“Leveling Up”

I have been emailing Haystack founders a bit more often with some stream-of-conscious thoughts, and many of them have encouraged me to publish them publicly. Below, I was thinking about how relatively easy it is (in the Bay Area) to raise a seed round versus raising from larger institutional VCs, and how that’s connected to my own experienced of raising small VC funds with individual LPs but then what I had to do to make the transition to an institutional capital base. Here’s the original email, to what I add a few suggested concrete tips for company founders to consider when attempting to make this transition.

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Hello Haystack founders,

This a post for seed-stage founders only. It is not for founders who have gone on to Series A or those founders who don’t seek institutional VC dollars. As always with these emails, please delete, disregard, or ignore if not Continue reading "“Leveling Up”"

Notes From The 2017 Cendana MicroVC Summit

Yesterday, I attended my fourth Cendana Micro VC Summit in San Francisco. As I’ve done in years past, I wanted to briefly summarize how I perceived the mood of both LPs (the money source) and GPs (those who allocate to founders) in today’s current environment. [For a look back on my notes from previous years, click on either 2014 or 2016.]

Briefly, and in no particular order, here’s what I thought about in finding patterns from the panels and chatter:

1/ LPs seem more resigned to the fact that exits will take longer, perhaps never materialize. Think about that. After years of being on stage asking for quicker exists, the data has come in and unless someone holds an LP position in a fund with an outlier exit, these are simply really hard to come by and manufacture right now. It will be interesting to see what this implies Continue reading "Notes From The 2017 Cendana MicroVC Summit"

How To Transform A VC Fund Capital Base From Individuals To Institutional LPs

Lots of people have raised small VC funds. There are more startups, and there’s more LP capital from various sources to meet that demand. After the rise of institutional seed funds in the late 2000’s, we’ve obviously witnessed a pure explosion of new (mostly seed) fund formation, with seemingly no end in sight. Many of those 400+ microVC funds (sub $100M) are also trying not only get bigger, but also trying to convert their LP capital base from mostly individuals to mostly traditionally institutional capital. It’s a heavy lift to make that conversion. While I would never give advice on how to do this, as I’m still learning and each individual case is very different (each fund manager is his/her own special snowflake!), I can share a bit about how I prepared myself for it, how I launched my campaign, and how it all closed. My hope is that Continue reading "How To Transform A VC Fund Capital Base From Individuals To Institutional LPs"

Brief Thoughts On VC Fund Management

If you’re a new or relatively-new VC, you simply must download or stream this new 20 Minute VC interview of Michael Dearing of Harrison Metal (download here). Harry Stebbings does a great job with this one. There are two key reasons to spend the time to listen to this — One, Michael is obviously known to be one of the Valley’s pure outstanding investors, and two, as he rarely opines so publicly, the wisdom he shares toward the end of this podcast with respect to fund management is gold. While a new investor can raise capital, build a network, and pick companies with somewhat relative ease, the art of managing a fund, portfolio, and multiple funds and companies across rounds and markets is very difficult to just pick up. Instead, fund management takes time, requires making mistakes, needs mentorship and guidance, and so forth. For me personally, it Continue reading "Brief Thoughts On VC Fund Management"

Brief Thoughts On VC Fund Management

If you’re a new or relatively-new VC, you simply must download or stream this new 20 Minute VC interview of Michael Dearing of Harrison Metal (download here). Harry Stebbings does a great job with this one. There are two key reasons to spend the time to listen to this — One, Michael is obviously known to be one of the Valley’s pure outstanding investors, and two, as he rarely opines so publicly, the wisdom he shares toward the end of this podcast with respect to fund management is gold. While a new investor can raise capital, build a network, and pick companies with somewhat relative ease, the art of managing a fund, portfolio, and multiple funds and companies across rounds and markets is very difficult to just pick up. Instead, fund management takes time, requires making mistakes, needs mentorship and guidance, and so forth. For me personally, it Continue reading "Brief Thoughts On VC Fund Management"

Who Startups Truly Compete With — Each Other

When a founding team is raising institutional money — either an institutional seed or Series A/B round — those founding teams may have a slide in their pitch deck which shows the competition in their market or sector. This is often referred to as “the competition slide.” Yet, while many investors do want to know what other incumbents and upstarts are competing in the space, oftentimes the startups pitching miscalculate who their real competition in that moment is. For instance, say an education marketplace company is about to pitch a firm for their Series A. That team may assume they’re competing for investment dollars against other education marketplaces who seek money. It’s slightly true, yes, but what is often more true on the ground is that startup is actually competing with every other single investment opportunity an investor sees on a daily or weekly basis.

I’ll illustrate with an Continue reading "Who Startups Truly Compete With — Each Other"

The Story Behind My Investment In IronClad

Sometimes, picking a company to invest in is just easy. The hard part is getting in. About two years ago now, I met Jason Boehmig of IronClad during YC’s Summer 2015 batch (before Demo Day). One of my founders who was in YC singled out Jason as outstanding. Jason’s pitch was exactly what I love to hear, paraphrased: “I was an attorney (at a prestigious Valley fund). I taught myself to code. I quit my job. I founded this company to bring systems intelligence to the legal department of enterprise companies and beyond.” I had to pitch Jason to let me in and also to make a gracious consideration for me. I started to help Jason with his round immediately and got working some customers. Jason put me to work right up front but he was easy to work with. In fact, I would say he’s one of the Continue reading "The Story Behind My Investment In IronClad"