Archive for the 'venture capital' Category
September 9, 2008
I’m sure many of you have noticed that I haven’t been blogging as much recently. It’s not due to lack of desire, but due to lack of time and mental energy. I have a full list of topic ideas I want to blog about, but by the end of the day after interesting and bureaucratically taxing events, kids, dinner, husband, baths, teeth brushing, catching up on Babble Soft stuff and personal emails, I feel pretty dazed.
I have blog posts floating around in my head with rarely enough thoughtful time to get them down in a post. Fortunately, I have had some timely guest posters who have filled in some of the gaps.
I can’t say I’ll be able to get to a blogging pace (in the near future) that can keep up with my blogging ideas given my current schedule and life situation, but so far I’ve done a better job at posting than Marc Andreessen, founder of Ning and formerly Netscape, who hasn’t consistently blogged since May 2008! But he’s running a heavily venture backed company so I’m guessing he has just a few more people breathing down his neck than I do.
I’m glad I’m not in his shoes right now in this economy, with the news constantly talking about the questionable results of social networks from a business model perspective, and with some of the widget partner issues his company is facing. But Marc’s a tried and true entrepreneur so I’m sure he and his team will figure something out. If not, he is a millionaire and married to a millionaire so chances are they won’t be out on the streets any time soon.
Yep, it’s all relative and I’m thankful for the opportunities I’ve been given and the opportunities yet to come. Thank you to all of you loyal readers for sticking around!
UPDATE: On an interesting note, Seth Godin, the famous author and blogger on marketing tips & ideas, did a post on September 10 called How often should you publish? and in it he says: “Key assertion: you don’t publish it unless it’s good. You don’t write more blog posts than you can support, don’t ship more variations of that software than your engineers can make marvelous.” So I guess my haphazard blogging is OK because it fits what I can support!
May 16, 2008
So here’s the rest of my Women 2.0 Conference story. If you want to see tons of pictures (which sadly I and my deep pink Banana Republic shirt don’t appear) please check out the official Women 2.0 Conference Wrap Up post. You can also see Sophia Perl’s (another semi-finalist) post on it here.
Friday - May 9, 2008
I took my rented yellow car and drove around the Palo Alto/Menlo Park area to meet some people. I met Jeff Nolan, who was one of the venture investors in my first company, for lunch at a place called Buck’s. We only just got to know each other while at my last company before I left, but he seemed to be one of the good guys. I mentioned him in a post I did about angels and venture capitalists a while back. We might get to work together again and this time in hopefully a more creative and collaborative way.
I tried to meet up with Guy Kawasaki later that afternoon but he had something mildly important to do like make some sort of silly book submission deadline, so we traded tweets and emails instead. Then I went to the Stanford mall. I’m not a big shopper, but since I had a few hours to kill, and my husband wanted me to get him a Stanford t-shirt (It’s one of his alma-maters) I wandered around a bit and read The Power of Now by Eckhart Tolle, but was not feeling in the “now” at the time so didn’t make much progress. So I got some hot chocolate, my rings cleaned, and happened to find a couple of light-weight jackets at really good sale prices to protect me from the Bay Area cool evenings!
Later I had the pleasure of meeting up with Maryam Scoble for wine and fabulous brie with a flakey crust. Yum! Maryam and I met through our blogs. I initially heard about her and her husband Robert Scoble from our very own Austin based Connie Reece. Robert even did a Qik video of me at SXSW but I don’t think that many pregnant moms or parents with newborn babies, preemies or twins are watching those videos. Go figure!
Saturday - May 10, 2008 (conference day)
You can see the agenda for the conference here. It was an interesting day in a tent near the Stanford golf course. Walking in grass was a challenge for many of us who were wearing heels. Those wearing pointed heels especially suffered by sinking into the grass/dirt, but since I would trip and fall on my face in pointed heels, I wear more flat ones.
The most interesting sound bites, in my opinion, came from the Power Panel: “Igniting the spark through strategies taught and lessons learned”
Terri Ghio, Unique Solutions and TBS Connect said: Make sure you have an audience, a secret sauce, strategic alliances, and ability to build the blocks and barriers for success.
Amy Love, Protégé Performance Group said: Build an inner circle, share your dream, think big, and have the confidence & energy to move forward.
Dr. Jwala Karnik, JwalaCo said: Be open to inspiration, tell people what you want to do, and just take the first step!
Dr. Maggie Haertsch, VOICEMAP said: Have passion and be totally committed, focused, and fearless!
