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Speaking about VC in Moscow Oct 13 – 16, 2014

ShareI am heading to Moscow Oct 13 – 16, 2014 where I will be speaking about venture capital at the biggest VC event of the year in Russia (http://forinnovations.org/) and running a workshop to teach angels and VCs how to make angel and VC investments. My book THE ENTREPRENEURIAL BIBLE TO VENTURE CAPITAL: Inside Secrets from the Leaders in the Startup Game will be released in Russian Language published by Alpina in Russia in November 2014. (Chinese & Japanese translations being worked on now) I am still filling in my meeting schedule in Moscow and would appreciate intros to anyone you think I should meet when in Moscow next week. Andrew...

Andrew Romans defends Alibaba against Wall Street skeptics on CNBC

ShareVideo of Andrew Romans, General Partner of Rubicon Venture Capital, defending Alibaba against skeptics from Wall Street on CNBC’s The Closing Bell on live television. Watch video on CNBC here: http://video.cnbc.com/gallery/?video=3000314534 This is the biggest tech IPO in history and between Alibaba and Yahoo there is something like $33bn in cash sitting in hands of folks that want to spend it in the tech market. This does not mark the top of a market. This is the starting gun. Expect other acquisitive players to do what may appear to be silly deals in anticipation of what Alibaba will pay when fighting over the startups we are funding now. With Alibaba’s new war chest of $25bn cash and the $200bn+ currency of their stock it is poised to be more acquisitive than Google if it wants to. The cash flowing back to Yahoo and Softbank will spawn new ecosystems of startups and acquisitions. Each time a company is acquired it creates a new population of angel investors and founders of new tech companies. With Shark Tank’s Kevin O’Leary and Brian Hamilton chairman of Sageworks ...

Legal Fees for Startups: Fixed Pricing

ShareHere is some good straight legal talk from one of Silicon Valley’s top corporate securities lawyers. This is taken directly from my book….and no that’s not John’s photo above…that’s below. John is a talented guy and was actually the youngest mayor in Cupertino, California’s history before becoming one of the Valley’s most active lawyers. No lawyer contributed more that made it into the final cut of my book.  I like this bit, because John shows you what you need from a legal perspective to get going. John Bautista, partner at Orrick, explains his pricing structure for startup formation: I’ve moved to fixed pricing for startups (and fee deferrals) for formation and initial financing. This is what I do for companies: 1. Formation: $2,500—which includes company formation, founders’ stock issuances (including founders’ FF Preferred stock), option plan, offer letters for early employees and advisor, and consulting agreements. 2. Bridge financing: $5,000 to $7,500—for a convertible note financing on standard terms, which I will help the company negotiate and provide coaching around. 3. Angel equity financing: $10,000 to $15,000—there is more work here than a bridge financing, with representations and warranties, board composition provisions, stock restriction agreements between the founders and the investors, management rights agreement with investors, and legal opinion provided by Orrick. The fees will be at the higher end of this range if the angels are represented by legal counsel and depending on the number of investors to coordinate closing. 4. Venture financing: 1.5 times investors’ counsel fees. The first thing a company should do is keep the cap on investors’ counsel fees to a minimum. The more the due diligence and...

Pitch Lawyers before Pitching Angels

ShareIf you are on your first deal, you should consider pitching lawyers first. It is always a good idea for a first-time entrepreneur to try to meet three to five big law firms and try to get them to make time for you to pitch your idea to them. This is a good way to practice your pitch and get used to pitching folks that see a ton of deals, ask for feedback, and eventually ask if they know anyone with relevant experience to your deal that might be a fit for advising you. Some smaller law firms may not be able to afford to defer legal fees and will want you to pay a few thousand bucks up front, and then they will do work for you. This may be cheaper in the end than going with a large national or international law firm, but many of these larger firms will defer legal fees until you complete your angel round or even wait until your VC round to start billing you for work done. Much of this work is boilerplate work that does not require more than changing a few things in a form, and it is work that a partner can pass to an associate that has the spare capacity. This is still an investment for the law firm, and if you just send an e-mail with some cryptic ideas about a vague startup you should not expect good results. I recommend early stage entrepreneurs get a polished version of their executive summary and slide deck before contacting a law firm. Exciting these guys about the opportunity is good since then...

