03Dec
Filed in Energy | Technology | Venture capital
During the third quarter of 2009, a total of 35 energy and environmental companies received $421 million in new venture capital financing, representing an 8% decrease in the number of companies being funded and an 8% decrease in the total amount funded to the four sectors of Alternative Energy, Clean Tech, Energy and Environmental.
Alternative Energy companies showed the only deal funding volume percentage increase of the four categories, with a 20 % increase quarter over quarter. The Clean Tech sector showed a sharp decrease in activity, with an 86% decrease in amounts funded. Energy funding amounts were also down, with an 18% funding decrease and the number of companies funded decreasing by 27%.
During the quarter, Software company fundings represented the second largest sector, raising $610 million between 97 companies. This activity represented an increase of 10% in total funding amount and a decrease of 22% in the number of companies funded.
The average financing round size reversed its previous decline and rose sharply, from $4.7 million in Q2 09 to $6.3 million in the current quarter.
Energy, Technology, Venture capital
21Apr
Filed in Economy | Technology | Venture capital
The New York Times reports that Venture Capitalist invest in 922 deals in the first quarter of 2008, compared to 861 in the same period last year. The total amount invested was down 5% causing the times to lead with the headline Venture Capitalists Invest Less In First Quarter – New York Times.
“We do not expect to see significant declines in investment levels in the coming year,” said NVCA President Mark Heesen.
Is this additional evidence that media outlets lean toward a doom and gloom outlook or are they just following the current sentiment of their readership? Just be sure to read past the headlines.
Economy, Finance, Venture capital
27Feb
Filed in Economy | Technology | Venture capital
Chris Anderson’s at Wired discusses where, why and how free products make sense today and will make make even more sense (and cents) in the future. Starting with the story of Gillette and bringing us to the plummeting cost of computing and networking, Anderson argues that the traditional cross-subsidy model is not required when incremental costs approach zero. This opens the way for numerous value creation models when a product is given away and allows companies to avoid the “penny gap” or the difference between cheap and free as coined by Josh Kopelman.
“People think demand is elastic and that volume falls in a straight line as price rises, but the truth is that zero is one market and any other price is another. In many cases, that’s the difference between a great market and none at all.
“The huge psychological gap between “almost zero” and “zero” is why micropayments failed. It’s why Google doesn’t show up on your credit card. It’s why modern Web companies don’t charge their users anything. And it’s why Yahoo gives away disk drive space. The question of infinite storage was not if but when. The winners made their stuff free first.”
23Feb
Filed in Colorado | Economy | Management | Venture capital
Speaking of the TXU purchase, Mr. Bonderman said the company was adept at running a profitable company and equally bad at politics from price increases to ecology to labor relations. These shortcomings lead tothe opportunity which focused on addressing these public concerns.Opportunities for private equity include exploiting public investorsfocus on short term focus, their dislike for debt or leverage, fixingbroken companies and putting companies together that changes thecompetitive landscape.His advice to students wondering which classes to take for a career inprivate equity, which job to take this summer, which classes to takenext year is to “Just relax”.In looking at the public policy of the US, Bonderman says ourlawmakers are thinking like it is 1975 when the US represented 50% ofthe world’s GDP. Now that we are less than 30% and falling the rest ofthe world has choices and will not play by any US tax code.Best run companies are those which build value over long periods oftime. However, fund managers often are looking for short term gains.This makes creating proper incentives for publicly traded companies’managers sub optimal if not downright harmful.
Colorado, Economy, Management, Venture capital
20Feb
Filed in Venture capital
If your in the mood for a smile (and if not, perhaps you need to check this out even more) then head over to VC Wear to see the t-shirts these guys have cooked up.
04Apr
Filed in Colorado | Economy | Management | Technology | Venture capital
Even though the most likely outcome for a successful technology company is via an acquisition, I have never liked the idea of planning for it. Plans and actions then often go away from what will help our customers and help us succeed in the market to what would ABC Inc. like to see in an acquisition target. Rarely do the two line up and even then the focus goes away from key items required to build long term sustainable value.
Guest blogger Will Price offered a sound plan for building value in a post on Ask The VC. Responding to a question regarding how to prepare for an acquisition exit, Will provided details around these three items.
