There has been a veritable explosion in the use of initial coin offerings (abbreviated ICO, sometimes also referred to as a token generating event or TGE, or a WTFLOL) to fund startups. Calculating the total investment in these offerings is complicated, but Coindesk puts the total right now at about $3.8 billion cumulatively, with the bulk invested in 2017. That total volume pales in comparison… Read More
Y Combinator famously funds a lot of companies, but there’s always more it could be doing, said its president, Sam Altman, in an interview with TechCrunch this fall. “I do think startups are a super important vehicle to make things happen in the world today and I think we are nowhere near the limit of how many we can help.” Altman had added that YC is “always… Read More
Hyperloop One co-founder and early Uber investor Shervin Pishevar has announced his resignation from Sherpa Capital, the venture capital firm he co-founded, following sexual misconduct allegations. “I have decided on my own accord to end my association with Sherpa Capital, effective immediately,” Pishevar tweeted, as part of a lengthy statement. Read More
Squarespace, the 14-year-old platform that makes it easy for essentially anyone to build their own website, is raising about $200 million from General Atlantic, valuing the company at a $1.7 billion valuation, Bloomberg reports. The plan with the funding is to buy stock from early employees and investors, giving them a way to cash out if they’re not trying to wait around for an IPO. Read More
Almost exactly two years ago, the venture firm Andreessen Horowitz took the wraps off a $200 million “biofund” that aimed to invest at the intersection of biology and engineering and was being led by its (then) new general partner, Vijay Pande. Pande argued at the time that it was finally possible to invest in software-enabled biotech ideas — without having to wait eons for… Read More
Last week, venture capitalists Steve Case and J.D. Vance announced they had raised $150 million for a new seed fund for startups located in Middle America. If you read VentureBeat’s coverage on the announcement last week, you’ll know that what was most important about the announcement was not that the fund had raised $150 million, but that the $150 million had come from high-profile investors like Jeff Bezos, Eric Schmidt, and Meg Whitman.
Investors like Bezos, Schmidt, and Whitman can offer young startups more than just money — they can also make connections on behalf of startups to the other top investors, corporations, and talent in the country. I also discussed how investors who might want to follow in the footsteps of Bezos, Schmidt, and Whitman should do their due diligence before making the Heartland their next area of investment.
If you’re interested in learning more about the pros
Mobile AR from Apple, Google and Facebook and computer vision/machine learning (CV/ML) are focusing the minds and wallets of VCs in Silicon Valley, China and beyond. The $2.5 billion invested in AR/VR so far this year was balanced across AR and VR, but now mobile AR and CV/ML are the new hotness. I spoke to a few friends about how the investment market has evolved. Read More
The Dow Jones may be at an all-time high, but entrepreneurial activity in the United States is close to a 40-year low. According to the Kauffman Foundation’s 2017 State of Entrepreneurship report, many startups face serious barriers because they are run by women or people of color. Geography also plays a part. According to the Economic Innovation Group, 50 percent of firms created since the great recession were built in just 5 (large, wealthy) counties.
Why? One big reason: the mathematics of venture capital.
Over the past six months, we’ve interviewed over 200 asset managers — from big university endowments to pension funds — who each manage more than $100 million. This trillion-dollar asset manager group largely ignores the typical entrepreneur, as they need to see a fund size of $100 million or more to even consider investing with a VC.
This should be obvious that it is totally cool to accept there are things we don’t know — if for no other reason than to be honest with ourselves so we can actively seek knowledge and learn from those who know more than we do. There is no reason to ‘fake it’, especially for VCs who have so many resources readily available to help them learn.
There may not be many textbooks on how to be a good VC, but professors, academics, students, entrepreneurs, startup execs, journalists, pundits, lawyers, accountants, other VCs, all are often eager to lend their expertise to VCs to help them learn about new technologies, new business models, new learnings in management sciences, complex corporate or IP legal matters, etc.
