I was reading the AlwaysOn Winter 2007 Magazine on the subway this afternoon and came across the “VC Deal Pitch� by Simeon Simeonov, a technology partner at Polaris Venture Partners. Before Simeon joined Polaris, he was the Chief Architect at Allaire and Macromedia. The article that he has penned for the magazine talks about a new way to date a venture capitalist before you get married, or in realistic terms, a new way to work together with a venture capitalist before they invest into your company.

Essentially, Simeon talks about how the founding team and would-be investors should work together, on the same side of the table, for a good amount of time to improve the business plan and test the market. This whole dating process only really works in the early stage funding realm and allows you to vet out a venture capital partner who does not share the same vision, culture, and operational expectations that you may have.

This process would only work if it was monogamous, says Simeon. As a founder, you do not want your VC partner to be flirting with other companies in your space. They ultimately will learn quite a bit about your business and have deep insight into your team, so keep it monogamous. Even though both parties will share lots of insight, Simeon also mentions that there should be “no strings attached.� If the relationship isn’t working for either party, it should be able to be terminated without any monetary compensation or consideration.

This is an interesting concept that Simeon proposes. As an entrepreneur, I can see how valuable it would be from an early stage perspective (maybe after seed funding?) but may not work for all startups due to time constraints, multiple VC’s, or other various reasons. What are your thoughts?

Brad Feld and Jason Mendelson have launched Ask the VC, a new blog and information resource site for people wondering about venture capital and the inner workings of the industry. Both Feld and Mendelson are venture capitalists at Mobius Venture Capital which has investments in a companies such as Judy’s Book, eCast, Sling Media, Technorati, Start Sampling, and others.

We’ve started this blog to discuss relevant issues in the venture capital and entrepreneurial ecosystem. As you may know, we’ve spent a lot of time over the past three years writing about venture capital and entrepreneurship on Feld Thoughts. We’ve had great feedback regarding our regular posts on matters that effect people in our industry, as well as our blog series on topics such as term sheets, letters of intent, and 409A. We’ve also had a lot of fun and learned a lot from the questions that people have asked us.

Brad Feld has been quoted on DarrenHerman.com in the past (alongside Raj Kapoor, Alan Kelley, Nick MacShane, and Keith Benjamin) with his contribution to the posting, When to Approach a VC. Their new resource already covers topics such as How to Incentivize Employees, How To Deal with Founders Who Leave, and other interesting topics…

A great topic that I would like to suggest (and will suggest eventually) is, “What should early stage compensation look like for co-founders and pre-revenue employees? What is normal and what would scare a VC?”

Great site guys!

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This is based on a posting I read on OnStartups.com titled Startup Founder Compensation. The data from this post was derived from the 2006 Compensation & Entrepreneurship Report in Information Technology by CompStudy.com which surveyed over 1,500 executives.

For anyone who is completing a business plan or trying to figure out how much that non-Founder CTO or VP of Advertising is going to cost, I’d certainly keep this posting in mind. Bookmark it. Add it to del.icio.us. Reddit. Whatever you need to do.

Read more »

Having worked with a good number of startups intimately, I can honestly say that “focus” is one of the main issues that can kill a startup. In a fantastic article on the blog, OnStartups.com, they talk about the force of focusing and how important it is to your business as a startup.

The comment I left on their blog posting is:

Great article! One thing that never fails to amaze me is how early stage companies or startups get sidetracked by inquiries from larger media companies or potential partners. Without fail, once a startup releases their press release that they have opened their doors, a larger company will contact them about a biz dev deal and the startup will solely focus on that. 9 times out of 10, that biz dev deal never comes to fruition but the startup wasted 6 months chasing that unfocused dream. Stick to your guns, focus on what you’re doing and if there are things that happen parallel to you - make them happen… do not go perpendicular.

I cannot stress enough about how important it is to ignore distractions. Half the time, one does not know what a distraction is until it plays out, but entrepreneurs are amazing at having these distractions find them! Recently, I sat down with one of the companies I’m advising, and had a meeting to talk about funding strategy and business development. After talking for 25-30 minutes to catch up on what they had been up to that specific week, I realized that 99% of that week had been tied up into inquiries from businesses trying to talk with them… all of which had contacted them straight off their website without a referral.

Since this particular company is a startup with a permanent staff of 5 and freelance employees fluctuating each week, can you really afford to have 75% of your company focusing on new business deals that are tangential to your business? Shouldn’t the company be focusing on getting their product to market?

This happens often. New contacts from a website come in and the company gets all excited because Media Conglomerate X wants to establish contact and find out what you’re up to. I’m not saying to ignore these contacts, but unless your business is fully operational and your product is well on its way to market, you just do not have the bandwidth to talk about tangential business development deals or even have lunch with that 3rd party. Focus on your company and if you execute correctly, you will find that a majority of the time, the inquiring company will come back when you’ve had some traction.

You don’t have to ignore the inquiring company but let them know that you’re busy focusing on your startup and that when you have bandwidth to chat, you’d be more than willing to open up conversations. Remember, your startup is your vision and you need to act upon it.

Note, this posting could get lots of “heat” as a few startups are sold at a very early stage from inquiries from their website. Do not ignore each inquiry… just let them know you are focusing on your startup and that when you have the time….will contact them.

It’s always tempting to talk to the Media Conglomerate, Sales Partner, Technology Vendor, etc - but each of those conversations have a very high probability of falling through so why waste time. Time is more valuable to a startup than anything.

Focus. Focus and focus.

I am about as passionate as anyone regarding entrepreneurship. I work and play amongst circles of entrepreneurs and always offer guidance to any aspiring business-minds who are trying to hatch their killer idea. Most of the time, I am lending advice to early to mid-stage startups about strategy, product development, or finance. While my strong point is not finance, I certainly understand the process at which an entrepreneur must go through to execute on a funding strategy and ultimately, close the venture deal.

I’ve decided to take some time to write a check-list that an entrepreneur should follow in order to have the most efficient and effective funding strategy. This list is not the end all and be all of how to get venture capital dollars, but will certainly help in your approach to working with VC’s. To round this posting out, I realized that what I’ve got to say is just one side of the equation. So, I’ve asked some extremely active VC friends what they look for in a company. Raj Kappor (Mayfield Fund), Nick MacShane (Progress Partners), Brad Feld (Mobius Venture Capital), Alan Kelley (SJF Ventures), and Keith Benjamin (Levensohn Venture Partners) all have added their two cents into this article with some original answers (thank you guys very much for taking the time to do so!). Read more »

Investment banking is hot, just look at all the current deals occuring in the media/technology space. BusinessWeek has released the rankings of the top Investment Banking groups and Goldman Sachs, Morgan Stanley and JP Morgan top the list according to banking revenue.Â

TOP PLAYERS. So who is at
the top of the game? Measured in terms of banking revenue, the top
three players remain Goldman Sachs, Morgan Stanley, and JPMorgan Chase (JPM). UBS (UBS), Merrill Lynch (MER), and Citigroup (C)
follow, although Citigroup and UBS switched rankings: Citi dropped from
No. 3 to No. 6, UBS moved up from No. 6 to No. 3 while Merrill held
steady at No. 5. They were followed by Lehman Bros. (LEH), which moved from No. 8 to 7, and by Lazard (LAZ), which broke into the top 10 at No. 8. Credit Suisse (CSR) came in at No. 9, down from seventh place, and Deutsche Bank (DB) came in at No. 10, down from 9. Rothschild, a powerhouse in Europe, dropped out of the top 10 altogether.