Pat McEntee, AuxoGlobal said: Women entrepreneurs are different and that’s OK. Women look at things they want to spend their time on differently. Women build different companies. The fact that many retail companies are currently dominated by men is not going to last long, but women should build companies that men feel comfortable in. By the way, Pat is a guy!
I mentioned the winners of the napkin business plan challenge in my yellow car post, so I won’t mention it here again, but I did want to mention one company and founder who was on one of the panels: Erica Estrada of d.light design. She is impressive and her company is very cool! They make affordable, small, solar power lighting units for people in third world countries who have no access to electricity. So the kids in who live in shacks can study/read after dark and parents can cook or work after dark without having to use a kerosene lamp that not only stinks and has to be bad for your lungs, but also doesn’t last very long. I really do wish her and her company great luck, good partners, fabulous investors and perfect timing!
I ended the day by eating sushi with the friends I was staying with. They even took a picture of me (see below) drinking this huge cup of sake! The waitress finished the bottle on me, so the sake overflowed into its holding bowl. I was glad I wasn’t the one driving us home in my rented yellow car. 
Coming soon I’ll post an update on my SEO experiences, so you might want to subscribe to read more about the birth pains of a web business. It’s not pretty.
May 7, 2008
You might have heard, I was a semi-finalist for the Women 2.0 napkin business plan competition. Well, they informed me on May 3, I didn’t make the finals. Sigh. But trying to look on the bright side, I’m actually kind of relieved because now I can focus on networking and learning instead of being stressed out about giving my pitch! I’m starting to think I’ll have to get a job to support my entrepreneurial addiction. Too bad I didn’t get rich off of my first entrepreneurial endeavor…
I’d like to profusely thank Sylvester Becker (a.k.a. German Cowboy) of Dana Lynn Media for helping me pull together a very cool 2 minute pitch video which I can’t share with the world yet, but maybe soon. Sylvester was awesome to work with and so creative! We used crayons. We used Little People to illustrate our future customers as well as small figures of Dora the Explorer and her friends Boots and Benny. Although I think Boots got cut out in editing. My daughter loves Dora and in fact some people say she looks like her especially now with her new haircut.
I had already decided that even if I didn’t make the finals, I was going to the Women 2.0 conference (check out the site for the fabulous list of panel speakers - entrepreneurs and venture capitalists) this weekend in the Bay Area where the skies are blue, the weather is usually predictable, the money made in tech is gigantic, and everything is way too expensive. Except for, oddly, the reasonably priced rental car I got from Hertz. Thankfully, some friends are letting me crash at their place so I can save money by not getting a hotel.
Anyway, in case you are interested in the names of the finalists, here you go:
I’ll do a post about it after I get back, so Subscribe Now so you don’t miss a thing about my sure-to-be idyllic, fantastic, jaw dropping trip to Cali! I wonder if I can find a way to eat some sushi while I’m there…
March 17, 2008
Unless you live under a rock or don’t drive a car, you have no doubt heard about or felt the state of the US economy. It’s in a state of well let’s say ‘confusion’ with indications it’s moving in the wrong direction. Gas prices are at record highs, people are filing for bankruptcy, they are losing their homes, the government has a record amount of debt, the stock market is going down, etc. etc.
So where does this leave us entrepreneurs who want to raise funds to take their businesses to the next level? Well, that’s a good question and a challenging one to answer.
I’ve had a handful of meetings with potential investors and a couple of them have expressed interest in participating, but they might change their minds given what’s going on in the economy. As the saying goes “It’s not in the bank, until it’s in the bank!” Fred Wilson, a venture capitalist in NYC, linked in his Read the Blogs post to a post on the Bear Stearns bailout by JP Morgan, which illustrates why even if you think it’s in the bank, it might not actually really be in the bank! Our personal savings accounts are also going down with the market.
I had several conversations with entrepreneurs coming from different parts of the country at SXSW Interactive who have been struggling for a while to raise funds for businesses that are up and running with strong visitor and user traction.
So despite only being less than two months into the process, all of this has forced me to revaluate my fundraising plans for Babble Soft. Entrepreneurship is not for the faint of heart as there are many ups, downs, and false starts. The economy changes however have a huge impact on the success or failure of a startup. If the economy is doing great you get all sorts of crazy new ideas/businesses popping up with chances to live and prove themselves. If it’s bad, even the companies with wonderful ideas can suffer, die out, or never even get a chance to shine.
