Founders – Use Your Down Round To Clean Up Your Cap Table

Mark Suster wrote a great post yesterday titled The Resetting of the Startup Industry. Go read it now – I’ll wait. Once again, as we find ourselves in the middle of a significant public market correction, especially around technology stocks, there’s an enormous amount of noise in the system, as there always is. Much of it is very short term focused and, like a giant tractor beam, draws the conversation into a very short time horizon (as in days or weeks). And, rather than rational and helpful thoughts for entrepreneurs, it often brings out the schadenfreude in even the most talented people. Mark’s post is one of the first in this cycle that I’ve seen from a VC giving clear, actionable advice . One of my favorite lines in buried in the middle:
“I’ve heard enough companies say “we simply can’t cut costs or it will hurt the long-term potential of the
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Recapped Alberta Enterprise makes debut fund commitment

Alberta Enterprise Corp (AEC) has made its first investment since receiving an additional $50 million from the provincial government late last year. AEC committed $5 million to Avrio Ventures LP III, the third institutional late-stage fund of Avrio Capital, a Calgary-based venture capital firm. AEC, a fund of funds that backs venture capital funding of Alberta-based companies, said the Avrio commitment supports its goal of diversification and creation of local value-added agriculture products and technologies. PRESS RELEASE Alberta Enterprise Corporation invests $5 million with Avrio Capital Alberta Enterprise makes first investment after new capital allocation EDMONTON, Feb. 8, 2016 /CNW/ – Alberta Enterprise Corporation announced today that it has invested $5 million as a limited partner in Avrio Ventures III, a $108 million agriculture and food technology venture capital (VC) fund based in Calgary. The investment in Avrio III marks Alberta Enterprise’s first capital placement since their new capital allocation from
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Load Balancing Between VC Partners

I woke up this morning in Fort Worth, Texas. For the first minute I wasn’t really sure where was I but it eventually snapped into focus. This happens to me periodically when I travel. I’ve got a stretch where I’m on the road a lot. Fortunately, I’ve got amazing partners. I was reflecting on this over a cup of stale coffee this morning. One of our deeply held beliefs at Foundry Group is that all four of us work on, and are responsible, for every company we are investors in. We don’t have silos where there are “Brad companies” or “Ryan companies” or “Seth companies” or “Jason companies.” In about 90% of the companies we are investors in, two of us are actively involved. In about 50%, three of us are actively involved. But in 100% of the cases, we all know what is going on, have relationships with
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As Israel’s tech sector booms, its pension funds miss out: Reuters

Israel’s pension funds are facing calls to invest more in the country’s thriving high-tech sector, with complaints growing that the Israeli public is missing out while foreign investors reap the returns of the country’s technology boom. Burned by the tech bubble that burst in 2000 and hampered by regulatory constraints, Israeli pension funds have shied away from high tech over the past decade, during which billions have been generated from high-profile takeovers or flotations. Now, with pension funds posting sluggish returns of between 2 and 3.6 percent during 2015, bankers, venture capitalists and entrepreneurs are saying they should put more into the country’s best performing industry. “It’s mostly guys from California enjoying the fruits of the Israeli high-tech success,” said Yaron Bloch, chief executive of Bank Leumi’s investment banking arm Leumi Partners. Israeli tech mergers, acquisitions and IPOs rose 16 percent in 2015 to $9.02 billion, according to
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Anpac Bio-Medical Science raises over $2 mln

Shanghai Zhangjiang Science &Technology Investment Corp., along with private investors, have invested over $2 million in Anpac Bio-Medical Science Co. Anpac Bio-Medical is developing an early cancer screening and detection technology. PRESS RELEASE SACRAMENTO, Calif., Dec. 24, 2015 /PRNewswire/ — Anpac Bio-Medical Science Co., Ltd., Chief Executive Officer Dr. Chris Yu announced that Venture Capital (VC) Firm, Shanghai Zhangjiang Science &Technology Investment Corporation (ZJSTIC), as well as private investors related to the insurance industry, have again invested over $2 Million to support Anpac’s “Cancer Differentiation Analysis” (CDA) technology.
Impressed by promising results generated from over 25,000 CDA cases to date, the bio-tech-focused VC group and strategic insurance industry leaders invested the equivalency of several million U.S. dollars in 2015, supporting technology listed as, “game changing” and “breakthrough”, in Nobel Prize Laureate Summit on Biomedical Science publications.
Anpac’s proprietary CDA technology effectively reinvents cancer screening and
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Why I Don’t Have To Follow VC Blogs Anymore

