VC Offsites – Our Approach

I regularly get asked by other VCs about how we do our offsites. When we started Foundry Group in 2006, we had a very deliberate quarterly process in an effort to learn each other and become highly effective at working together. For the first three years, we were disciplined about the timing and process, used an outside facilitator, and always spent one night away together as a group. This was intense and rocky for the first few years, as we had to work through a lot of stuff as individuals and as a team, even though we had all be working together since the early 2000s at our prior firm. Around 2010, as we started to feel like we had hit our stride working together as a team, we shifted from a facilitator driven model but maintained our quarterly rhythm. Recently, after adding Lindel, Moody, and Jamey to
Continue reading "VC Offsites – Our Approach"

Sequoia Capital plans $8 billion global fund, eyes China investors: Reuters

HONG KONG (Reuters) – Sequoia Capital, an early investor in global tech behemoths like Google Inc and Apple Inc, aims to raise up to $8 billion in its largest-ever fundraising and has set sights on Chinese investors, people familiar with the plan told Reuters. More cash in the bag would help the Silicon Valley venture capital giant diversify its focus from early-and growth-stage investments to pre-IPO funding rounds, at a time when startup valuations are spiking partly due to money pouring in from SoftBank Group Corp’s $93 billion Vision Fund. “There is so much money now (in the tech sector). You need to have a bigger war chest,” said a Hong Kong-based investment banker familiar with Sequoia’s strategy. For its new global fund, Sequoia is already trying to attract investors in China, where fund managers are looking to gain from growing sources of capital at wealth management
Continue reading "Sequoia Capital plans $8 billion global fund, eyes China investors: Reuters"

Northwestern Mutual and Aurora Health Care to invest in Milwaukee startups

Northwestern Mutual’s Cream City Venture Capital and Aurora Health Care’s InvestMKE are each investing $5 million to back Milwaukee startups via a multiyear funding commitment. Cream City VC will provide early-stage funding for startups ranging from $100,000 to $250,000 while Aurora’s InvestMKE, will co-invest, alongside Cream City VC and others, up to $1 million in early-stage healthcare companies. PRESS RELEASE MILWAUKEE, Oct. 30, 2017 /PRNewswire/ — Northwestern Mutual and Aurora Health Care announced today the companies are each investing $5 million to support local Milwaukee startups through a multiyear funding commitment, business resources and mentorship. Northwestern Mutual’s Cream City Venture Capital (VC) and Aurora Health Care’s InvestMKE are the latest examples of both companies’ commitment to growing the local startup community. Cream City VC and InvestMKE will each have independent investment criteria, but will be run in close collaboration to maximize the opportunities for funding, mentorship and technology development. “We
Continue reading "Northwestern Mutual and Aurora Health Care to invest in Milwaukee startups"

We Lead or We Participate

Over the years, I’ve been in many multi-party negotiations. I don’t know the maximum number of participants in a single negotiation, but I’m sure it’s greater than ten active negotiating parties in a transaction. I don’t mean the number of entities participating in the transaction, but the actual number of active negotiating entities. The best way to figure this out is to count the number of different law firms involved in the transaction. We shifted our behavior some years ago. Often, we lead deals. When we lead, we negotiate the terms. We work collaboratively with any other co-investors, but we’ll take the lead. But, if we don’t lead, we follow. This can be tricky, as our instincts (or ego) can often get in the way since we are used to leading deals. Or, the lawyers can get confused about what our real goals and intentions are in the negotiation. We always have
Continue reading "We Lead or We Participate"

The Generic VC / PE Reference Questions For An Executive Hire

I’m on the receiving end of a lot of reference calls. I try to be thoughtful and direct in my responses, but I’m increasingly annoyed by the generic nature of the questions. Over time, I’ve developed an approach to doing reference checks, and they actively avoid asking any of the following questions.
  • How did you get to know Person X?
  • What is your relationship to Person X?
  • What were Person X’s different roles?
  • How does Person X rank concerning leadership ability?
  • How does Person X rank concerning analytical ability?
  • What about Person X’s vision and ability to communicate it to others?
  • Was Person X well respected by the people he managed?
  • What are Person X’s strengths?
  • What are Person X’s weaknesses or areas for development?
  • Would you hire Person X again? If so, what size company?
  • What other questions should I have asked?
  • Are there any things you would want
    Continue reading "The Generic VC / PE Reference Questions For An Executive Hire"

The Second Reboot VC Bootcamp

On Saturday night I got on a plane and flew to the other side of the planet, where I am now. I’m in Melbourne, finishing my coffee, getting ready for one last meeting here before I fly with David Cohen to Adelaide for the day. When I left, I had the voices and energy of 25 people in my head. Last Thursday evening was the beginning of the second Reboot VC Bootcamp at my house just outside Boulder. Amy and I have a second house on our land, which we refer to as “the Carriage House” and the Reboot gang calls “Chez Feld.” The first floor is an event center that we use for non-profit events. The second floor was going to be a man cave, but my idea of a man cave is carrying my laptop around the house wherever Amy goes and sitting down next to her.
Continue reading "The Second Reboot VC Bootcamp"