“Venture Fratricide” explained by Howard Hartenbaum, a general partner with August Capital

ShareWise words from Howard Hartenbaum of August Capital as one of the 40 VCs that contributed to my book. I was translating my book into Russian and wanted to share this little bit. Yesterday, I went through about 50 deals that had come in over the weekend and 10 of them were in the exact same space / category making me think of Howard’s point here. “I just tend to stay away from companies where there are a lot of direct competitors. If or when several get funded, there is “venture fratricide” as the multiple companies compete uneconomically using their venture cash, resulting in trouble (and sometimes failure) for the entire segment. I’m not saying that one won’t succeed, just that a crowded space makes me nervous (my normal state of mind) to consider an investment.” If you want to come to Europe this summer there is no better place to be in June than Stockholm and London. Join us! Stockholm – The Future of Raising Angel & Venture Capital Funding – June 3 http://stockholmvcbible.eventbrite.com Stockholm – The Future of Angel & Venture Capital Investing – June 4 http://futurevcstockholm.eventbrite.com London – The Future of Angel & Venture Capital Investing – June 9 http://futureVC.eventbrite.com London – The Future of Raising Angel & Venture Capital Funding – June 11 http://londonvcbible.eventbrite.com Twitter: @RomansVentures...

The term carried interest goes back to the medieval merchants in Genoa, Pisa, Florence, and Venice

ShareThe term carried interest goes back to the medieval merchants in Genoa, Pisa, Florence, and Venice. These traders carried cargo on their ships belonging to other people and earned 20 percent of the ultimate profits on the “carried” product. Today VCs compensate themselves with 20% of the profits from their funds and this is called “carry” or “carried interest”. This is somewhat appropriate as the shippers took on on risk and were patient to see the journey through and ultimately shared in 20% of the upside much like VCs today. If you want to come to Europe this summer there is no better place to be in June than Stockholm and London. Join us! Stockholm – The Future of Raising Angel & Venture Capital Funding – June 3 http://stockholmVCbible.eventbrite.com Stockholm – The Future of Angel & Venture Capital Investing – June 4 http://futureVCstockholm.eventbrite.com London – The Future of Angel & Venture Capital Investing – June 9 http://futureVC.eventbrite.com London – The Future of Raising Angel & Venture Capital Funding – June 11 http://londonVCbible.eventbrite.com Twitter: @RomansVentures...

Venture Capital Organizations Outside the United States

ShareI’ve been talking to a lot of friends in London and Scandinavia recently as we prepare and promote our events and meetings coming up in London and Stockholm below. I wanted to share an international bit that was cut from my book . My publisher McGraw Hill helped me cut the book down from 600+ pages to 222 pages. See links below to venture capital organizations outside the United States. These lists may be a bit out of date as I prepared this for my book ages ago. Venture Capital Organizations Outside the United States African Venture Capital Association http://www.avcanet.com Australian Private Equity and Venture Capital Association http://www.avcal.com.au/ Belgian Venturing Association http://www.bvassociation.org/ Brazilian Private Equity and Venture Capital Association http://www.abvcap.com.br British Venture Capital Association http://www.bvca.co.uk/ Canada’s Private Equity and Venture Capital Association http://www.cvca.ca/ China Venture Capital Association http://www.cvca.com.hk/index.asp Czech Venture Capital and Private Equity Association www.cvca.cz Danish Venture Capital Association www.dvca.dk European Venture Capital Association www.evca.com Finnish Venture Capital Association http://www.fvca.fi/ Association Francaise des Investisseurs en Capital http://www.afic.asso.fr German Private Equity and Venture Capital Association http://www.bvk-ev.de Gulf Venture Capital Association http://www.gulfvca.org/ Hong Kong Venture Capital & Private Equity Association http://www.hkvca.com.hk Hungarian Venture Capital Association http://www.hvca.hu/ Indian Venture Capital Association http://www.indiavca.org/ Irish Venture Capital Association http://www.ivca.ie/ Israel Venture Association http://www.iva.co.il/ Italian Private Equity and Venture Capital Association http://www.aifi.it Japan Venture Capital Association http://www.jvca.jp/en/ Latin American Venture Capital Association http://www.lavca.org/ MENA Private Equity Association http://www.menapea.com Netherlands Venture Capital Association http://www.nvp.nl/ Russian Private Equity & Venture Capital Association http://www.rvca.ru Singapore Venture Capital and Private Equity Association http://www.svca.org.sg/index1.htm Spanish Venture Capital Association http://www.ascri.org Swedish Venture Capital Association http://www.svca.se Swiss Private Equity & Corporate Finance...

