Venture Capital News Roundup

  • The NYT reports on the disaster sale of Good Technology to Blackberry for $425 million, less than half its valuation in 2014. Investors and executives were protected by their preferred stock, and regular employees were left with stock valued at 44 cents a share, down from $4.32 a year earlier. The CEO left with a total of $5.9 million. 
  • In a followup to this article, Startup L. Jackson wrote an article based on this premise: “for all that is good and holy, don’t join a startup for the fucking money.” The pseudonymous author often gets the question, “Will working at this startup make me rich.” He advises that startups are always risky, but they are the best way to get 20 years of experience in about 5 years (if done right). He then lists a number of criteria for picking the right startup. 

 

  • Fred Wilson gives a Ec 101 lesson on his blog. The VC discusses price elasticity, cost of acquisition, lifetime value, and churn, all the basics of ‘unit economics.’ 
  • Do not miss Benedict Evans’ 16 Mobile Theses for 2016. It’s a very comprehensive outlook for mobile, which he states is the “new central ecosystem of tech.”
  • Jeffrey Carter discusses debt as a way to finance a startup, stating that it is a double edged sword for an entrepreneur. On one hand, you are not giving up equity and can keep more of the upside on a successful exit. On the other hand, debt has to be paid with money from operations, which could stall growth down the road. Read on to find out why debt is bad from an investor’s perspective
  • Thomas Grota gives his predictions for 2016, including an end to the unicorn era and a change in corporate investment strategy. 
  • The Israeli tech ecosystem of flourishing. The venture ecosystem has more than doubled in two years. Approximately $5b will be invested in Israeli tech by the end of 2015. This is the results of a confluence of factors: private equity moving into Israel, Asian capital, and the rise of Israeli robotics, drones, optics, and IOT companies. 
  • Foursquare is raising a down round that will value the company at around $250 million, less than half of its valuation two years ago. 
  • Josh Burwick discusses a common pitfall of early stage startups: the pursuit of the bluechip company partnership. There are huge opportunity costs to pursuing these deals and there is an unfair amount of leverage on the side of the BCC. This is not to say that these are always bad, but startup founders should not pursue these deals without a thorough analysis of costs and benefits.