Bar Camp: Session on Venture Capital Concepts

I led a discussion on fund raising at mighty Bar Camp last week-end. The goal was essentially to try and answer the questions guys in the room might have. These are generally related to funding raising strategies (how much to raise when), funding sources (how do I find angels, VC firms, other source of capital that are right for me), and how can I assess the fundability of my project (and how can I increase it).

We started by going through a short presentation on venture capital concepts, in order to set the scene and provide some (hopefully) useful pointers. I have posted this presentation at the request of attendees, but must reckon that without the voice-over, it is sort of raw information. I am also enclosing my VC blogroll for reference.

The discussion we then had covered a lot of grounds, and I want to thank my Sam Perry and Mike Arrington – who is a recovering corporate lawyer and writes the terrific TechCrunch – for engaging in the discussion and sharing their views and experience.

The few pointers I mentioned were:

• Allen Morgan’s “10 Commandments” - that he is actually continuing beyond 10 – is providing great insights on the VC perspective
• Brad Feld recently completed his “Termsheet series”, providing both explanations and recommendations on typical financing terms – and is nicely complemented by this white paper.
• Fred Wilson also has an interesting series on “VC cliches”. As someone pointed out, I don’t have Fred in my blogroll (it was in, got out), but I know that many people I read do and link to the best pieces he writes - which I enjoy reading as well.

Most of the VCs in my blogroll share great hints, experiences and thoughts related to companies they have invested in (or passed on), and markets they cover. My own posts related to Venture Capital will typically be found in the Venture Capital category.

Speaking of Brad Feld (I know, I am a fan), he was recently interviewed on Venture Voice. I recommend the program that covers a number of topics we talked about.

Some of the points we covered:

• I always warn my readers, or entrepreneurs I address, that we tend to generalize when blogging about markets, terms, opportunities, etc. – whereas each deal is different in nature – because of the team behind it, the concepts, the technology, the relationships, etc. So everything we write about has to be taken into a  “general” context.
• Not all businesses are meant to be funded by VCs, which does not mean that they are necessarily bad or not interesting. They might just miss the scale that VCs require to make their own economics work (minimum 5 to 10X return on investment, $50 to $100M in revenues potential,…), but might very well end up being profitable businesses with a few millions of dollars in revenues that will end up generating nice cash flows, and/or interest a larger company enough to get acquired.
• It is cheap to start a company, and get a product/service to market in the Web 2.0 world. This post covered the point quite extensively, and is complemented by this one on “built to flip” startups.
• Networking is key in the early stage of a startup, so try and find a few key advisors: entrepreneurs, VCs, executives,… who can provide you with honest (read brutal) feedback on your venture. It will only make it better. And hire a good lawyer – he will be a great advisor as well, and will avoid you making the mistakes that would take time and money to untangle afterwards.
• and several others…

Download:

• Presentation (PDF)
• VC Blogroll (OPML)

Tag: barcamp

Comments

[Michael Arrington]

Jeff, this was one of the best presentations at Bar Camp (and most of the presentations were excellent). You not only gave very useful advice, but you took the time to patiently answer questions. Thank you for posting the presentation here as well.