Two words: Mattermark Daily When I started blogging in 2004 I think I was the third VC blogger after David Hornik and Fred Wilson (if you were, or know, of another pre-2004 VC blogger, please tell me so I can update my historical recollection.) I remember lots of people asking me why I was doing it. I heard plenty of trash talk from other VCs, especially second hand, such as “He doesn’t have enough to do”, “He’s not spending his time doing his job”, or “What a waste of time.” I didn’t care, as I was doing it – like Fred often said – to help me think out loud in public, learn about different things, and get a conversation going around topics I was interested in. In retrospect, it was also helping me “practice writing” and without all the practice, it’s unlikely I would have ever gotten in
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Vize Capital buys Bevo Media

Vize Capital has acquired Bevo Media. Financial terms weren’t announced. San Diego-based Vize Capital provides a tracking platform and ad exchange for the performance marketing industry. PRESS RELEASE SAN DIEGO, Sept. 14, 2015 /PRNewswire/ — Bevo Media (http://www.bevomedia.com/), a popular tracking platform and ad exchange in the performance marketing industry, has been acquired by Silicon Valley-based private equity firm Vize Capital(http://www.vizecapital.com). Vize Capital plans to invest significant resources into growing and further improving the platform.
Bevo Media’s founder and CEO Ryan Bukevicz states, “This is a huge milestone for the Bevo team and our customers. Through this acquisition, Bevo Media will have the infrastructure to better provide for our thousands of advertisers and tens of thousands of tracker users. This milestone will help us to fulfill our ultimate vision of Bevo Media and take our company to the next level.” Bukevicz plans on staying active
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Bridge Bank launches Equity Fund Resources

Bridge Bank said Wednesday that it launched a banking group, Equity Fund Resources, which will offer services to venture capital and private equity investment funds, their partners and portfolio companies. This includes capital call lines of credit, treasury management tools and management company flexibility lines. Michael David is leading Equity Fund Resources. David was previously managing director and group head of Fifth Street Technology Partners. PRESS RELEASE SAN JOSE, CA–(Marketwired – Sep 9, 2015) – Bridge Bank announced today that it has launched a new banking group — Equity Fund Resources — which will serve as a centralized resource to Venture Capital (VC) and Private Equity (PE) investment funds, their partners and portfolio companies. The new group will enhance Bridge Bank’s robust technology banking practice by offering services to equity funds including capital call lines of credit, treasury management tools and management company flexibility lines.
“The Equity Fund Resources
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A Venture Capital History Perspective From Jack Tankersley

In January, Jerry Neumann wrote a long and detailed analysis of his view of the VC industry in the 1980’s titled Heat Death:  Venture Capital in the 1980’s. While I don’t know Jerry very well, I like him and thought his post was extremely detailed and thoughtful. However, there were some things in it that didn’t ring true for me. I sent out a few emails to mentors of mine who had been VCs in the 1980s. As I waited for reactions, I saw Jerry’s post get widely read and passed around. Many people used it as justification for stuff and there were very few critical responses that dug deeper on the history. Jack Tankersley, a long time mentor of mine, co-founder of Centennial Funds, and co-founder of Meritage Funds, wrote me a very long response. I decided to sit on it for a while and continue to ponder the history
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Anpac Bio-Medical Science raises Series A

Anpac Bio-Medical Science Co., Ltd said Tuesday that it raised a Series A round of funding from Shanghai Zhangjiang Science &Technology Investment Corp. Financial terms weren’t announced. Anpac of China, provides early cancer detection technology. PRESS RELEASE Anpac Bio-Medical Successfully Achieves Series A Funding from Shanghai Zhangjiang Science & Technology Investment Corporation SACRAMENTO, Calif., Aug. 18, 2015 /PRNewswire/ — Anpac Bio-Medical Science Co., Ltd., Chief Executive Officer Dr. Chris Yuannounced this week that highly-respected Venture Capital (VC) Firm, Shanghai Zhangjiang Science &Technology Investment Corporation (ZJSTIC) is the latest partner to invest in what the 2015 Nobel Prize Laureate Summit on Biomedical Science (NPLS) organizers published earlier this year as, “game changing” and “breakthrough”, Anpac early cancer detection technology.
Impressed by promising results generated from over 22,000 case studies, the technology and biomedical focused VC group has invested the equivalency of several million U.S. dollars in
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The two goals of startup fundraising

