Posted by Guest Author on March 11th, 2014
By Tomasz Tunguz, Partner at Redpoint Ventures
Has it become harder to raise money? is a question I hear all the time. On one hand, the total dollars invested by VCs is relatively flat at just under $30B per year, according to the NVCA. On the other hand, the stories of difficulty raising series As and Bs have become a steady
Posted by David S. Rose on March 6th, 2014
The best way for a VC to mitigate conflicts between portfolio companies is to avoid investing in direct competitors in the first place! While this can be a bit difficult for seed funds with very large portfolios and limited direct day-to-day involvement, most larger funds are careful to avoid directly competitive investments. The reason for this is simple: why have
Posted by David S. Rose on February 16th, 2014
While anything is technically possible, the reality is that venture capital firms do not fund “ideas”. There are many wonderful ideas, and even many people having the same idea in the market at any given time. So what VCs fund is execution. Indeed, VCs only invest in one out of every 400 fully-formed companies that approach them for funding…let alone someone with a
Posted by David S. Rose on February 9th, 2014
The U.S. Securities and Exchange Commission has very strict rules about who can raise investment funds for privately held businesses, and how they are allowed to go about doing it. At the moment, this is primarily limited to raising money from very rich people who qualify as Accredited Investors, and with whom you already have a pre-existing relationship.
Posted by David S. Rose on February 2nd, 2014
The ideal angel investor would spend a great deal of his/her time working on behalf of the company in support of the CEO, in every way other than being a full-time employee.
In addition to doing the kinds of things that anyone (employee, friend, parent, founder, etc.) could do (referring customers, tweeting out news, suggesting ideas, checking out competitive sites, pointing out
Posted by David S. Rose on January 26th, 2014
There are actually no angel investing ‘journals’ per se, because there simply are not enough active, professional angel investors to make a market :-). There are, however, quite a few blog posts on the subject, although most are written for an entrepreneurial audience, rather than angels themselves. And there is one really excellent weekly podcast to keep you up to
Posted by David S. Rose on January 23rd, 2014
This is obviously a softball question that I’ve been Asked to Answer, as I’m the Founder/CEO of Gust. The answer, of course, is Gust—because that’s exactly the purpose behind the platform!
Gust is the infrastructure that underlies much of the professional world of early stage finance. It is used by hundreds of thousands of companies in 195 countries to organize all of
Posted by David S. Rose on December 29th, 2013
I would be unlikely to invest in a Brazilian startup at this time because I have absolutely no background or knowledge of the local market, I don’t speak Portuguese, I would be unlikely to be able to attend board meetings or even visit the company, and finally because there are issues relative to double-taxation under US and local tax codes that make
Posted by David S. Rose on December 22nd, 2013
The direct answer to your question is NO, VC and PE funds do not provide debt financing for any companies. Their entire business model is based on investing in companies that can potentially offer very high returns. For venture capital, this is typically ten times the invested capital, and those returns can only be achieved through equity appreciation, not debt service.
Posted by David S. Rose on December 19th, 2013
There is not a definitive answer to this, because a good lawyer can write terms into either one to make one or the other preferable to one or the other party.
That said, the primary entrepreneur-friendly reason for doing a Convertible Note (and the reason that no serious investor under regular circumstances will therefore do an uncapped note) is:
