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Published: 8/27/2008 10:38:26 AM, comments: 0
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One of the things that new entrepreneurs frequently get wrong is how much money they're going to need for their next funding round and how that translates into their company plan.
What I tell startup founders is to think in terms of "milestones and money." In other words, a startup plan should state very clearly what the company expects to achieve with how much money.
From an investor's perspective, they want to know what their money is going to get them, whether it is company performance, valuation inflection or other metrics.
So think very carefully about what your company will provide prospective investors, and in what time frame.
Cheers,
Don Jones
VentureDeal
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Published: 8/20/2008 2:37:48 PM, comments: 0
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Much has been said in the technology industry and venture capital world about the importance of the management team in a start-up's fortunes. One saying is "I'd rather back an A management team with a B idea, than the other way around."
Internet VC Fred Wilson has a long and insightful post about some of the issues surrounding early-stage start-up management teams:
http://www.avc.com/a_vc/2008/08/the-human-piece.html
One of the things that I stress to start-up company founders is that they should understand their strengths as well as their weaknesses. All effective executives have strengths and weaknesses - one of their greatest strengths is knowing what they're good at and knowing what they need help with.
So I urge you to look at your work history, examine those aspects of your past experience that you enjoyed and excelled at, and those experiences that you were challenged with. Self-knowledge is one of the greatest assets you can bring to a start-up.
Cheers,
Don Jones
VentureDeal
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Published: 8/14/2008 11:05:49 AM, comments: 0
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I'm not a "sky is falling" type, but my belief is that the credit crunch that's been talked about in the media so much recently is actually just beginning.
In the late 1980s, after the Savings and Loan industry loaned far too much money and paid for their indiscretions by having a nearly complete implosion of their market value, the actual credit crunch happened only after banks started failing and stopped lending.
We are seeing evidence of bank failures now of a pullback in lending to both businesses and consumers. Below is a roughly 20 minute Bloomberg audio interview of David Goldman of Asteri. Although he talks about a number of other contributing factors to the financial crisis, such as what he perceives as the beginning of the failure of the hedge fund industry, it is a very succinct and thought-provoking interview:
Interview with David Goldman
Don Jones
VentureDeal
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Published: 8/6/2008 4:11:13 PM, comments: 0
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Prominent Internet VC Fred Wilson of Union Square Ventures has written a very insightful series of posts on the economics of venture capital funds:
http://avc.blogs.com/a_vc/2008/08/venture-fund-ec.html
http://www.avc.com/a_vc/2008/08/venture-fund--1.html
http://www.avc.com/a_vc/2008/08/venture-fund--2.html
Why should you be interested in the economics of venture capital funds? If you are searching for venture capital investment, it is extremely valuable for you to understand how venture capital firms operate and how they look for businesses that are suitable for their investment.
Fred is one of the better VCs who invest in Internet companies and has enjoyed a number of significant successes in his career.
Cheers
Don Jones
VentureDeal
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Published: 7/30/2008 2:25:30 PM, comments: 0
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There is a report out by the well-known consulting firm McKinsey, and that basically says that enterprise adoption of Web 2.0 technologies such as wikis, blogs, social networks and mash ups, is resulting in significant dissatisfaction:
http://www.pehub.com/wordpress/wp-content/uploads//08_07_30_McKinsey1.pdf
Among the other findings of the survey, a large percentage of companies state that they don't understand the potential financial return from the use of Web 2.0 tools and technologies.
Of note is that the companies in the survey have stated that they have moved beyond simply experimenting with these tools to adopting them as part of a broader business practice.
They just aren't sure of the value that they're getting from them, but it appears that they don't want to be left behind and are continuing to adopt them.
It seems to me, that this represents tremendous opportunities for those interested in Web 2.0 applications to create applications that can provide quantifiable results in the enterprise space. It's almost as if businesses have had their appetite whetted and are ready to dive in, if only Web 2.0 vendors could show them how much money they can stand to gain by taking the plunge.
Cheers,
Don Jones
VentureDeal
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Published: 7/23/2008 2:45:58 PM, comments: 0
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I've been fascinated reading "The HP Way", by the late company co-founder David Packard.
One of the points that he returns to repeatedly in the book is the concept of being disciplined in product or service expansion as a function of your company's core strengths. He cautions against going too far afield in pursuing expansion opportunities.