The good news is that of all the industries out there (except for maybe the alcohol industry), the baby market is fairly recession proof. People don’t stop having babies nor do they stop buying things for their babies or things to help them take care of their babies. The bad news is that what we are trying to do at Babble Soft does not yet have a predefined “mental need or want” (because it’s so new) like say bouncy chairs, bright/shiny toys, Baby Einstein videos, or diapers.
On the plus side, we have not taken any outside money to date so we don’t have to worry about how and when we pay investors back like some other start-up companies. The downside is that if we don’t raise money right now, it will take longer to bring the exciting, potentially life changing vision I have to the world or worse we might miss the market opportunity.
I’m still trying to figure out the best plan of action. I wish we had more money to create a new user experience, enhance our current applications, and create new applications ourselves. I’m evaluating trying to raise a smaller amount of money and growing slower. Now’s the time when the creative juices start flowing!
If you know an entrepreneur, give them a hug (if you can’t give ‘em money) because it’s going to be a tough roller coaster ride for the next probably year or so. Some will be able to hang on and emerge stronger and better, some will get off gracefully, others might fall off unexpectedly, and yet others will wish they had fallen off before they lost their money and lost some of their sanity. 
If any of you have any thoughts, advice, virtual hugs, or even questions please share below…
March 12, 2008
Yesterday was the last day of SXSW Interactive and I have practically a desk full of business cards. Our son came yesterday (yes, it’s Spring Break here) for part of it as well but went with husband this time to a panel he attended. I was only able to make one panel yesterday and spent the rest of the time networking. Check out my posts on events I attended on Sunday (including my take on the Zuckerberg/facebook interview) and Monday.
Robert Scoble even did an interview of me that was posted to Qik but for some strange reason (due to the 3G connection) it got broken down to 16 different few second clips. Here’s the first one, here’s a middle one, and here’s the last clip. They are going to try to see if they can string it together, but it’s looking doubtful. Guess that means we’ll have to do a more official one next time!
UPDATE: Qik was able to string pieces of the video together and you can see it HERE. Once they get Robert’s phone, they will see if they can fill in some of the missing gaps using the files on his phone. Once they do that, I’ll embed the video in a future blog post.
The Insiders Guide to Angel Investing
This panel was not really a panel because the only speaker was David Rose. David is the founder of New York Angels and Angelsoft, a software application that helps angel investing groups manage plans received by entrepreneurs. He had some great info on angels and angel investing. He mentioned that he would make his slide-show presentation available and I will update this post if and when he sends the link, but here are some highlights:
- There are 600K new companies started each year. Of those 350K are self-funded, 200K are funded by friends and family, 50K by Angel investors, and a mere 1200 by venture capitalists.
- Angels are generally about 57 years old, they have a master’s degree, 15 years of entrepreneurial experience, have been involved with and/or started on average 2.7 ventures.
- To be an accredited investor you must have $1 million in assets and have to have made $200K of annual revenue for the past 2 years.
- The average angel investor has spent 9 years investing, had done 10 investments, had 2 exits (profitable or lost their money), and 10% of their wealth is tied up in angel investments.
- Angels look for companies with Scalable Business Models, an “Unfair Advantage,” a Great Entrepreneur, External Validation, Low Investment Requirement, Reasonable Valuation ($1 to $3 million pre-money range), and a 20 to 30 times return on their investment within 5 to 7 years.
- The single most important characteristic an Angel investor looks for in an entrepreneur is Integrity. Then they look for Passion, Experience, Knowledge, Skill, Leadership, Commitment, Vision, Realism, and Coachability.
David said most angel investors don’t end up making a ton of money from angel investing. In fact most lose money. Many invest because they want to give back and help other entrepreneurs. He even offered us a joke that goes like this: How do you make a small fortune angel investing? You have to make a large fortune first!
He then went on to talk about the process of applying to an Angel network and described what the entrepreneur as well as the Angel investor sees if they are using the Angelsoft software application tool. If you are an entrepreneur, he suggested you submit your plan at www.angelsoft.net/entrepreneurs. They will soon be launching a site called Open Deals where entrepreneurs who don’t have access to a local angel group can submit their plan. For a full list of angel groups, check out the Angel Capital Association site and their directory of angel groups.
All in all, I had a great time at SXSWi. I look forward to attending next year and maybe even being a panelist!
March 8, 2008
For the past few years I have served as an Advisor to The University of Texas at Austin MBA team that competes in the Venture Capital Investment Competition (VCIC).
