News > Venture Capital

Many startups delay IPOs too long, says Google's Maris
Venture Capital
<p>Here's a timely warning for Silicon Valley startups. A Google boss reckons too many have taken too long to go public, and they'll lose out by being too greedy or arrogant.</p> <p>Some start-ups may rue their decision to exploit the booming private markets to push for high headline valuations, rather than selling shares to the public, said Bill Maris, head of Google Ventures, one of California’s most active VC firms to the Financial Times. (paywall)<br /> “They’re setting the bar so inordinately high they’re making life difficult for themselves,” he said in an interview with the Financial Times. “There’s going to be some fallout: some of them will lose a lot of money.”</p> <p>Next year, many will be unable to raise more cash in the private markets or be forced to accept lower valuations, he predicted. Google Ventures, which is changing its name to GV, has backed more than 300 companies since its creation six years ago.</p> <p>The warnings signal a reversal of what became received wisdom during the latest tech boom, as venture capitalists courted entrepreneurs with promises of leaving them free to stay private rather than pushing them to cash out by taking an “exit” like an initial public offering.<br /> Photo: Charis Tsevis </p>
7 mistakes startup founders make when pitching investors
Venture Capital
<p>From making everyone you talk to sign nondisclosure agreements to burying bad news, here's what to avoid.</p> <p>No one who's trying to get their startup in front of a venture capitalist needs to be told how challenging that can be. But some of the trouble can come unwittingly from entrepreneurs themselves.</p> <p>Startup founders often make decisions that they think will protect their ideas but end up sabotaging them instead. Here are some of the most common and how to avoid them.<br /> 1. Opening The Conversation With An NDA<br /> My first time around as a startup founder, I refused to show my business plan to anyone without them first signing a nondisclosure agreement (NDA). I’m sure I missed funding opportunities as a result. I can’t offer many more details than that, though, because my company never had a chance to develop that far. By the time I got around to starting my second business, I couldn’t have cared less about NDAs. I knew that no one had the ability to execute my plan as well as I did. Sure, they could read my blueprints, but building it was another story.</p> <p>Entrepreneurs all need that confidence. Ideas are a dime a dozen. For all you know, the investor you're pitching might already be talking to another startup with similar ideas. Your team, your plan, and your ability to execute are more important than your "secret sauce."<br /> 2. Assuming Your Business Plan Is More Important Than Your Team<br /> Revenue projections, competitive analysis, and vision are all important, but they're all forward-looking. Investors want to know who's driving the bus right now. Are the goals of everyone on your team aligned? How have their past experiences prepared them to execute your business plan? Be able to explain how your team's track record sets your new venture up for success.</p> <p>3. Obsessing Over Control</p> <p>Stories about founders losing control of their companies to investors are ubiquitous. But most startups fail anyway, and captaining a sinking ship is cold comfort. Investors want to see startup founders delegate and share responsibility. You won’t be able to do everything yourself forever, and investors need to be able to see that you can accept help.</p> <p>Money is the same no matter who you get it from. When you’re looking for investors, look beyond the term sheet for other factors that differentiate them. Do they understand your space and your vision? Will they be able to make introductions to the right people on your behalf? Are they invested in you, or just in your company? When something isn’t going as planned, will they offer support and guidance, or just cut their losses and run?<br /> 4. Trying To Hide Bad News<br /> Your investors are on your side. When you win, they win. You’re running a startup, which means that investors don’t expect everything to go smoothly. No one likes hearing bad news—or delivering it. But investors would rather hear bad news now, when there’s an opportunity to fix things, than later when there isn't. Problems can compound quickly, and it’s easy to get in over your head. But whatever is happening probably isn’t as insurmountable as it seems.</p> <p>Good investors value consistency and transparency. They want to know you’re going to be honest about roadblocks and bring them up as early as possible.<br /> 5. Predicting Rapid Growth<br /> Anyone can draw a chart projecting rapid growth. It doesn’t mean anything, and it only makes you look naive and cocky to investors. Do the research and be sensible in your projections. VCs are looking for sustainable businesses, not pie-in-the-sky dreams. Realistic growth projections tell investors that you’ve carefully considered the market you want to enter and have done your homework.<br /> 6. Waiting To Think About Marketing<br /> Marketing should be a core part of your business plan from the beginning. This doesn’t mean starting an advertising campaign before you’ve written your first line of code. It means that if you don’t have a go-to-market strategy, then it doesn’t matter if you have a product. Investors need to see th
