Blog Archives

Stunning returns for Google VCs

In one of his landmark posts, Bill Burnham dissected SEC filings and other publicly available information to tell us Just How Much Did VCs Pocket On Google?

I recommend the reading to anyone interested in understanding VC exits, and to some extent, how profits are split in VC partnerships – unequally so.

As a reminder, Kleiner Perkins Caufield & Byers and Sequoia Capital invested $12.5M each in Google in 1999, for about 24M shares. Both funds have distributed a majority of these shares to their own investors, otherwise their investment would be worth $7.1B (at today’s closing price).

Because of the distributions of shares at "lower prices", Bill estimated the value of KP’s investment at $4.3B, i.e a multiple of 344x in 6 years. This is the number that will be used to calculate the performance of their $500M fund IX (?), which was returned multiple times with just … Read more »

The “Build It/Flip It” Bubble Discussion

Great post from Ross re  A Flip/Flop Bubble of Microventures? in which he "attacks" the concept of  startups launched and bankrolled by former "bubble entrepreneurs" for the sole purpose of flipping them to large established players.

[…] there are a ton of former entrepreneurs getting back in the game these days. The lure isn’t just that markets are opening again. A mindset is developing in the valley that you can and should develop startups for quick flips. If you have your own cash, you can seed a play like this yourself, filling a targeted niche — both in product, market and engineering expertise. I even heard of a major portal getting into seed funding to encourage it. Perhaps this whole thing was started by Google’s micro-acquisitions. I don’t have any data on this trend, as it is the most private part of equity, but it is the talk of many … Read more »

Trends in Venture Financing – Q105 Data

The law firm Fenwick & West compiles every quarter the financing terms received by Bay Area technology companies. I just found out that this report I used to receive by email from Bill Schreiber (a corporate partner I have been working with for a few years) was available on the web.This is a very useful indicator as to the evolution of typical terms recently offered by VCs. Key terms of a venture financing are: average round size, pre-money, type of liquidation preference (seniority, multiple, participating,…), dividends, provisions, etc. For a clear definition of all these terms, I recommend checking Brad Feld’s excellent series on financing terms, or the short version from Fenwick. Whilst the report does not give absolute terms (what is the typical pre-money for a Series A), it tells you about price evolutions over the past few quarters.

What were the key trends in Q1’05 ?

The quarter showed an increase in the number … Read more »

New VC blogger: Seeing Both Sides

Jeff Bussang, a General Partner with IDG Ventures in Boston, recently started a blog. Jeff is a former entrepreneur, and therefore can provide a point of view encompassing…both sides. His objectives:

I was inspired to start this blog for many reasons, but the most important one is to help entrepreneurs.  During my ten years as an executive at start-ups (such as Upromise and Open Market), I often viewed the venture capital business as a black art.  Now that I’ve had a few years to practice that black art, I hope to help demystify it for other entrepreneurs.

Like most experiments, I will start this one off small and see where it leads.  If this blog can help both educate and entertain, it will have served its purpose.

In a few posts, he has provided useful answers to a few questions that many entrepreneurs tend to wonder about:

Should I go with a small angel round or a VC … Read more »

“Dream Mergers” Candidates

Ross has made a call for participation in an interesting Dream Mergers contest of sorts. Since the wiki’s "recent changes" do not list the name of who added each contribution, I thought I would go on the record with mine, just to be able to look (now and/or later).

So here we go, note that this is pure imagination, and not the result of anything "I would have heard". And let’s not get too serious on this one, OK ?

Google hires Jimmy Wales to run Wikimedia "from within" (or at least tries to) SixApart acquires FeedBurner Sun acquires SocialText and WordPress, Inc and bundles them with Solaris 10 as a ready-to-deploy publishing solution Sun acquires JBoss and MySQL, and becomes the professional Open Source company Google picks up IBM acquires JotSpot, connects its back-end to Lotus Notes, and makes it its entry level collaboration platform Yahoo brings in Eric Rice (AudioBlog), Google … Read more »

To the editors of BusinessWeek Online’s DealFlow

Matt Marshall and Steve Rubel, (and Brad Feld), mentioned the launch of a new blog (or "blog" – see below) focusing on the startup/VC world by BusinessWeek Online: DealFlow. It is interesting because mainstream press can add a different perspective in their reporting on our industry. However, as I checked it out (full of hope and interest), I found no RSS feed, no way to trackback a story or leave a comment on a particular post.

So it is a "blog" (something that looks almost like a blog, is referred to as a blog, but is not a blog).

It is actually surprising that they do not provide (at least) an RSS feed for their "blog" since they offer some for their news. And, hem, it is not as though BW was the first to use this channel, and therefore had to discover what it means to foster participation, as opposed to traditional "one-way" publishing. … Read more »

Pick Your VC Carefully… If You Can

Jeff, from SAP Ventures, has recently written an interesting post: Pick Your VC Carefully. A number of BlogoVCs have made reference and added interesting comments to it (Ed, Brad, Fred, Marc, Stephen).

I would tend to agree with most of Jeff’s points, and they are certainly very valid for entrepreneurs to be aware of. The issue of alignment across investors (or lack thereof) is typically a critical problem that has sunk companies that might have had a chance to survive otherwise. However, when I read this post, I had to think a couple of times "Yeah right, that is true but only if have the luxury of picking your VC".