Winsome, feisty startup ISO customers, profits, cities…

A fundamental change for many early-stage companies is their increased capital efficiency: it simply takes less money (and time) to bring a product to market, and even to start to achieve scale.  An article in the New York Times highlights this trend towards lean-startups, with a fascinating quotation that details the transformation: "A start-up" says one practitioner, "is a temporary…

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To Tweet or Not To Tweet?

Valuations of Facebook, Twitter, and other social media companies have been constructed, in part, around the idea that their platforms will serve as facilitators for commerce - particularly for small businesses that lack large advertising budgets.  Some initial evidence now seems to say that expectations may overwhelm reality. With a survey showing that only a tiny percentage of small companies…

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Billionaire Hot or Not?

Already the subject of a book or two, the origins of Facebook are now providing enough soap for a full-scale opera.  A new article charges that FB founder Mark Zuckerberg hacked into different accounts and used various means of subterfuge to ensure that his creation would surpass that of a similar idea from some older classmates, who eventually sued him.…

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The Madness of Ad Men?

Venture professionals have no life? Well, witness the always engaging Jeff Bussgang admit that he is just now starting to watch the television drama Mad Men, which is entering its fourth season.  However, Jeff uses the occasion to reflect on his recent dinner with Madison Avenue advertising CEOs, and finds four reasons why their companies are doomed: earning pressure on…

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Seed is the new “A”

With the traditional venture model under assault, there is an increased focus on seed-stage funding. Back in September we noted the attempt to create a standardized Series A term sheet. Now there is similar stakeholder interest in moving further upstream, with a prominent Silicon Valley attorney creating a downloadable set of Seed Stage documents free to all parties. The logic…

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What’s the ROI on that Pound of Flesh?

Three young guns – and not a detained Nigerian prince among them – are currently offering investors a chance to invest cash now in return for a percent of future income.  One, a 26-year-old Stanford grad, has even priced it out: 6% of future income for $600,000.  Even with no hurdle rate, this would require her to average annual income…

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Alternative Capital Sources

With many small businesses losing their lines of credit, coupled with the demise in small business lending from commercial banks, alternate sources of capital such as purchase-order financing are on the rise, as the New York Times details.  For companies with large orders and without hard assets, purchase order financing -- and other ways of borrowing against receivables -- has…

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The Acquisition Option

With venture funding down and the market for IPOs still anemic -- just eight venture-backed companies so far this year, compared to an annual average of 64 from 2003-2007 -- emerging companies hoping for an exit are increasingly on the lookout for suitors.  Several trends indicate a potential upswing in M&A activity early in 2010. First, as Montgomery & Co points…

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Pay to Pitch

An online brouhaha broke out over angel groups that charge startups to pitch potential investors. Led by media entrepreneur Jason Calacanis, and with an echo from Fred Wilson, soon a full chorus was reciting a litany of painful experiences.  The revelations are exacerbated as these "pay to pitch" sessions -- questionably effective in the best of times -- coincide with…

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Founder Liquidity

And further on the topic of increased liquidity, the always-observant Mark Suster has a terrific piece on why company founders should be able to take some equity off the table once their firm has reached reasonable milestones. His point is simple, but often overlooked: the alignment between investors and founders breaks down at some midway point between investment and exit. …

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