Add Angel Dignitaries to Your Series A VC Round

ShareAt Georgetown Angels when we get a VC to commit to the Series A financing for example $5m, just at the last minute I have my CEO say to the VC, “Wait, I don’t want the check for $5m. Make that $4.5m and here’s a list of 20 people that will invest $25k each after the $4.5m has been wired. The names on that list are all CEOs and co-founders of major league companies scattered across the US, Europe and Israel. Then when we announce the Series A financing with <your big name VC fund> we disclose that these 20 people also participated.” The names on that list are a who’s who of VIP entrepreneurs. People will wonder how a company located in Stockholm, for example, managed to get those people from the Valley and all over the world to invest in that round. I first saw Rick Marini, CEO of Branchout, do this. Branchout is basically Linkedin on Facebook. He tells his story in detail in my book. If you go to his web site and click on his investors, the list is amazing – Shawn Fanning from Napster, Michael Birch from Bebo, Naval Ravikant from Angel List, Dave Morin from Path, Matt Mullenweg from WordPress, Chris Michel from Military.com, Tickle co-founder James Currier, and others. When we do this for our companies at Georgetown Angels it gives you a Branchout rocket launch. It may be counter intuitive to add angels after the VCs, but it’s a brilliant move. And those angels are lucky to get in. At $25k being a small amount for them, they don’t care...

Successful European Venture backed Companies by Country

ShareBuddies of mine at DN Capital created this mapping document together with the support of the EVCA Digital Task Force, where Nenad Marovac is chairman. It provides a nice map of major exits and potential exits in the European technology venture-backed landscape. It’s a maturing list of big exits that each spawn multiple newly funded companies and grow the ecosystem as well as a number of hot companies to watch. You can see why we still focus on these markets despite being in Silicon Valley. We know most of these past and potential exit entrepreneurs and they are nearly all actively seeking to make angel investments. Nenad, thanks for sending and allowing me to share! The PDF file is easier to read and lists specifics on the individual companies. European-Winners-Mapping-Document Twitter: @RomansVentures...

What is happening right now in the Silicon Valley

ShareI’m in the valley every day in many meetings with CEOs, VCs, angels, corp dev folks, etc. with most meetings tied to fundraising. With a constantly changing market here’s my view of where things are right now. The IPO performances of Facebook, Zynga and Groupon laid an egg in the public markets and that proliferated through the entire chain of late stage pre-IPO financing, venture financings and all the way down to angel rounds. This hit us in the spring pretty hard and the summer was kind of “wait and see what this means”. By the time September and October arrived we knew what this meant. It meant that raising new VC funds was on hold. That meant smaller exits for VC or angel backed startups. That means harder again for VCs to raise new funds from LPs. That means less VC funding to go into startups at any stage. It meant that the terms for early stage funding rounds got worse for entrepreneurs. Pre-Facebook IPO there were tons of seed rounds for Y Combinator type deals with a $19m cap on a convertible note or no cap and sometimes no discount rate or an insulting discount rate. Now we have $4m caps. This is back to what I always said was $2.5 to $5m caps which can be shifted for first money in and climb as the round fills in to reward early investors and punish the investor that delayed and came in last. Simply put, prices have come down. Probably too many companies got funded in 2011 and 2012. These companies are now facing tough decisions. It’s...

The best form of financials for a VC and advice on the email approach

ShareVCs receive so many investment proposals it is important to put your investment proposal in a form that a VC can QUICKLY get his or her head around to rapidly understand the stage of the company, opportunity highlights and the financial situation. I tell people that I receive about 4,000 investment proposals per year, but that’s not true. I actually receive a lot more than that. Sometimes a VC or accelerator shows me 10 to 15 at once. Sometimes a banker shows me the five they are working on. If I go to a conference and meet 100 people, I am likely to get at least 100 investment proposals within a few weeks. The point is that I need to move quickly to be able to make an assessment of which ones to progress to my team and which ones I can introduce to someone I think can help them. I try to do this with every deal. I try to send the entrepreneur in the right direction and pass them onto a friend somewhere in the world where they can be helped and the contact of mine can make a good investment or become an advisor to the company creating a win-win for everyone. This is how I operate and how I collect favors and good karma every day. I saw this financial summary today and thought to share it. The name of the company will remain confidential, but I think these are good categories to show an impatient VC. I also like the way these guys show 2 years of historical fins and 3 years pro forma....

Startups Led By Women Do Better

ShareBrian Cohen, chairman of New York Angels, first investor in Pinterest and a true friend of mine, recently published a must read book What Every Angel Investor Wants You to Know: An Insider Reveals How to Get Smart Funding for Your Billion Dollar Idea. The book focuses on teaching entrepreneurs how to raise angel funding effectively as well as helps angels be more successful making angel investments. I recommend that all entrepreneurs, VCs and ecosystem players pick up a copy. He makes a strong case about why startups led by women do better. DowJones VentureSource conducted a study of 20,194 US-based companies that raised funding between 1997 and 2011 and found that women led companies have a greater chance of going public, operating profitably, or being sold for more money than they’ve raised. Successful companies had 7.1% female executives compared to 3.1% at unsuccessful companies. Women consumers make the majority of purchasing decisions in the US. Women are behind 85% of all consumer purchases and 55% of consumer electronics. Companies with women leading product design and marketing tend to outperform companies lacking gender diversification. The Nielsen Company estimates almost all income growth in the US over the past 15 to 20 years has been generated by women exercising their growing economic influence. Brian then goes into more subjective depth as to why women led companies outperform the market for instance arguing that women are more concerned with the well being of their team and that they are more likely than men to consider feature-sets, market segments, or brand statements designed to appeal to women. No doubt diversity builds strength....