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VC ADVENTURE
Nietzsche has so many famous quotes it’s sometimes hard to choose just one (most have heard that which doesn’t kill you makes you stronger although I suppose few realize that it was the German philosopher who first penned it). My favorite, perhaps, is: there are no beautiful surfaces without a terrible depth.I like it in particular because in many ways it describes Nietzsche himself. ABOUT - VC ADVENTURE Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. ARCHIVE - VC ADVENTURE - SETH LEVINE Designing the Ideal Board Meeting Series 5 Articles DiversitySTARTUP COMMUNITIES
I’ve always loved Brad’s Startup Communities – it’s long been my favorite of his books, built upon ideas that are clearly stating the test of time. In it, he talks about the key ingredients to building a startup community and talks about our experience in Boulder – one of the first startup communities to really thrive outside of the traditional tech hotbeds of the coast (but HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS This post is going to sound like an infomercial except this is 100% true and I’m not trying to sell you anything. About 8 months ago my doctor told me that I had high cholesterol (242 in total) and that it needed to come down or he wanted to put me on a statin (Lipitor, or something like that). Apparently cholesterol runs in my family (my dad and sister both have high cholesterol) and WHAT'S A FAIR 409A DISCOUNT? Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the BOARD OBSERVER VS. BOARD MEMBER Venture capitalists generally participate in boards in one of two fashions – either as actual board members or as board observers (see Brad and Jason’s post on Term Sheets – Board of Directors — for more information on how we take positions on boards). As an associate at Mobius I was not able to take actual board seats, so I took the board observer position in the companies I workedVC ADVENTURE
Nietzsche has so many famous quotes it’s sometimes hard to choose just one (most have heard that which doesn’t kill you makes you stronger although I suppose few realize that it was the German philosopher who first penned it). My favorite, perhaps, is: there are no beautiful surfaces without a terrible depth.I like it in particular because in many ways it describes Nietzsche himself. ABOUT - VC ADVENTURE Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. ARCHIVE - VC ADVENTURE - SETH LEVINE Designing the Ideal Board Meeting Series 5 Articles DiversitySTARTUP COMMUNITIES
I’ve always loved Brad’s Startup Communities – it’s long been my favorite of his books, built upon ideas that are clearly stating the test of time. In it, he talks about the key ingredients to building a startup community and talks about our experience in Boulder – one of the first startup communities to really thrive outside of the traditional tech hotbeds of the coast (but HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS This post is going to sound like an infomercial except this is 100% true and I’m not trying to sell you anything. About 8 months ago my doctor told me that I had high cholesterol (242 in total) and that it needed to come down or he wanted to put me on a statin (Lipitor, or something like that). Apparently cholesterol runs in my family (my dad and sister both have high cholesterol) and WHAT'S A FAIR 409A DISCOUNT? Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the BOARD OBSERVER VS. BOARD MEMBER Venture capitalists generally participate in boards in one of two fashions – either as actual board members or as board observers (see Brad and Jason’s post on Term Sheets – Board of Directors — for more information on how we take positions on boards). As an associate at Mobius I was not able to take actual board seats, so I took the board observer position in the companies I worked ABOUT - VC ADVENTURE Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. ARCHIVE - VC ADVENTURE - SETH LEVINE Designing the Ideal Board Meeting Series 5 Articles DiversityWELCOME TO FOUNDRY
I send a note to each new company that I work with at Foundry that sets up what I hope will be the key tenants of our working relationship. I thought it might be fun to post it publicly – I think it gives meaningful insight into how all of us at Foundry work with the company in which we have an investment. I’m psyched to be moving forward with our investment! I thought it would be helpful WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling HOW STARTUPS ACTUALLY GROW We’ve all seen the growth curve on the left – all successful startups strive for a version of one. But in reality, the notion of a smooth growth curve actually masks how most successful companies truly grow. Our experience at Foundry suggests that if you blow up the growth curve you’ll find that companies grow linearly and that what creates the log curve is a series of small changes that HOW TO GET A JOB IN VENTURE CAPITAL One of the most frequent questions I get asked is “how do I get a job in venture?” In fact, I’ve written two posts over the years on this topic – one way back in 2005 and a follow-up to that a few years later in 2008 (the 2nd of the post is the more practical advice if you’re pressed for time; or just keep reading below). A lot has changed in the past 10 years since I wrote my most WHAT DOES IT MEAN TO BE AN "EXECUTIVE" We have active and lively Foundry CEO and Portfolio Executives email lists. They are among the things that I love the most about the community we’re creating at Foundry. I love watching execs across the portfolio (who refer to each other as “Foundry cousins”) help each other out and share ideas. It’s an important reminder that great companies are created not by solo, heroic efforts HOW TO VALUE YOUR SAAS COMPANY If you read my blog regularly you know I love (LOVE) metrics. So no surprise that when River Cities Capital released an overview of SaaS operating and valuation benchmarks, I hung on every juicy detail. It’s chocked full of them – I’d highly recommend your reading the full report. But if you’re too busy for that, below are some of the key take-aways. I’ve added color commentary of my THE MARKETS ARE GREAT . . . BUT VENTURE OUTCOMES HAVEN'T A few years back I blogged about the hard data behind venture outcomes and the challenge of creating a venture portfolio that produces strong returns. That blog post – which turned into one of my most read posts ever – grew out of a study done by Correlation Ventures showing the distribution of outcomes across over 21,000 financings during the years 2004-2013 as well as some of my own HAS CONVERTIBLE DEBT WON? AND IF IT HAS, IS THAT A GOOD Paul Graham, founder of Y-Combinator, sent out a tweet on Friday saying: “Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.” It’s an interesting data point on Y-Combinator companies, but is this truly a macro trend? Have convertible notes really won? And if so is that good for start-ups? Good forVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to VENTURE ECONOMICS ARCHIVES The Correlation study produced a lot of interesting data and showed that the typical “1/3, 1/3, 1/3” model that many VCs talk about was significantly more optimistic than the reality of typical venture returns. The vast majority (almost 2/3rds) of venture financings fail to return capital. And only about 4%. PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. ENTREPRENEURSHIP BEHIND THE WALL: A TRIP TO PALESTINE A little background and context. Palestine can be a rough place. GDP per capita is low – about US$ 1,650 per capita. The overall labor force participation rate is only 43% and unemployment is over 20%. The population is very young – 70% are below the age of 30 (and 40% younger than 15) and youth unemployment is over double the overallrate.
HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some BOARD OBSERVER VS. BOARD MEMBER Venture capitalists generally participate in boards in one of two fashions – either as actual board members or as board observers (see Brad and Jason’s post on Term Sheets – Board of Directors — for more information on how we take positions on boards). As an associate at Mobius I was not able to take actual board seats, so I took the board observer position in the companies I workedVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to VENTURE ECONOMICS ARCHIVES The Correlation study produced a lot of interesting data and showed that the typical “1/3, 1/3, 1/3” model that many VCs talk about was significantly more optimistic than the reality of typical venture returns. The vast majority (almost 2/3rds) of venture financings fail to return capital. And only about 4%. PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. ENTREPRENEURSHIP BEHIND THE WALL: A TRIP TO PALESTINE A little background and context. Palestine can be a rough place. GDP per capita is low – about US$ 1,650 per capita. The overall labor force participation rate is only 43% and unemployment is over 20%. The population is very young – 70% are below the age of 30 (and 40% younger than 15) and youth unemployment is over double the overallrate.
HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some BOARD OBSERVER VS. BOARD MEMBER Venture capitalists generally participate in boards in one of two fashions – either as actual board members or as board observers (see Brad and Jason’s post on Term Sheets – Board of Directors — for more information on how we take positions on boards). As an associate at Mobius I was not able to take actual board seats, so I took the board observer position in the companies I worked ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
VC ADVENTURE
A 20x returner for a fund that on average invests $3-$3.5M in a company doesn’t return that fund. Taking the most aggressive end of these numbers would still only have this one company returning 70% of the fund’s capital. If you were going to have several of these, of course, that would work out for your fund. THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the THE COVID CHURN YOU'RE NOT THINKING ABOUT The Covid Churn You’re Not Thinking About. Early on in Covid many businesses, of course, worried about the ways that Covid would affect their business. Many made various contingency plans and quite a few adjusted spending (marketing, sales, hiring, etc) in anticipation of Covid’s impact. While in hindsight I think many (in the tech world,I
LEGAL - VC ADVENTURE - SETH LEVINE I’ve been advised that I need to have a legal disclaimer on my blog. So here’s my disclaimer. I’m responsible for what I say, and all comments are my own personal responsibility. They – and this blog – are in no way affiliated with Mobius Venture Capital, Foundry Group or any other company that I have any involvement in. If I’ve made a mistake, it’s my fault. You should not HOW TO VALUE YOUR SAAS COMPANY Companies that scored between 20% and 40%, 5.3x, 0%-20% 3.8x and below 0% 1.9x. Healthy SaaS companies balance growth and profitability. At IPO only 7 of 39 companies that have gone publics since 2013 had positive EBITDA. More on this below, but growth is more important than profitability, subject to the balance in the rule of 40 note above. THE ROLE OF COMPANY ADVISORS (PART II) Part II of a series of guest posts by Gerald Joseph on the role of company advisors. If you missed it, see Part I here. There are various types of advisors with differing skill sets and motivations. The key is to work with Advisors that have skill sets that help solve your company’s current and near-term problems. Here is a fractional categorization of the various types of Advisors Startups HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some HAS CONVERTIBLE DEBT WON? AND IF IT HAS, IS THAT A GOOD Paul Graham, founder of Y-Combinator, sent out a tweet on Friday saying: “Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.” It’s an interesting data point on Y-Combinator companies, but is this truly a macro trend? Have convertible notes really won? And if so is that good for start-ups? Good for VENTURE OUTCOMES ARE EVEN MORE SKEWED THAN YOU THINK The typical “successful” venture portfolio is often described as having the following outcome: 1/3 of companies fail 1/3 of companies return capital (or make a small amount of money) 1/3 of companies do well Fred Wilson, for example, described this a few years ago: I’ve said many times on this blog that our target batting average is “1/3, 1/3, 1/3” which means that we expect to loseVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling ENTREPRENEURSHIP BEHIND THE WALL: A TRIP TO PALESTINE A little background and context. Palestine can be a rough place. GDP per capita is low – about US$ 1,650 per capita. The overall labor force participation rate is only 43% and unemployment is over 20%. The population is very young – 70% are below the age of 30 (and 40% younger than 15) and youth unemployment is over double the overallrate.
I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some BOARD OBSERVER VS. BOARD MEMBER Venture capitalists generally participate in boards in one of two fashions – either as actual board members or as board observers (see Brad and Jason’s post on Term Sheets – Board of Directors — for more information on how we take positions on boards). As an associate at Mobius I was not able to take actual board seats, so I took the board observer position in the companies I workedVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling ENTREPRENEURSHIP BEHIND THE WALL: A TRIP TO PALESTINE A little background and context. Palestine can be a rough place. GDP per capita is low – about US$ 1,650 per capita. The overall labor force participation rate is only 43% and unemployment is over 20%. The population is very young – 70% are below the age of 30 (and 40% younger than 15) and youth unemployment is over double the overallrate.
I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some BOARD OBSERVER VS. BOARD MEMBER Venture capitalists generally participate in boards in one of two fashions – either as actual board members or as board observers (see Brad and Jason’s post on Term Sheets – Board of Directors — for more information on how we take positions on boards). As an associate at Mobius I was not able to take actual board seats, so I took the board observer position in the companies I worked ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
VC ADVENTURE
A 20x returner for a fund that on average invests $3-$3.5M in a company doesn’t return that fund. Taking the most aggressive end of these numbers would still only have this one company returning 70% of the fund’s capital. If you were going to have several of these, of course, that would work out for your fund. THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the THE COVID CHURN YOU'RE NOT THINKING ABOUT The Covid Churn You’re Not Thinking About. Early on in Covid many businesses, of course, worried about the ways that Covid would affect their business. Many made various contingency plans and quite a few adjusted spending (marketing, sales, hiring, etc) in anticipation of Covid’s impact. While in hindsight I think many (in the tech world,I
STARTUP COMMUNITIES
Robust startup environments began to develop in communities across the United States as entrepreneurship became more and more democratized. These changes appear to be accelerating due to Covid-19, as more people flee larger cities and the wide-spread adoption of technologies that enable seamless remote working has become even more rapid. LEGAL - VC ADVENTURE - SETH LEVINE I’ve been advised that I need to have a legal disclaimer on my blog. So here’s my disclaimer. I’m responsible for what I say, and all comments are my own personal responsibility. They – and this blog – are in no way affiliated with Mobius Venture Capital, Foundry Group or any other company that I have any involvement in. If I’ve made a mistake, it’s my fault. You should not HOW TO VALUE YOUR SAAS COMPANY Companies that scored between 20% and 40%, 5.3x, 0%-20% 3.8x and below 0% 1.9x. Healthy SaaS companies balance growth and profitability. At IPO only 7 of 39 companies that have gone publics since 2013 had positive EBITDA. More on this below, but growth is more important than profitability, subject to the balance in the rule of 40 note above. HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some THE ROLE OF COMPANY ADVISORS (PART II) Part II of a series of guest posts by Gerald Joseph on the role of company advisors. If you missed it, see Part I here. There are various types of advisors with differing skill sets and motivations. The key is to work with Advisors that have skill sets that help solve your company’s current and near-term problems. Here is a fractional categorization of the various types of Advisors Startups HAS CONVERTIBLE DEBT WON? AND IF IT HAS, IS THAT A GOOD Paul Graham, founder of Y-Combinator, sent out a tweet on Friday saying: “Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.” It’s an interesting data point on Y-Combinator companies, but is this truly a macro trend? Have convertible notes really won? And if so is that good for start-ups? Good forVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail toSTARTUP COMMUNITIES
Robust startup environments began to develop in communities across the United States as entrepreneurship became more and more democratized. These changes appear to be accelerating due to Covid-19, as more people flee larger cities and the wide-spread adoption of technologies that enable seamless remote working has become even more rapid. PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. WHAT'S A FAIR 409A DISCOUNT? Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the BOARD OBSERVER VS. BOARD MEMBER Small companies do not need "observers" on the board. Let the VC negotiate for--pay for--the privilege of two seats. The observer thing is a scam to get a second seat for free. Observers may not vote, but they opine, meddle, politic and interfere at least as much as a regular board member; maybe more because they are usuallyinexperienced.
