Category: Venture Capital
Last week on Brad Feld’s Amazing Deals we offered a huge discount on Ruby classes, and had one of our most successful offers ever. This week I asked my friends at Udemy to cook up another great deal on the course “Creating iPhone Games for Beginners”. They came up with an offer where $39 takes you through the process of building a complete iPhone game (normally $99).
Leave a comment and give me your pitch for a new iPhone game. The best idea by midnight tonight gets a free course.
Today on Brad Feld’s Amazing Deals you can purchase a $250 Ruby course from Udemy for only $49. The course, Learn Ruby Programming (In Ten Easy Steps) contains over 30 video lectures, written course materials, and additional discounts on Ruby literature.
With more and more companies making the move to Ruby on Rails, demand for Ruby developers has gone through the roof. If you are interested in giving Ruby a look, this is a great place to start.
On Friday, I saw a tweet from Chris Sacca about super pro-rata rights that said “Seeing a lot of VCs cram super-prorata terms into deals. Feels uncool to me. Any good arguments for why it’s helpful to entrepreneurs?” I quickly responded to Chris on Twitter with “@sacca just say no to super prorata” and then opened up a WordPress window and scribbled some thoughts for a draft post on that that I was planning to put up Monday morning (now).
On Sunday, I saw a phenomenal post from Mark Suster titled Why Super Pro-rata Rights are Not a Good Deal for Entrepreneurs. In it, he covers many of the reasons I was planning to cover. He also does a great job of setting up how pro-rata and super pro-rata rights work. It’s a must read post for any entrepreneur doing a seed or early stage financing.
Mark talks about why super pro-rata rights are suddenly appearing regularly, but I think he’s being too nice about it. He says:
“Often it’s when a larger fund (e.g. non seed / micro VC fund) wants to put in $500k (less than their typical investment) but wants to have a marker on your company if you end up being super hot. In my mind, it’s almost like a dog pissing on its territory. Read: it’s an option for that investor and a super expensive one to you, the entrepreneur.”
This behavior is not limited to large funds. I’ve had two investments over the past year where smaller funds tried to argue for super pro-rata rights in the seed round. In one case they argued that they were going to do more work than the other two investors (which included me); in the other case they stuck with the 20% argument but said “we have to have 20% after the next round in order for us to want to work on this investment.” In both cases the entrepreneurs ultimately decided not to include the firm insisting on super pro-rata rights in the round.
I’ve also starting seeing this ask all over the place with the “new” seed programs that large funds have. This is a subset of the case Mark is referring to, but it’s actually more annoying than Mark makes it out to be. In the last two years, many large established VC firms have created “new” seed programs. These are firms that have historically positioned themselves as early stage investors, but in some cases explicitly stopped doing seed rounds while in others simply drifted away from them. Suddenly, they are back, with seed programs aimed at making high velocity investments in brand new companies.
I applaud these firms, but only if they are doing their seed investing in a way that is consistent with how they position the activity as “entrepreneur friendly.” Specifically, if you are entrepreneur friendly and you do a seed investment, you do not need or even want a super pro-rata right. Instead, you should earn the right to invest above your pro-rata in the next round through early engagement with the company, hard work, and active help for the company. This behavior is “entrepreneur friendly” and is the spirit of how many firms are talking about their seed programs (e.g. we make decisions quickly, we treat you like any other company we invest in, and we help as much as we can.)
Now for firms that insist on super pro-rata rights, they should call it how it is. Which is “we are tossing a tiny amount of money in you now but we want to reserve the option to own a lot more if you are successful.” Mark calls this dynamic out specifically in his post, but doesn’t put it on the VCs. It doesn’t actually bother me that a VC might want to take this approach; I just don’t think an entrepreneur should ever accept it if he has any other choices.
In many cases, I’ve seen the VC request for super pro-rata rights collapse in the context of a hot seed investment. The entrepreneur holds all of the cards in this case and should use them, as it gives the entrepreneur many more options in the next round. If the VC insists on the super pro-rata right, make sure you really understand what is going on, as this negotiating posture (and philosophy) on the part of the VC will likely surface again in the future.
To all my VC friends – take a page from the super angel playbook. If you want to do seed investments, or have a formal seed investment program, model it after the super angels, especially the ones who have raised small VC funds. These guys make small investments, bust their asses for the companies they invest in, and often get opportunities to invest more in the next round. In a lot of cases, they don’t have the capacity to do anywhere near what you could do, but in all cases I’ve been involved in, the entrepreneurs have fought for these seed investors and as someone who doesn’t feel the need to be the first money in a company, I’ve always tried to accomodate the request for more than pro-rata in the context of the new financing I’m leading.
And yes Chris – it’s definitely uncool.