It all started when I was an adjunct lecturer of entrepreneurship at UT Austin and since then I’ve continued to advise as they need me and my schedule permits. This competition did not exist when I got my MBA, and even if I had the opportunity to participate I was too busy trying to start my first venture. What a plus it would have been for any entrepreneur to have seen a term sheet presented by experienced investors in an academic environment rather than in real life when you feel like you have to learn another language just to understand parts of the investment terms!
This year the regional competition was held at USC in LA on March 7, 2008. The UT team this year was comprised of:
Ben Jones - MBA 2008
Kyle Reese - MBA 2008
Rajiv Bala - MBA 2009
Ryan Sanders - MBA 2009
Scott Chiou - MBA 2009
I connect them with local venture capitalists and entrepreneurs to help them prepare but we had a late start with only about 5 weeks to get ready and midterms in between this year. Other teams have semester long classes to prepare for this competition!
At the competition, 6 teams were given business plans for 3 real companies including NiLA, makers of environmentally friendly lighting, on Wednesday, March 5 at 5:00 pm. They use the Internet and other relevant sources to research the companies and come up with questions for the entrepreneurs. On Friday, they heard the entrepreneurs pitch their business concepts in front of 11 real live venture capitalists, including Aditya Mathur of Revolution Ventures, Nathan Joyner of Pacific Ridge Capital, Neal Hansch of Rustic Canyon Ventures, representatives from Tech Coast Angel Group and many more.
They then go into little rooms and subject the entrepreneurs to answering several of the same questions over and over again from the 6 different teams. Why would any entrepreneur do this you might wonder? Because the VCs are in the room while they are being asked the questions so they are getting exposure that they might not have had otherwise to them.
After the questioning sessions are over, the teams again regroup and come up with a PowerPoint presentation which outlines which company they would chose to invest in and why. For the company they choose to invest in, they create a term sheet. They present their choice in 3 minutes in front of the VCs. The VCs then grill them for about 15 minutes on their company choice and investment terms.
At the end of the day, the judges decide who wins and who takes 2nd place. The 1st and 2nd place winners get money and the opportunity to compete in the national competition at University of North Carolina Kenan-Flagler Business School in April. I have personally seen one student get a job on a team I advised in venture capital because of participating in this competition.
As an advisor I get to be a fly on the wall and watch the VCs deliberate and observe the decision making process. Plus I build my network in areas outside of Austin. Personally, I believe this experience has helped me gain better perspective on what venture capitalists are looking for which is why I’m currently seeking money from angel investors or smaller boutique/seed stage venture firms.
So I’m sure the suspense is killing you as to whether or not our team placed and unfortunately they did not. They picked the company with the biggest market potential but with the highest risk and the VC judges picked NiLa, which has a great opportunity but less risk and less upside. Goes to show you that most VCs are not early stage investors!
There are so many variables that go into winning from judges backgrounds, to student’s experience, to understanding of the market of the presenting companies, etc. that you can’t always prepare for everything. But what an experience!
Flying back to Austin today for SXSW Interactive and will post about my experience as a newbie SXSW attendee. I’m looking forward to meeting many of the people I’ve met through blogging and twitter!
January 10, 2008
Following on my Other People’s Money - The Hunt Begins post, I thought it might be interesting to share what I will be putting in my Fundraising Toolkit. Check out The Entrepreneurial 7 Year Itch to get some additional background.
I plan to raise seed financing from angel investors for Babble Soft, and here’s what I will have in my toolkit.
An Executive Summary. Thankfully people have moved away from the 35 to 40 page business plans that used to be required when I raised money for my first company. Now it’s easier to get your foot in the door with a 5 to 7 page summary. If they are interested, they will ask for additional information. In a typical Executive Summary you will see sections on:
- The Company
- The Problem
- The Solution (i.e., Your Products)
- The Market (including Competitors)
- The People
- The Numbers (i.e., the Financial Projections).
Financial Projections. In my opinion, creating Financial Projections for an Internet startup is often an exercise in futility that shows you have an idea of how you will make money. Most experienced technology investors know that predicting the future is a crazy process at best especially when you are starting from ground zero and success primarily depends on many viral factors. Financial projections for IBM are much different than financial projections for an Internet start-up. The assumptions you make are the most important part of the model as they give the investor an idea of the homework you have done on the market.
Some venture capitalists like high profile Fred Wilson (a.k.a. A VC in NYC) of Union Square Ventures go as far to say that sometimes you can wait to scale before figuring out and executing your business model when describing his stance on Twitter’s lack of a current business model.
