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“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”

A VC to learn from

Posted by direwolff on October 25, 2006

I’ve been an avid reader of Fred Wilson’s “A VC” blog for some time now and also keep up with his and Brad Burham’s Union Square Ventures blog. I’ve known of both of them since my days at Reuters NewMedia back in ’94 when Fred was at Flat Iron Partners and Brad was at AT&T Ventures. Both seemed pretty bright on the various occasions I’d hear them speak at conferences. Through happenstance and by having played in this early stage company space for so long, I had the good fortune of meeting them both. As it turns out, I have a lot of very dear friends in common with them and in whom they have invested, as well as one who has invested in their fund.

Over the past couple of months, Brad and Fred have been openly blogging about the process they go through as VCs vetting and assessing companies to invest in, and it’s been refreshing to read their posts. They’ve brought some transparency to this previously mystifying process, which really helps early stage companies do some benchmarking against how prepared they are to present their case to VCs.

If you haven’t already done so and are a budding entrepreneur or in the throes of that role, you should really read their posts on what they look for. Not all VCs have the same formula or see things the same way, but not many outline their thought process as clearly as these guys have, so it’s worth taking advantage of this information to expand your understanding of VC perspectives. Here’s a list of the specific posts that go over this:

Today’s post on investment ranges that they participate in (“Deal Size”) also brings a sobering view to counter the insanity that we have seen with VCs raising billion dollar funds over the past two years. Such funds put the early stage companies out of reach given the amount of money they need to put to work. It really begs the question of whether such funds are really participating as VCs, or are they more like private equity funds, which generally prefer to play in rounds where the fund’s investment is north of $10-15M.

As far as I’ve always been taught, VCs are supposed to work with entrepreneurs to help them grow businesses and not focus on walking in to businesses that already grown and simply dump a bunch of money in to get a return. The Union Square Ventures really embody the idea that smaller investments, given the times, can still yield positive economics for all involved, and that’s good news for all trying to make a go of it.

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