Tag Archives: Venture Capital

Free Lunch Friday Notes August 6th 2010

NYCSeed‘s managing director Owen Davis came by the Rose Tech Incubator this week to give a talk on what investors look for in startup’s. Some of the key points Owen mentioned that I took away from the talk are below. (NYCSeed only invests in the 5 NY borrows).

Owen Davis of NYCSeed at the Roes Tech Incubator

FUNDING CRITERIA

To anyone doing a startup, “Time matters”. Owen mentioned that committing large amounts of time to R and D is a bad mistake.
Timing has to be in your favor, things have to be aligned. Your technology and the timing is key. You can build something great but is there a demand for it?

Owen recommends 2 person teams, I hear this magic number a lot, google, yahoo, etc. Startups with 2 founders is the magic number. It shows a demonstrations team work, difference in dynamic. With a team of two you have a sounding board.

Another key thing is to have a prototype complete.

Showing you have tech leads on as founders is the DNA of the company it is important. Moment by moment technology changes.

Angels and VCs like to see a good sized market, show a clear path to revenue.

TYPE OF STARTUP COMPANIES

Network Effect
-Hard to invest in these
-Risk
–e.g.: Gaming companies
–e.g.: iPhone apps
–e.g.: YouTube lost 40 or 50 million a year
-not real innovation

Application Oriented
-look at market
-build an application
–e.g.: ticketfly.com
–e.g.:quickbooks

Innovation
e.g.: google’s rank algorithm
e.g.: Advertising space, customer segmentation of ads
Investors believe or don’t believe in the innovation you have.

Some companies have pricing power, if coke raised it’s prices they would be ok.
If a copper wire company raised it’s prices it would take a toll on them

Some examples of companies that have a little higher prices are:
zappos.com has customer loyalty.
Amazon charges more then others.
Wholefoods charges much more then others.

Team
Having a good team culture is important.
Be honest and be transparent that is what is important.

WHAT MAKES A COMPANY FUNDABLE
Big Market
Team

A “good business” is not necessarily fundable.
A lot of great biz that will be successful without funding.

GOOD TRENDS
-how do u derive meaning out of data
-New ways to data mine
-Project management tools
-Online learning
-Digital advertising
-Billboard industry
-Local search
-Building a better Craigslist
-Building better Email

How to Contact An Investor

There are a few ways to contact investors.

I believe the best way to do this is to find someone who can make a warm introduction for you via email. Then taking it from there. If you can find someone that you know who knows the investor.

Sending an email without knowing an investor before hand is hard because investors get 100’s of email a day from potentail companies to invest in.

Listening to Jason Calacanis’s on the podcast This Week In Startups he talks about the best way to contact investors via email. Some great advise from him, never send powerpoints, don’t email investors at strange hours of the night with your business ideas. Screenshots or a URL are good. Listen to these few minutes, they are very good: mp3.

Howard Morgan from First Round Capital says he will never open a .doc file. He doesn’t want to get a computer virus.

This is the email:

Hi Mr [THEM],

This is dot dot dot, I’m taking on this market, I’d love to tell you more if your interested. Here is my URL.

[YOU]

Term Sheet

If you build a company, when negotiations happen an angel investor or a VC might want to write you a check for a percentage of your company.

Generally an investor will pass you a term sheet, this is something that is non binding but is a layout of how the company will change, what the investor expects and if it is a good term sheet will motivate the startup team to progress the company.

Some more intesting info on term sheets:

Some terms you should know about term sheets:

Types of investments an investor will make:

NYC Venture Capital Office Hours

Here is a great list of VC office hours
(This is a repost from bronson.vc.)

Rolling

  • Nate Westheimer (NYTM Organizer, Flybridge Capital Advisor) has been holding weekly office hours for some time (Fridays 11:00-12:30).
  • Rose Tech Ventures holds weekly office hours (Wednesdays 4:00-5:00pm).
  • David B. Lerner (Director Columbia Technology Ventures) holds Office hours for people associated with Columbia University (by appointment).

One day only

BootUpNYC 2009

Michael and I went to BootUpNYC 2009, it was a great experience, we met a number of great
people doing startups and looking to do startups. There were investors, workspace providers and people providing advice. The BootUpNYC is a must for anyone starting and running a business.
Photos of the night:
bootupnyc_2009_collage
Michael and I at the BootUp, me on the left and Michael on the right:
Danie and Michael
David Rose, an investor whom we had the honor to chat with:
Tokumbo Shobowale, Chief Operating Officer of the New York City Economic Development Corporation:
Darren Herman, entrepreneur and digital media evangelist:
Sanford Dickert, a social-media consultant:
Bruce Niswander, an entrepreneur and consultant with over 20 years of experience:
Rachel Sterne, CEO of GroundReport.com:

Venture Capital Bootcamp 2009

This year during internet week in New York there was a “Venture Capital Bootcamp” event. Venture capitalists from DFJ Gotham Ventures and Wilson Sonsini Goodrich and Rosati came to Columbia University and participated.

It was a great event, very informative and the presenters took an interesting approach to telling everyone about how VCs think and work.

Information on the presenters at the Bootcamp:
Venture Capital Bootcamp 2009 - Program Materials

Adam Dinow

Ross Goldstein

Venture Capital Bootcamp 2009 - Daniel Schultz

Venture Capital Bootcamp 2009 - Thatcher Bell

Check out the video of the whole talk below! The presenters go overview of the VC industry, the venture capital fundraising process, company formation types (LLC, corporations, etc.), term sheets, and what to do after investment. There’s also a discussion about whether VC funding is right for you and your business as well.

The video runs just over three hours and you can listen to the audio while working.

The slides from the event:

VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati