On Heartbreak, the VC variety
Venture capitalists get a lot of slack for breaking the hearts of entrepreneurs. Most perceive that we sit on our leather chairs every day and tell a bunch of CEO’s that their “babies are ugly” - aka, “your business will never scale.” This is far from the truth.
The difficult reality is that there is a lot of inbound interest for capital from start-ups that are just getting started and haven’t truly vetted their product in the market. There are rare exceptions to the rule: entrepreneurs that jump out at you and force you to take a leap of faith. The hardest part is figuring out whether the start-up you just passed on, is one of those.
Even more rare is a business that has all the right metrics (customer traction, revenue, stellar management team) but doesn’t want you. I call them our shooting stars; You only see them once or twice in your career and they zip past you before you can figure out what to do next.
Just like entrepreneurs have their pie-in-the-sky firm they hope to raise capital from, we have our shooting stars. We all have a list of start-ups we wish we had invested in, or entrepreneurs we courted who chose another firm. We don’t talk about it often, but its there. In the back of drawer or a sad evernote log. It’s like having your dream guy (or lady) ask someone else to the prom. It’s not fun.
So if you are an entrepreneur that has gotten the infamous VC “pass” email, take a step back and realize we’ve been in your shoes. We’ve been passed up for another firm, or having been an entrepreneur in another life, been passed up for capital. It’s part of the job, and part of this scary ecosystem.
It isn’t fun for a week, or two weeks, or several months - but you get back into the routine of things and it makes you want to work harder.
And, for the record, if Bessemer has been the source of your heartbreak, check out our anti-portfolio and send us an e-mail when your company files for an IPO. We’ll add you to the list.
The NBA Finals are an important, symbolic time in American culture. The success of one team out of many, triumphing against an entire league awaiting your downfall, plays perfectly into the idea of a ‘champion’. As the Finals draw close with the final two teams set to face each other, London-based artist Richard Swarbrick teamed up with ESPN to create an painting-style animation depicting the greatest moments in the history of the competition. Jordan’s flying windmill layup, Larry Bird victoriously leaping, LeBron cradling his first Larry O’Brien trophy – all of these moments are immortalized in a bold, flowing collage in vivid color. Prepare for tomorrow’s Game 1 matchup by taking a trip down memory lane above.
The Acquisition Question
A big acquisition is an exciting time for those in venture capital and technology as a whole (even if it isn’t an acquisitions that directly benefits you!)
The NYC tech landscape was in dire need of a large b2c exit like Tumblr, for all the implications around what we like to call a post-acquisition talent exodus (read: engineer exodus), future angel investor exuberance, and geographic sustenance (read: NYC legitimacy). For that, we salute you David Karp!
More specifically though, I have always wondered whether acquisitions bode well for the competitors that follow suit. Does a large acquisition in an adjacent market mean that there is room for similar acquisitions or does it mean that the ships have sailed and you were not chosen to come on board?
In the mobile advertising world, for example, Google made their bet with Admob, and Apple quickly followed with Quattro. No one expected, Millennial Media, to be the astounding success it was at the time of IPO in 2012. Other ad networks met a more undetermined fate, with no natural acquirers willing to pay upwards of several hundred million dollars and the IPO market drying up in preparation of Facebook’s $100 B affair.
Similarly, in the social media management and analytics space, Salesforce made a bet with both BuddyMedia and Radian6 in order to perfect an out-of-the-box marketing cloud solution. Most thought the market had picked its winners, but more acquisitions followed as Oracle acquired Involver and Google acquired Wildfire. Even now, several companies in the space are well-funded and growing significantly in revenue.
Is there an effective barometer to help figure out if you can continue to make bets in a space, or is a dried-up market harder to pinpoint before it is too late?
Checking it Off
Adrenaline. Miami, 2013.