Yet Another (ex-)VC Blog

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Building a business before raising money

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SEOmoz was also helped in this deal by an important factor I think every startup should consider – WE DIDN’T NEED THE MONEY. We were already profitable and growing, already had a brand name in the industry and had attracted interest from multiple investors. I think that every entrepreneur who’s considering startup-dom should think about establishing those goals before they go for institutional capital – a profitable, growing company with a product that’s on the market and a brand name that’s well known makes you:

* A) Lower risk to investors

* B) Interesting to multiple parties and multiple kinds of investors (angels, VCs, private equity, etc.)

* C) More confident in every step of the process

* D) Able to walk away from a deal you don’t like

This psychology is so powerful that I can’t imagine doing it any other way. If I wanted to build a travel portal to take on, I’d start a great travel site (maybe even just a really interesting blog), build up some brand recognition, use advertising or low-cost premium features to drive revenue and only after those numbers made for a compelling story, approach investors. I’d use that same formula even for a capital intensive business – start with cool ideas, great writing and valuable resources, become a hub for your industry, show web traffic and positive interest, then go fundraise.

via SEOmoz | My Startup Experience: VC, Entrepreneurship, Self-Analysis & The Road Ahead.

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Written by John Gannon

July 1, 2009 at 1:56 pm

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Don’t pitch the product

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Johan Santana on May 17, 2008
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Having seen this come up a couple of times over the last couple of weeks, I felt it was worth blogging it.

Don’t give the product sales pitch when you’re pitching an early stage investor.

An investor presentation, although technically a sales presentation (you want the investor to buy equity in your company), should not be a product sales presentation.

Yes, we want to understand the product you have built or are building, but if it’s 100% about the product (or even 70% about the product), it’s hard to tell the story that will convince the VC that this is an exciting team and market opportunity, with the right product at the right time.  Getting bogged down in features and functions is going to take the investor’s eye off the vision and into the weeds.

There’s plenty of time to get into the weeds once you have the investor’s interest, but not in a first meeting.

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Written by John Gannon

May 26, 2009 at 12:59 pm

Finally getting started on the VC Careers eBook

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Desert Island Collection - Top 24 - Books
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Here’s the first stab at the forward for the VC careers eBook. I’m going to build the content around this, so please let me know if there are topics that you think I missed or that you want to make sure are included in the chapters I’ve outlined here. Comments are very welcomed and appreciated.


It’s no surprise that it’s not easy to get a venture capital job when you consider some of the factors at play:

  • There are very few VC jobs to begin with
  • People tend to stay in a VC job for a long time
  • Venture capital is not a growth industry; The number of people employed in the field does not typically increase annually (in fact, it may start decreasing going forward)
  • VCs only hire through trusted referrals
  • VCs are generally well compensated
  • VCs work with entrepreneurs who are trying to change the world, or at least the industries in which they operate (which is no small feat, either!)
  • Bottom line: VC is a great industry and the jobs are great, too

The combination of scarcity and quality of the jobs makes for a big labor supply/demand imbalance that works mightily against the venture capital job seeker.

The goal of this eBook is to share what I learned during my venture capital job search process with the hopes that you can leverage some of the strategies and tactics that worked for me during your job search process.

Chapters and topics include:

  • Acknowledgements and thank you’s (A shoutout to everyone that I can remember who helped me or met with me during my search)
  • What’s the job of a junior VC? (A discussion of the day-to-day work of an analyst or associate)
  • Onramps to venture capital (Discussion of the feeder jobs and industries to the venture capital industry)
  • Do you need an MBA?
  • What makes a good VC? (Discussion of skils that can help you be successful in this industry)
  • Where are the jobs? (Finding/creating venture capital job opportunities)
  • Where are the internships? (Finding/creating internship opportunities as an undergrad or grad student)
  • Introductions and followups (The lifeblood of a VC job hunt)
  • The Informational Interview (Once you get it, how to get the most out of it)
  • Offer negotiations (If you’re fortunate enough to have offers to join multiple firms)
  • Exit options (If you’re not a VC lifer, some thoughts on careers that might make sense post-VC)
  • Final advice
  • Online information sources (Sites and blogs that I found useful during my job hunt)

If you are interested in careers in venture capital, think about subscribing to my mailing list. I promise not to spam you and will only send information related to venture capital jobs and careers. Please input your email address in the field (and click ‘Submit’) below if you would like to subscribe.

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Written by John Gannon

May 10, 2009 at 9:33 am

VC Deals twitter feed

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If you visit the blog fairly regularly, you may notice that I removed the M&A Funding Pipe feed in the right column and replaced it with the @vcdeals twitter feed.

