I like passing along simple and useful advice. And, if written by someone else then all the better!!
I often hear the question, what should be in my startup fund raising deck? Here is a simple and well presented answer from Mashable.
Category Archives: Dealing with VCs
Public Service Announcement – Great Post by Chris Dixon
Just read a great post by Chris Dixon called “So you want to raise seed capital…..” . Here it is. Link. Enjoy.
The Weekly Update on Steroids
Some of you know my feelings about the incredible value of a startup CEO sending out a weekly update to the company’s board. See The Weekly Update.
Steve Blank has taken this to a new level – put it on steroids. In his post today he writes about having an enhanced version of the weekly update replacing board meetings for companies that are in the angel funded stage. I am not sure if eliminating board meetings completely is the right answer, but I currently recommend fewer board meetings (one half in fact) for companies in our portfolio that practice the weekly update routine (and that applies for those well beyond angel funding). The real time updating is teamwork at its best. I could be convinced that Steve is right. It is all about results driven communication between the management team and the board and often certain investors.
Here are links to Steve’s posts. Enjoy.
Reinventing the Board Meeting – Part 1 of 2
Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures
Shareholder Alignment
Sorry for the longer time between posts lately. I have been swamped at work and that is my excuse. Given that, I have been wondering how Fred Wilson and Brad Feld (among others) do it – how do they post almost every day. I am sure that they too are swamped at work. When I wake up they are always waiting “smiling” at me in my inbox.
For Brad, I am pretty sure it is because he has no kids. My kids luckily take up a lot of my time, and I am fortunate for that!
For Fred, I think he is just super human and maybe sleeps very little. He has kids and he seems to do a lot with them based on his posts. Ok, enough chatter.
Quick substantive content. Shareholder alignment is a tricky topic that involves not only the alignment of common holders (think founders and management) with preferred holders (think investors), but also the alignment of preferred holders with other preferred holders. The simple truth is that the more shareholders a company has the greater likelihood of misalignment of shareholders. I like to follow the general rule that minimizing the number of shareholders is always a good thing.
You might have a situation where one Series of Preferred Stock wants outcome X and another Series favors outcome Y. You might have a case where a group of investors inside Series A favors a different outcome than another group of investors inside that same Series A (for example, one group might have more dollars to invest and so favors keeping the company independent and another group might be tapped out and favors selling). There are many variants and examples.
I find the alignment or misalignment of interests among investors a fascinating topic. Just as investors love to invest in entrepreneurs they already know, VCs love to invest with VCs they know. This minimizes the chance of misalignment and also creates a typically reasoned outcome when it happens.
As an entrepreneur/founder, I urge you to think about not only the alignment of your own interests with those of your investors, but also how your investors’ interests might run in parallel or intersect/clash with each other. Both topics could greatly impact your startup.
Board Meeting Follow Up
I think communication is a critical factor in the success or failure of a startup. I guess I would phrase it as “over-communication”, with over-communication typically being associated with successes. Prior posts have touched this topic, namely 3 Up / 3 Down and The Weekly Update.
Most of the written communication falls on the CEO of the company, but there is one practice that should fall on a director who is not the CEO. It does not matter if this director is the “lead” director or chairman. In short, after each board meeting, a director should promptly write an email to the entire board (including the CEO) with follow-up and action items coming from the meeting. The email is typically short and often just a set a numbered points. Importantly, the numbered points are not just for the CEO and his/her team to perform. They may also task other board members.
The goal of the post-board meeting email is to make sure that everyone is on the same page. This is really helpful for the entire board team, including of course the CEO. Hopefully your board meetings (assuming you have outside board members) conclude with 2 “executive sessions”. One with the CEO and no other management team members (and that might mean excusing another board member if he/she is also on the management team; and it certainly means excusing any other non-board member attendees who are present, except for contractual board observers, if any) and then a final session without the CEO and just the non-management board members. The post-board meeting email should also appropriately address any issues surfaced in the final executive session as well. This is a way of reporting back to the CEO. Sometimes it is not appropriate to address all issues in this group email, particularly on points that are critical of the CEO and thus often handled one on one.
When I have been asked to write the post-board meeting email, I often run a draft by one other director before sending it off to everyone. Nice to get another set of eyes to catch any missed items, etc.
Good practice to consider.
ithaca VC 