Archive for the 'venture capital' Category

Crash Course: How to Build a Company

March 5, 2010

Five part video series by VC Jason Mendelson.  Well worth watching.

Summary points:

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Getting Portland on the map

February 12, 2010

Josh Friedman wrote a nice “In My Opinion” piece in the Oregonian entitled “Getting on the map as a hub for startups.” While agreeing with the fact that Oregon is the West Coast laggard in venture capital, he argues that the bigger issue is the lack of angel, or seed, funding.

This caused me to reflect a bit on the three startups that I’ve been involved with.  The first two were based in California.  The latest was in Portland.

There was no lack of financing for the California based companies, either angel or venture capital level.  Times were different in the late 90’s and early 00’s, of course.  However, there is simply more access to capital outside of Oregon. The first startup raised $70M.  The second raised even more, and ended up going public. Read the rest of this entry »

Rise of Angels in Consumer Internet Space

December 29, 2009

This is a must read post related from Bill Burnham discussing the heightened role that angel investors are playing in the consumer internet startup world.

Here’s what he sees happening.  VCs are concluding that its very difficult (very, very difficult) to identify early winners.  Therefore, it makes sense to wait to see and watch for the next Twitter, Facebook, etc. to emerge.  At the same time, VCs are becoming larger.  They need to make larger investments and are, therefore, happy to wait for the winners to emerge (even though that means investing at higher valuations).  VC partners are personally content with this situation because they are sitting on more funds under management (i.e., collecting more management fees).

At the same time, technology has become cheap (really, really cheap).  Very small teams of entrepreneurs can build version 1.0 products for little more than sweat.  Given this, there are a lot more “projects” happening.  Some of these projects might become businesses.  This situation makes the VC’s “wait and watch” approach appear even more rational.  High tech is becoming cheap tech (question: if tech is this “easy” is it really “tech” at this point?).  Angel investment is far better suited for backing early stage efforts that will either succeed or fail fast.

At first glance, this would seem to be a good development for markets like Portland, where there are relatively few established VCs.  However, it may be more of a negative given that Portland lacks an established community of successful entrepreneurs in the consumer internet space (relative to Silicon Valley, LA, NY).  It’s my impression that it’s relatively more important for angels to be located close to their investments.

“It’s not a revenue play”

December 23, 2009

A friend just pitched a VC and said with a straight face “it’s not a revenue play.”  The VC nodded in agreement.  Perhaps I’m too old school, but “not a revenue play” sounds like “play” to me.  A business, by definition, generates revenue, or has a plan to do so.

Funny VC quote about Portland

December 21, 2009

Anonymous [on the topic of whether Portland entrepreneurs have fire]: “I offered to come up and meet with the CEO.  He said that he couldn’t make it because he would be snowshoeing.  I said, maybe next lifetime then.”

Funny + a bit of truth…

The New Rules of Angel Investing

October 30, 2009

From The New York Times:

SMALL-BUSINESS GUIDE: The New Rules of Angel Investing

The deal makers still exist, but they are pickier and less tolerant of risk.

http://s.nyt.com/u/WJh

The Venture Capital Mix in Oregon

September 22, 2009

Here are some good data regarding venture capital in Oregon. The study covers 2008, so it’s a bit dated at this point. It’s very interesting to see the mix of investment. As has been well discussed elsewhere, Oregon is not a digital media market. The relatively larger segments relate to semiconductors, energy, and biotech (62% of the total).

Software comprised 12% of the total. Media and entertainment were only 5%.  Investments in these sectors are simply the exception versus the rule in Oregon.  Oregon has a relatively light track record in these sectors (as compared to Silicon Valley and Seattle).  Additionally, digital media companies require less and less capital and are able to cost effectively go after niche markets.  Many digital media companies simply do not fit the traditional venture capital profile.  (See a good discussion on this issue at the SiliconFlorist blog.)

Thus, no surprises as to where the investments are being made in Oregon.

[I would like to see how the mix has shifted, if at all, in 2009.]

Aside from the mix, in absolute terms, 29 companies raised a total of $174MM in venture capital in 2008.

Here is the chart. The full presentation can be found here.  The data source is PriceWaterhouseCoopers, MoneyTree Report (March, 2009).