Which is why I am quite surprised why I still feel so many VCs still keep ‘faking’ it. Maybe its because VCs unfortunately get put on high pedestals of startup
Last month San Francisco-based Bitwise Investments announced a passively managed index fund comprised of the top 10 cryptocurrencies by market capitalization. The fund rebalances once a month, and all assets are held in cold storage. Essentially its an easy way for investors to gain some passive exposure to cryptocurrency without having to worry about which ones to choose and how to buy and… Read More
Real estate heavyweights clearly don’t want to be left in the dust by tech startups that see opportunities to do things more efficiently, more transparently and more affordably than has previously been possible in the long clubby, expensive and opaque world of real estate. Just one indicator is their sudden interest in venture capital. Read More
Swati Mylavarapu and Matt Rogers are the definitive Silicon Valley power couple. Rogers, a cheerful, be-fuzzed technologist, co-founded Nest Labs. Swati, a sharp visionary, was at Square for four years before joining legendary investment firm Kleiner Perkins Caufield & Byers as a partner. Read More
Silicon Valley has hardly been immune. In the world of venture capital, two of the highest-profile poster boys for this uprising (as of this writing) are venture capitalists Steve Jurvetson, formerly of the venture firm DFJ, and Shervin Pishevar, who cofounded the firm Sherpa Capital and has, in recent days, taken a leave of absence from the outfit. While seemingly devastating body blows for… Read More
For a while, on this blog, I attempted to pick one startup for that year which truly “broke out” of its shell. Dialing back the clock, one could say 2011 was Uber and Airbnb; in 2012, I wrote about Stripe; in 2013, I wrote about Snap; in 2014, I prematurely said there were none but then backtracked when Slack exploded; in 2015, I didn’t write one, and in 2016, my thesis was the big tech incumbents would grow even more powerful from the web’s and mobile’s network effects that startups wouldn’t even have the chance.
Now with 2017 nearing the end, I’m back to the point where I can point to this year’s tech breakout company: Coinbase. I know, it’s likely an obvious pick, but I unpacking “why” is a fun exercise I’ll attempt below.
Shervin Pishevar, co-founder of Sherpa Capital and co-founder of Hyperloop One, is taking an immediate leave of absence from both companies, as well as from his board responsibilities at Sherpa’s portfolio companies. Pishevar, in his statement via a lawyer, said it was his idea to take a leave of absence and that the decision was not made lightly. Pishevar’s hope is that his… Read More
Have you ever bought something only to see it go on sale the next day? It may seem like bad luck, but you’re often still entitled to get that discount. Some retailers and credit card companies will even guarantee price drop refunds for up to 90 days. But it can be a hassle to keep track of price changes and to follow through and get your money back. A handful of sites have been… Read More
Victor Basta hit a nerve with his article on TechCrunch last week describing the “implosion” of venture capital over the past 36 months. Using PitchBook data, he found that the total number of VC rounds committed to startups has declined from 19,000 in 2014 to 10,000 estimated for this year, even while dollars invested has remained mostly static. Silicon Valley is no longer making… Read More
A scant three months after its launch, the $50 million Consensys Ventures fund that was created to back companies developing applications on Ethereum (by Ethereum co-founder Joe Lubin’s Consensys Systems) has made its first four investments. Read More
Earlier today, at the TechCrunch Disrupt Berlin event, founder Timo Rein took the stage alongside venture capitalists Andy McLoughlin of the early-stage firm Uncork Capital and Thomas Korte of the accelerator AngelPad. The grouping wasn’t accidental. Rein, a former salesman who founded his CRM software company Pipedrive in 2010, launched the company in his home country of Estonia, soon… Read More
This chart (taken from a recent post by First Republic’s Samir Kaji, data from leading venture investor Horseley Bridge) shows that to get the 3-5x return that most venture capitalists target 10% of their portfolio need to return 10x+. That explains why we are so focused on market size and other upside indicators when we invest. Getting a 10x result is hard and if 10% of our portfolio is to reach those dizzy heights then all of our investments must have that potential.
Of course, a 10x return on an individual investment doesn’t necessarily return the whole fund and many venture funds go a step further and stipulate that every deal must be a potential fund returner. That’s the way that we work at Forward Partners, so for us every investment in our second fund must have the potential to return £60m back to our investor. That means if we have a