The Benelux Scene – league tables of most active Benelux VCs – part of my European VC blog series

ShareBelgium, Netherlands and Luxembourg (Benelux) have a steady flow of strong entrepreneurs and a few good VCs. Some of the biggest operating in the region includes GIMV, a large fund with Karl Naegler, one of their general partners a former colleague of mine sitting on the advisory board of The Founders Club. More recently Amsterdam was the birthplace of Startupbootcamp, which has quickly become the largest accelerator across Europe with locations sprouting up everywhere. We are organizing an event at their London location June 13. I have personally been to the Netherlands over 50 times on business and Belgium a number of times. I do find the Dutch challenging to negotiate with and a wise and successful enterprise salesman once told me his strategy to sell to the Dutch. He suggested that you just show them your costs and ask them what they are willing to pay so that you have some kind of margin to stay in business. Once you have made them want your product that’s the way to close them quickly and not get into a competitive auction and price / feature comparison that will go on for ages. He was talking about a big sale to KPN, their incumbent telecom operator. I dealt with all the telecom operators in the region and would agree with this assessment. Also good for the quick win and grow through Europe with KPN as a reference customer. The other thing I learned when running The Founders Club is that a lot of French and German entrepreneurs (mainly French) become Belgium residents or make sure that the holding company that...

About our name – Rubicon – In 49 BC Julius Caesar

ShareIn 49 BC Julius Caesar took a risk and crossed the Rubicon River with his army violating Roman law, which stated that no head of troops could command an army inside of Italy. The Rubicon was the border between Gaul and Italy. Caesar at the head of a single, but loyal legion successfully crossed the Rubicon and took command of Rome. As he crossed the river Caesar uttered the famous words “alea iacta est” – the die is cast – symbolizing passing the point of no return. At Rubicon Venture Capital we began by grouping our own army of successful entrepreneurs, angel investors, venture capitalists, lawyers, bankers, headhunters, senior executives at technology titans and other important members of the venture capital entrepreneurial ecosystem. These successful executives invested their own money into our venture capital fund and they do not like to lose. As such we add value as a group to our portfolio companies. Beyond these very important operational investors we raise additional capital from institutional investors adding to the base of capital we can deploy to support technology startups. This powerful and diverse network generates a unique supply of high quality deal flow. After we invest from our VC fund we typically open what we call “sidecar funds” giving our LPs the option to invest additional capital on a deal-by-deal basis. Utilizing this unique approach enables Rubicon to provide additional capital and support from individual investors via sidecar funds that add strategic value to our startups ensuring their own investments do well. We invest and support companies that, like Julius Caesar, think big, address large markets, have assembled...

Mastering key legal terms in a VC term sheet

ShareThis is taken directly from my book The Entrepreneurial Bible to Venture Capital, which brings together advice and stories from over 40 VCs. This blog post should help entrepreneurs, VCs and angels understand the key issues worth fighting for in a term sheet and hopefully minimize your legal bill so you don’t need to ask your lawyer what this all means while paying $600 to $1,200 per hour and go back and forth among startup – lawyer – investor – repeat loop. I also find many VCs don’t have a great handle on all of these terms and so I wanted to just put this out on the web. My book gets into a bit more detail on this, but nothing beats Brad Feld’s book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist and blog Ask The VC and Feld Thoughts. I’d also like to thank Nic Brisbourne, Managing Partner of Forward Partners, for his contributions to this chapter of my book and this blog post. Check out Nic’s essential blog The Equity Kicker. You can meet Nic who will participate at both of our investor only and VC-entrepreneur events in London June 9 and June 11, 2014. First up, some categorization. The “terms” in “term sheet” can be put into four buckets: Terms that drive the economics of the deal—the most important of which are valuation, liquidation preference, and anti-dilution Terms that pertain to control of the company post investment—the most important of which are board structure and protective provisions Clauses that are legally binding on signature of the term sheet—the most important of which are exclusivity and...