I could not be happier with the end product. Truly, I am ecstatic.
I have set myself a goal to challenge the New York Times bestseller list and to reward my loyal supporters for their endearing love: so, here are the deals.
In a nutshell,
Basics: Buy 1 book (cost $19) and receive $120 in bonuses
Incremental Chinnovator: Buy 3 books (cost $57) and receive $250 in bonuses
Disruptive Chinnovator: Buy 10 books (cost $190) and receive $1025 in bonuses
Uber Chinnovator: Buy 5000 books or best promoter of Chinnovation wins a chance of a lifetime 5-day exclusive trip to China.
- Complimentary Invites to by-invitation-only Founderspace events (Priceless). Founders Spacebrings together founders, angels, VCs, advisors & innovators to help startups rock the world.
- Valuator (On Ipad and Iphone) - The only app on ITunes which calculate the value of your company ($1.99)
Hear from the world’s leading faculties from Peking University, Fudan University, Tsinghua University, as well as senior Chinese government and business leaders on winning business strategies in China. Learn concepts and topics such as:
Building a heightened awareness of the political, cultural, social, and economic issues facing Chinese companies in global markets.
Acquire the frameworks to develop and implement strategies that help you reinvent yourselves and stay ahead of the competition.
Formulating and administering a successful China strategy in the face of economic uncertainty and fierce competition. This will also be an invaluable opportunity to establish a privileged network of peers from leading companies!
BUSINESS MATCHING
Engage in exclusive meetings with government leaders and senior executives of China state-owned and private enterprises. From high profile, young executives taking companies public to mainland entrepreneurs who are redefining the business landscape, have you ever wonder: (i) How did Richard Chang, CEO of SMIC, managed risk and diversified its product its product line to catch up with its competitors? (ii) How did Zhang Tao, CEO of Dianping, start a ZAGAT-inspired user-review site for restaurants and establish a continuous process of innovation?
Here is your chance to explore “Chinovation” and get your answers straight from the lion’s (or the dragon’s) mouth.
VIP TRAVEL
Experience China like never before. Tour highlights include imperial palaces, ancient temples, colonial-era architecture, water gardens, rustic villages, local markets and stunning landscapes to help you gain a holistic appreciation of this 5000-year old civilization of 1.3 billion people, both culturally and historically.
Also includes roundtrip economy airfare from and back to the U.S. (or comparable destination)
I’m almost 100% that I’ll be there to show you around.
If you want to go for the gold, get amped and promote Chinnovation best by 1 Feb 2011 and tell me what you did in the comments. Measure your impact (clicks, sales, etc.) whenever possible.
If you are the best promoter, judged by me and a panel of friends, you get to go to China for one trip of a lifetime… for free. I will almost definitely be in attendance.
Date: March 2011 or based on your availability
Total value: Priceless (for 5000 books or best promoter of Chinnovation)
David is a friend whom I got to know in my journey as an author. I thank him for his support of Way Of The VC. He ordered a signed copy of Way Of The VC to be shipped to his home in Canada - it was a flattering gesture and the first time that I realised that the autographed copy of my book was in such demand.
One kind gesture deserves another - I wanted to help him pass a message. Genesis Facility Foundation, which David founded, has launched the Canada India Sustainable Technology Venture Competition (CISTVC). The Competition will be between qualified management and technical schools/institutes in Canada and their counterparts in India and will invite graduate students (final year) from respective MBA Programs, Science and Technology Programs, Climatology and related Engineering Programs, to develop commercially viable, clean and sustainable technologies for combating and reversing climate change. This would be a Canada-Indian education event which would propel the best and brightest students into thinking of climate change mitigation and develop alternative energy solutions. Schools and institutes may send up to two representative teams to the competition. Each team would submit a business plan for its technology.
The business plans must meet traditional return-on-investment and profitability standards, while demonstrating eco-efficiency and achieving sustainability on a project-by-project basis. Approximately eight qualifying teams will be selected to make their presentation and compete at the Finals in the host/partner institution. A panel of judges will be composed of eminent faculty, venture capitalists and industrialists. Winners of the CISTVC will receive cash awards and will be introduced to top tier venture capitalists.
The CISTVC will be the first of a series of Bilateral Sustainable Technology Venture Competitions with US India and US China Sustainable Technology Venture Competitions being planned to follow the CISTVC.
Josh Lerner, Jacob H. Schiff Professor of Investment Banking at Harvard Business School Many gems:
Q Private Equity in Asia - too much money, too little deals and signs of bubble? A The ugly secret - returns of PE in general are 15 percent per annum. This is not horrible, or great. If you look at subset of private equity mkts in developing markets - returns per annum drop to five percent. Private Equity magic which works in states and Europe does not work in emerging mkts.