VC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail toSTARTUP COMMUNITIES
Robust startup environments began to develop in communities across the United States as entrepreneurship became more and more democratized. These changes appear to be accelerating due to Covid-19, as more people flee larger cities and the wide-spread adoption of technologies that enable seamless remote working has become even more rapid. PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. WHAT'S A FAIR 409A DISCOUNT? Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the BOARD OBSERVER VS. BOARD MEMBER Small companies do not need "observers" on the board. Let the VC negotiate for--pay for--the privilege of two seats. The observer thing is a scam to get a second seat for free. Observers may not vote, but they opine, meddle, politic and interfere at least as much as a regular board member; maybe more because they are usuallyinexperienced.
ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
ARCHIVE - VC ADVENTURE - SETH LEVINE TechStars (1) The New Builders (1) Uncategorized (142) VC Bloggers (1) Venture Capital (70) Venture Economics (22) Adoption angellist angellist syndicates boulder bubble colorado company building company creation company culture Conferences efco effective communication email Entrepreneurship Foundry Companies foundry group Future of VCGlue
THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the THE COVID CHURN YOU'RE NOT THINKING ABOUT The Covid Churn You’re Not Thinking About. Early on in Covid many businesses, of course, worried about the ways that Covid would affect their business. Many made various contingency plans and quite a few adjusted spending (marketing, sales, hiring, etc) in anticipation of Covid’s impact. While in hindsight I think many (in the tech world,I
STARTUP COMMUNITIES
Robust startup environments began to develop in communities across the United States as entrepreneurship became more and more democratized. These changes appear to be accelerating due to Covid-19, as more people flee larger cities and the wide-spread adoption of technologies that enable seamless remote working has become even more rapid. LEGAL - VC ADVENTURE - SETH LEVINE I’ve been advised that I need to have a legal disclaimer on my blog. So here’s my disclaimer. I’m responsible for what I say, and all comments are my own personal responsibility. They – and this blog – are in no way affiliated with Mobius Venture Capital, Foundry Group or any other company that I have any involvement in. If I’ve made a mistake, it’s my fault. You should notWELCOME TO FOUNDRY
I send a note to each new company that I work with at Foundry that sets up what I hope will be the key tenants of our working relationship. I thought it might be fun to post it publicly – I think it gives meaningful insight into how all of us at Foundry work with the company in which we have an investment. I’m psyched to be moving forward with our investment! I thought it would be helpful WHAT'S THE OPTIMAL PORTFOLIO STRATEGY FOR A VENTURE FUND Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling WHAT DOES IT MEAN TO BE AN "EXECUTIVE" An executive thinks like the CEO first. Their first team is the whole company. They have a deep sense of the market, how the business operates together as a machine. Their particular department (even their role) is the secondary consideration. An executive spends 80% of her time thinking about what we need to accomplish as a company, andhow
HAS CONVERTIBLE DEBT WON? AND IF IT HAS, IS THAT A GOOD Paul Graham, founder of Y-Combinator, sent out a tweet on Friday saying: “Convertible notes have won. Every investment so far in this YC batch (and there have been a lot) has been done on a convertible note.” It’s an interesting data point on Y-Combinator companies, but is this truly a macro trend? Have convertible notes really won? And if so is that good for start-ups? Good forVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
ARCHIVE - VC ADVENTURE - SETH LEVINE TechStars (1) The New Builders (1) Uncategorized (142) VC Bloggers (1) Venture Capital (70) Venture Economics (22) Adoption angellist angellist syndicates boulder bubble colorado company building company creation company culture Conferences efco effective communication email Entrepreneurship Foundry Companies foundry group Future of VCGlue
VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of DESIGNING THE IDEAL BOARD MEETING Designing the Ideal Board Meeting. This is the first of a multi-part series on Board Meetings. The question of what the ideal board meeting looks like comes up quite a bit in my world and I’m hoping to add my voice to the debate through a few posts (with what I hope will be clear and actionable advice). We’ll cover the creation of a board I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. ENTREPRENEURSHIP BEHIND THE WALL: A TRIP TO PALESTINE A little background and context. Palestine can be a rough place. GDP per capita is low – about US$ 1,650 per capita. The overall labor force participation rate is only 43% and unemployment is over 20%. The population is very young – 70% are below the age of 30 (and 40% younger than 15) and youth unemployment is over double the overallrate.
BOARD OBSERVER VS. BOARD MEMBER Small companies do not need "observers" on the board. Let the VC negotiate for--pay for--the privilege of two seats. The observer thing is a scam to get a second seat for free. Observers may not vote, but they opine, meddle, politic and interfere at least as much as a regular board member; maybe more because they are usuallyinexperienced.
HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that someVC ADVENTURE
Seth Levine's VC Adventure. It’s Boulder Startup Week and there is a great lineup of events happening all week. I was really grateful when Dave Mayer from Technical Integrity suggested I consider an event during BSW to highlight some of the trends around diversity that we write about in The New Builders.Makisha Boothe from Sistahbiz (who is featured in the book) is going to join me for a ABOUT - VC ADVENTURE About - VC Adventure. Seth Levine is a partner and co-founder at Boulder-based Foundry Group focusing on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers. In addition to his work at Foundry, Seth is active in the globalentrepreneurial
ARCHIVE - VC ADVENTURE - SETH LEVINE TechStars (1) The New Builders (1) Uncategorized (142) VC Bloggers (1) Venture Capital (70) Venture Economics (22) Adoption angellist angellist syndicates boulder bubble colorado company building company creation company culture Conferences efco effective communication email Entrepreneurship Foundry Companies foundry group Future of VCGlue
VC FUND RETURNS ARE MORE SKEWED THAN YOU THINK Some of the most popular posts I’ve written over the past couple of years were the two that focused on just how rare outsized returns for an individual deal are in venture capital. You can see the original posts here and here. In those posts I was analyzing data from Correlation Ventures that showed just how skewed venture returns are, specifically that 65% of investment rounds fail to PPP AND WOMEN AND MINORITY-OWNED BUSINESSES I’ve published a number of posts over the past few weeks about some of the challenges of the existing PPP loans and in particular, about my concerns that the loans aren’t getting to as many of the smaller businesses that need them. In this CNBC op-ed article, Elizabeth McBride and I pointed out how the face of entrepreneurship in the United States is changing. Specifically, the number of DESIGNING THE IDEAL BOARD MEETING Designing the Ideal Board Meeting. This is the first of a multi-part series on Board Meetings. The question of what the ideal board meeting looks like comes up quite a bit in my world and I’m hoping to add my voice to the debate through a few posts (with what I hope will be clear and actionable advice). We’ll cover the creation of a board I DROPPED MY CHOLESTEROL 70 POINTS IN TWO WEEKS The idea behind the program is to change your metabolism from burning carbs to burning lipids (fats). To do this, you consume 65% of your calories in fat, 10%-15% from protein and the remaining 20%-25% in simple carbs. No grains, no sugar, no dairy and at least during the first two weeks, no dietary sources of cholesterol. ENTREPRENEURSHIP BEHIND THE WALL: A TRIP TO PALESTINE A little background and context. Palestine can be a rough place. GDP per capita is low – about US$ 1,650 per capita. The overall labor force participation rate is only 43% and unemployment is over 20%. The population is very young – 70% are below the age of 30 (and 40% younger than 15) and youth unemployment is over double the overallrate.
