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8 tips for entrepreneurs from a founder-turned-VC

26 Feb

This article was produced when a friend inquired Mr. Jeff Richards, a partner with venture capital firm GGV Capital and the former co-founder of two companies, R4GS and Quantum Shift, about the basic tips for the growing venture-backed businesses. Jeff Richards gives the following 8 tips for the beginners.

  • Keep your options open

The smartest second- and third-time entrepreneurs I see raise capital in a very focused and efficient manner. They preserve option value at each stage of the company’s growth and make conscious decisions about how to proceed in each funding round.Jeff Richards says that he learned this way in his first company where they raised capital at a $250M valuation and essentially priced ourselves out of an attractive M&A opportunity.

  •  Hire the best talent you can find. 

Richards says that he really can’t say enough about this. The bottom line is A players may cost 50% more than B players, but will add 10X the value. Talent wins. Be proactive and always on the lookout for impact players.

  • Take advantage of the moment, and run like hell.

Great entrepreneurs do not wait. When they’re onto something, they move aggressively, and don’t spend time thinking about Plan B. They realize they have a window of opportunity, and they jump through it. The leader is aggressive, maniacally focused on growth, moving fast, and delivering for customers. The followers are often bogged down by customer/product/board/funding issues. In short, #1 sees speed bumps and jumps them, whereas #2 and #3 see roadblocks and spend time trying to figure out how to go around them.

  • Work with great investors.

This doesn’t necessarily mean the headline-grabbing VCs you read about on TechCrunch. Ever heard of Dave Strohm, David Cowan, or Jim Goetz? They’re three of the most successful early-stage VCs you’ll ever meet, but you won’t typically read about them on today’s hot tech gossip blog. Don’t get caught up in the hype. Focus on VCs who have built winners in your space and reference well with entrepreneurs and CEOs. They’ll make a difference.

  • Play bigger than you are.

Create a market impression that is greater than reality. This has to be done carefully – history is littered with companies that failed to live up to the hype – but done well it can really boost your company’s prospects. Artfully tooting your own horn is part marketing, part PR, and part an aggressive approach to today’s social platforms. Done right, Twitter, LinkedIn, and Facebook can serve as powerful platforms to amplify you company’s position. The key is to not just talk about how amazing your company is, but to show how you’re succeeding with key customers, business milestones, analyst and media coverage, and key new hires. Examples of companies that have done a great job building this kind of buzz include Buddy Media, Yammer, Zuora, Betterworks, Square, and Appirio.

  • Find and leverage mentors.

There are many amazing CEOs in Silicon Valley who love nothing more than to help young entrepreneurs build great companies – you just have to ask for their help. It’s one of the truly unique aspects of Silicon Valley. Ask your investors for introductions. And don’t just reach out to a mentor in times of crisis; build an ongoing relationship with him or her. You’ll be amazed and the nuggets of wisdom you pick up from CEOs who have “been there, done that.”

  •  Be honest and transparent.

The most successful entrepreneurs Richards know are transparent with their team and with their board. They stay in regular communication with their board members and treat board meetings as an opportunity to have a meaningful discussion around core issues – not as a sales pitch. Your board and investors are “in the boat” with you, and fully invested in helping you build a winning company. If you have to constantly “sell” your company to your board members, you’ve got the wrong board members. Brad Feld and Fred Wilson have covered the topic of board meetings well.

  •  Enjoy the ride

Richards has started his first company when he was 25, and by the time he was 30 they had raised more than $100M and hired 400 employees. It was awesome, but Richards was immensely stressed. The second time around, he surrounded myself with better talent, raised less capital, and had a lot more fun (and a better outcome). Great entrepreneurs have that unique DNA that makes them relentlessly focused on building something great, and it’s a 24×7 thought process. However, the difference he see between first-time entrepreneurs and second-time entrepreneurs is that veterans are typically enjoying the ride. They’ve figured out how to make time to have fun, spend time with family and friends, and still build a great company.

These 8 tips might help some founders out in the trenches today.

Source: venturebeat

CapLinked wants to modernize startup investment, takes money from new investors

5 Feb

CapLinked, the startup that wants to make it easy to invest in private companies, has just taken in a $500,000 round of from a new group of investors.

Investing in private companies has depended on outdated technology for too long,” said CapLinked CEO Eric M. Jackson in a release last month.

Emails loaded with attachments, spreadsheets for tracking leads and clunky enterprise data rooms are straight out of the 1990s. CapLinked makes the process easier for companies, investors and their advisors by giving them social tools to connect and share information.

