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Across more than 10 years we have kept the size of our Seed investments between $2–3.5 million, our SeedFunds mostly between $200–300 million and have delivered median ownerships of ~20% from the first check we write into a startup. By 2021 we had to write a $3.5m How Does the Industry Really Work?
Last week, the University of Southern California 's Viterbi School of Engineering announced that it had established a new, business plan competition, the Maseeh Entrepreneurship Prize Competition ([link] specifically aimed at students in the engineering school. Why a business plan competition, and why in engineering school?
Heck, stick around and watch me discuss the seedfunding debate that is going on right now and what is happening in the VC industry overall. I give a sneak peek at a blog post I’m writing on the topic next week. I’m going to make this a regular part of the show since it was really fun.
These tensions seep out in some angels or seedfunds publicly or semi-privately deriding later-stage VCs for their “bad” behavior. Or your A-round investor who wrote a $5 million for 25% of your company may not be well positioned to write another $5 million (25%) of a $20 million round.
It’s why in this article I advise that people “market today not futures” because you don’t want your playbook in the hands of the competition. The reality is that a journalist who’s writing a story about you – a relatively unknown entity – wants to hear directly from the founders and/or the CEO.
If you know, VCs end up writing sizable checks into their own funds, which is important in better aligning interests. Therefore of course they need to be more selection when writing checks and can’t spread their bets across 75 deals. million round I might write $1.8 – 2.2 So What’s the Big Deal?
It’s true the some VCs have started writing so many checks that they resemble stock pickers but the majority of us still have less than 10 board seats at any time and tend to go pretty deep so the result is that we care deeply about where we commit our time. Would they build a world class team.
This strangely may come even more quickly in the more successful funds, because any funds (ours included) who still hold some public stock from a recent IPO will likely be seeing write-downs sooner due to the immediacy and transparency of public stocks being repriced. The Biggest Area of Concern is Late Stage Investments.
So by offering convertible debt you can avoid a price discussion in the same way that angel investors sometimes do in order to win competitive early-stage deals. He had raised about $500,000 in seedfunding that lasted a long time. He got a good degree of user adoption but clearly hadn’t proven his model.
I remind founders that the no’s come early because it’s super easy to qualify out a deal that you know is unlikely due to stage, focus, geography, competitive deal you’ve done or even just the fact that you’re too busy right now. When investors hear that somebody else wanted to fund you it gets their FOMO going and they pile on.
Building a standout destination site for video gamers takes moxie in the highly competitive and lucrative on-line game industry. Although the first draft of this post began when Kluge was a proud member of NextSpace; as of this writing we have moved to a bigger office to accommodate our expanding team.
Raising money is difficult, even with the best idea, so don’t assume any entitlement to loans, grants, or seedfunding. I don’t advise pitching to famous Silicon Valley venture capitalists for major funding until well after your business is a proven hit, and you are looking to scale it up across the country or world-wide.
Valuing any company can be difficult because it requires a degree of forecasting future growth & competition and ultimately the profits of the organization. Brad was openly writing about this and it felt like he was giving the VC playbook away for free! Of course a group of 10 seedfunds can’t fix the prices of a market.
Members can also enhance their expert status by writing informative articles and position themselves as a contact person for other professionals to get information from. Competition? How unique are you from the competition? Any funding yet? exploreB2B is a social platform for business professionals.
For a high-volume seedfund that adds many portfolio companies every year (such as our friends at 500 Startups who invest in over 100 distinct companies annually), the cost of a bad affirmative decision (a false positive) is quite low, since it accounts for a relatively small portion of their total fund.
Building a standout destination site for video gamers takes moxie in the highly competitive and lucrative on-line game industry. Although the first draft of this post began when Kluge was a proud member of NextSpace; as of this writing we have moved to a bigger office to accommodate our expanding team.
The VC market has right-sized (returned back to mid 90′s levels & less competition). Lower costs to start a business (95% reduction), many more companies created & funded by angels / seed. Just 3 years ago there was talk of institutional investors “not being able to write small enough checks.”
I’m over-paying for every check I write into the VC ecosystem and valuations are being pushed up to absurd levels and many of these valuations and companies won’t hold in the long term. Because to invest at a $60–80 million pre-money valuation (or even $40–50 million) before there is enough evidence of success requires a larger fund.
Have you looked at competition? How well financed is the competition? My advice: Do not mention the other VC firms, angels, seedfunds, etc. It’s called competition. And sometimes VCs want to fund companies where we take the whole round and don’t mind paying slightly higher than angels want us to.
I had seen many cycles and decided that since I was going to do it all over again I should write about it. I decided to write about my experience and to be blunt. It became a huge kerfuffle with many VC partners writing to thank me for the post, which exposed those that gave their industry a bad name. And covered we did.
In Silicon Valley, people are much more competitive, have more focus/experience in software backgrounds and often focus more attention on the methods first, then the results. In the beginning, we hired a bunch of people based on the “LA profile&# that we were used to, and ended up hiring the wrong people.
We had to write a CRM to keep track of them all. How I Think About Seed Investing As A VC - Feld Thoughts , August 2, 2010 Last week saw an explosion of discussion around seed investing, including plenty of negative comments around VCs as seed investors. The expanding pool of angel, seed, and super seedfunds is another.
But the biggest thing to know is this: Companies who are scaling quickly in revenue and with a high gross margin often should invest as much capital in growth as they can manage responsibly because when you find a product / market fit and your company is growing at a very fast scale you want to capture market share before competition sets in.
No, that IS NOT a competitive advantage - A Smart Bear: Startups and Marketing for Geeks , July 12, 2010 This is part 1 of the series: 5 Lessons from 150 startup pitches. Automating the Path to a Better User Experience - The Product Guy , July 5, 2010 I started writing about Quick-UX in 2008. California Milk Processor Board) – 1993.
At Sony, he didn’t feel like he could “steer the ship” and get his ideas heard so he left and started GUBA, GUBA had no seedfunding. You can write an angry email to get your emotions out but you shouldn’t necessarily send it (or wait 1 hour and then make a decision). Before GUBA, Thomas worked at Sony on the VAIO computer.
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