BOARD OBSERVER VS. BOARD MEMBER Small companies do not need "observers" on the board. Let the VC negotiate for--pay for--the privilege of two seats. The observer thing is a scam to get a second seat for free. Observers may not vote, but they opine, meddle, politic and interfere at least as much as a regular board member; maybe more because they are usuallyinexperienced.
HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some ARCHIVE - VC ADVENTURE - SETH LEVINE TechStars (1) The New Builders (1) Uncategorized (142) VC Bloggers (1) Venture Capital (70) Venture Economics (22) Adoption angellist angellist syndicates boulder bubble colorado company building company creation company culture Conferences efco effective communication email Entrepreneurship Foundry Companies foundry group Future of VCGlue
VC ADVENTURE
A 20x returner for a fund that on average invests $3-$3.5M in a company doesn’t return that fund. Taking the most aggressive end of these numbers would still only have this one company returning 70% of the fund’s capital. If you were going to have several of these, of course, that would work out for your fund. THE POWER OF GIVING AWAY POWER I don’t often write book reviews here on VC Adventure, but occasionally I read a book that I feel so strongly about that I feel compelled to write about it. The Power of Giving Away Power is exactly that kind of book – it’s exceptional. I’m fortunate enough to be friends with the author, Matthew Barzun, who has a fascinating and varied background. He was an internet entrepreneur, the LEGAL - VC ADVENTURE - SETH LEVINE I’ve been advised that I need to have a legal disclaimer on my blog. So here’s my disclaimer. I’m responsible for what I say, and all comments are my own personal responsibility. They – and this blog – are in no way affiliated with Mobius Venture Capital, Foundry Group or any other company that I have any involvement in. If I’ve made a mistake, it’s my fault. You should not MAKE JUNETEENTH MEANINGFUL Juneteenth isn’t just about a day in the calendar. It’s about the actions we take the other 364 days of the year to create meaningful change in our society. If we’ve learned anything new over the past few weeks since George Floyd’s murder, its that this change is toolong in
WELCOME TO FOUNDRY
I send a note to each new company that I work with at Foundry that sets up what I hope will be the key tenants of our working relationship. I thought it might be fun to post it publicly – I think it gives meaningful insight into how all of us at Foundry work with the company in which we have an investment. I’m psyched to be moving forward with our investment! I thought it would be helpful DESIGNING THE IDEAL BOARD MEETING This is the 3rd post in my “Designing the Ideal Board Meeting” series. I didn’t mention this in my prior post but thought of it as I started writing this section on how to put together a good board package. Companies often bias to wanting to hold their board meetings a few weeks after the end of each quarter. The rationale is that this allows the board to review quarterly results. For WHAT DOES IT MEAN TO BE AN "EXECUTIVE" An executive thinks like the CEO first. Their first team is the whole company. They have a deep sense of the market, how the business operates together as a machine. Their particular department (even their role) is the secondary consideration. An executive spends 80% of her time thinking about what we need to accomplish as a company, andhow
NETWORKING 101
Networking – To interact or engage in informal communication with other for mutual assistance or support (from Dictionary.com) I talked about networking in my recent post on How to become a venture capitalist. In it I said that I’d put up a separate post with more detailed thoughts on the subject. I don’t pretend to be the final source on the matter, but I do regularly engage in the art HOW MUCH SHOULD A START-UP CEO MAKE? I was asked this question at a talk I gave to the recently graduated TechStars Boulder class and thought it deserved wider dissemination than to just the group in the room at the time. This is a loaded question and while there are many variations I do actually think there are some general norms that are followed in most cases. So here goes with some guiding principals and then below that some __ __ Press enter to search* Archive
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Hi, I'm Seth Levine, a Boulder, CO based technology investor and managing director at Foundry Group. While I love technology I’m also a husband, father, avid cyclist, snowboarder and outdoors guy.*
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June 1, 2020
ENOUGH
I’m
not entirely sure where to begin, so let me start with stating whatshould be obvious:
Black Lives Matter
That we can’t seem to agree on this in America is 2020 makes me some kind of mixture of sad, angry, screaming, crying, depressed. But how _I_ feel and what _I_ think isn’t important. In fact as a white person, especially a white man, my “feelings” are and should be beside the point. It’s the experience of black people that matters and they are experiencing racism daily. I don’t know what it’s like to have to think twice before going out for a jog. Or getting into my car. Or taking a stroll in a park. I get to take that for granted because of the color of my skin and the privilege it brings. From my vantage point there was a moment in time about a decade ago when it felt like racism was for the most part going away (the talk of a “post-racial” society). _IT NEVER WAS_ and my perspective was from the lily white perch of my privileged existence. Had I even bothered to ask my friends of color I would have known this to be the case. I know many other white friends who felt this way as well. We were not only wrong, it allowed us to lull ourselves into a sense ofcomplacency.
Donald Trump is a racist. But he is a symptom of our problem, not the cause of it. He is incompetent. He takes every opportunity to divide us as a country and he openly and clearly encourages racists among us (can we stop saying “dog whistle” – there’s nothing subtle about his words or his actions – he’s a bull horn to racists). He must be voted out in November. But getting rid of Donald Trump doesn’t get rid of racism and more fundamental changes need to be made to our policing system, law enforcement more broadly (the prosecutors, jurys and others who have proven to be powerless to act in the face of police officers time and time again turning to murder as an outlet for their anger or incompetence), our criminal justice system and the systemic incarceration of black men. Our society has become more and more unequal and less and less compassionate and caring. We’ve lost ourselves as a nation. I have some ideas on how to be a part of the solution. Sitting on the sidelines is not an option (and I believe doing so makes you a part of the problem – the cops in Minneapolis who stood by while their colleague murdered an innocent black man last week were not bystanders, they were accessories to his murder). But I think that’s for another post. This one isn’t about telling people what to do orhow to feel.
