Venture Capital

arbitrage

I'm looking for information on venture capital both from the point of view of the venture capitalist and the entrepreneur. All resources appreciated - books, videos, application forms, stats on investments, success rates, links to VCs, ect.

Any first hand stories would be great also.

Thanks.

fishbun

For a general overview, the blogs off the top of my head would be:

http://venturehacks.com/
http://blog.asmartbear.com/
Dave McClure
Paul Graham
http://www.avc.com/
http://techcrunch.com/
Bothsidesofthetable.com
Brad Feld

In an Irish context, I have this snippet saved from an answer on Quora.

Home to 3 of the top 8 accelerator programs in Europe.
(NDRC Launchpad, StartupBootcamp, Propellor.)
http://eu.techcrunch.com/2011/06...

Dogpatch Labs just opened its first non US outpost in Dublin; http://dogpatchlabs.com/2011/11/...

The IGAP program is very highly regarded
http://www.alliance.ie/index.php...

Likewise the Endeavor Program;
http://www.endeavour.biz/what-is...

These programs get 100's of applications both locally and across Europe.

Global start up streams such as Microsoft Bizspark have some of their highest take up in Ireland (close to 500 companies)

Access to seed capital.
At a macro level, in 2010 the Irish Government launched the EUR500m Innovation Ireland fund
http://chrisjhorn.wordpress.com/...

In total there is $250m available in funding for startups in Ireland.
http://dogpatchlabs.com/2011/11/...

More recently a re-location based fund;
http://www.businessinsider.com/i...

The Competitive Start fund (50k to 15 companies a year)
http://www.siliconrepublic.com/s...

There are a number of Seed funds and VC's that are investing in startups, including:

• ACT Venture Capital

http://www.crunchbase.com/financ...

• AIB Seed Capital Fund

http://www.crunchbase.com/financ...

• Delta Partners

http://www.crunchbase.com/financ...

• Kernel Capital Partners

http://www.crunchbase.com/financ...

• Enterprise Equity

http://www.crunchbase.com/financ...

• NCB Ventures

http://www.crunchbase.com/financ...

• SOS Ventures

http://www.crunchbase.com/financ...

An increasing amount of angel investment activity.

• Bloom Equity www.bloomequity.com

http://www.siliconrepublic.com/s...

• HBAN www.hban.org

Tech start up events...
The Dublin Web Summit and F.ounders is widely regarded as one of the best events in Europe. 1500 attendees this year.
http://eu.techcrunch.com/2011/11...

Other examples;
http://dublinbeta.com/
http://dublin.startupweekend.org/
http://2011.buildconf.com/
http://www.ndrc.ie/events/dublin...
http://www.ndrc.ie/events/innova...
and many more.

A few recent examples of successful exits and fundraising.
Newbay acquired for $100m
http://www.irishtimes.com/newspa...
Datahug lands 1.5m investment from VC and Ron Conway
http://techcrunch.com/2011/10/28...
Orchestra acquired by Engine Yard
http://techcrunch.com/2011/08/23...
The European HQ presence of Google, Twittter, Facebook etc. hasn't led en-masse to many spin outs from these companies but give it time... :-)

For European success stories see below:

- Time period Jan 2008-current
- General tech and internet (excludes cleantech and life sciences)
- Exit value > $250m (first exit) of European origin
- Venture and private/PE backed

Total so far of 23 (8 IPOs; 15 acquisitions)
- Yandex $12.5B IPO (Tiger, ru-net)
- Icera $367m (Balderton, Accel, Amadeus, Atlas, DFJ) acquired by Nvidia
- Bigpoint $600m EV - sale of controlling stake to TA (GMT, Peacock)
- RIB Software $300m IPO
- Lovefilm >$250m (Balderton, Index, DFJ, arts Alliance), acquired by Amazon
- Betfair $2bn IPO (Balderton, Index, Softbank)
- Ocado $1.6bn IPO
- Qliktech >$1.5bn IPO (Accel)
- Mycitydeal >$400m+ (European Founders, Holtzbrinck), acquired by Groupon
- Net a porter $525m, acquired by Richemont
- Yoox >$500m IPO (Balderton, Net Partners)
- Playfish ~$300m (Index, Accel), acquired by EA
- Messagelabs $695m, Acquired by Symantec
- Symbian $317m, acquired by Noikia
- Tele Atlas $2531, acquired by Tomtom
- Bebo $850m (Balderton), acquired by AOL
- MySQL $1bn (Balderton, Index), acquired by Sun
- Mail.ru $5.5bn IPO (DST, Tiger Global)
- Priceminister $270m acquisition by Rakuten (3i, Quilvest, Atlas)
- Sophis £375m acquisition by Misys (Advent international PE)
- Emis £200m IPO
- Promethean £400 IPo (Apax)
- Sophos $830m sale of majority stake by Apax (from TA)

No first hand stories from me (yet!!!), however some term sheet examples to get you excited:

- http://ycombinator.com/seriesaa.html
- Brad Feld - Dropbox hosted pdf on term sheets

And in case anyone was curious , typical range of investment per round

From $0 - $25,000 you will likely be investing your own cash out of your own pocket, otherwise no one else will be comfortable investing at all. Once in, this money stays in, and is part of what makes up your Founder's Equity (along with your work and your intellectual property.)

From $25,000 - $150,000 you will likely be rounding up friends and family to put in the first outside cash on top of yours. This will usually be documented as either a straight sale of Common Stock (which is most typical) or else as Convertible Note which converts into the same security as the next professional round, but at a discount (which is actually better for everyone).

From $150,000 to $1.5m, you are in angel territory, either by lucking into one really rich and generous angel, or (more likely) by pulling together either a bunch of individuals (at $10,000 - $100,000 each), or one or more organized angel groups, or one or more micro-VCs ('super angels'). Depending on the circumstances, they will invest either in the form of a Convertible Note (but with a cap on valuation), or else in a Series Seed or Series A Convertible Preferred stock round, using similar documentation to that used by VCs.

From +/- $1.5m up to, say, $10m, you're looking at early stage venture capital funds, which will almost certainly be using something very much like the National Venture Capital Association's Model Series A documents. They will likely make their first investment about half of what they're prepared to put in, with the rest coming in one or more follow-on rounds if you execute successfully on your plan.

Finally, north of, say, $10m - $20m, you'd be getting money from a later stage venture capital fund, whose paperwork will be similar to the earlier VCs. They will put in much larger amounts of cash, but your valuation will be much, much higher, so they may end up with a smaller stake than the earlier investors (who would likely have continued to invest in each round in order to maintain their percentage ownership.)

Although this is the canonical progression, keep in mind that the number of companies that get all the way through it is very, very, VERY small. A majority of companies that are started in the US begin and end with the first stage: the founders' own money. The number of companies that are able to get outside funding then begins to drop by orders of magnitude: the percentages (again, very, rough) are that 25% of startups will get Friends & Family money; 2.5% will get angel money; 0.25% will get early stage VC money; and probably 0.025% will make it to later stage VCs

fishbun

Also, while I'm at it, I always found it helpful to run any business idea I have through Y Combinator's interview questions to gain focus. Dropbox did it any now they're valued at about $4 billion dollars!

(Apologies about the Hacker News bias!)

Dropbox's initial app

And I'm aware I'm hijacking my own answer, but if anyone is interested in VC/high tech entrepreneurship and would like to discuss how best to trick pitch to Enterprise Ireland, drop me a pm!