The fresh money has raised the startup’s total funding to $1.4 million. The firm drew a seed round in mid- 2010 and an angel in March 2011.

Among the newly announced investors, there are few guiding lights. Chris Yeh, a prominent blogger and investor who is also a vice president at PBworks, pitched in for the round, as did angel investor and onetime Paypal exec Jason Portnoy, TheGlobe.com founder Stephan Paternot, Althea Foundation chair Alexsis de Raadt-St. James and a couple others.

Portnoy cited in a statement,

Private companies are an important source of job creation and economic growth. By streamlining the investment process and giving companies new tools to raise capital and sell assets, CapLinked is changing how private investments get made.

CapLinked was established in 2009 by former Paypal exec Jackson and finance pro Christopher Grey and claims it has almost 100,000 accounts of would-be investors as well as 10,000 profiles for cash-seeking companies. Until now, CapLinked has made $12 billion in transactions through its service.

Through this CapLinked site, the private management companies can make better fund raising process that includes networking and investor relations. Investors can use the site for deal flow, due diligence and portfolio tracking. And both companies and investors can bring advisers, attorneys and consultants into the loop of information.

While CapLinked is steeped in tech provenance, it’s not just tech companies raising funds through this service. The company tells us it is also being used by private companies in such markets as energy, transportation, real estate, financial services and food and beverages.

Previous investors include Peter Thiel, Dave McClure, Yammer CEO David Sacks and a lot of other Silicon Valley luminaries.

 

Source: venturebeat

Motorola Mobility shareholders vote in favour of Google merger

22 Nov

The Shareholders of Motorola Mobility have given permission to Google’s proposed buyout, with 99 percent of those that voted in favor of the deal.

Google’s proposed purchase of Motorola Mobility for $12.5bn is a endeavor to support both firms fight patent lawsuits by combining Motorola’s considerable patent portfolio with Google’s financial resources. After all, Motorola’s shareholders have granted approve for the deal, Google and Motorola have to get clearance from the US Department of Justice(DoJ). Motorola’s shareholders turned out in force to vote in favor of the deal, with the strong report that 74 percent of then voted and 99 percent of those in favor of the deal. This high turnout and approval prefigures well for the firms should the DoJ approve the merger, as such solid support should help defuse any tension created by these two firms uniting together.

Sanjay Jha, chairman and CEO of Motorola Mobility said, “We look forward to working with Google to realize the significant value this combination will bring to our stockholders and all the new opportunities it will provide our dedicated employees, customers, and partners.”

Motorola ingeminates that the company expects to close the deal with Google early in 2012. For Google the deal cannot close too soon, as it faces legal action against the firm’s Android operating system.

Source: theinquirer

Venture Capital deals drop across the board, clean tech hit

15 Nov

Venture Capital deals in the third quarter of 2011 went down 12 percent in dollars invested when compared to last quarter. The report, released on last month, by PricewaterhouseCoopers and the National Venture Capital Association says that clean technology and life sciences industries were particularly hard hit.

Mark Heesen, President of National Venture Capital Association, detailed, “Public policy challenges in the life sciences and clean technology sectors are impacting investment levels this quarter as is the IPO market that basically came to a screeching halt in August”. The venture capital industry is often the same of how the markets are doing, according to Heesen, though it does support company, product and job creation. Not only the dollars, but also the number of deals made also went down 14 percent to 876 completed deals, down from the 1,015 deals in quarter two, 2011.

Clean technology agree on with the overall venture capital economy, a 13 percent drop in dollars invested , totaling at $891 million. The investors spent $1 billion on the industry in last quarter. Yet while green was not great, the software industry did better- it outranked all industries in dollars spent and deals completed. Software had a 23 percent increase in dollars at $2 billion. The industry had only 1.6 billion last quarter. Software deals completed, while at the top this round, actually dropped 1 percent from last quarter, reflecting that even an industry’s success in one quarter is still subject to the whims of the market.

The full report by MoneyTree from PricewaterhouseCoopers and the National Venture Capital Association stories the venture capitalist markets overall.

Source: venturebeat

The legal checklist every startup should reference

7 Nov

There are some basic legal mistakes that startups repeatedly make (many of which surface when investors are conducting their due-diligence investigation).

This simple checklist will be much useful for startups . This simple checklist provides a ideas that includes links to in depth posts for a more detailed discussion.

Startup checklist:

1. Build a corporation, not an LLC (see post here) or a partnership (see post here).

2. Integrate in Delaware and qualify the company to do business in the state in which its principal office is located (see #2 here).