It’s to say simply that Black Lives Matter. To the many who are suffering and hurting, I’m sorry. I won’t pretend to know how you’re feeling. But I do know that we can and must make meaningful changes. Enough. Join the Conversation 4 Comments Discussion4 Comments CategoriesCurrent AffairsShare
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May 27, 2020
UNCERTAINTY
I’ve been
reading a lot recently about the relationship between uncertainty and mental health. Specifically, it’s well-documented that uncertainty drives significant anxiety. This is logical on many levels but what I didn’t realize is just how deep-seated it is. In a time when there’s an incredible amount of uncertainty, I think this is something that everyone needs to take a step back and understand. Even people who haven’t lost jobs, don’t have loved ones impacted by COVID, and whose kids are doing well in online school are affected. Uncertainty provokes a kind of “fight or flight” response in the human brain. As we try to escape the idea of uncertainty, we analyze a situation in an attempt to make ourselves feel better. In other words, we worry in order to eliminate uncertainty and reassure ourselves. Frequent worry can lead to anxiety or depression and some individuals are more susceptible to it than others. It turns out that if you’re particularly vulnerable to uncertainty, you’ll have a heightened reaction to it in the same way someone who is allergic to a bee sting will react to that. For some people, it’s just a nuisance and for others, it’s more threatening. People who don’t tolerate uncertainty well fall prey to needing constant reassurance, procrastination, double-checking everything, and needing to do everything themselves all of which exacerbates the initial problem and leads to more worry and anxiety. The future is always uncertain and we cannot prepare for every possible outcome so tolerating some level of uncertainty in our lives is essential. Establishing healthy routines (eating, sleeping, activity), staying present, and avoiding isolation are all good tactics for maintaining your mental health. Another is to focus on what _can_ be done versus all of the unknowns. Obviously in this time of incredible uncertainty (work, life, kids, summer plans, camp, school in the fall, family, loved ones that are vulnerable, did I already have Covid, etc.) this becomes even more important. I’ve been trying to think about how to apply these ideas to work and to life and looking for places where I can help reduce uncertainty for myself and for others. There are not a lot of things right now that we have real control over but this has led to decisions such as the one I posted recently about Foundry keeping its office closed untilSeptember
.
It’s a small thing but it allows everyone at Foundry to make plans and at least have more certainty in this one thing. I’d encourage you to consider this for your own life. Especially for those readers (CEOs, managers, etc.) who are in a position to make seemly small moves that could remove uncertainty in the lives of those around them that could actually be very meaningful. Join the Conversation 1 CommentDiscussion1 Comment
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May 20, 2020
WORKING REMOTELY – EXTENDING WFHA
few weeks ago, I posted that Foundry had made the decision to remain out of the office until at least June 1st.
We’re fortunate that we’re in the position to work effectively this way – because of the kind of work we do and the way our company is set up (not to mention that we’re a team of 14). While we miss seeing each other, we felt it was safer to keep everyone at home. I’d actually been thinking for months before the crisis about the changing nature of work and had intended to write a post titled something to the effect of, _The Future of Work Is Remote _– a trend that I thought would be accelerated when some famous remote tech companies such as Automatic (a parent company of WordPress) went public and the world could see just how productive and effective a fully remote workforce could be (wish I had written that – would have been a great reference point right now). In our own portfolio, we have a few companies that are primarily remote – TeamSnap and Help Scout come to mind, as examples. There are many across the portfolio and almost all have some remote workers or at least a satellite office. Most of these “remote” companies also have a main office of some kind that at least a subset of their employees comes to. But often that office is laid out more like a co-working space than a traditional office, allowing for more flexibility for how it is used. One of the main advantages of remote work is that you can hire the best employee for any role, not just the employee that happens to be in your town. This was a huge advantage when the job market tightened and talent for specific positions got tight and we saw companies who were more flexible about remote work be able to take advantage of individual contributors across the country and across the world. Of course, now many people are talking about working remotely and how the experience of forced WFH because of Covid will have lasting effects on how companies organize their physical relationship to their employees. Fred Wilson from Union Square wrote an interesting post about the future of work last week, which was particularly thoughtful. For Foundry, we have decided that we are not going to reopen the office until at least Labor Day (that date could move out but it won’t move up). We concluded that this was the safest thing to do and felt like we wanted to eliminate some uncertainty for our staff (more on the topic of uncertainty soon – in a time of uncertainty around just about everything in our lives, providing some amount of certainty, even about something as simple as when employees will asked to come back to the office, can make a big difference). We also felt that this extended period would give us the chance to lean into work at home. As one of our portfolio CEOs said on a recent call, _“You can either become world-class in working from home or world-class in creating a safe work environment. It feels like the better thing is to focus on the former.”_ I totally agree with this sentiment and we felt unprepared to create an office environment that would be fully safe for our staff. But we did know we had the structures in place to be very effective working from home and to continue that for a long period. To be sure of that we did a few things to make sure that everyone was well set up, such as giving everyone a budget to make sure their home office environment was as productive as possible and paying for internet access. Most importantly, we’ve put in place business structures, communication plans, and a regular cadence of stand-ups that allow us to stay connected (in some ways, more effectively than when we were all in the office together). Obviously, not all businesses have this ability and many businesses need some or all of their employees in an office either to access specialized equipment and machinery or because of the nature of their business. But for those businesses that are able, we would encourage you to consider setting a date for returning to the office that is well in the future to provide some certainty for your staff and to keep the pressure off of the system as states start to open up. Join the Conversation 0 Comments Discussion0 CommentsCategoriesCovid-19
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May 19, 2020
JOIN ME THURSDAY FOR A BUSINESS TOWN HALL WITH REP JOE NEGUSE Sorry for the short notice but I’ve been working with Rep Joe Neguse (CO 2) to put together a Business Town Hall this Thursday, May 21st at11:00MT.
Joe’s been a real champion of small business (in particular minority and women-owned businesses) and I’m really glad that he’s agreedto do this.
Joe has been one of the most available Congressmen during his time in office holding over 24 town hall events in his first year in Congressalone.
Frances Padilla from the Small Business Administration Coloradowill offer some
thoughts on the call as well (she heads the SBA in CO and is super thoughtful). It’s a great chance to connect with him about the both the CO response to COVID-19 as well as the federal programs that havebeen put in place.
You can register for the event here.
This isn’t a fundraiser, just a chance to hear from Joe directly about the response to the crisis. I hope you can join us. Join the Conversation 0 Comments Discussion0 CommentsCategoriesCovid-19
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May 18, 2020
AN UPDATE ON THE COLORADO TALENT NETWORK We launched the Colorado Talent Network on March 26 in direct response to Coloradans losing their jobs due to COVID-19 layoffs. To date, over 650 people have signed up and created a profile to gain more visibility with companies hiring. Since the launch, we’ve added the ability for employers to add open positions and job seekers to browse the 35+ companies actively hiring. We also
decided to open this up beyond just the startup community adding professional backgrounds such as: Banking, CleanTech/Energy, Credit Unions, Education, Entertainment, Hospitality, Restaurant, Retail, and Other for those not captured. While we don’t have the systems to track everyone on the list, we do know that many have found employment (note that we do track as we ask every 45 days whether they’d like to keep their listing live) and know that a number have been found jobs through their participation in the Network, which is fantastic. For those that are frequent readers, you know I love diving into data. I tweeted a screenshot of the backgrounds of people in the group lastmonth (when we
had ~300 people) but wanted to reflect on some stats about the make-up of folks in the Talent Network now that we’ve hit a critical mass. Backgrounds of people in the Talent Network: The backgrounds are fairly well spread out between job functions. This is not particularly surprising as we know companies have had to make reductions across their entire teams. Experience level of people in the Talent Network: 80% of people in the network are entry level to middle level managers. Only 20% were at the director or executive level. Where people are looking to work: No surprise that ~60% of selected Boulder/Denver as their ideal work location. ~25% are open to working remotely (no surprise there). I would like to highlight the ~17% that are looking for jobs outside Boulder/Denver metro area. These locations are: Central CO I-70 Corridor, Colorado Springs, Eastern CO, Ft. Collins, Southern CO, Western Slope and a few others. This is the same ideal work location data shown another way: If you’re a company hiring, check out the Colorado Talent NetworkDatabase
for
a list of candidates and please fill out this form to add a specific job posting or career page . If you are a job seeker looking for your next role, you can add yourself to the talent list here . You can learn more about the Colorado Talent Network here.
