VC Overview with Peter Wendell of Sierra Ventures

Our crash course in Silicon Valley began with a thousand foot overview by Peter Wendell of Sierra Ventures.  In addition to the basics of VC, there were a few core points that stood out among all the talks in this subject area I’ve heard:

• Expect 4.5 rounds of financing on average before liquidity.  Shoot to raise 6-12 months of cash (just enough for a inflection point in value)
• Founder groups are usually 1-4 people.  Seek a diverse team that can cover the critical areas of the business (product dev/sales), but maintain agility.
• Founders are the decision makes.  They steer the business.  Employees execute.
• Most founder shares are subject to reverse vesting.  This enables the founders to ‘own’ shares before they are vested.  This allows founders to maintain control and to enjoy favorable taxation (capital gains % vs. regular income %).
• Spend some time on NVCA.org
• The NVCA Year In Review Report is amazing
• As a founder you want to help VCs’ greed supersede their fear.  After this inflection point the checkbook comes out.

• Your investors will be with you for the life of a company. Approach and choose with extreme caution.
• Entrepreneurs should use their ears and mouth in proportion (listen more than you talk).  Chances are if a VC has been investing for years their feedback is valuable.
• Look beyond VC for funding.  Anyone whose interests align with yours are targets (Customers, banks, angles, VC).
• It’s going to be a bumpy (but still worthwhile) road ahead: http://www.nytimes.com/2013/01/14/technology/start-up-investors-grow-wary-of-tech-ventures-after-facebooks-ipo.html?pagewanted=all&_r=0