I especially liked the quote that he provided when he and his partner Bill Hewlett were first approaching their local bank for a small loan. The bank sent out a veteran banker who told him, "More companies die of indigestion, than of starvation."
While the quote may not be perfectly applicable to the startup world, since so many companies die of cash starvation, I think it points to a great concept: don't try to expand in ways that are not compatible with your core competency, otherwise you may get yourself into trouble.
Cheers
Don Jones
VentureDeal
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Published: 7/16/2008 2:14:59 PM, comments: 2
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During the Carly Fiorina years at HP, a new company slogan was created: Think Different. As I currently read the seminal classic "The HP Way", written by the late company co-founder David Packard, I see that the concept of creating differentiated products was part of the original and ongoing culture at HP.
Their belief was that it wasn't good enough just to make a product better, faster or cheaper. The product needed to be differentiated from its competitors so that it provided a clear value proposition to the customer and contributed new technological solutions to solving problems.
While Ms. Fiorina may have chosen a company tagline that prompted it's employees to focus on differentiation, that company value had already been created by the founders several decades before.
So as we create products and services in an increasingly technology driven world, it's a lesson well worth remembering: think and create something different.
Cheers
Don Jones
VentureDeal
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Published: 7/10/2008 10:58:53 AM, comments: 0
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VentureDeal is pleased to announce the availability of a new service for helping entrepreneurs of technology companies search for venture capital financing for their company.
We receive many inquiries from entrepreneurs wanting more than just a self-service database. They ask for an increased level of service in determining exactly which VCs are the right VCs for their funding search, and for feedback on their company plan documents.
Under our Venture Funding Advisory Service program, we will work individually with you to create a customized VC funding search based on the criteria specific to your company's situation and funding needs. We will also include three months of full database access and 300 downloads. The service is available for a flat fee of $149.
Additionally, at your option, we will perform a review of your company
documents such as your executive summary, business plan and
presentation in order to more tightly focus your message to potential
investors.
We feel that these services can provide entrepreneurs with highly customized and focused search results, combined with feedback on their company documentation, at a very reasonable cost.
To inquire about the service for your company, visit our Contact Us page and send us a quick e-mail. We will respond within 24 hours.
Cheers
Don Jones
VentureDeal
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Published: 7/3/2008 9:45:25 AM, comments: 0
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The IPO market for a venture backed technology companies has gone completely dormant, according to the results of Q2, 2008. There were no IPOs during the quarter, which has not happened since 1978.
While there are no doubt many reasons for these results, in my opinion, this is the continuing fallout from the extreme dot com boom/bust cycle of 1999 - 2003. The investment world (and regulatory system) has never really recovered from its skepticism about new, "IPO-ready" technology companies as a whole, regardless of individual success stories, so when other factors (credit crisis, economic uncertainty) increase the risk premium, the memory of being burned and scarred by tech companies is still vivid, and investors flee to quality, or sit on their hands.
I think what we'll continue to see it as a tightening of terms by VCs, lower valuations and a pruning of their lowest performing portfolio companies. It behooves startup entrepreneurs to "improve their game" and provide the highest quality investment opportunity if they want to obtain funding for their technology startup company.
Don Jones
VentureDeal
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Published: 6/26/2008 7:50:04 PM, comments: 0
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One of the things that differentiates a database like VentureDeal from blogs is that we avoid entering information into the database that is unconfirmed. Prior to entering a transaction into our system, we confirm that the information is valid by seeing a press release from the company, contacting the company directly or viewing the SEC filing.
While blogs perform a great service and many times are right in breaking their news stories ahead of confirmed information, we do not use them as sources of information for transactions entered into VentureDeal, because sometimes they report rumors that are unsubstantiated by the facts.
Essentially, we view blogs and databases as similar to newsstands versus libraries. People usually go to a newsstand to get the latest and newest information that is hot off the presses, and go to libraries (or at least used to go to libraries) to research and gather data.
VentureDeal is a research tool that allows subscribers to search, find, download and reference confirmed information about technology startups, venture capital firms and the transactions between them. We hope you find it useful.
Don Jones
VentureDeal
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Don Jones
CEO, VentureDeal
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