Money’s been flowing. VCs have been investing money at levels not seen since the bubble year of 2000. Entrepreneurs have been raising enormous amounts of money at valuations that assume years of future growth and eventual profitability. So what’s the downside of all this? That entrepreneurs mistake what they’re reading on Techcrunch as the reality for their own companies both now and for the foreseeable future. Raising money seems like a cakewalk, but that’s only because you don’t read about the failed financings, down rounds and recaps nearly as much as the unicorns and decacorns. And warning signs are emerging that the cascade of cash is about to end. The reality may be very different soon, and that’s something that we’ve emphasized to our Homebrew partner companies as they’ve hit the fundraising trail this year. Fundraising is confusing, frustrating and all-consuming at its worst and informative, exciting and rewarding at
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Chaac Ventures invests in Locent

Chaac Ventures said Thursday that it has invested in Locent. Financial terms weren’t announced. Los Angeles-based Locent is a Software as a Service company that is developing technology that lets merchants sell products and services over SMS (text) technology. PRESS RELEASE Santa Monica, CA (PRWEB) June 11, 2015 Chaac Ventures, a seed venture capital (VC) fund focused on Princeton University’s top alumni tech founders, agreed to make it’s first investment, into Locent, a Los Angeles-based SaaS (Software as a Service) company that has developed technology that will allow merchants to expand their capabilities to sell products and services over SMS (text) technology. “We are excited for the opportunity to invest in and partner with Locent,” said Luke Armour, founder of Chaac and Princeton class of 2013. “We see the future of mobile commerce moving from voice and email to SMS. It is the next step in the progression of mobile
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The Pre-money vs. Post-money Confusion With Convertible Notes

The other day, Mark Suster wrote a critically important post titled One Simple Paragraph Every Entrepreneur Should Add to Their Convertible NotesGo read it – I’ll wait. Or, if you just want the paragraph, it’s:
“If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”
I also have seen the problem Mark is describing. As an angel investor, I have never asked for a liquidation preference on conversion that is greater than the dollars I’ve invested. But, I’ve seen some angels ask for it (or even demand it), especially when there is ambiguity around this and the round happens much higher than the cap.
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Payzer raises $4.2 mln

Grotech Ventures and Route 66 Ventures led a $4.2 million Series A round for Payzer. Charlotte, North Carolina-based Payzer is a mobile and cloud based financial technology platform. PRESS RELEASE CHARLOTTE, N.C., April 30, 2015 /PRNewswire/ — Payzer, a mobile and cloud based financial technology platform, today announced a $4.2M Series A financing round led by Grotech Ventures and Route 66 Ventures. The investment will allow the company to accelerate its sales and marketing growth and to expand its product development team.
Payzer, originally founded as Just Push Pay, is the All-in-One Financial tool that helps fleet based businesses such as contractors grow their business by enabling mobile payments, instant loans via mobile devices, easy management of recurring payments, and simplified customer management.
“There’s a lot to be excited about at Payzer,” said Joe Giordano, Payzer CEO and Founder. “We’ve built a strong team, our product
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Transparent Funding Announcements

We are in a cycle again where how much you raise is the story. It’s what the press likes to write about (e.g. Company X raised Y from A, B, and C). Now that everyone is overly focused on unicorns, the headline number on the valuation (e.g. Company X raised Y at a valuation of Z from A, B, and C) has crept into the story on big rounds.

While this makes for press release fodder and ego gratification, it’s of very little use to entrepreneurs. There’s no real story there. No understanding of the human dynamics behind the financing. No understand of what actually went down. No underlying metrics that drive the financing. No real perspective on how people thought about things and the choices they made. Just happy talk focusing on the dollar raised. Zero educational value around anything.