Two possibilities: First twenty years of PE market in US saw mediocre returns. Maturation process similar in the states in developing markets. Over time, PE seem to do much better. Growing pains and will still mature. Other skeptical reason is that investor rushing into this category. No intellectual reason why PE is not effective or not effective
Betting on emergent technology in Asia is not easy. Trend has been for entrepreneurs to create application for existing technology. Another trend is to move away from venture technology (e.g. Budget airlines startup business) in emergent mkts
RMB funds in China: Introduce a wedge in a lot of funds, create two set of investors in one fund. Reminds us of Biotech fighting with IT investor in US - different organizational complexity and different lp perspective. Pe already complex enough in china
Had breakfast with Tim Draper, Founder and Managing Director of Draper Fisher Jurvetson, a leading venture capital firm. He sportingly obliged to my request to provide an inspirational spiel to youths in Singapore thinking about entrepreneurship. Sneak preview below. Charming, lilting and vintage Tim Draper.
San Francisco — Recurve, a developer of software that analyzes the energy efficiency of residential buildings, has raised $8 million in its second round of venture capital, which was led by Lowe’s, the national building materials retail chain.
Recurve was founded in 2004 and provides home energy audits, as well as installing solar systems. The company’s software helps home energy performance contractors to more accurately and profitably manage home energy auditing and retrofitting projects.
Here is an example from angel investing based on data I’ve been looking at data recently: 68% of all angel investors lose all their money, primarily because they do too few investments. A change in portfolio size from 5 to 10 investments and 5 to 25 investments increases return at the beginning of the top quartile by 54% and 200%, respectively. (The angel at the beginning of the top quartile has better returns than 75% of angels and worse returns than 25% of angels.) The distribution of angel returns is surely not similar to similar to iPhone apps so the example is purely illustrative.
If the data is true, time to take out my chequebooks and make more investments. One winning model is Ron Conway's many bite-sized 50k deals.
"One VC told me a story about a failed IPO for one of their portfolio companies a few years ago. He told me the legal and accounting bill they got after the IPO was pulled was $3.5mm. Yup, $3.5mm for an offering that was not successful.
The second story has a happier ending. It was about an IPO of a company that happened recently. The company was able to get public. It has revenues of almost $100mm a year and is profitable. The company raised about $75mm in the offering. And it is now trading at a market cap of around $300mm. That is a lower valuation than the company would be able to get in a late stage private financing in my opinion."
I agree with Fred.
These days, almost every potential IPO is dual-tracked, meaning that M&A conversations are also entertained in parallel. The IPO filing usually brings any potential strategic M&A buyers to the table. The current window for IPOs seems to be closed for a while, but it will open again, as it always does, within the next year or two. At the same time, M&A has always been the predominant exit vehicle for all venture-backed companies.
Focusing on M&A as the primary exit strategy achieves three things: It means you have to be capital efficient, you need to be disciplined on valuations, and you need a larger percentage of your portfolio contributing to the returns of the fund. VCs should also look for corporate investors who might later want to acquire the start-up.
Super angels as a category is an important category to be the best of the angel investors especially for very early stage companies. The label being very silicon valley centric right now is not necessary the right label. In my world a super angel is someone who is regularly making investments in the same domain so if they invest in internet companies they regularly make their investments over time. I like to ask the question when somebody says they’re an angel investor I ask them how many investments they’ve made in the last 12 months. And a surprising number of people say zero. I don’t consider that person to be an active angel investor. There is a very big difference between someone who has made zero investments in the last 12 months, someone who has made 1 investment in the last 12 months and somebody who has made 5 and somebody who has made more than 5. I take those to be the break points – 0, 1 and 5. Super angels are people who, in my mind, have made more than 5 investments in the last 12 months.
Most angels claim that venture capitalists are neither venture nor capitalists. They try to take very safe and rather slow decisions, which are not very good nor entirely rational. And they don't have as much money as they claim.
Of course, venture capitalists view angels as rivals, getting to invest in companies before the venture capitalist does. Yet angels, often lacking the resources to put more money into an investment, fail to capture those very high returns. Hence the heavy dilution they face becomes a source of real tension.
Business angels are wealthy individuals who use their own cash – and often their entrepreneurial and business skills – to back early stage companies. They are to be distinguished, in terms of their net worth and probably business acumen, from the alternative source of very early stage funding, namely the three Fs – friends, family and fools. The monicker derives from the rich financiers of Broadway theatre productions and is intensely misleading. Whereas the Broadway financiers were genuinely engaged in acts of philanthropy, business angels are, or should be, hard-nosed businessmen involved in a commercial relationship, and not always necessarily behaving very angelically. The wider catch-all term 'private investors' is probably more appropriate, but the angel term remains common parlance (and so will be used here).
Private investors tend to invest in the industries in which they have:made money, and which they feel they know and understand.
Angels and venture capitalists inhabit the, same ecosystem. All too often, this crucial fact gets lost. Times are rough and animosities flare as angels see their stakes crushed in heavily dilutive later financing rounds. Yet this. is precisely when it is all the more imperative that the two parties work together symbiotically. When the bulk of venture capitalists are moving to larger, later • stage investments, credible angels are needed more than ever to step in at the outset. Otherwise venture firms will, in time, be very stuck for deal flow. A logical response might be for venture capitalists to cultivate dedicated networks of the more sophisticated angels. In a funding bear market, some angels will say they intend to finance a company to profitability without planning to involve venture financiers at all.