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May 15, 2020
SOCIAL DISTANCING OR SOCIAL DISTRUSTI
was at the grocery store the other day and thankfully most people were wearing masks (a big change from a few months ago when I was literally laughed at when I wore a mask to that same story, early on in the crisis). However, walking around, people’s body language really struck me. In our efforts to socially distance, we are going out of our way to stay away from each other. That’s exactly what we should be doing, but I felt like there was almost a veneer of distrust and mistrust between people. What people are thinking is made harder to understand because everyone’s facial expressions are hidden behind their masks. Is that person smiling at me or growling as I gave them space coming off the end of an isle? Did they hear my muffled voice say something kind as we passed or did I come off as mad? It’s a good idea to consider that as we’re distancing from everyone in our lives except for members of our own household, it’s important to maintain the social ties and graces that keep us bonded together as a society. I’m not talking about zoom happy hours with your friends. I’m talking about how we treat strangers when we do find ourselves out and about. The other day, my wife was at a different grocery store, talking to someone in the long line to check out (long in part because people were appropriately distancing). She described people eyeing her suspiciously, just for talking – as if we’re not supposed to be interacting in any way. Let’s not lose our humanity in this. There are so many examples of people being generous with their time, energy, or money during this time of crisis, which is fantastic. But it’s also important in our day to day interactions that we do not lose a sense of our communities and connectedness to each other, even if we cannot be in closephysical proximity.
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May 14, 2020
CIRCULAR ADVICE FROM THE SBA_
Quick
preface to this note. I’m_ _not _your_ lawyer and I’m not givinglegal advice. _
As I wrote about at the beginning of the week, the SBA has made a mess of the Payroll Protection Program. Yes, there are
some challenges to parts of the structure of the program,
but I was referring in that post to the SBAs implementation of the program and the varied guidance they’ve given since the program’s launch. They have been inconsistent, unclear and sometimes contradictory to statements made by Treasury and administration officials. It’s led to confusion on the part of companies who applied (or were thinking of applying) and ultimately to greater loss of jobs as companies struggled to understand whether they qualified or not. I can tell you from the board rooms that I’ve been in (virtually, of course) that people are genuinely trying to understand the intent and do the right thing, even if turning down the money meant that they needed to lay off or furlough some workers to keepcosts in check.
Last week the SBA said it would offer further guidance before May 14th and many companies postponed or agreed to revisit decisions about the loan program once that guidance came out. The assumption had been that the SBA would offer further clarification about the “economic necessity” threshold that was prescribed in the original program language as well as a further update to its FAQ question #31, which stated that companies needed to consider “_their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” _(I wrote about this at length in my post on the PPP’s challenges earlier this week).
Yesterday – May 13th, one day before the SBA’s “safe harbor” deadline (the date that they had previously said that companies needed to return the money if they felt subsequent guidance disqualified them and be essentially absolved of any wrongdoing) – the SBA released their new “guidance” and updated their FAQs related to the program(the SBA
maintains a single document for this – when they update it, they simply tack on the new guidance to the end). The wait was not worth it. I assumed that the SBA would offer thoughts on “economic necessity” such as how many months of runway a company might have, above which they would generally be deemed not to have necessity. Or perhaps would suggest a threshold for how much revenue, bookings or other key metrics of a business might need to be down in order to qualify. Or even just a general view about how companies should consider the overall future economic impact of Covid (can we even look to the future in making our determination of need, for example). Certainly they would address the question about “other sources ofliquidity”.
But they did not. They waited until the day before their deadline and ultimately added little in the way of guidance. In fact they appear mostly to have repeated what had already been said and on a few key points backtracked completely. The key FAQ related to the economic necessity question read as follows. I added the emphasis. _46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?_ _Answer: When submitting a PPP application, all borrowers must certify in good faith that “urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: ANY BORROWER THAT, TOGETHER WITH ITS AFFILIATES, RECEIVED PPP LOANS WITH AN ORIGINAL PRINCIPAL AMOUNT OF LESS THAN $2 MILLION WILL BE DEEMED TO HAVE MADE THE REQUIRED CERTIFICATION CONCERNING THE NECESSITY OF THE LOAN REQUEST IN GOOD FAITH._
_SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, GIVEN THE LARGE VOLUME OF PPP LOANS, THIS APPROACH WILL ENABLE SBA TO CONSERVE ITS FINITE AUDIT RESOURCES AND FOCUS ITS REVIEWS ON LARGER LOANS, WHERE THE COMPLIANCE EFFORT MAY YIELD HIGHERRETURNS.
_
_Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, AND OTHER PPP LOANS AS APPROPRIATE, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. IF SBA DETERMINES IN THE COURSE OF ITS REVIEW THAT A BORROWER LACKED AN ADEQUATE BASIS FOR THE REQUIRED CERTIFICATION CONCERNING THE NECESSITY OF THE LOAN REQUEST, SBA WILL SEEK REPAYMENT OF THE OUTSTANDING PPP LOAN BALANCE AND WILL INFORM THE LENDER THAT THE BORROWER IS NOT ELIGIBLE FOR LOAN FORGIVENESS. IF THE BORROWER REPAYS THE LOAN AFTER RECEIVING NOTIFICATION FROM SBA, SBA WILL NOT PURSUE ADMINISTRATIVE ENFORCEMENT OR REFERRALS TO OTHER AGENCIES based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loanguarantee._
This is a lot of words to basically about-face on much of the bluster coming from Treasury while offering no real guidance on the key questions I described above. Basically the SBA is saying that loans of less than $2M will be deemed to be requested in good faith and won’t be reviewed. Except in the 3rd paragraph they say that some smaller loans _will_ actually be reviewed (“other loans as appropriate”). Although the document is inconsistent, it does seem appropriate to at least hold out the threat that some smaller loans will be reviewed (certainly some will have not been made in good faith or even been fraudulent; in fact likely at a higher rate than larger loans). The real action is in the last paragraph. Here the SBA surprised pretty much everyone by basically saying “we’ll review your loan and if we think you didn’t qualify the penalty will be making you pay it back.” This essentially extends the safe-harbor they already offered (which required companies to pay back a loan in order to qualify). There’s some grey area there, because in theory some other agency could take up enforcement action against a company that didn’t return the money prior to May 14th, but this seems like an unlikely scenario. To be clear, companies that take the money and they are required later to pay it back (but who in the meantime kept people employed and spent the money in ways they wouldn’t have if they had never taken it in the first place) are on the hook for the cash, so there are real consequences to getting it wrong. But for many companies on the bubble the consensus seems to be that they should take the money, apply for forgiveness (which will trigger a review of the loan, per the new guidance) and let the SBA decide if they qualified or not. It’s hard to argue with that logic given this new guidance. Especially because it appears the money in the program is not going to run out quickly (and therefore the argument that one company is effectively taking money from another company that didn’t get their loan application in as quickly is gone). Personally, I was hoping for more. We’ve tried to be thoughtful in our approach to the PPP program and the SBA’s guidance. But with this latest round of advice, it’s hard to argue that companies on the margin shouldn’t lean on the SBA to arbitrate whether they qualified or not and stop their board level arguing. I know of a number of companies that had decided to return the loan but reversed course because of this new guidance, or who were on the fence waiting for the new guidance and have now agreed to keep the money and let the SBA weigh in directly. Perhaps this is exactly what the SBA wanted, but at least for me it was far less in terms of “guidance” than I was hoping for. Join the Conversation 0 Comments Discussion0 CommentsCategoriesCovid-19
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May 10, 2020