Recently, the gang at SalesLoft told the detailed

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The Paradox of VC Value-Add

Scott Maxwell of OpenView Partners had an awesome post up this morning titled The Truth About VC Value-Add. Go read it – I’ll still be here when you get back. You may recognize Scott’s name – I wrote about him in my post When VCs Don’t Bullshit You.
The next person on the list of supporters is Scott Maxwell at OpenView Venture Partners. Scott and I were both on the Microsoft VC Advisory Board that Dan’l Lewin organized and ran. While we had never invested together, I felt like Scott was a kindred spirit. We both spoke truth to Microsoft execs, even though they mostly ignored us. I remember a meeting with the Microsoft Mobile 6.0 team as they were pitching us their vision for Microsoft Mobile 6.5. Both Scott and I, on iPhone 1’s or 2’s at the time, told them they were completely and totally fucked.
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Resolving Conflicts in a VC Partnership

I got the following question the other day.
“If you get a chance, I’d request you to write a blog post about various business decision related conflicts or misunderstanding that might occur in a partnership and how you folks at the Foundry Group resolve it. My partners and I grapple with such challenges quite often.”
Every VC firm is different so to answer a question like this, it’s important to remember that the answer is one specific to Foundry Group. Never forget that VCs Are Like D&D Characters. When my partners and I started Foundry Group in 2007, we created a set of deeply held beliefs that we carry around with us every day. Some of them are about our strategy and some are about our behavior. One of our deeply held beliefs is that “We will address and resolve all conflict between us directly, clearly, quickly, and openly.” This is easy to say but very hard to do. It means that there will be no passive aggressive behavior on anyone’s part. We won’t carry around things that bother us. Instead, we’ll put them on the table to discuss. We have to have a strong basis of trust, which we’ve extended to the notion of “business love.” It has to be ok to be upset, to disagree, to be sad, to be disappointed, and to be unhappy. These are normal emotions. Things don’t work, they can be confusing, frustrating, or downright miserable. A partnership has to be a safe place to be open about these emotions, especially when they are being generated by someone in the partnership. The deeply held belief is nice, but unless there are tactics and consistent action to back it up, it ends up being meaningless. There are three things we do to make sure we execute on this deeply held belief. Weekly Time and Space for Discussion: We have a set time on Monday’s – between 11am and 1pm – where the four of us meet every week. Unlike many firms that chew up an entire Monday of “partner meeting stuff”, we do it over lunch. As part of this we have a chance to touch base with each other once a week. This is like flossing your teeth – it gets rid of the easy stuff. Regular Dinner / Offsite: We have a full day offsite at least quarterly and as often as monthly. We spend at least an hour on the question “How are each of us doing?” In this case, “doing” means “emotionally doing” and covers what is on our mind, how we are feeling, what is stressing us (professionally and personally), and how we are doing with each other. Sometimes the discussion is balanced between the four of us; other times it ends up being focused on one person. We always end these days with a long dinner together, which allows us to spend more time on our collective relationships. Be Direct: I wrote about this in a post last
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Squire Patton Boggs promotes Poland-based PE and VC head to partner

Squire Patton Boggs has promoted its private equity and venture capital head in Poland Michal Karwacki to a partner at the firm’s Warsaw office. Karwacki joined Squire Patton Boggs’ global corporate practice in May 2014. Squire Patton Boggs is an international law firm that serves as an adviser in the private equity and venture capital markets in Central and Eastern Europe. PRESS RELEASE (WARSAW – 17 March, 2015) – Squire Patton Boggs is pleased to announce that its Head of Private Equity (PE) and Venture Capital (VC) in Poland, Michał Karwacki, has been promoted to Partner in the firm’s Warsaw office. Mr. Karwacki has some 15 years of transactional experience, with a special focus on the private equity and VC sectors. Since joining Squire Patton Boggs’ Global Corporate Practice in May 2014, Mr. Karwacki has led the firm’s private equity and VC team in Poland by developing close relationships with local PE Houses that are extremely active in their markets. Mr. Karwacki is known for his skills in managing and advising on all aspects and stages of private equity and VC transactions, from matching potential deal partners, and structuring and negotiating the deal to closing and post-completion work. He has been involved in some of Poland’s leading transactions in the sector. A well-known commentator on the market and a key speaker at the recent 2015 Polish & CEE Private Equity Conference in Warsaw, Mr. Karwacki has been recognized by Chambers Europe 2014 as “a key figure with a strong track record in private equity”. He is also praised by clients and market observers in Chambers Europe as “a noteworthy lawyer who is thorough and committed”, and endorsed for his “energetic approach” as well as “efficiency, experience and excellent skill-set”. Squire Patton Boggs is recognized as a leading adviser in the private equity and VC markets in Central and Eastern Europe. Since 2014 Mr.
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