Valuation Policies Are A Mess
Every venture firm reports the “value” of each of its underlying investments. Typically, this is updated quarterly and sent to each of the fund’s investors. The idea is that investors will then have a definitive view of the value of the firm’s investments. Simple, right? But what is the “value” of a private company? Turns out the answer to that question is not so easy to determine, and, as a result, valuation reporting in venture is a mess. …
March 18, 2025· 6 min read
The Future of Venture
Just before the end of the year, Erin Griffith of The New York Times published an article titled “What Is Venture Capital Now Anyway?” It’s a provocative look at the state of venture capital and, as these sorts of things are want to do, very quickly started making the round in venture circles as VCs tried to map how they fit into the landscape that Erin describes – a split in how VC firms are operating: some firms are keeping to a smaller, boutique style while a handful are becoming behemoths, almost unrecognizable as venture firms. There’s very little in between. …
January 24, 2025· 6 min read
SVB and The Tyranny of the Commons
Like many of you, I’ve been reflecting on the implosion of Silicon Valley Bank quite a bit this past week, now that the initial panic has faded into a dulled sense of disbelief. Certainly, there were warnings that SVB was in trouble (most notably from Seeking Alpha – in December – asking if SVB was a blow-up risk and, as if time traveling, describing almost exactly what would come to pass just a few months later). Many others have commented on how and why SVB (and soon after Signature, and nearly First Republic Bank and Credit Suisse) imploded. If you’re interested, I think Matt Levine from Bloomberg has the best overviews of what led to the crisis of last Thursday and Friday (see here, here, and here on SVB; here for an overview of what happend with CSFB, and for those paying close attention, here for what, at the time, we thought was an isolated “crypto thing” in the failure of crypto bank Silvergate, but perhaps was a harbinger for the weeks ahead). …
March 19, 2023· 7 min read
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 the service of their portfolios. …
June 14, 2022· 4 min read
VC Fund Returns Are More Skewed Than You Think
Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to return 1x capital and only 4% return greater than 10x capital. …
October 5, 2020· 3 min read
Options about your Options – How to think through your company’s option program
Quick break from Covid related topics for a moment to post something I’ve been intending to write about for a few months but haven’t had the chance to commit to paper. It’s perhaps a boring topic – Options and your company’s option program – but an important one. Despite how much time companies talk about the importance of their employees and, in many cases, how every employee is also an “owner” of their business through their option program, most companies are pretty ad hoc (or down right sloppy) about how they plan for and execute their option program. My hope with this post is to push your thinking around options and encourage you to formalize what you’re doing into an actual option program. …
August 16, 2020· 9 min read
How To Get a Job In Venture Capital
One of the most frequent questions I get asked is “how do I get a job in venture?” In fact, I’ve written two posts over the years on this topic – one way back in 2005 and a follow-up to that a few years later in 2008 (the 2nd of the post is the more practical advice if you’re pressed for time; or just keep reading below). A lot has changed in the past 10 years since I wrote my most recent post on this subject. And a lot hasn’t. Below is an updated overview of the venture job landscape as well as some current thoughts on how to break into the industry. …
February 7, 2019· 8 min read
You May Have Too Many VCs On Your Board
Those that have followed my blog for any period of time know that I love the data that my friends at Correlation Ventures gather and write about (for example the data behind my post Venture Outcomes are Even More Skewed Than You Think or IPO or M&A). Today they released some data on the correlation between the number of venture board members around the boardroom table and the success of venture funded businesses which I thought was pretty illuminating and which confirmed a long held suspicion of mine. …
March 13, 2018· 4 min read
The Changing Venture Market In 3 Images
Want to visualize how the venture funding market is changing? Look no further than these 3 slides (from a presentation put together by our friends at Greenspring). I don’t think much commentary is needed here. Average round size at Series A is increasing dramatically. Venture is being increasingly driven by large rounds (especially at the later stages – this is significantly skewing the overall funding numbers that are being reported). IPOs are the new Unicorns (they’re becoming more scarce than their $1BN valued cousins)
February 13, 2018· 1 min read
Forget about the rest. What makes a good VC?
I should preface this post with the caveat that a VC describing what it takes to be a good VC runs the obvious risk of falling into a trap of vanity and lack of self-awareness. I hope I haven’t, but you be the judge… There’s been a real uproar over Andy Dunn’s recent missive slamming venture capitalists. In it Dunn asserts (I’m paraphrasing here and I’d encourage you to go read the full post) that 98% of VCs suck. And his last line pretty much sums up his feelings: “98% of VCs who read this post self-identify as being in the top 2%. The other 2% are actually the top 2%.” There have been some good rebuttals of his overall critique – and especially of the 98/2% split (which, interesting, is perhaps an admission that certainly by track record, and implicitly by some of the other critiques Andy offers, there is some split between good and bad VCs -or Dumb and Not Dumb in Andy’s parlance; by the way, his math is completely wrong – the majority of venture returns are generated by an order of magnitude more than 2% of VC firms). I particularly like what Mark Suster had to say on the topic in his response – especially his opening point, about liking the VCs you know and hating the rest (Andy calls out his own VCs as being great in his post, to Mark’s point). …
May 29, 2013· 2 min read