VC

I know many entrepreneurs who feel that VCs have played them, gamed them, deceived them, or bullshitted them. But this doesn’t only happen to entrepreneurs. VCs play this game with VCs all the time. One of our deeply held beliefs at Foundry Group is that there is no value in bullshitting anyone. We screw up a lot of things, make plenty of mistakes, and often look back and say some version of “oops.” But we never bullshit each other or bullshit anyone we work with. ...

I woke up to an article in Daily Camera today titled Small Business Administration trying to bring SBIC funds to Colorado . There are so many things wrong in the article I felt compelled to write about it. This isn’t a knock on the writer (Alicia Wallace) – I like Alicia and think she does a good job. Rather, it’s an example of the difference between signal and noise in any kind of reporting around the VC industry. ...

I was in the bathroom this morning catching up on all the blogs (via Feedly ) that I hadn’t read this week since my head was in a bunch of other things. I came across one from Nic Brisbourne (Forward Partners) titled I’m a stock picker. I wish he had called it “This Unicorn Thing Is Bullshit For Early Stage Investing” but I think he’s a little more restrained than I am. ...

Almost exactly a year ago I wrote a post Your Words Should Match Your Actions . It was a generic rant that resulted from me watching a couple of VCs blow up their reputations with entrepreneurs I know because of how they treated them. This morning I ended up on an email thread about this. I’m going to anonymize it, but you’ll get the point. The two people (who I’ll call “Entrepreneur” and “VC”) are both very successful, extremely smart, and very visible. ...

I woke up to a bunch of VC related things in my twitter stream this morning. I had a nice digital sabbath yesterday so I was a little surprised by how much there was. I tried cranking out a #tweetstorm of them using Little Pork Chop but I found the tweetstream experience to be very unsatisfying and very inauthentic feeling. The links are good, so here they are if you want to get in the headspace for what I really want to talk about. ...

I’m an investor in a bunch of VC funds. Some of them recycle their management fees; others don’t. I’ve never really understood why funds don’t recycle their management fees. Understanding what “recycling management fees” means is a fundamental part of understanding the economics of a venture firm. Here’s how it works. Let’s assume a $100 million VC fund that charges a 2% management fee and a 20% carry. In the typical case, a fund will get an annual management fee of 2% of “committed capital” (the $100 million) for the “investment period” (usually the first five years, or until a new fund is raised) and then an annual management fee of 2% of “invested capital” (whatever the fund has invested in companies that are still active) over the remaining life of the fund, which is usually 10 years. ...

My partner Jason and our dear friend Professor Brad Bernthal are attempting to teach everything there is to know about the venture ecosystem in 90 minutes on January 28th. The link to the event is here. Now realistically, you won’t learn everything, but they have been teaching a class on the subject for the past five years and it is not only excellent, but was one of the reason Jason and I wrote our book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. ...

Phin Barnes at First Round Capital just nails it today with his post To get the most out of your investors, turn them into rubber ducks. Go read it – I’ll wait and will be here when you get back. I love Rubber Duck Debugging . I use this approach when writing, which I call “Writing with Yoda.” I have a little Yoda figurine staring at me at all times and when I stall out I just talk to him for a little while and then get started again. He always looks serene and wise and I almost always get going after talking to him for a little while. ...

VCs love to say things like “we are entrepreneur friendly.” It’s trendy, catchy, and looks good on a blog post. But, as I’ve said in my post Your Words Should Match Your Actions , one can “damage their reputations by having their words not match up with their actions.” Now – this post isn’t about responding to emails. Nor am I trying to be preachy. I’m not trying to explain a new behavior. Rather, I’m making an observation about something I’ve experienced – both as an entrepreneur and investor – since my first angel investment in 1994. ...

Over the past few months I’ve watched several powerful and successful VCs and entrepreneurs damage their reputations by having their words not match up with their actions. I think this is especially true in the context of a long term relationship. This is a deeply held value of mine and of my partners at Foundry Group. I occasionally screw up and when I do I own it, apologize, and learn from it. But it stuns and amazes me when others assert strong style / values / culture and then consistently have their actions not line up with their words. ...