Feb 29 - Mar 6 Flashcards
Series A Crunch
Series A funding typically holds steady. The ‘crunch’ is excessive demand for a limited supply of seed funding
Excessive amounts of seed funding means that over $1 billion evaporates each year.
The survival of the fittest filter makes it harder to raise a series A.
Follow-on Financing
40% of seeded companies go on to get follow-on financing
Sead deals in which VCs participate have a historically higher rate of getting follow-up financing
The best time to raise follow-on capital is when you don’t need it
Seed –> Series A transition
It is way better to increase the amount you plan to raise than decrease.
The most successful founders wait to raise, to demonstrate traction and hit proof-points
Keep your burn rate low until you have product-market fit. Give yourself opportunity to collect data. Risky to spend most of your money before launch
Founders’ happy ears are often fooled by they happy words of VCs to believe that VCs are more interested than they actually are. It’s their jobs to make calls and generate interest
Consider raising a larger seed round to give you runway needed to rack up more proof-points
Startup deaths - Rdio
Digital music service- pandora, spotify, last.fm are competitors
In a world where licensing is incredibly expensive, they tried to be sustainable and profitable to early. A better strategy in their world is to pursue astronomical growth and user volume over profitability (like spotify did)
Startup deaths- KiOR
Bio-fuels startup and joint venture between Khosla Ventures and BIOeCON
Poor hiring decisions as it staffed up. Preponderance of lab researchers with Ph.D.s, dearth of technical, operational talent.
Startup deaths- SideCar
On-demand driving service
Couldn’t compete with uber. Uber has insane amount of seed-findings and notoriously anti-competitive. Sidecar out-innovated uber, but could never win the market.
Startup deaths - Healthspot
Allows patients to have immediate access to medical diagnostics from doctors via video conferences and interactive digital health tools.
Struggled to foster and maintain consumer engagement, largely because of administration demands. It wasn’t truly an on-demand service, because people had to schedule in advance.
Startup deaths - flytenow
Connects aviation enthusiasts with local pilots and facilitates flight sharing
Federal aviation administration banned flight-sharing websites, and couldn’t be overturned
Vinod Khosla
Cofounder of Sun Microsystems - a company that created Java program language and Network File System (NFS)
Was Chairman and CEO for two years, before leaving to become a partner for VC firm Kleiner Perkins Caufield & Byers
Formed his own VC frim in 2004, Khosla Ventures
Startup death stats
Median time to die after raising financing= 20 months
Average time= 20 months
Median amount raised before raising financing= $1.3 million
Average amount= $11.3 million
Sun Microsystems
Founded in 1982- Company that created Java program language, Solaris Unix, and Network File System (NFS),
and also sold computer, software, and information technology.
Was acquired by Oracle in 2010 for $7.4 billion, and merged with Oracle USA to become Oracle America.
Fred Wilson
Venture capitalist
Founder of Union Square Ventures
Runs a blog A VC, which has garnered him some fame
Judge at Michael Bloomberg’s NYC BigApps competition
Union Square Ventures
Has invested in Web 2.0 companies like Twitter, Tumblr, Foursquare, Zynga, Kickstarter, and 10gen
Four square advertising
Foursquare audience network (FAN): re-targeting solution, brands target users (on phone) using anonymized data based on physical visits to locations.
Place-based ads: ads on post-check in screen of relevant categories.
Promoted places: drive new customers into store. Like paid search, and manifests in the ‘explore’ tab.
For small businesses: allows local businesses to target most valuable customers, payment happened only when ad is acted on. Ads only shown to customers near physical location. Ads only shown to customers near a business location and there is promotional flexibility.
Merchant claims - gives businesses control over their Foursquare listing, suite of tools and analytics to track check-ins, tips, etc.
Data deals - Foursquare gives anonymized location data to partners
For all services, Foursquare gets paid on a Cost-per-Action basis
- toggle for more information
- check-in within 72 hours of seeing the ad
Swarm
Foursquare spin-off (2014) and companion app
Allows users to share their locations with social networks.
