Today’s guest post comes from Ted Rosen, a partner at the law firm Fox Rothschild. How to write an effective company “teaser” is one of the most common topics I’m asked about by entrepreneurs and I think Ted has some excellent thoughts on how to prepare a company summary that hits the right points but isn’t so long that you’ll lose your reader’s attention (or make them abandon the summary before reading the important parts). Ted really nails it in the piece below. I’d especially call out “jargon free” and “keeping it simple” – the inverse of which are probably the two most common traits of poorly formed executive summaries. As always, I welcome comments, ideas, suggestions, etc. You can…
Category
Fundraising
Has convertible debt won? And if it has, is that a good thing?
Paul Graham, founder of Y-Combinator, sent out a tweet on Friday saying: “Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.” It’s an interesting data point on Y-Combinator companies, but is this truly a macro trend? Have convertible notes really won? And if so is that good for start-ups? Good for investors? I think the answer to these questions are that 1) it’s not at all clear that this trend is as definitive as Graham suggests; 2) it’s a mixed bag for entrepreneurs (more positive in the short run, potentially negative in the long term); and 3) it’s clearly not a positive trend for…
How not to pitch your business
I had an exchange with an entrepreneur last night that I couldn’t resist posting (I did resist including the guy’s name, however). It started with a relatively typical email. One which I wonder why I still receive but still get regularly. The entrepreneur writes: Seth…..I’d like to pitch you on a start up. I need the help of someone like you. I haven’t filed any patents yet and I need a nda signed. can we do it? I respond as I do for all requests like this by saying: Hi [name redacted]. Like most VCs I don’t sign NDAs (see: https://www.sethlevine.com/wp/2008/01/why-i-dont-sign-ndas). Let me know if you’d still like to show me what you’re up to (totally understand if you feel…
The new era of venture capital
You already know the about the state of the venture capital industry in 2009: venture investing down (32%), exits down (14%; slowest exit year for VC backed companies since 1995), fundraising down (56%), IPO’s almost non-existent (8 venture backed IPOs in 2009). It’s a bleak picture for the industry overall, even if there’s a group of us that continue to believe this is a great market in which to be investing (and it clearly is). These stats got me thinking about the future of the venture industry and I thought I’d offer up some thoughts on where we might be headed. First, let me frame the conversation by stating that I agree with Fred Wilson’s assumption that somewhere around $15Bn…
Saying "no" can be hard to do
At the risk of opening myself up to a landslide of snide comments expressing sympathy for the "difficult" job a VC has saying no to so many potential investments, but in the interest of being open about the experience of venture capital from the inside I offer up the following thoughts: Sometimes it’s very easy to decide to decline a company’s request for financing (and we see literally thousands of plans a year, so we’re pretty well practiced at it). Many times the company simply isn’t a fit for our investment focus (we get a few "invest in our [pick one] manufacturing/car wash/custom painting/etc business" requests ever year). Or the business plan is clearly off base (my personal favorite from…
Why I don’t sign NDAs
An entrepreneur started a meeting with me a few days ago by asking me to sign a non-disclosure agreement. I politely declined and thought I’d back that up with a post on the subject (I recall reading a few other VC blogger’s views on NDAs in past years – there’s certainly no lack of thought on the subject, although it does seem to consistently come up every year). VC’s, as a general rule, won’t sign NDAs. No – we’re not trying to steal ideas from entrepreneurs or pass confidential information along. We’re just not in a position to review, negotiate and keep track of literally thousands of NDAs that would result if we started signing them on a regular basis. …