THE SBA NEEDS TO GET IT’S ACT TOGETHER ON THE PPPThe
SBA’s implementation of the Payroll Protection Program (PPP) has been a mess. The intention was to provide needed relief to businesses that were impacted economically by the COVID-19 crisis. But, while very well-intentioned, it’s implementation has been flawed. In particular, the SBA has given inconsistent guidance that continues to change and evolve, leaving companies left to wonder if they qualify or not. The result has been not just confusion but also job losses that were likely not what Congress intended the program to result in. The Paycheck Protection Program was established by the CARES Act to help small businesses keep paying their workers. The program allows businesses with fewer than 500 employees to apply for low-interest loans to pay for their payroll, rent, and utilities. The program’s original $349 billion was allocated between April 3 and April 16. The second allotment of $320 billion was signed into law on April 23 and the SBA began accepting applications on April 27. The program sparked confusion from the start. After its enactment but before it was implemented, there were questions about the SBA’s “affiliation rules” which can disqualify companies if the aggregated number of employees at affiliate companies is greater than 500. That rule was designed to prevent companies under common ownership from accessing SBA funds, but as it applied to PPP, it potentially excluded any venture-backed companies where venture firms owned greater than 20% equity (and where the companies were not affiliated, they just shared a common investor). Those rules seem to have been ironed out and there was initially a rush of venture-backed companies wanting to avail themselves of help under the PPP. Many VCs urged caution (see my post describing Foundry’s view that companies should carefully consider if they met the program criteria for example, and a New York Times article on the subject,
as just two examples), wanting to make sure that any company applying truly qualified for the money. It was always our belief that some venture-backed companies could and should apply (venture-backed companies employ about 2.7M people in the US) but it was unclear from the start which companies were (or should be) eligible. This confusion was compounded by several problems with the way the program was set up. The funds allocated by congress were limited and everyone expected the program to be oversubscribed. Secondly, the funds were to be given out on a first-come, first-served basis. This exacerbated the first issue and meant that anyone considering a loan needed to rush to apply and many companies did so without the space and time to think through whether it made sense for them. Additionally, the funds were distributed through the existing banking system – the only practical way to get that much money into the hands of companies that quickly for sure, but also leading banks to prioritize their own customers over others (see below for ways this created challenges to the fair disbursement of funds) and to their prioritizing larger loans oversmaller ones.
The language of the act requires companies to certify that the uncertainty of current economic conditions makes it necessary to apply for the PPP loan to support its ongoing processes but it was not clear what “necessary” actually meant. Subsequent to this, the SBA released a series of FAQsin an
attempt to clarify which companies qualified but this only served to further confuse things. In particular is the question of what “economic necessity” means for a business, which was the standard set in the original act by Congress. Particularly confusing to many companies was the statement that companies needed to consider whether they had alternative financing options. This concept was first brought up in the infamous question # 31 on one of the SBA’s FAQs that was released about a week ago. In that FAQ the SBA stated (emphasisadded):
_efore submitting a PPP application, all borrowers should review carefully the required certification that “urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” Borrowers must make this certification in good faith, taking into account their current business activity __AND THEIR ABILITY TO ACCESS OTHER SOURCES OF LIQUIDITY SUFFICIENT TO SUPPORT THEIR ONGOING OPERATIONS IN A MANNER THAT IS NOT SIGNIFICANTLY DETRIMENTAL TO THE BUSINESS.__ _ The original FAQ related to public companies but was quickly extended to include private ones. Exactly what this means isn’t clear. It doesn’t appear to mean that a company needs to have a financing offer, just that they could likely raise money elsewhere; and while the PPP isn’t a “cap table protection program”, as venture attorney Ed Zimmerman has pointed out,
it’s not at all clear where the bar is on alternative financings and how a company should evaluate the likelihood of its obtaining money elsewhere. Nor is it clear what that last statement means, “not significantly detrimental to the business.” This new guidance came on the backs of some companies clearly abusing the intent of the program, if not at the time the exact language of the Act. For example, AutoNation car dealerships ($77M), Ruth’s Chris Steak House ($20M), and the Los Angeles Lakers ($4.6M). It’s understandable that public option, as well as the SBA itself, felt that the program should be clarified such that companies like these were not eligible (each of the companies above have said they willreturn the money).
At the same time, as I’ve written about a few times, PPP money is not getting to many of the kinds of businesses that Congress clearly intended to be helped.
This is particularly true for women and minority owned businesses but also true for a wide swath of Main Street businesses that either lacked the banking relationships to access funds (which were distributed through a subset of banks in the US that were qualified under a specific SBA program) or for whom the loan program or its forgiveness element wasn’t practical. For instance, the measurement of payroll for forgiveness – a central element of the program – is 8 weeks after funds disbursement, which makes it impractical for businesses that are unable to restart their businesses in that time period (it would make much more sense to have the repayment period begin after a state’s stay at home order has been fully lifted). Additionally, the initial terms of the loan stated that the full amount of the loan needed to go to payroll, rent/mortgage, and utilities with no specific percentage of the funds going to each. Now, no more than 25% can go towards rent/mortgage and utilities. As companies try to figure all this out, the PPP Safe Harbor has been extended to May 14 (meaning that companies can return their loans by that time and avoid any potential penalties). But we’re still waiting on final clarification on the rules, which the SBA has said is forthcoming (but have not yet been released – we’re 4 days out from the safe harbor ending). The result is confusion and quite a bit of disagreement across businesses. Many companies are trying to rely on the initial intent of the act – preserving payroll – and arguing that if they plan to reduce staff but for taking the PPP money they should qualify for the loan. That clearly isn’t the way the SBA is interpreting the Act nor how they’re guiding the business community (but it is likely closer to what Congress intended when they passed the Act). Just where the line is between need (and payroll preservation) and greed isn’t very clear. This must be clarified and done so quickly. That Treasury Secretary Steve Mnuchin has stated that all loans greater than $2M will be audited is adding to the pressure companies are feeling to get this right (and presumably the vast majority of those audits will have the benefit of a year or more of hindsight; it will be hard in many cases to divorce what actually happened from what a company thought was happening in real time). The lack of clarity is causing real world challenges for businesses. In just one example, Zumasys, Inc., a California software company, has sued the SBA saying that it should not have to pay back its $750K loan since the SBA changed its rules for eligibility after their loan had been dispersed. They argue that they already spent the money for what the program was intended for and qualified based on what they understood the rules to be at the time. I’m not arguing for their case – just pointing out that 4 weeks into the program the SBAs changing guidance is causing real issues. This is a meaningful issue for companies who took money and kept people employed in good faith based on their understanding of the program at the time only now to have the rules changed on them. If a company returns the money they’re still on the hook for the payroll they incurred. Presumably (and we know this from our own direct experience) some will have to cut deeper now to compensate. In related news, The Washington Post reported yesterday that the Economic Injury Disaster Loan Program (also administered by the SBA) has reduced their loan limit from $2 million to $150K and is only accepting applications from agricultural interests, due to itsbacklog.