@vcdeals tweets any financing or M&A announcements that get posted to a variety of blogs and then provides a link where you can get the full article.

If you are a twitter user and follow the venture-backed startup market, follow @vcdeals and let me know what you think.

Special thanks to the Twitterfeed folks who made it really easy for me to get this going.

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Written by John Gannon

May 1, 2009 at 10:18 am

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We’re looking for an intern at L Capital

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Better late than never, but L Capital is looking for a summer intern to assist us over the next couple of months with some portfolio corporate development projects.

This would be a great fit for a 1st year MBA who is still looking for a summer internship, or an i-banker who has some time on their hands before starting b-school in the fall.

Click this link, and if you meet the desired qualifications,  follow the directions if you’d like to apply.

Thanks, and I hope to hear from you soon!

Written by John Gannon

April 28, 2009 at 2:57 pm

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New kid on the block: How a junior VC can contribute to portfolio companies

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(This post is one in a series of posts and third-party resources related to careers in venture capital.)

As a junior staffer at a VC firm, I think its important to understand where and how you can be helpful to portfolio companies.  The advice I received from my venture capital teachers Stuart Ellman and Will Porteous of RRE Ventures (blog) has stuck with me, and I’ve tried to operate using that advice since starting my VC career.

I’m paraphrasing here (it’s been about a year since the class where we discussed it) but in essence, the advice was to simply be helpful and humble.

Here are some examples of ways that a junior VC can add value:

  • Business development: Introducing the company to potential customers and partners in their network.
  • Fundraising: Introducing the company to other VCs during the fundraising process and helping the company develop their investor pitch materials.
  • Recruiting:  Portfolio company is looking for a couple of engineers?  Get the job description, post it on some boards that might be relevant and forward it out to your LinkedIn network.  Maybe make some phone calls to folks in your personal network to see if anyone would be interested in the roles.
  • Strategy: If you have an interest in corporate strategy and/or a background in strategy consulting, and the company is looking to explore new markets or the competitive landscape, see if you can lend some of your experience by helping crunch numbers, helping to put together the board presentation, etc.
  • Listening and learning: Learn as much as you can about the company and the industry in which it operates.  Attend board meetings and listen!  VC is an apprenticeship business, so in many cases, the best approach is to sit down, shut up, and open your ears!

Company management, the VC partners who have invested in the company, and the founders will be adding the most value and steering the ship.  As a junior staffer at a VC firm, your job is to be ready to help out wherever they identify a need they’d like you to address OR to identify a need and then socialize it with your boss(es) at the firm to see if its something they’d like you to pursue.

You definitely don’t want to go off half-cocked, ginning up initiatives and projects without making sure that they are viewed as value-add by the partners and company management.

If there are any other junior VCs out there (I know some of you are lurking!), it would be great to hear some of your thoughts on what works and what doesn’t related to working with portfolio companies.

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Written by John Gannon

April 23, 2009 at 5:37 pm

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Facebook raising more money, has termsheets, but what of anti-dilution protection?

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Image representing Facebook as depicted in Cru...
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I just read the Techcrunch report on Facebook‘s latest fundraising activities( Decision Time For Facebook: Term Sheets Received At $2 Billion Valuation).    The report talks about the potential heavy dilution that common stockholders might suffer because of 1) a fairly significant down round (taking pre-money valuation down from $15B to $2B) and 2)anti-dilution protection clauses that would apply to the previous investors’ ownership stakes (which means common would bear the brunt of the dilution).

From the article:

The cost of taking money at such a low valuation is higher than it appears. In addition to the direct dilution to stockholders from the new money, old investors at the $15 billion valuation may need to be made whole. Venture rounds traditionally include anti-dilution provisions that give investors more stock if the company raises new money at a lower valuation. Those anti-dilution provisions are heavily negotiated and can end up anywhere from full protection (which is very rare) to no protection at all (which is also very rare). It’s likely that there will be some form of additional dilution, possibly a lot of it, from the $375 million Facebook has raised at that valuation.

Although the current investors will certainly want to preserve their ownership stake as much as possible in any new deal, new investors are not going to do a deal that they think will drive out key employees and founders in droves.

There are a couple of ways to get around this issue.  The new investors could require the old investors to waive their anti-dilution protection as a condition of investment.  Or, the new investors could require that more common stock options get issued prior to closing.  These options could be use to refresh employees and founders who experienced heavy dilution due to the down round financing.  My guess is that both of these mechanisms will be a part of any new Facebook deal.

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Written by John Gannon

April 15, 2009 at 9:14 pm

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