Deal flow: the technologies receiving the most investment from VCs [Chart]
Venture Capital
<p>Angel investors and venture capitalists put up with a lack of liquidity in there investments for a good reason. The ability to fund private, early-stage ventures allows these investors to get a pulse on industry trends before they fully materialize in front of the general public. If they play their cards right, it allows this group to get in on an Uber or an Airbnb years before anyone even knows it exists to receive a lucrative return.<br /> Deal Flow: The Technologies Receiving The Most Investment From VCs</p> <p>Here’s the geographic breakdown of venture capital by continent:</p> <p>Lastly, the majority of deals were led by the same usual suspects such as Sequoia, KPCB, and Andreessen Horowitz.:</p> <p>Original graphic by: Raconteur</p> <p>This story first appeared in ValueWalk.<br /> Photo: Patrick Nouhailler</p>
Startups don't actually create that many jobs, say economists
Venture Capital
Technology startups create jobs. It's the well worn mantra used every time governments extol the virtues of a booming startup industry.  But how many job do they create? Not that many, say the experts. Re/code has highlighted a recent paper from Oxford economists Thor Berger and Carl Benedikt Frey that is just one of several pieces of research that show tech
As the money gets tighter, VC demands get more absurd
Venture Capital
Startup valuations maybe getting more reasonable, but the requests they receive from venture capitalists are not. In fact, the two might even be inversely correlated. Re/code lists just four examples of just how out-of-hand VCs are getting as the power balance shifts from the entrepreneurs to the ones with the cash. As the rout in valuations continues, VCs' heavy-handedness with
More and more corporates are turning to startups for innovation
Venture Capital
As big corporations feel the pressure to innovate, more of them are setting up startup programs to get them out of a creative rut. Forbes  reports that the number of corporate accelerator programs reached unprecendented levels in 2015. In the past year, 31 programs were launched globally with pretty much an even split between the U.S.(10), Europe and Middle East (11),
Uber's enemies close in as rivals form pact
Venture Capital
We have already reported extensively  on the anti-Uber alliance, and on Thursday it was made official.  The ride-sharing app's  global rivals - Lyft, Didi Kuaidi, GrabTaxi and Ola - have now formed a blood pact covering every market where Uber operates. In a statement on behalf of the Alibaba-Softbank-backed hunting pack, Lyft said: Together, these companies now cover nearly all of Southeast
Basecamp founder blasts VCs in satirical press release
Venture Capital
Unicorns have gone from idealistic fantasies to a joke for many in Silicon Valley. Basecamp founder Jason Fried jumped on the trend of blasting venture capitalists for their flippant valuations of companies in a Medium post Tuesday. Much like the recent anonymous book "Iterating Grace" that rips on the power and influence of VCs in the startup world, Fried wrote a
Has Didi Kuaidi got Uber's billion-dollar China business up against the ropes?
Venture Capital
<p>Venture capital-backed taxi app giant Uber has sunk a lot of cash into breaking China. It even raised $1 billion in funding last August purely so it could spin off its China unit and focus on grabbing market share in the country. Unfortunately, Uber’s Chinese rival, Didi Kuaidi, claims the Silicon Valley-based firm’s China business is taking a bit of a beating. </p> <p>By its own reckoning, the Chinese unicorn -- which was formed out of a merger between Didi Dache and Kuaidi Dache earlier this year -- claims it is the market leader in all of 259 cities where is provides private-car hailing service. It also claims a 90% market share in the country’s capital Beijing where the company gets over 1 million ride requests, Forbes reports.  </p> <p>Of course Didi's data should be taken with a large grain of salt, but there are third party reports which still paint an equally grim picture for Uber. </p> <p>Last month, Chinese research firm Analysys International released a Chinese report also showing that Didi leads China’s private-car ride-hailing market by a wide margin, with company representing 83.2% of active users. Uber's share comes in at 16.2%. Ouch. </p> <p>Still, that's 16.2% of a very large market, but is it enough to justify the massive amounts Uber has already piled into its China business?  Uber is now fighting a war on many fronts and it 's looking less likely that it will grow that share by a significant margin.  <br /> Photo: Boxing AIBA</p>
Zenefits tops list of 2015's fastest growing unicorns
Venture Capital
&nbsp; Cloud-based HR software developer Zenefits was the fastest growing unicorn this year -- in percentage terms -- growing by a staggering 800%. The startup, which tops a list compiled by CB Insights, was last valued at $4.5 billion in May when it raised $500 million. The round was equal to the company’s entire valuation a year ago when it raised