Most all the talk about the JOBS bill is about crowdfunding, seeding, and the ability to advertise private placements. In my mind, other provisions are the really big news for young companies.
Those are the expansion of the size limits for “Reg A” offerings, and the newly created “regulatory on-ramp.” Together, these have re-opened a door to capital that’s been boarded over and forgotten: small company public offerings. In a back-to-the-future way, companies with a proven model and modest revenues will have a new, realistic option for growth capital– one that doesn’t require capitulating to onerous terms from large funds, or begging bankers who prefer to make money by simply rolling over government securities. Read more
Yesterday I was a judge at the Northeast Regional Finals of the Venture Capital Investment Competition, featuring teams of MBAs from some pretty fancy schools. The big idea is that the MBAs form imaginary VC firms, look at real startups, and get judged on how they handle due diligence, investment structures, etc. So it’s the MBA “investors,” not the startups, who are being judged. Needless to say, we heard lots of great insights and ideas from the teams; but there were also several teachable moments that we’ll examine in this and future posts. Read more
OK, the Most Interesting Man’s isn’t a lawyer, and his view is a bit simplistic. But he does have a point: in many cases, provisional patent applications can provide useful and inexpensive (if short term) protection for your brilliant new idea. Read more
The list is of angel investing mistakes is an awfully long one, equally as long as the list for liquid investments, plus a bunch more. On the too-aggressive side: believing the hockey stick, ignoring the management holes, and overestimating product acceptance. On the too-conservative side: my favorite startup myth, thinking that because competitors exist, opportunity doesn’t. That logic is behind some of the biggest groans of regret ever, including the countless folks who said “no” to Google early on for that reason.
Despite all the competition, there’s a clear number one error in my book: failure to keep dry powder for the inevitable, yet somehow always unexpected, “re-opened” first rounds. Read more
Stopping by the First Growth Venture Network session today, I saw the usual great collection of startups and industry experts. It’s about the best forum for practical advice, mentoring, and support that an entrepreneur could hope to find. As usual, there were lots of quotable quotes, but my favorite one today was from Jeff Bussgang, co-founder of Flybridge, who said: Read more
We’ll get there, but let’s start here: I don’t believe in “angel portfolio theory,” which applies Wall Street’s favorite myth to the early stage world. According to this approach, the “smart” way to do angel investing is massive diversification, with scores of early stage bets.
There are several reasons that this common wisdom is more the former than the latter, but let’s start with an indisputable fact. Even assuming portfolio theory works for public markets (it doesn’t), the idea rests on the premise of an efficient market: liquid, broad and transparent, with distributed information, educated investors, structural consistencies, and reliable reporting. Does that sound like the startup world to you? Read more
It seems that everyone is writing about best practices these days, and I certainly agree they should be followed whenever possible. There has been a disturbing lack of guidance on one of the most common activities of early stage companies: throwing money out the window. So, I’m here to help. Read more