Before we invested in MakerBot, we bought and assembled a Thing-O-Matic. When I say we, I mean me, Jason, and Ross. It took us about 20 hours (Jason and I did the first half; Jason and Ross did the second half) and was a blast – think of it as an adult lego project. Our Thing-O-Matic has been steadily printing stuff – you can play a game of chess with our Thing-O-Matic pieces. the next time you are in my office.
As part of the endless series of Amazing Deals I bring you from my deal site, today’s offer is a fully assembled Thing-O-Matic. If you want your own 3D printer, but you don’t want to assemble it, you can buy it fully assembled for $2,500. But, through the magic of daily deals, there are 20 available for a 20% discount ($2,000). This is a one time offer from my friends at MakerBot so grab ’em while they are available.
In additional TechStars Cloud launched today along with the first episode of TechStars on Bloomberg TV.
And finally, for all of you that have written asking for a “Convertible Debt Series” like our term sheet series, we’ve just started one on AsktheVC.com. The first post is up and introduces the series – we’ll be working through all of the terms in a convertible debt deal over the next few weeks.
Today on Brad Feld’s Amazing Deals, we’ve got another great offering from our friends at Udemy. For $49 you can get The Lean Startup, The Lean Startup Ignite, and The Lean Startup SXSW by Eric Reis.
These three courses contain over 9 hours of content and 60 talks from people like Eric Ries, Dave McClure, Steve Blank, Hiten Shah and many more. That’s a lot of knowledge for 67% off.
In addition to the courses, you get a hardcover copy of Eric Ries’ awesome new book The Lean Startup. Eric – congrats on converting all of that digital content to ink on dead trees!
Today on Brad Feld’s Amazing Deals, we are featuring the Urban Sherpa Strap from Go Gaga. Sherpa Straps distribute the weight from laptop bags, gym bags, and briefcases that take straps, across your back and shoulders. I’ve been using the Sherpa Strap for a while – it’s dynamite.
With today’s deal, you can get the strap and free shipping for $19, a discount of 50%.
If you have a bag that you love, but are tired of having it cut into your shoulder as you are traveling from DEN to LGA, check out Sherpa Straps. For each purchase, Go Gaga will make a donation to The Mountain Fund, helping some real sherpas.
Also, check out today’s deal deal on your iPhone or Android. Deal Co-op recently launched the Feld Store web app, a full touch site for mobile buyers. Once you store a credit card in your account, you can check out my deals each week on mobile, and buy future deals with one click.
When Jason and I started AsktheVC, one of our goals was to have a place where entrepreneurs could ask us questions and get direct answers. We did this for a while, getting to most of the questions which has created a very nice corpus of answers to several hundred questions easily searchable by Lijit.
For example:
- How Did We Get Our Idea For Our Startup?
- How Much Equity Should an Early Stage COO/CFO Get?
- How Do You Negotiate a Carve Out With Investors?
Of course, these are our answers and opinions, and many of the questions are subjective, but they form a starting point for any entrepreneur looking for answers to a bunch of random questions from a VC.
Now that we have relaunched AsktheVC with the publication of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, we’ve started answering questions again at AsktheVC. You’ll notice a “Have A Question” link just above the Do More Faster image on the right sidebar. We’ll try to answer them within a few days of them coming in. And, if you have a different opinion to any of our answers, please weigh in on the comments.
As a VC who has been blogging for a long time I’ve been fascinated by the VC Blogger phenomenon. I’ve been subscribing to, reading, forwarding, occasionally commenting, and setting up networks of feeds for a while.
With the relaunch of AsktheVC we’ve resurrected something we used to do periodically which is highlight a great VC post. However, we are taking a different tact this time around with our new motto.
“We read all the VC Bloggers so you don’t have to.”
It’s not quite the gray lady, but hey, we are just VCs and bloggers, not real journalists. Jason and I already have some great posts up from guys like Jeff Bussgang (Flybridge), Mark Suster (GRP), Fred Wilson (Union Square Ventures), Roger Ehrenberg (IA Ventures), Charlie O’Donnell (First Round Capital) and 500 Startups. We’ll provide a little additional insight, or at least a pithy comment.
We’ve also got a full list of known VC bloggers (at least to us) on the sidebar of AsktheVC. If we are missing anyone (I’m sure we are), please email me and I’ll add them.
At Brad Feld’s Amazing Deals, we only bring you shiny happy deals. If you are a Mac user and like to live in a mail client instead of a browser, Sparrow Mail is for you. I paid $10 when it came out but through the magic of daily deals am making it available for $5 for the next 24 hours (up to 1000 copies).
Jason Calacanis even loves it – on G+ he says:
“I’m absolutely in love with Sparrow Mail. It’s made me 10-35% faster in GMAIL/Google Apps.”
For the next 24 hours, you can get Sparrow Mail for $5 instead of $10. Just wander over to Brad Feld’s Amazing Deals and grab it. And be able to say “I got something for $5 that Brad paid $10 for that he then made available for $5 bwahahahahaha.”