Since Babble Soft is not Twitter, I’m not already a gazillionaire, and I have a million things to do, I have a sharp MBA student, Anand Balasubramanian, helping me create an Advertising and Subscription based model. I love energetic, rock star, cheap, student help! He has done a great job so far building a simple, easy to understand financial model for me.
Visuals. Since I’ll be raising funds for products that do not exist yet, I have engaged a great local design, user experience, and information architecture firm, Projekt202, to create a few mock-up pages illustrating both the web and mobile components of our new applications. They seem as excited about the vision as I am and are taking on some of the financial risk with me. It makes me so happy when I find people who get what I’m trying to do! I’ll also have a demo account of Baby Insights and Baby Say Cheese ready to log in to demonstrate our existing applications.
An Investor Leads List. However you choose to keep track of your calls, meetings, and referrals it’s important to do so. I have met entrepreneurs who want to raise funds who aren’t organized about the process and end up looking a bit flighty. Unfortunately the investors are allowed to be flighty but they usually don’t tolerate too much flightiness in entrepreneurs. Remember: “She who has the gold makes the rules.” After a while it’s easy to forget what you promised to get to whom and who referred you to whom. It’s important to remember at what stage of the investing dance you are in with each potential investor. On this spreadsheet I plan to keep track of:
- Name
- Contact Information
- Professional Background
- Who Referred Them to Me
- Investment History
- Typical Investment Size
- What Items They Need From Me, and
- Personal Assessment on the likelihood they will invest.
Passion Tempered With Wits. I think that often the big thing that can swing an investor, especially an angel investor who has been in your shoes before when building his/her company is your passion. Why are you doing this when there are much easier ways to make a buck? What will keep you going? What excites you about the business? I am passionate about helping new parents and caregivers connect and find answers. I am passionate about building a business. I am passionate about finding great people to work with. If that passion is tempered with some logical thinking, that’s a big huge ‘ole plus! All of us entrepreneurs are a bit crazy at times so I just hope I don’t lose my wits in the middle of an investor pitch!
Since I am still working on everything above except for my passion which has recently been reignited, I’ve got a lot to do before the meetings I already have set up with potential investors in the next couple of months. If you have suggestions on other things I should have in my fundraising toolkit, let me know by leaving a comment below. It’s been a while since I have raised money and I’m always open to learning new things.
Join me for the journey. Subscribe to the blog and hold on to your stomachs, it’s bound to be a scary roller coaster ride at times!
UPDATE Jan 12, 2007: Found|Read republished this very post on their blog and called it My Funding Toolkit. Check out that post for some great comments! They have many more readers than my blog currently does so I’m delighted that they chose to share it with their readers!
November 13, 2007
First off, if you haven’t heard Al Gore is now a partner at Silicon Valley venture firm, Kleiner, Perkins. Kleiner is the most prestigious venture firm in Silicon Valley. He joined to help guide their investments in companies that are combating global warming. I have to really hand it to Al Gore for totally reinventing himself from VP of the United States to candidate for President of the US to champion for the planet! His parents must be mighty proud!
After writing my post on Fred Wilson on Venture Capital Fund Performance, I have happened upon a few more interesting posts on the subject of fundraising.
Wendy Piersall made me aware of 7 Things No One Tells You About Raising Venture Capital Financing by Ben Yoskovitz.
From Ben’s blog I found 7 Steps to Land and Leverage an Angel Investor by Carleen Hawn.
Here’s a chart listing their lucky number 7 items:
| 7 Things No One Tells You About Raising Venture Capital Financing |
7 Steps to Land and Leverage an Angel Investor |
|
|
| Signing a term sheet is only step one. |
Step 1: Identify yourself. |
| It might not be worth negotiating the finer points of the deal at the term sheet stage. |
Step 2: Identify the right angel |
| Due diligence is an “interesting” process. |
Step 3: Your company’s fundamentals. |
| The paperwork is extremely detailed and extensive. |
Step 4: Valuation. |
| Most of the deal focuses on negative details. |
Step 5: Structuring the deal. |
| You pay all the legal bills. |
Step 6: Negotiation. (Psst!: You don’t need to do it!) |
| Don’t just focus on how much you’re raising and what chunk of the company you’re giving up. |
Step 7. Leveraging the relationship. |
Ben and Carleen make great points and from my experience back in the late 90’s I agree with all of them. I’d like to add, ‘trust your gut!’ Your gut feelings are based on years of experience that you may not be able to articulate quickly in words but you know…you know you do.
