Venture Capital

I know I’m getting old. I remember in 2007 when the idea of a super angel appeared, where successful entrepreneurs were suddenly angel investors making 10 or more seed investments a year. This was a “new” innovation that was celebrated with much fanfare. Between 1994 and 1996 I made 40 angel investments with the money I made from the sale of my first company. I was referred to as an “angel investor” – I didn’t get the super angel moniker back in the 1990s, but I was often referred to as promiscuous. ...

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 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. ...

A few weeks ago Hunter Walk and Satya Patel of Homebrew , a one year old seed-stage VC firm that my partners and I are investors in, came and spent the day in Boulder. This wasn’t the typical “hey – I want to come see you for a meal when I’m in town” kind of meeting that happens with a lot of VCs. In this case, the firm (Homebrew) came by, committed a full 24 hours to being in Boulder, and went deep with me and my partners. ...

I often get asked how I ended up becoming a venture capitalist. When people ask me how they can become a VC, I point them to my partner Seth Levine’s excellent blog posts How to become a venture capitalist and How to get a job in venture capital (revisited) . But it occurred to me today – after getting another email asking me how I’d become a VC, that I wasn’t really answering the question. ...

When David Cohen and I came up with the idea for the Global Accelerator Network (GAN) in 2010, we counted roughly 100 accelerator programs around the US that were founded following the Techstars model. We labeled Techstars a “mentor driven accelerator” and reached out to others who were using the same approach to create what became GAN. From that initial outreach, 16 high quality accelerator programs joined us to launch the network. ...

“Passion is temporary. It doesn’t last long. Love is enduring. And that’s the important thing. If we all had love in our lives to the degree that we should, it would be much happier.” — UCLA Anderson | John Wooden Global Leadership Award ceremony (May 21, 2009) Last night I had dinner with my partners and our significant others. It was a wonderful evening with the three people I work most closely with, the people they love, and the most important person on the planet to me. ...

I’m a big fan of Jason Calacanis’ show This Week In Startups . I usually run naked (no headphones) but when I listen to something it’s usually an interview or a book. Amy and I had dinner last night with Paul Berberian and his wife Renee and Paul mentioned Jason had interviewed him at Techstars FounderCon in Chicago a few weeks ago. So – I grabbed my iPhone, downloaded the interview, and listened to it. Dynamite stuff. ...