bizSessions 1.0

“VC FTW or WTF? Funding models
     for cash-starved times”

       Jonathan Abrams

         July 14, 20...
“It’s a great time to be an
              entrepreneur”
“There’s never been a better time to be an
  entrepreneur because ...
So, What Happened?




  PwC/NVCA/MoneyTree Report
“Could VC be a Casualty of the
                 Recession”
“When startups came back into fashion, around 2005, investors
 ...
“Could VC be a Casualty of the
                 Recession”
“If founders decide VCs aren't worth the trouble, that could be...
Buy High, Sell Low?




                  As long as VCs
With costs                                VCs and founders
      ...
Sustainability of Venture Industry
“If Common Stock Is Worthless, What
 Does That Mean for Entrepreneurship?”
“Plain common stock has become largely
  worthl...
“Help me rename "Lifestyle Business"”

“I think the industry places too much of a premium on raising
    venture capital -...
The Lean Startup

• “The next wave of capital efficient startups”
• Low burn rate
• Open source, cloud computing, etc.
• C...
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BizSessions 1.0 - "Funding models for cash-starved times"

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7/14/09 BizSessions Presentation on "Funding models for cash-starved times"

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BizSessions 1.0 - "Funding models for cash-starved times"

  1. 1. bizSessions 1.0 “VC FTW or WTF? Funding models for cash-starved times” Jonathan Abrams July 14, 2009
  2. 2. “It’s a great time to be an entrepreneur” “There’s never been a better time to be an entrepreneur because it’s never been cheaper to be one. With costs so low, I think you’ll see many more companies raise angel money and take it all the way to profitability.” Joe Kraus, June 29, 2005
  3. 3. So, What Happened? PwC/NVCA/MoneyTree Report
  4. 4. “Could VC be a Casualty of the Recession” “When startups came back into fashion, around 2005, investors were starting to write checks again. And while founders may not have needed VC money the way they used to, they were willing to take it if offered. … As long as VCs were writing checks, founders were never forced to explore the limits of how little they needed them. VCs and founders are like two components that used to be bolted together. Around 2000 the bolt was removed. Because the components have so far been subjected to the same forces, they still seem to be joined together, but really one is just resting on the other. A sharp impact would make them fly apart. And the present recession could be that impact.” Paul Graham, Dec 2008
  5. 5. “Could VC be a Casualty of the Recession” “If founders decide VCs aren't worth the trouble, that could be bad for VCs. When the economy bounces back in a few years and they're ready to write checks again, they may find that founders have moved on. This recession may be different from the one after the Internet Bubble. This time founders may keep starting startups. And if they do, VCs will have to keep writing checks, or they could become irrelevant.” Paul Graham, Dec 2008
  6. 6. Buy High, Sell Low? As long as VCs With costs VCs and founders were writing so low… “fly apart”? checks… PwC/NVCA/MoneyTree Report
  7. 7. Sustainability of Venture Industry
  8. 8. “If Common Stock Is Worthless, What Does That Mean for Entrepreneurship?” “Plain common stock has become largely worthless in funded companies. Preferred shareholders have increased their rights and protections, while liquidity events have become rare. Meanwhile, common stock has remained largely unchanged, having value diminished by the changing world.” Adeo Ressi, PE Hub, April 24th, 2009
  9. 9. “Help me rename "Lifestyle Business"” “I think the industry places too much of a premium on raising venture capital -- and it has become the default operating assumption for every entrepreneur. Entrepreneurs can create great businesses -- and have great outcomes -- without raising meaningful outside capital. Part of the problem, I think, is that the technology startup ecosystem seems to be structured so that the goal of every entrepreneur is to raise venture financing. There is a pretty strong gravitational force that pulls entrepreneurs towards raising VC dollars -- and it's often hard for an entrepreneur to overcome the inertia.” Josh Kopelman, First Round Capital, July 8, 2009
  10. 10. The Lean Startup • “The next wave of capital efficient startups” • Low burn rate • Open source, cloud computing, etc. • Customer development process (“The Four Steps to the Epiphany”) • Agile product development • Minimal viable product • Charge from day one See: Steve Blank & Eric Ries

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