Angels'-VCs' Needed Skills

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ANGELS’ VCs’ NEEDED SKILLS POSTS (4 posts)

The following is a list of the post titles by author under this topic.  Scroll further down this page to find the actual blog post by your selected author.   Author’s posts appear in reverse alphabetical order.  For example, following this list, Mark Suster’s post appears towards the beginning of the blog page, and Jeffrey Bussgang’s posts appear towards the end of the blog page.   

JEFFREY BUSSGANG (2 posts)

Jeffrey Bussgang:  How to Select a Venture Capitalist

Jeffrey Bussgang: Why Twitter Picked Fred Wilson as its Lead Investor

BRAD FELD  (1 post)

Brad Feld:  How Entrepreneurs can Increase the Chance of Success

MARK SUSTER (1 post)

Mark Suster: Mark Suster: Angels Need Five Skills to Excel

 

Mark Suster: Angels Need Five Skills to Excel

Mark Suster Partner Upfront Ventures and former entrepreneur

Suster identified “[] five skills [angel investors need to excel]”:

1.  “Access to the Best Deal Flow” []

2.  “Domain Knowledge

“[]Domain knowledge [] [is] [well-honed industry knowledge].” “[] It requires domain knowledge to know what you’re talking about and success long term as an angel. [] One of the biggest problems is when “you don’t know what you don’t know.””

3.  “Relationships with VCs

“[] Relationships with VCs [] protect [angel] investments” by taking out angels’ positions. 

4.   “Deep Pockets

A company is either acquired or has an IPO in an average 7-10 years.  Suster says that angels’ deep pockets providing follow-on investments minimize these risks:  dilution, inability to protect good investments and a lack of deal diversity.  “[] [Angels] need to be able to do a large enough number of investments to create enough deal diversity.”  The greater the deal diversity, the lower the risk. 

5. “Access to Buyers”

“[] the best investors influence their end-games through well-cultivated relationships with eventual buyers of their portfolio companies.” [] [Helping] companies exit to the right buyer and importantly at the right time” can be crucial.  Mark Suster, Angel Topics Sept. 14, 2010 http://www.bothsidesofthetable.com/angel-topics/

 

How Entrepreneurs can Increase the Chance of Success

Brad Feld venture capitalist and Managing Director Foundry Group

 When asked what entrepreneurs can do to increase their success,  Feld said, “[] I think the biggest thing [] is [for] entrepreneurs, especially first-time entrepreneurs, [to] surround themselves with mentors who can help them, people who have been through it before, who can really help them build a great company.”  Brad Feld, Seed Capital From Angel Investors: Brad Feld, Managing Director, Foundry Group (Part 8), Aug 2, 2010; http://www.sramanamitra.com/2010/08/02/seed-capital-from-angel-investors-brad-feld-managing-director-foundry-group-part-8/

Why Twitter Picked Fred Wilson as its Lead Investor

Jeffrey Bussgang venture capitalist and General Partner Flybridge Capital Partners and former entrepreneur 

Bussgang discusses why Twitter founder Jack Dorsey picked Union Square Ventures VC Fred Wilson as his lead investor.  Below are story highlights.

Dorsey said, “[] We wanted to be questioned, we wanted to be challenged, and we wanted to see some of their thinking around actually developing this product. [] [Wilson] was very aggressive, in a good way, in a thinking way. [] he was a day-to-day user of our service and he obviously loved it.  He came [] with lots of questions about why we had done what we had done. That helped clarify our thinking [].  [Wilson] could contribute to the product’s vision and direction to help lead the company to success.”

“[]Wilson [] likes to think of himself as the entrepreneur’s consigliere [] with great pattern recognition. “I want to be the person they call when they need some advice. [] we’ve seen all these issues a lot [].[] I’ve observed enough to know what’s happening and interpret it appropriately.””  Jeffrey Bussgang, Mastering The VC Game,   pg  124  125, 114

How to Select a Venture Capitalist

Jeffrey Bussgang venture capitalist and General Partner Flybridge Capital Partners and former entrepreneur 

Entrepreneurs should consider the following when selecting a VC: “[] [industry knowledge], [] geographic presence and strategy], [] [the stage the VC specializes in],[fund size], [where the firm is in its fund life cycle] and [] willing[ness] to continue [] support [] in a follow-on round and [] [criteria for same].” 

The VC should provide entrepreneurs value in: “[] 1. strategy  2. recruiting  3. business development [ [] including introductions to prospective partners, customers and acquirers]; and  4. future financing.” 

Future financing issues include “[] whether the follow-on round should be an “inside round” [all current investors], or an “outside round” [] led by an outside investor [].”  An inside round might be easier to raise but an outside round provides another financing source and can validate a new valuation.  “[][Entrepreneurs should discuss with the VC the next round the day after closing the first round] including  “[] [if milestones are met, will VC support continue and if so, at what price (valuation) increase]; [if milestones are exceeded or missed by say 20%, respectively, then the impact thereof.]”  “[Normal tension exists around price]”, so entrepreneurs might check outside the investor group to substantiate market price and terms.

Chemistry with a VC is essential.  “[] the real emphasis on chemistry concerns the thinking styles, ways of working, enthusiasm for the business and a shared view of the future.  You want [] someone [] you can work with and [] trust.”   Jeffrey Bussgang, Jeffrey Bussgang’s book Mastering the VC Game –A VC Insider Reveals How to get from Start-up to IPO on your Terms. copyright 2010,   pg 111,113,118, 120, 122, 123