3. Set-up vesting schedules for the founders (see post here) and file 83(b) elections with the IRS (see #3 here).

4. Button-down IP ownership and assignment issues (see post here).

5. Part the equity based on prior contributions and expectations going forward, not necessarily equally (see post here).

6. If you hire any employees, make sure you don’t misclassify them as an independent contractor or fail to pay them at least the minimum wage (see post here).

7. Only raise funds from “accredited investors” (see post here) and don’t pay anyone a commission for raising funds for you unless they are a registered broker-dealer (see post here).

8. Put proper privacy policies in place and make sure you adhere to them (see post here).

9. Don’t issue stock options unless a proper option plan is in place and a valuation has been done in compliance with Section 409A of the Internal Revenue Code (see post here).

10. Regarding lawyers, don’t give them equity (see post here); don’t use your investors’ lawyers (see post here); and there are ways of cutting legal fees in half (see post here).

These ideas are not a rocket science.  But as the late, great super-lawyer and VC Craig Johnson wrote in the book, The Silicon Valley Edge: A Habitat for Innovation and Entrepreneurship, “Starting companies is a lot like launching rockets: if you’re a tenth of a degree off at launch, you may be a thousand miles off downrange”. How true and peppy statement.

Source: venturebeat

Chrome Now at 25% Market Share, IE Down to 40%

5 Nov

Chrome’s October market share result has met the 25 percent milestone in what appears to be an increasing speed of growth.

According to StatCounter, Chrome finished October with 24.99 percent share and Firefox leads chrome with 26.39 percent and IE with 40.19 percent. During the month, IE lost 1.47 points, Firefox lost 0.4 points and Chrome gained 1.38 points. Apple’s Safari was able to collect 0.33 points to 5.93 percent share.

Some people guessed that Chrome’s growth will fall splat at a level. Making the judgments incorrect, Chrome is increasing its market share. The browser has scored  average of 10.1 points of market share in this year. Chrome has posted the strongest 6-month gain in its short history. If Chrome prolongs with this pace,  there is chance for it to transcend Firefox’s market share on an average basis in this month and will able to outrank IE by mid-2012. Regarding the last week’s market share, Chrome averaged 25.43 percent. Firefox was with 26.03 percent of share, as StatCounter says.

Microsoft considers this development trivial and unstriking, at least not publicly. The corporation only quotes Net Applications data and only IE9 market share on Windows 7.  To Micorosoft Corporation, IE9 now has 22 percent of share on Windows 7 systems globally, just ahead of Chrome and has fallen behind Firefox. Google’s interest in browser share differs much when compared to that of Microsoft’s interest. Microsoft tries to get more share on Windows 7 thereby claiming for the crown, IE9 is ready for a undefeatable launch of the HTML5 application model for Windows 8, Google is purposing the gain of overall market share to support its core revenues that are still designed through its search engine.

Source: tomshardware

How Klout Got Klout.com

31 Oct

While everyone is making up their minds about whether Klout is an utterly meaningless service or the divine “standard for influence”  the earth is outcrying for, here comes an the details of an interesting conversation with  Joe Fernandez, co-founder and CEO of Klout on the day of Founders conference in Dublin, Ireland.

Joe Fernandez storied how he got the domain name klout.com, small behind-the-scenes story in a interesting manner. Klout was started in New York City a few years ago. Then Fernandez had first and top choice for a name of Klout. So he enrolled klout.net and tried to catch up the owner of klout.com, who was in San Francisco.

Klout was in a situation of still trying to get fund and in making money. Fernandez utilized the circumstances and offered Klout $1,000 of his own money for the domain name. But it was in vain that the owner retorted laughing at him, saying that it was worth ‘high five figures’ and he had plans to build something for it.  For the next 18 months, Fernandez troubled the owner incessantly every week trying to convince Klout to sell the domain name. In August 2009, Fernandez decided to shift the company from New York City to San Francisco. Whereas, Klout was able to raise its first round of seed funding: a check from angel investor Nova Spivack, which Fernandez cashed, keeping the cash in his apartment. Much to the dismay of his team and hosting company, he says.

After this, Fernandez followed the owner of klout.com on Twitter, waiting for him to reveal his location. At a point, when the owner tweeted that he was at a restaurant in San Francisco, Fernandez went there. He offered an envelope with $5000 in cash and told the owner that he would stop troubling him in case if he finally agrees to sell he domain name in exchange for the money. The owner agreed. Immediately, at the same place Fernandez opened up his laptop and transferred the domain right then and there. Fernandez then tweeted this:

Apart from being creepy in behavior, real entrepreneurs like Fernandez know how to tackle the situations.

Source: techcrunch