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I love this post and the analysis, however for those that would derive actions from it I put together a series of caveats which are simple but important to keep in mind:
6 months, 2 weeks ago on Memo to this year’s YC class: It’s damn hard to build an enterprise company
@PatrickSF we (investors) celebrate failure because failure is a necessary by product of taking big risks. if folks aren't failing it means they are playing it too safe - which is great for lifestyle businesses but leads to depressed returns overall from a VC perspective.
6 months, 4 weeks ago on Can’t raise a Series A? Just sell yourself to Yahoo
I don't like the vapid cynicism of PandoDaily posts. have you even talked to any of the entrepreneurs you so condescendingly write off? i'm familiar with the founders and teams behind many of these companies - they're sharp, ambitious, and talented - YHOO has made good purchases. the tone of this article suggests neither the writer nor her editor have spent any time in a real startup (!= a blog) - there would be a lot more empathy if you had. startups fail, we all know this. we celebrate failure, we don't write snarky posts about it.
it's easy to be an armchair quarterback, it shouldn't be this easy to get published as one.
8 months, 2 weeks ago on Y-Combinator Demo Day 2013: Still looking for the next Airbnb or Dropbox
"Fact" one is a bit shaky (LP/GP cycles take years to adjust to changing market dynamics), but 2 + 3 are spot on.
11 months, 2 weeks ago on There is no “Series A Crunch”
"he’s excited about the oncoming “winter of consumer apps,” because those that aren’t truly passionate about it will fade away."
this guy gets it!
11 months, 2 weeks ago on Not everyone believes the consumer Web is over — Meet Backspaces
you should have made CBInsights release some extra data in exchange for the exposure you're giving them..
12 months ago on New study on companies worth $100M+ shows how much of a lie the Web 2.0 fad was
to be honest I haven't seen this. the lessons are same as always: stay lean, stick to the customer, iterate to market fit. if you do all three of those things your seed investors are quite likely to back you again (if you chose wisely among seed investors!), giving you more time to find that market fit. there's always growth capital available for companies that have found market fit.
so, yes - there are many companies flaming out, but those companies would have flamed out anyway. for good companies with good teams, i'm seeing multiple "seed" rounds which sometimes add up to what would be considered a pretty healthy series a. any of those folks if they're worth their salt will back you again (at the same valuation if need be), as long as you fullfil all other expectations, giving you plenty of time to achieve product market fit, at which you bring in multiple VCs, bid up to high valuations, and lock in the gains for your team, angels + early seed investors.
with the increasing ubiquity of angellist and ramp up of crowd-funding activity, there will be tons of capital for some time to come. is it hard to raise follow-on financing? fuck yeah. who said it had to be easy? was it "easy" to get that first check?
the real story/"news" in all of this is that the combination of readily available risk capital with the dramatic increase in capital efficiency by companies means that many, many successful companies will be created, grown to profitability, and exited without any participation from a non-seed VC.
1 year ago on The Series A crunch is hitting now. Have we even noticed?
good stuff Michael - i enjoy reading your posts!
1 year ago on Apple’s stick in the mud routine is getting old
Good stuff. Anything that skews our society back a bit to quality long-form content instead of SEO and pageviews is a good thing.
1 year, 1 month ago on Oyster raises $3 million from Founders Fund for “Spotify for books”
boom. great job guys. one of the most impressive teams I know in this space.
1 year, 2 months ago on Know Thy User! GraphDive Distills Inferred Demographic and Interest Graph Data from Social Feeds
Fantastic, all the best to Jagath & co.!
1 year, 4 months ago on Ecommerce Company Ordoro Raises $1.2M to Make “Confirm” Button Hassle-Free
Congrats to Jerry and Andrew, impressive entrepreneurs who will achieve great things!
1 year, 4 months ago on Data Science Startup Retention Science Gets $1.3M, Fulfills Founder’s American Dream
@TKKader I have custom @toutapp templates for some deal follow up as well as quick turn downs for stuff that's out of scope. I usually like to do the good stuff in person though.
1 year, 7 months ago on VCs in Angels’ Clothing: The Sneaky New Trend of “Deal Scouts” in Silicon Valley
@DannyHorowitz Most VC LPAs restrict them from investing in other "vehicles that bear carried interest" without explicit approval from their board of advisors.
Interesting. I'm very active in exactly this space (I work with a VC firm and invest -separately- our family's money as an angel) and have never heard about anything like this. To be honest with you, as long as the "scouts" are good, trustworthy people who are mentors and value-add to the companies they work with, I don't think there's any problem with this. If the idea is for scouts to shadily get into competitive deals and either be useless or funnel confidential information or even sabotage company operations, then that's obviously reprehensible. I think the latter would get found out rapidly - this is a tiny ecosystem and word gets around fast.