January 19, 2017 Pitchbook : 2016 Annual US PE Breakdown
If 2014 was a record-setting year for PE, and 2015 a turning point, then 2016 can be characterized as the first step toward normalcy. Buyout activity receded amidst the growing concerns about global trade, rising populism and central bank policies that we know all too well. It must be noted, however, that PE transactions occur on a deal-by-deal basis, not a global basis. As such, managers have continued to find pockets of growth and opportunity, particularly in the tech and energy sectors. (read more…)
January 16, 2017 Sramana Mitra : Death By Overfunding
Funding = Success, right? I wish it did. But entrepreneurial tracks are littered with carcasses of dead startups that were very well funded, some to the tune of hundreds of millions (read more…)
CATEGORY: leadership, profitability, VC
December 22, 2016 Bryce Roberts via Medium : Meaningful Exits For Founders
Lifetimes of work and risk lie between a Seed round and a Series D round. And, despite increasing the value of the underlying business 7x, the dollars at exit for the founder remain roughly the same. It is also worth noting that an exit at $210M would not even qualify as a home run for even the smallest fund in Sam’s examples. (read more…)
CATEGORY: alternative financing, capital, profitability
December 17, 2016 Samuel Gil via Medium : Meaningful VC Exits
Some VCs will only aim at potential home-runs, knowing that some of those investments will most likely end up being “just” meaningful exits, and some VCs will mainly aim at potential meaningful exits, expecting that 1 or 2 of those investments will end up being home-runs (read more…)
CATEGORY: capital, VC, winner take all
November 29, 2016 First Round Capital : State of Startups 2016
The bubble is deflating. We asked 700+ founders to answer one of the most frequently asked questions we receive: are we in a bubble? Last year 73% said we were. While this year the majority still say yes, it’s closer to a coin flip (57%), down 22% from 2015. Though the majority of founders say we’re in a bubble, 9 out of 10 founders believe that it’s a good time to be starting a company. All aboard! The unbridled optimism that drives founders is alive and well in tech: 18% of leaders say they’re certain they’ll build a billion dollar company. But that’s not to say there aren’t bumps along the way. The same percentage of leaders (18%) also report having executed a layoff in the last year. (read more…)
CATEGORY: downturn, valuation, VC
October 15, 2016 Founder Collective via Tech Crunch : Overdosing on VC: Lessons from 71 IPOs
Venture capital is a hell of a drug. Used properly, it’s like adrenaline energizing many of the greatest companies of the past fifty years. Used incorrectly, it creates toxic dependencies. (read more…)
CATEGORY: bootstrap, resilience, VC
October 8, 2016 Scaleworks via Medium : Company Valuations
Valuing a company is typically done based on either Value Pricing or Market Pricing. Value Pricing is what mature, stable, normally profitable businesses are bought on, and how Private Equity evaluate companies. Market Pricing is VC’s (and founders) set a price using external factors. Scaleworks Venture Equity sits in the middle with a Growth Pricing method.
Obviously there’s a ton of depth and complexity in the details of how to value companies, and people far more expert than I am have spent years doing it, and written extensively on the subject. My goal here is to write about how Venture Equity (what we call the Scaleworks Fund model) fits in the macro landscape between value and market pricing.
(read more…)CATEGORY: capital, valuation, VC
September 26, 2016 John McDuling at Financial Review : Everyone wants to be a VC now
Venture capital has become [one of] the most glamorous and exciting corners of finance. Rich heirs used to open record labels or try their hand at producing films, now they invest in start-ups. (read more…)
CATEGORY: capital, leadership, VC
September 20, 2016 Industry Ventures : A Graceful Exit – Managing Shareholder and Limited Partner Liquidity
Most investors and companies invest significant time and energy in securing capital, hiring a CEO, or finding a strategic partner. But they devote considerably less to lining up the right shareholder or limited partner when they want to sell or leave a job. When an employee or other shareholder is looking to cash out, how are they treated? How does the exiting partner or management team member treat the company and remaining stakeholders? For whatever reason, most leavers simply want to move on; they give short shrift to the personal and professional benefits of maintaining relationships and connections. More often than not, the exit process is an afterthought or is seen as a waste of time. (read more…)
CATEGORY: capital, leadership, VC
September 16, 2016 Eric Paley via Tech Crunch : Venture capital is a hell of a drug
I regularly see entrepreneurs agonize over a percent of dilution, while ignoring the fact that they are surrendering their most likely exit options for a low-probability shot at building a superstar startup. Billions of dollars have been outright wasted by founders selling future value that didn’t materialize, while surrendering present value that could have been navigated to great success. My advice: Don’t give up your present for a future you haven’t validated. (read more…)
CATEGORY: alternative financing, leadership, VC