Email - Jeanette (AT) dialexa (DOT) com Subscribe With Your Favorite App Share With Entrepreneurial Colleagues & Friends Connect With Me Why a Venture Capital Podcast About Failure? From early childhood you've always heard the saying “Learn from your mistakes.” In the venture capital industry you frequently hear “Fail fast” to learn and get to the right idea.  Great advice. So, for this venture capital podcast I interview venture capital backed entrepreneurs about what they learned when their start-up didn't go as planned. I hope you can learn from their valuable experience. The post