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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.  Why?  Entrepreneurs are concentrated; VC firms are diversified. Company founders have steep liquidity cliffs: they generally only realize a significant…

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Digestif

Lastly, in my first nod to venture celebrity gossip, read about the night Brad Feld almost went to jail. And it wasn't even for his self-regretful investment in Interliant.

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The Future of Term Sheets

The predictable pendulum swing of harsher terms during a buyer's market lead to a lively online discussion on the future of the term sheet.  A dialogue between influential bloggers -- entrepreneurs and venture capitalists alike -- including Chris Dixon, Fred Wilson, and the eponymous Brad Feld extol the benefits of a simple, standardized, Series A term sheet (see posts by Chris, Fred 1, Fred 2, and Brad). A couple of law firms all have their own versions, as do one…

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Location, Location, Location. Not.

 Investing locally is a mantra of many venture firms.  The desire to conveniently monitor, interact, and network with their portfolio companies has lead to some long return trips for out-of-town entrepreneurs.  Now a recent working paper suggests that the Think Global, Invest Local view is bunk.  Among the findings: investments in regions where a venture firm has no presence outperform investments in regions where they have an established office.  Nor is there any difference by stage - despite the general…

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The Mess of Success

A fascinating Wired magazine article about craigslist.  Everyone one knows craigslist - it is the lead suspect in the death of the newspaper industry, has more job postings that Monster, CareerBuilder and HotJobs combined, and gets more online traffic than eBay or Amazon, all with just 30 employees. Highly successful, except truth be told, the site soft of, um, sucks.  Craigslist is one of the least innovative and user-friendly sites on the web - using it (which I still do)…

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2Q Venture Investments: Is this the new normal?

Most media coverage of Venture Capital investments in the second quarter split the baby: the $3.7 billion invested in 612 companies was either way down (from the $7.6B raised by 1,048 companies in 2Q 2008) or heading up (from the $3.2 billion invested in 601 companies in 1Q 2009).  Neither half takes the long view. Looking back at the last decade of venture financing, if one discards the bubble years from 1999-2001 and assumes a slight exuberance from the recent…

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The “Promote”

Flybridge's Jeff Bussgang has a nice blog piece where he coins a new word in the venture lexicon: the "promote" (not the Prestige).  Entrepreneurs too often fixate on their pre-money valuation (the "pre"), instead of focusing on what their equity is worth after the venture check has hit the bank account. For Jeff, the "promote" is where an entrepreneur should focus: the founding team's equity ownership percentage multiplied by the post-money valuation. In other words: after you've received a venture…

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