Fred Wilson on Reserves

Fred Wilson has a spectacular post up on how VC funds should think about reserves. It’s even more valuable to entrepreneurs so they can understand how the best VCs think about reserves, giving the entrepreneurs ammunition to ask their investors how they are thinking about reserves. I only noticed one thing missing from Fred’s post which is a statement about cashflow which I commented on.
“Fred – phenomenal. The only thing I noticed missing was a comment on fund cash flow. To recycle, you have to have the cash flow. If you don’t have the exits to generate funds to recycle, you can hit a cash flow wall where your reserve model breaks (since you don’t have the cash to fund the reserves.) There are several solutions to this, including recalling capital, having an annex fund, and suspending management fees, but the best is having the cash in the Continue reading "Fred Wilson on Reserves"

Board Seat For Sale

I had lunch recently with a founder. We were talking about current and future board configuration for his company and he said “Up until this point, all my board seats were simply for sale. Whenever a new investor showed up, they wanted – and got – a board seat.” I loved the phrase “board seat for sale.” It’s exactly the opposite of how I think about how to configure a board of directors, but I recognize that it’s a default case for many VCs and, subsequently for many entrepreneurs and companies. It’s a bad default that needs to be reset. I wrote about this a lot in my book Startup Boards: Getting the Most Out of Your Board of Directors. In the past few years there have been some interesting changes. In pre-seed and seed stage companies, there’s been a trend against having board of directors. Instead, there
Continue reading "Board Seat For Sale"

Q316 State of Venture Capital Update With Cooley

Each quarter Cooley does a VC market update. This quarter they interviewed me as part of it on Quarterly VC Update: Brad Feld on the State of Venture Capital InvestingThe full Cooley Q3 report includes a bunch of data and trend graphs which I encourage you to go take a look at. The interview with me follows.

Based on Cooley data for the quarter, how does your experience in the market compare?  Similar/different?

The tone of Q3 felt like a continuation of Q2 with summer vacations tossed in. The existential freakout that occurred in January and February seemed like the distant past with the lingering hangover being a clearer focus on valuation and overall funding needs from new investors. While there are a few clear trends in the data, such as lower valuations for Series A through C rounds and more flat rounds, the overall changes from
Continue reading "Q316 State of Venture Capital Update With Cooley"

Content From LPs

My partner Lindel Eakman wrote a post a few days ago about his transition from Austin to Boulder and a really helpful one about how to work with him titled A Human User Interface….with lots of quirksThis prompted me to poke around for other content from the limited partner (LP) side of the LP/VC/entrepreneurship universe. I think the first LP blogger was Chris Douvos who periodically puts up an instant classic post at Super LP. I fondly remember a meeting with Chris in NY at the end of the day when we were raising our first Foundry Group fund. I was tired and dragging a little from the fundraising, but Chris’ energy and enthusiasm around VC picked me back up in advance of dinner. He didn’t invest in our fund, but he made a strong impression on me. OpenLP is a new site moderated by the gang at Sapphire Ventures
Continue reading "Content From LPs"

Current Startup Market Emotional Biases

Bill Gurley wrote an incredible post yesterday titled On the Road to Recap: Why the unicorn financing market just became dangerous … for all involvedIt’s long but worth reading every word slowly. I saw it late last night as it bounced around in my Twitter feed and read it carefully just before I went to bed so the words absorbed into my brain. I read it again this morning when I woke up. And I expect I’ll read it at least one more time. I just saw Peter Kafka’s summary of at at Re/Code (We read Bill Gurley’s big warning about Silicon Valley’s big money troubles so you don’t have to) and I don’t agree. Go read the original post in its entirety. Fred Wilson’s daily post referred to the article in Don’t Kick The Can Down The RoadFred focuses his post on a
Continue reading "Current Startup Market Emotional Biases"

Kensington Capital VC fund closes at $227.9 mln

Kensington Capital Partners said Thursday it closed a fund of funds at C$306 million ($227.9 million). The target of the Kensington Venture Fund, which will invest in Canadian-based VC funds and technology companies, was C$300 million. Investors include BMO Financial Group, CIBC, OpenText Corp, Richardson GMP, Royal Bank of Canada, Scotiabank, TD Bank Group, Torstar Corp, and the Government of Canada. PRESS RELEASE TORONTO, ONTARIO–(Marketwired – March 3, 2016) – Kensington Capital Partners announced today the final closing of the Kensington Venture Fund after exceeding its target of $300 million in investor commitments. The Fund, which raised a total of $306 million, received its most recent commitments from a mix of wealth managers, private foundations, and individual investors. “This is a great time to be investing in technology in Canada,” says Rick Nathan, Managing Director of Kensington Capital Partners. “Our significant talent pool,
Continue reading "Kensington Capital VC fund closes at $227.9 mln"