It’s clear that the SBA is out of its depth and cannot cope with both the volume and the complexity of our country’s small business needs right now. While US entrepreneurs are the ones dealing with the clumsy handling of these loans in the short term, our overall economy will be dealing with the fallout for years. Join the Conversation 0 Comments Discussion0 CommentsCategoriesCovid-19
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May 6, 2020
THE CHANGING NATURE OF ENTREPRENEURSHIP | EFORALLEntrepreneurship
in the United States is changing pretty dramatically – in ways that many of us have failed to notice or understand. Specifically today’s American entrepreneurs are more likely to be female and non-white. In fact, the number of women-owned businesses has increased _31 times_ between 1972 and 2018 according to the Kauffman Foundation (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%). Meanwhile, the fastest-growing group female entrepreneurs are women of color, who are responsible for 64% of the new women-owned businesses being created. There’s a lot more to dig into here, which I’ll do in future posts. But it’s urgent that we begin to understand this because we’re failing to build systems to support these new entrepreneurs. This has become especially clear in the current economic crisis, as I pointed out in this piece I wrote with Elizabeth Macbride a few weeks ago for CNBC as well asthis post
from last week. Relief money authorized by congress under various programs of the CARES Act and other initiatives is failing to reach many women and minority owned businesses and is highlighting structural issues with the way we support entrepreneurs in the United States. For example, it has been widely documented that women and minority owned businesses are not accessing aid through the Payroll Protection Program (PPP) – see for example, here,
here
,
here
,
here , here
.
This program requires businesses to have relationships with certain approved SBA lenders, which women and minority owned businesses are less likely to have. Its initial roll-out excluded certain types of financial institutions (most notably CDFIs) which disproportionately bank these businesses. It also left much of the underwriting criteria up to the banks themselves, who favored other customers. And the program itself – based on W2 payroll and primarily benefiting businesses that were in a position to open up quickly – failed to address the kinds of businesses most likely to be started by this new generation of entrepreneurs. WE CAN AND _MUST_ DO BETTER. Which is why I’d like to highlight for you a great program called EforAll . Launched in 2013 with a mission of partnering with communities to help under-represented individuals successfully start and grow their businesses, EforAll is a pretty special organization. I’ve gotten to know them well over the past two years (Brad and his wife Amy, as well as Greeley and I are financial supporters of EforAll). EforAll combines immersive business training, mentorship and an extensive support network to help support their entrepreneurs. It’s incredibly compelling and urgently needed – now more than ever. EforAll is up and running in 9 communities in Massachusetts and Colorado and, to date, they’ve supported entrepreneurs in starting almost 350 businesses, 83% of which continue to be actively pursued by their founders. About a year ago we launched in Longmont and that program just graduated their first class (I attended the virtual demo day/graduation – it was inspiring). We’ll be starting up another Longmont program this summer and ARE LOOKING FOR MENTORS IN BOULDER AND THE FRONT RANGE (although potentially for this one anywhere – we anticipate much of this summer’s program will end up being virtual). This is a fantastic opportunity to help female, minority, and immigrant entrepreneurs pursue their business ideas.A few stats:
EforAll National
– Over 500 ventures graduated – Nearly $35M in capital raised – Over $25M in 2019 revenueEforAll Longmont
– 9 businesses (11 entrepreneurs) went through first Longmontaccelerator
– Those entrepreneurs were from the North Metro area, Boulder County, and Weld County – Ventures in the first program ranged from gluten-free beer & pastries being made from ancient grains & traditional Peruvian recipes, to a financial literacy app for elementary school students, to a husband & wife duo manufacturing adaptive underwear for individuals with sensory disabilities – Highlights from the first accelerator include an entrepreneur securing her first two grocery store clients for her plant-based meat product, an entrepreneur raising 40k from friends and family, and an entrepreneur launching their first online marketplace for disability-focused products – EforAll Longmont was also mentioned in this href=”https://www.nytimes.com/2020/02/07/your-money/entrepreneurship-philanthropy-gururaj-deshpande.html”>New York Times article, received support from Google, and worked with more than 50 volunteers during our first accelerator (including about 30mentors)
EFORALL MENTORING ASK – Mentoring with EforAll is a fantastic way to support small businesses and aspiring entrepreneurs in your own background. Accelerator Mentors come from a variety of backgrounds and use their business and leadership experience to guide new entrepreneurs through the process of starting or growing a business. Mentors work in teams of three and are matched with an entrepreneur based on schedule availability and desire to work together. The team meets as a group to help reaffirm topics and themes raised during classes, while also strategizing with the entrepreneur on how to reach their specific goals during the program. Mentoring with EforAll is a 90-minute per-week commitment from July-September and all meetings between entrepreneurs and mentors will take place virtually. For more information, you can click hereand you can also
email EforAll Colorado Executive Director, Harris Rollinger, at harris@eforall.org. Join the Conversation 0 Comments Discussion0 CommentsCategoriesCovid-19
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May 4, 2020
COLORADO IS OPENING UP. FOUNDRY IS NOT. HERE’S OUR THINKING.In
mid-March, I wrote a post about how Foundry Group had joined a number of other businesses in the early adoption of work from home and other practices to stem the spread of COVID-19. We recognized that this would be an essential part of helping create social distance and by doing so, flattening thecurve.
As Colorado and many other states are moving to a more relaxed set of policies (although Denverand Boulder
are waiting a few more weeks until they follow the rest of the state), we’ve decided that for Foundry we’ll continue our work from home policy until at least the end of May (Brad’s post on that here).
We’re doing this because we’re in the fortunate position where we can and we’re being public about it because we’re hoping other businesses that are in a position to do so will do the same. We’re fortunate at Foundry to operate the kind of business that works well remotely and although we miss seeing each other in the office and the natural collaboration that happens when we’re all there, our business functions pretty much normally even when we’re all remote. And, like other businesses, we’ve been very deliberate about trying to replicate our in-office dynamic online (for us that includes several weekly stand-ups, extended time together on Mondays as well as ad hoc “cocktail/mocktail hours”. We also recognize that there are many businesses that _need_ to open up sooner and we feel that they should take priority over companies like Foundry that can continue working from home without big disruptions to our operations. If you are running a company that is similarly situated, we hope that you will follow suit and wait a bit longer to open up. We’re going to reevaluate opening up at the end of May and decide if it’s appropriate for us to re-open the office in early June or if we should extend our work from home time even further. The more effort we put into mitigating this crisis, the more flexibility we will have later in the summer to get things back to normal. Join the Conversation 0 Comments Discussion0 CommentsCategoriesCovid-19
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