Book Description
Publication Date: November 16, 2011
"This is probably the single most valuable resource for the entrepreneurs aspiring to build successful companies"—Ron Conway, Special Adviser, SV Angel, and investor in Facebook, Google, Twitter, Foursquare, PayPal, Zappos
"I highly recommend Venture Capitalists at Work. This book captures the personalities and approaches of a number of leading VC practitioners and displays the heart and soul of the venture capital process, by offering an exclusive window into the voice of the practitioners."—Gus Tai, Trinity Ventures
"Venture Capitalists at Work is a foundational pillar in an entrepreneur's understanding and resources. This is a first in terms of the level of detail, quality of discussion, and value to the entrepreneur."—George Zachary, Charles River Ventures and Investor in Twitter
Venture Capitalists at Work: How VCs Identify and Build Billion-Dollar Successes offers unparalleled insights into the funding and management of companies like YouTube, Zappos, Twitter, Starent, Facebook, and Groupon. The venture capitalists profiled—among the best in the business—also reveal how they identify promising markets, products, and entrepreneurs.
Author Tarang Shah, a venture capital professional himself, interviews rising VC stars, Internet and software investment pioneers, and venture investment thought leaders. You’ll learn firsthand what criteria venture capitalists use to make investments, how they structure deals, the many ways they help the companies they fund, avoidable mistakes they see all too often, the role of luck in a success, and why so many startups fail.
Venture Capitalists at Work also contains interviews with those on the receiving end of venture money—entrepreneurs in high-profile startups that went on to achieve great success. Whether you’re an entrepreneur, an aspiring VC, an M&A professional, or an ambitious student, the knowledge you will gain from Venture Capitalists at Work could provide a significant shortcut to success.
What you’ll learn
How venture capitalists identify promising markets, entrepreneurs, and companies
What venture capitalists are looking for in entrepreneurs and business plans
How to build an “A” team and a culture of success
Successful relationship dynamics between entrepreneur and investors
When to slow down, ramp up, and scale companies
Knowing when to sell a business, keep growing, or shut it down
Why startups fail
Common entrepreneurial mistakes you can avoid
Who this book is for
This book is a must-read for entrepreneurs and venture capital/private equity investors. It's also for venture capitalists and entrepreneurs in emerging markets who want to apply to homegrown ventures the Silicon Valley model of building billion-dollar startups. Corporate executives focused on innovation or mergers and acquisitions will find the book's insights priceless. Finally, business students and aspiring entrep
21. Copyright VCs At Work Tarang Shah
Venture Funding Myths
22. Copyright VCs At Work Tarang Shah
Funding Model
Stage 0 Stage 1 Stage 2
Formation Build & Prove Grow & Scale
Extended Team ???
Scalability
(Sales, Business
Model, Product
Core Team
Product/ Idea
Product-Market Fit
Market
Cofounding Team
Funding Type Seed Super Angel Series A Series B Series C Series D, E, F
How Much? $50-500k $500k-2M $3-7M $7-25M $15M+ $25M+
Typical Valuation $1M $3-5M $5-10M $15M+ $50M+ $100M+
Dilution 25-40% 5-10%
23. How do VCs think?
Entrepreneur
Market First
First
First identify First identify
promising promising
market Entrepreneur
Look for
Follow their lead
promising team
into promising
than can execute
market opportunity
in that market
25. Copyright VCs At Work Tarang Shah
Anatomy of Successful Entrepreneurs
Balanced Ego – Big ego to Real Visionary – Can
pursue unconventional ideas Big & Bold Head see the whole company
but in-check ego to surround – “The World is beyond current product
with people smarter than him Not Enough” ; Big Ears – Listens
Not afraid of non- actively and intently to
Authenticity – Product view consensus view customers and analytics
informed by 10k hours of
tinkering; deep experience that Passionate Disinterest –
provides insights into the fine Passionate to seek out the
nuances of market and customer truth but not biased about the
outcome – highly objective
Iterative – Not afraid of failures
Genuine & Avid Passion to
but like Edison enjoys discoveries High Integrity solve the problem and make
through methodical trial and – Transparent a difference -> A Missionary
errors and
Trustworthy Personal Relevance to the
Extremely Focused – breaking vision pain point being solved –
into short-term metrics and single- motivation beyond making
mindedly pursuing it. money
26. Copyright VCs At Work Tarang Shah
Building World Class Team
27. Copyright VCs At Work Tarang Shah
Anatomy of Successful Cofounding Team
High
Complementary Past Successful
Proven Potential
Skills (e.g. Working
Chemistry Cofounding
business, tech) Relationship
Team
28. Copyright VCs At Work Tarang Shah
Building World Class Team
Lift the quality Hire unfettered
Hire for Cultural
of team with passion without
fit as much as
each hire and ego & restrictions
functional skills
fire of past learning
Hire people who Fire promptly and
Hire People you
can start adding amicably
have worked
value day 1 – No someone who is
with well before
time for training not fitting well
29. Copyright VCs At Work Tarang Shah
Building “A” Team Egoistical, Insecu
re & Can’t attract
smarter people
to join
CEO “B” CEO
“B” Player hires
CFO CTO “C” Players
“C” Player hires
VP VP VP VP “D” Players
“D” Player hires
Dir Dir Dir Dir “E” Players
Pretty soon you
Mgr Mgr Mgr Mgr have “Zombies”
in your team
30. Copyright VCs At Work Tarang Shah
Building “A” Team
CEO “A” CEO
“A” Player hires
CFO CTO “A” Players
“A” Player hires
VP VP VP VP “A” Players
“A” Player hires
Dir Dir Dir Dir “A” Players
Pretty soon you
Mgr Mgr Mgr Mgr have world class
Copyright VCs At Work Tarang Shah
“A” team
31. Copyright VCs At Work Tarang Shah
Culture of Success
32. Can you identify promising markets?
Changing Highly
New Supporting
Customer Attractive
Technology Infrastructure
Behavior Market
33. Can you identify promising markets?
Changing Highly
New Supporting
Customer Attractive
Technology Infrastructure
Behavior Market
34. So what do you look for?
Changing Highly
New Supporting
Customer Attractive
Technology Infrastructure
Behavior Market
35. Identifying Emerging Platforms
???
Netscape
eBay
Cisco Amazon Mobile
3Com
Apple Internet
Microsoft WANs
LANs
IBM
Intel PCs
Micro
Computers
Chips
Transistors
1950 1960 1970 1980 1990 2000
36. What are some of the Emerging Platforms
Today?
Smartphone iPad/
Facebook Twitter
Tablet
PayPal Amazon ??? ???