I love Felda Hardymon- I have a little notepad which contains gems of Hardymonism from his HBS classes. His firm came up with the anti-Portfolio which the list of all of the dumb decisions and great deals BVP passed up on. Some of my favorites include:
E-Bay: ""Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass.""
PayPal: "David Cowan passed on the Series A round. Rookie team, regulatory nightmare, and, 4 years later, a $1.5 billion acquisition by eBay."
and finally, Google: "Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine”. Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?”"
You submit your story. Every month, I pick two finalists. Everyone votes. And the winner goes into a featured case in my next book. Winner also gets prominently featured as Feature Story on Way Of The VC. Not to mention you get to profile yourself/your company to thousands of venture capitalists, angels and potential customers.
My 3rd book is a MBA textbook (New Venture Creation - Entrepreneurship for the 21th Century in Asia) that I have been commissioned to co-author for Mcgraw-Hill, one of the world's largest textbook publishers. This will be used as the standard MBA entrepreneurship text for top-tier MBA programs. I trust that this would be a significant milestone for your company, in addition to gaining a lot of exposure to investors, venture capitalists, angels and potential customers.
Winner Of the month also gets a complimentary electronic version of "Way Of the VC - Top Venture Capitalists On Your Board."
It's hard to believe, but only one venture-backed company has held an initial public offering since medical device maker CardioNet Inc. went public a year ago today. That honor goes to computing hosting services provider Rackspace Hosting Inc., whose IPO on Aug. 8 saved venture capital firms from laying a goose egg for the entire 12-month period.
Even during the worst of times when the dot-com bubble burst and tumbleweeds rolled in, we never saw less than 10 venture-backed IPOs in any 12-month period. This underscores the desperate times for liquidity-starved venture capitalists, who have always depended on IPOs as the best way to pull in a giant internal rate of return.
After no VC-backed company went public in the second quarter - the first such quarter since 1978, according to the National Venture Capital Association - the trade group went so far as to declare the situation "a capital markets crisis for the start-up community."
Some in the industry snickered at the NVCA's use of "crisis" at the time, but it's become abundantly clear since then that the IPO process for small companies is indeed flawed - from how institutional investors get introduced to young companies to the process involving analyst coverage of these companies.
The situation sure has the industry in a tizzy. The NVCA late last year established task forces made up of securities experts to try to find ways the private sector, and possibly Congress, can fix the IPO process. Those recommendations haven't yet been released.
Some venture capital firms have taken matters into their own hands, forming a new venture, called InsideVenture Inc., that affords institutional investors opportunities to meet with executives of venture-backed companies along with giving them online access to confidential information about the companies. The idea is to get the qualified institutional buyers to buy in before the IPO, thereby giving them more access to shares, and to give companies more access to long-term investors to mitigate a slide in stock price. InsideVenture is holding its first conference next week in Santa Barbara, Calif.
What also might help investors and entrepreneurs is a private stock market for exchanging shares of venture-backed companies, where entrepreneurs and VCs could list their stock for sale to potential investors.
That market might be around the corner. Nasdaq has been looking to launch an unregistered venture capital market so institutional and accredited investors can trade stakes in early-stage companies. Dow Jones Newswires, citing a presentation given by Nasdaq to the Securities and Exchange Commission, reported today that Nasdaq wants the SEC to change a rule that allows only qualified institutional investors, or QIBs, to trade positions in the unregistered securities market, and to extend a safe-harbor rule to accredited investors. Currently, Nasdaq's Portal market, which launched two years ago, only allows these QIBs to trade shares. (Read the Newswires story here via VentureWire.)
These drastic measures should help, but it's also clear that VCs need to build more financially healthy companies. Of the 14 non-health-care venture-backed companies that were left in IPO registration at the end of the year, six produced a profit in 2007, while only three generated revenue above $100 million, the oft-mentioned threshold underwriters use to gauge whether a company is ready for an IPO.
This brings us back to Rackspace. How did it manage to go public at a time when the stock markets were badly bruised? The answer is simple: Rackspace makes money. It posted 2007 revenue of $362 million, up 62% from the year before and better than nearly all companies in registration for IPOs. It has also been profitable for at least five years, a rarity among start-ups.
A month after Rackspace's IPO, the collapse of Lehman Brothers Holdings Inc. sent the stock market into a tailspin, making it nearly impossible for any company to go public. But once the Dow Jones Industrial Average trudges back upwards and loses the volatility that characterized most of 2008, venture capitalists may have their time in the sun again. Hopefully by then, they will have ironed out some of the kinks in the IPO process - and revenue-producers like Rackspace won't be a rarity among venture-backed companies.
Vinod remains one of the authority on venture capital. His three simple maxims still rings true 1) Look for people who can execute the right idea 2) Look for a large market (0-billion) capable of disruption 3) Look for a technology which is capable of disrupion
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