Venture Capital

I’ve met and emailed with many pre-seed and seed GPs in the past year. Over sushi last night with two of them, who are also long-time friends, one of them asked me “Brad, how do you think we are differentiated?” This generated a rant from me that went something like this. There are over 500 seed funds in the market right now. Maybe there’s a thousand. Many of them are angels raising a VC fund. Others are entrepreneurs / operators raising a VC fund. A few are existing VCs who are starting a new firm. I don’t even know what differentiation means anymore as it all blurs together. The operators say we know how to run businesses and help the CEOs that way. The angels say look at the deals we’ve done and the networks we have. Everyone describes the expertise they have around whatever the current hot new technologies are. Regional funds are trendy again. Differentiation is bullshit at this point – the only thing that matters is strategy and returns. And many of these funds / GPs have no realized returns, so all that really matters is strategy. ...

At 18 minutes into this awesome talk that Fred Wilson did at MIT a few weeks ago , he finishes the statement “The best time to invest in something is ...” “… when nobody wants to invest in it but you.” He adds “And – you have to believe in it and know why.” Truer words have never been spoken about investing as, or in, VC. Just don’t forget the phrase “and – you have to believe in it and know why.” ...

I’m on the receiving end of a lot of reference calls. I try to be thoughtful and direct in my responses, but I’m increasingly annoyed by the generic nature of the questions. Over time, I’ve developed an approach to doing reference checks, and my approach actively avoids asking any of the following questions. How did you get to know Person X? What is your relationship to Person X? What were Person X’s different roles? How does Person X rank concerning leadership ability? How does Person X rank concerning analytical ability? What about Person X’s vision and ability to communicate it to others? Was Person X well respected by the people he managed? What are Person X’s strengths? What are Person X’s weaknesses or areas for development? Would you hire Person X again? If so, what size company? What other questions should I have asked? Are there any things you would want to know if you were me? I don’t know which VC or Private Equity firm first came up with this list of questions, but like many elements of a term sheet, they seem to have been passed down from generation to generation. ...

If you have purchased the hardcopy edition of Venture Deals 3rd Edition, you can now buy the Kindle version also for $2.99 via the Amazon Kindle Matchbook program. Jason and I have been asking our publisher (Wiley) for this for a while and we are psyched they’ve agreed to it. It came about after a number of you asked us if we were going to do this, so thanks to y’all for pushing us on it.

On Saturday night I got on a plane and flew to the other side of the planet, where I am now. I’m in Melbourne, finishing my coffee, getting ready for one last meeting here before I fly with David Cohen to Adelaide for the day. When I left, I had the voices and energy of 25 people in my head. Last Thursday evening was the beginning of the second Reboot VC Bootcamp at my house just outside Boulder. ...

I’m in Minneapolis with my partner Seth. We had a meeting at Best Buy headquarters, met with a gang from the Mayo Clinic who drove up from Rochester, spent the afternoon at the Techstars Retail Accelerator which is at Target headquarters, and had dinner with Revolar . We are at the Techstars Retail Accelerator again today, then at Leadpages for a board meeting, and wrapping up with an internal Target event and an external startup community event put on by Beta.MN . ...

If you’ve missed me, it’s because I spent a week in Australia. Ten days ago, after being there for a few days, I came down with salmonella poisoning. I’m finally starting to feel normal again although I’m still exhausted. This has easily been the sickest I’ve ever been. While I was gone, the gang at Reboot put up the Reboot Podcast #45 – What’s Love Got to Do with It?- with Fred Wilson and Brad Feld which was a delightful conversation between me, Fred , and Jerry Colonna. ...

My partner Lindel Eakman wrote a post a few days ago about his transition from Austin to Boulder and a really helpful one about how to work with him titled A Human User Interface….with lots of quirks . This prompted me to poke around for other content from the limited partner (LP) side of the LP/VC/entrepreneurship universe. I think the first LP blogger was Chris Douvos who periodically puts up an instant classic post at Super LP . I fondly remember a meeting with Chris in NY at the end of the day when we were raising our first Foundry Group fund. I was tired and dragging a little from the fundraising, but Chris’ energy and enthusiasm around VC picked me back up in advance of dinner. He didn’t invest in our fund, but he made a strong impression on me. ...

We are starting to work on the teaching materials for the 3rd edition of Venture Deals , which is coming out in the fall of 2016. If you have either taught or taken a class using Venture Deals and are willing to talk to our publisher at Wiley about what kind of teaching materials would make the book even more useful, please send me an email . As part of this, we are doing a refresh of the Ask the VC website so if you have suggestions for that, just toss them in the comments.

Signups are open for the second Reboot VC Bootcamp happening January 19-22, 2017 . It will – once again – be at my house in Longmont, Colorado. If you are interested, here are some reactions to the first Reboot VC Bootcamp .