Posts By / seth levine

Startup Boards Second Edition

Effectively building and working with a board is a critical part of building any successful business. But there is a lot of nuance in doing both of these things effectively. Enter the second edition of Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors by a trio of authors including my partner, Brad Feld; CEO of Foundry portfolio company Bolster, Matt Blumberg; and co-author of the original edition of Startup Boards, Mehendra Ramsinghani. While the first edition was great, this second edition is a well-needed and excellent update (it’s been 7 years since the original came out). I had the chance to read an advance copy a few months ago and loved the practical information…

Investors Think They’re More Impactful Than They Actually Are

Companies looking to raise money turn to venture capital for a variety of reasons. Top among them is generally access to capital, but often on the list is the hope that raising capital from experienced (and well-networked) investors will have other positive impacts on their business. Certainly from the venture perspective, VCs (Foundry included) pitch themselves to companies, co-investors, and LPs as more than just capital. Indeed, many firms even institutionalize the practice of providing help to portfolio companies through extensive platforms that may include PR, talent, marketing, technical, and other help (sometimes offered for free, sometimes offered ads a pay-for-service, but often at below-market rates for those services). There are venture firms that have dozens of people employed in…

IRR is a vanity metric

I’m observing that IRR is a metric that is becoming an increasing focus in venture, replacing fund return multiple as the key metric of success. I understand the draw of IRR, and – as a fund draws to a close – there’s no question it’s an important metric. LPs have plenty of options for where to put their money and IRR is an easy way for them to compare how their money grows across various investment options and a convenient way to determine whether they believe they’ve been adequately compensated for the relative risk and varying degrees of liquidity available to them across different asset classes. BUT (and you knew there was a but here given the post title…) it’s…

Money in the Bank vs Burn

With the markets down significantly, financings (at least at the later stages) slowing down, and inflation and interest rates on the rise, perhaps now is a good time to talk about your burn rate. Hopefully, you took advantage of the robust financing markets of the past few years to put some money on your balance sheet. Perhaps you raised at what historically have been very attractive valuations (we certainly have companies in our portfolio that have raised well, well above the historical averages). With that as the backdrop, it’s probably a good time to remind you that the amount of money you have in the bank doesn’t have to dictate your burn rate. Your underlying business metrics should. Dividing the…

Building and Compensating Your Board

For frequent readers of this blog, you know I’ve written a lot about startup boards including the importance of diversity and being deliberate about how many investors you have on your board (hint: likely too many). Last month I joined Bolster and compensation consulting firm J.Thelander for a conversation on building and compensating boards in the most effective way possible. This is an important topic, and I wanted to share and emphasize a few insights from the conversation. If you’re interested in watching the full session you can do that here. Much of the data shared by Bolster can also be found in their Board Benchmark report that I wrote about earlier this year. The role of the independent director…

Downsides of a white hot economy

A few quick market observations from dicussions I’ve had with portfolio companies over the past few weeks. All relate to just how a white hot economy has some downside effects on certain types of businesses. Certainly some early warning signs – curious if others out there are seeing the same. My take-away is that in many sectors of the economy companies quite literally don’t need more customers. They can’t handle the additional load because they can’t hire fast enough and their supply chains are stretched thin. We’ve seen this in digital advertising for sure (and not just in travel and other segments that might be reacting to the Delta variant). Interestingly we’ve also seen a couple of companies – especially…

Pledge 1% – Boardroom Allies

One thing I’m particularly proud of in my career is founding Pledge 1%, an organization that encourages companies to give back to their communities by donating a portion of equity, profit, time, or product to nonprofits in its community. It was bold idea from the beginning and I’m happy to see that more and more companies are taking the pledge (we’re around 20,000 strong now and growing quickly). Recently, Pledge launched a new initiative, Boardroom Allies, to broaden their network and reach. The Allies program is comprised of an alliance of VCs who have committed to unlocking $5 billion in new philanthropy over the next five years by helping their portfolio companies set aside equity for social impact prior to liquidity…

Calling Financial Innovators

The Kauffman Foundation published an article last week that my New Builders co-author, Elizabeth MacBride, and I wrote about the inspiration for writing the book and – related – about how our systems of finance and support need to evolve to meet the needs of today’s entrepreneurs. One of our biggest inspirations and favorite New Builders is Danaris Mazara of Sweet Grace Heavenly Cakes. Sweet Grace was born in 2008, as the Great Recession ripped through the United States, particularly affecting working-class communities like Lawrence, Massachusetts where Danaris lives. She can identify the exact minute the bakery was born. She had $37 in food stamps to her name. “What are you going to do with $37 in food stamps?” Danaris…

The Power of Giving Away Power

I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the US Ambassador to the U.K. and Sweden under President Obama, and was the National Finance Chair for Obama’s 2012 reelection campaign. More importantly, he is an incredibly thoughtful and compelling person. He puts all of these qualities and more into his new book, The Power of Giving Away Power, where he…

You Need More Nietzsche in Your Life

Nietzsche has so many famous quotes it’s sometimes hard to choose just one (most have heard that which doesn’t kill you makes you stronger although I suppose few realize that it was the German philosopher who first penned it). My favorite, perhaps, is: there are no beautiful surfaces without a terrible depth. I like it in particular because in many ways it describes Nietzsche himself. His writing is often beautiful, but with a depth that sometimes takes time to fully recognize. In their new book, The Entrepreneur’s Weekly Nietzsche: A Book for Disruptors, Brad Feld and David Jilk pick out some of their favorite Nietzsche quotes and form chapters around business lessons from them. It’s a brilliant construction and one…