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Archive for the ‘Carl Schubarth’ Category

 

Why star VCs matter (and what doesn’t)

Joi Ito / Creative Commons license

Having a big name VC on a firm such as Marc Andreessen matters more to startup founders than being funded by a big name firm, according to a new study.


Senior Technology Reporter- Silicon Valley Business Journal

Startup founders want big-name VCs like a Marc Andreessen or a Reid Hoffman on their side, not no-name firms.

And having women on the team at the firm matters more than funders think.

Those are two of the findings of a big brand study done for the National Venture Capital Association by Desantis Breindel and Rooney & Associates.

An overwhelming majority of founders in the study said VC brand means a lot to who they seek funding from.

But they disagree strongly in key areas about what is most important in that branding.

More than half of the venture-backed CEOs in the study (57 percent) said they care most about the reputation of a firm’s individual partners. Only 38 percent said they focus on the firm’s overall reputation and a mere 5 percent care about the reputation of the firm’s portfolio companies.

The gender gap may be a result of more women founders starting up companies than there are women making partner at VC firms.

One in four founders said the gender makeup of a VC firm mattered to them while only one in 10 VCs said they thought it mattered. But two-thirds of women founders said it matters to them.

Other findings of the brand study include:

— Proximity matters: About half of both founders and funders said that being located near their funders mattered to them, with about the same number saying that firms located in Silicon Valley, Boston and New York City are most attractive.

— Friendly but not too much: CEOs said they want a VC firm that is entrepreneur-friendly and collaborative but they are turned off if the firms have too much of a hands-on reputation.

— Peer networking: CEOs said the most important activity that VC firms can provide is a summit or meeting where they can learn from other founders.

Click here to read more about the National Venture Capital Association branding study.

Click here to subscribe to TechFlash Silicon Valley, the free daily email newsletter about the region’s founders and funders.

Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.

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SEC lifts ban on open fundraising by startups, VCs, other funders

Senior Technology Reporter- Silicon Valley Business Journal

The Securities and Exchange Commission lifted a decades-long ban on open solicitation of funds by startups and fund managers on Wednesday.

The move was mandated by the JOBS Act more than a year ago, but was held up while the SEC studied how to implement the new rules.

The ban on general solicitation had forced founders and funders to solicit funds in private meetings and through word of mouth, although some new platforms such as AngelList have provided ways to be more transparent about fundraising.

The SEC said investment in funds and startups will still be limited to accredited investors whose liquid net worth is more than $1 million.

It also said that reasonable steps must be taken to assure that the investors meet that net worth standard.

Further, it will now require anybody doing a general solicitation to file a Form D with the SEC at least 15 days before starting their campaign. They must file a followup within 30 days of ending the solicitation.

It isn’t clear that established funds in Silicon Valley will start advertising since they prefer to raise money from large institutional investors.

Emergence Capital Partners founder Brian Jacobs told me, “Most VCs I know don’t want to raise money from individuals.”

Jacobs said that many VCs got started by raising money from their friends and from successful entrepreneurs but shifted to institutional backers later on.

“Those aren’t particularly reliable investors over the long haul,” Jacobs said. “Ultimately most venture funds want the stability of institutional backing.”

Alex Mittal, CEO of the FundersClub online venture capital platform, expects a wave of new offerings from funders and founders.

“In this new normal, issuers will be put under increased pressure to demonstrate the merits of the opportunities as well their own qualifications to investors, and investors will be wise to heavily scrutinize the reputation of issuers and the quality of offerings before proceeding with an investment,” he said in an email to me.

One immediate result of the SEC ruling was a satirical Twitter stream of possible hedge fund advertising slogans, such as, “Fee all that you can fee.”

Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.

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