Archive for the ‘Venture Capital’ Category


Beyond the Money: Some VCs Provide Startups With A Competitive Edge

Posted on March 21st, 2009 in: Venture Capital
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Surprisingly, some of the most important resources from a VC isn’t the financial funding.

When I meet with startups I find it helpful to find out who their investor is, secondly, it’s important to watch how VCs are funding, as it impacts what type of technologies we’ll see in the next few months. I don’t know as much as I want to about the VC world, so when I have questions I turn to Jennifer Jones, just this weekend we were engaged in the topic of the overall value that VCs bring. No, not just the money aspect, but the other intangible benefits, as VCs provide several intangible services to their portfolio companies, as I understand it, they include:

VCs Provide Startups With A Competitive Edge by Offering Additional Services:

Thought Leadership
VCs are required to anticipate future trends, and as a result they are highly connected, obtain information from a variety of sources, and have to quickly synthesize what’s next. Some of the VCs are more active in public, and are on the speaking circuit, and are sharing their ideas. Take for example David Hornick, who does a great job at this as he discusses why and how he’ll invest the $650mm they raised in high tech. Considering the recession this fund will fuel a great deal of innovation –even during a downturn.

Strategic Guidance
Often, VCs sit on the Board of Directors of their portfolio companies and provide guidance, direction, and access to other decision makers. This not only protects the VC to keep an eye on the company, but gives the entrepreneurs a chance to bounce ideas off senior and seasoned investors.

Being Part of The Family
Access is important. When I meet with startups, it’s important to know who invested in them, as it indicates their network. If you watch carefully (real carefully) you can see that startups that share the same investor use each others products, exchange executives, and are talking to each other. They often have offsites

Ancillary Services
Some VC firms have education teams and marketing teams that provide a broad range of services to the portfolio companies who don’t have the resources to hire full time marketing staff. In fact, I’ll be doing a workshop with Giovanni Rodriguez in the near future for a VC group. Recently I held a dinner discussion with Allegis capital and Scale Venture Partners, to meet their portfolio and discuss market trends.

Umbrella Branding
Perhaps the most under utilized is the benefit of being part of the brand of a well known firm. There are certain firms that are known for investing in certain verticals, or have a track record of success that lights my eyes up. Companies often tout their investors in briefings, especially if they are a top tier firm.

Parties… eerr um Networking
Ok, that’s my polite way of saying great parties, well networking too. During the height of the economy, some VC firms flew the executives of their portfolio companies out to a one week retreat in Hawaii. Also, some of the best parties in all of Silicon Valley are at August capital –social media networking nirvana.

Recruiting and Fundraising
I added this bullet after the fact, after seeing how David Hornick has added to the conversation it’s too important to pass up. VCs offer additional services like recruiting, which I’d be so bold to say is often executive placement of the right folks. Secondly, they help with fundraising, which I would assume would be for additional rounds of investment, I would expect that this would often mean a solid reference from one investor to the next.

Entrepreneurs should weigh all benefits
Of course, with the top tier VC firms, there are certainly considerations, getting backed by a very successful VC firm may mean they have more influence over the terms, may drive the direction of your company, and ultimately, may have more equity of the company. I encourage you to think about the other services, network, and events that your VC will offer you, find out by observing or talking to companies in their portfolio.

VCs offer more than just funding
VC should continue to provide thought leadership in their space, discussing in public why they are raising money, where they anticipate market growth, and how they plan to invest. This not only attracts new investors for their fund, but gives branding cover for their portfolio, and the folks in the industry, like me, visibility on the next trends. What they do beyond the investment makes a different –I can see it.

Wrapup: What’s on the mind of VCs, Entrepreneurs, and Industry Analysts

Posted on September 15th, 2008 in: Events, Venture Capital
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Left: Scale Venture Partners brought VPs of Marketing, CMOs and founders portfolio clients to meet with me last week.

When we think of influencer groups in the social media space, we often think of top bloggers like Techcrunch, RWW, GigaOm, Fast Company, Cnet, yet there’s a whole ‘nother influence group that rarely gets ink –I’m starting to spend more time with them as it helps me to better understand the space.

An inconspicuous influencer group . The last seven business days have been intensive full day sessions with vendors for my upcoming Forrester Wave research on community platforms. I’m always energized by the fire in the eyes and the passion that comes through when talking to founders and entrepreneurs. Sadly, a problem for entrepreneurs is that they often get tunnel-vision and forget to look up outside of the lab at the greater market, fortunately, they should have VCs (who often sit on their board) that help them to see further, connect deals, and provide guidance.

The interesting thing about VCs is how incredibly powerful they are in our space. Compared to the excessive noise in our industry, tou don’t hear too much out of the mouths of VCs, but believe me they are extremely powerful. Aside from the obvious power from control of funding for investments, they can influence the direction of their portfolio companies, and foster relationships between different companies. VCs influence the sellers, in my market, these are the startups.

On the other hand, industry analysts, while do have some influence over startups, have an even stronger relationships with the buyers, (and media) in this case is the the Fortune 5000 companies that seek help to make decisions on how to organize their company, staff, budget and deploy social computing.

VCs and Analysts are on a quest to answer the same questions
Despite these different takes on the same market, VCs and industry analysts are answering the same questions: 1) What’s going to matter in the future? 2) Who’s going to do it? In fact, while the methodology differs slightly, both analysts and VCs are conducting research, taking in pitches and briefs, and finding out what others think of companies before they fund or recommend them.

Given the similiar goals, last week, my long term friend Jennifer Jones, a marketing expert who is known for her work with VCs such as Mayfield, Versant Ventures, Scale Venture Partners, and Levensohn is my go to guide to meeting these folks. In fact she helped coordinate a dinner between myself and Scale Venture Partners with a handful of their web portfolio companies (VPs, CMOs, CEOs and founders) and potential investments. So what did we talk about?

Over dinner we discussed that:

  • We all see the same direction of the social web, the social graph is going to separate and be available from many different websites.
    Micromedia tools are powerful for support and marketing, but monetization is still a mystery.
  • Jokingly, Microsoft and Yahoo aren’t known for innovation and flexibility, yet we are in awe with Google, Apple, and Facebook.
    There are too many players in the space due to commodity technology, the need for segmentation and stratifcation is needed.
  • Funding for social media in the marketing space slowly grows as it gets pulled from other traditional marketing channels, many are looking at where other buckets of money can come from within the enterprise in IT, HR, and maybe even Sales.
  • There’s a need to bring the varying vendors together for roundtables to discuss how data will be shared from site to site as the entire web becomes more social.

    • Analyst/VC dinners
    As you can tell, we all learned alot from this trifecta of entrepreneurs, VCs and industry analysts; it was healthy to bring forward a larger part of the ecosystem to share with each other. VCs also want to demonstrate to their investments and investors that they’re highly connected, influential, and have a broad set of connections. Jennifer is setting up some future VC/Entrepreneur/Analyst dinners, if you’re a VC firm and want to participate, I recommend you contact her, as I’ll be spending more time with this powerful influence group as I move forward, it gives me a greater viewpoint to how the market is shaping for my research as well as providing portfolios with access to brief analysts on what they’re working on.