1) Plan for Independence
"The company’s operating plan, technology road map, and executive team should not focus on unnatural acts, in the hopes of attracting a buyer, but rather on building a company with the potential for independence. Companies built to "flip" often flop."
2) Be prepared for acquisition
"…acquirers tend to believe that successful partners make the best acquisition targets. "
3) Keep the house in order
"good record keeping makes for good diligence and good diligence makes for expedited outcomes."
Maximize your "best alternative to a negotiated agreement" (BATNA) and your will be well on your way to delivering value to all your stakeholders.
09Jan
Filed in Management | Technology | Venture capital
Tom Evslin’s post Web 2.0 – Greater Initial Investments Required suggests that early Web 2.0 companies seized the advantage of low cost technical infrastructure and low cost marketing to gain cost advantages. These companies were able to get big cheaper and faster than the first generation internet companies. While he agrees with Fred Willson that the technology cost will remain low, he suggest the lower promotion expense is now behind us. The low cost of technology results in a lower cost of entry and will in fact increase promotional spending and the need for capital.
In any event, both men are suggesting there will be capital required to grow these companies going forward. Those who are putting their business plans together without consideration for this cost increase will at least have some tough funding questions or worse some serious costs overruns.Â
Economy, Management, trends, web
07Nov
Filed in Economy | Management | Venture capital
In
Web start-ups snub the big money, the International Herald Tribune suggests this is a trend that should be expected to continue for a few if not spread to many companies in the space.“By then, Meebo was being courted by venture capitalists, but it decided to take a modest $100,000 from three angel investors, people who typically contribute small amounts and make few demands.
“We had a bunch of VCs talking to us about potentially putting more money in,†Sternberg said. “We said no. A lot of things happen when you raise a VC round, and they really slow you down.â€
Eventually, Meebo did raise money from venture investors – about $3.5 million from Sequoia Capital. But that was after the company was well on its way to showing that its service was a hit with consumers. At the time, Meebo had about 200,000 daily log-ins.â€
Finance, Management, Venture capital, web
19Jan
Filed in Economy | Management | Venture capital
In Web start-ups snub the big money, the International Herald Tribune suggests web start-ups will continue to use less capital. This is a trend that should be expected to continue for a few if not spread to many companies in the space.”By then, Meebo was being courted by venture capitalists, but it decided to take a modest $100,000 from three angel investors, people who typically contribute small amounts and make few demands.
“We had a bunch of VCs talking to us about potentially putting more money in,” Sternberg said. “We said no. A lot of things happen when you raise a VC round, and they really slow you down.”
Eventually, Meebo did raise money from venture investors – about $3.5 million from Sequoia Capital. But that was after the company was well on its way to showing that its service was a hit with consumers. At the time, Meebo had about 200,000 daily log-ins.”
- Original Nov. 2006 post updated
Is the recent news of tech and media startups needing less capital a trend or a passing fad? There have been some noteworthy articles in recent weeks suggesting it is a combination of the two. I recommend reading both Tom Evslin’s Web 2.0 – Greater Initial Investments Required and Fred Willson’s that the technology cost will remain low, both covered in the Random Connections Web 2.0 – A Bubble, Hype, for the Lucky Few?
11Feb
Filed in Management | Venture capital
The National Venture Capital Association has prepared this set of model legal documents:
Term Sheet
Stock Purchase Agreement
Certificate of Incorporation
Investor Rights Agreement
Voting Agreement
Right of First Refusal and Co-Sale Agreement
Management Rights Letter
Model Opinion Letter
Model Indemnification Agreement
According to the site, “the model documents aim to:
reflect industry norms
be fair, biased toward neither the VC nor the entrepreneur, consistent with industry norms
present a range of “typically seen†options (again, consistent with industry norms)”
include explanatory commentary where necessary or helpful”
Finance, Management, Venture capital
14Jan
Filed in Economy | Management | Technology | Venture capital
Bill Gurley outlines the future trends in VC investing via the ever present 2 x 2 matrix (Accurate vs. Inaccurate x Conventional vs. Non-conventional). Of course, we can all agree that inaccurate predictions are worthless. Gurley suggests the Conventional/Accurate predictions are also worth very little. The market prices the high expectations into a marketable security while the early stage investors fund too many companies for the market.
predictions, trends, Venture capital