By Fred Wilson
The term “lead investor” is often misunderstood. I have seen VCs negotiate to be called a co-lead or a lead in the term sheet. But you don’t get given that designation. You earn it.
Glenn Kelman (a long time AVC regular) has a great blog post on this featuring former Sequoia partner, now Khosla partner, Pierre Lamond in the lead investor role:
Then Pierre Lamond, the Sequoia partner on the deal, began working out of our office, acting as the virtual CEO. Pierre made a point of being there the day one of his other companies went public. We looked at a news photo of all the smiling people, who seemed to be living in a gated community, on a planet I would never visit. Then Pierre said “that company was once even more screwed up than you are.”
Glenn describes a strong parental figure providing support, encouragement, and criticism in equal doses. And he goes on to explain why:
That anyone gave us money was a miracle. But once we get the money, we prospered, eventually becoming one of only two technology companies to go public in 2002. I wondered why Sequoia went to such great lengths to get Plumtree funded when it would have been easier to write off the few hundred thousand dollars invested in our company. And the simple answer was that Sequoia cared about its reputation and stood by its companies.
That last bit is the key point. It is what every VC firm I respect and admire does. It is what VCs should do. It is the bargain we make with entrepreneurs when we invest.
I am old fashioned. I was trained by a couple VCs who are Pierre’s age. This is how they taught me to do the VC business. It is how I do the VC business. It is how USV does the VC business. And I think it is ultimately the only way you can do the VC business.
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By Jolie O’Dell
Kohlberg Kravis Roberts (KKR), a private equity fund, is looking to raise $6 billion to establish a new pool for Asian startups.
Reuters reports that the new funding will be raised during the beginning of 2012 and that the firm had originally planned to raise $4 billion but will now be aiming as high as $6 billion.
Already, KKR represents the largest Asian-focused fund from a private equity firm. The firm maintains a $4 billion fund raised in 2007 to support Asian investments as well as a $1 billion China growth fund. The former is currently 70 percent invested, sources told Reuters, which has prompted the new fundraising efforts.
KKR now has investments in China, Singapore, Korea, Japan, Vietnam and Taiwan.
According to recent reports from KKR, it expects less volatility in markets like China where the government debt load is lower. “Both Europe and the U.S. are likely to face increased political unrest and social discord as they try to stimulate growth and reduce debt at the same time,” the firm stated in its statements on global macroeconomic trends.
Analysts at the firm also pegged Asia (with the exception of Japan) as a key point of global economic growth but also cited Chinese inflation as a point of concern.
As we’ve noted in recent months, a shaky market in the U.S. as well as distinct advantages in the pan-Asian arena are making the region more and more interesting to investors. Singapore in particular is a hotbed, with a tech-savvy workforce and startup-friendly government regulation.
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The business profile that can be found at the link found below may be of interest to my fellow venture capitalists and business partners. This Bloomberg Businessweek profile details by professional background and current employment positions. Please take a moment to look over my profile found here.
Steve Blank has a great post up on his blog suggesting that VCs should require startup CEO experience in their partners’ resumes. He quotes from me in that post but I’m not going to state which one came from me. You can guess if you want.
You might be surprised to know that I agree with Steve. I have never run a startup company. By Steve’s measure, that is a weakness in my background and experience. And I agree that it is. I’ve managed to overcome that weakness, but it is a weakness nevertheless.
I particularly like this paragraph in Steve’s post:
What running a company would do is give early-stage VC’s a benchmark for reality, something most newly-minted partners sorely lack. They would learn how a founding CEO turns their money into a company which becomes a learning, execution and delivery engine. They would learn that a CEO does it through the people – the day-to-day of who is going to do what, how you hold people accountable, how teams communicate, and more importantly, who you hire, how you motivate and get people to accomplish the seemingly impossible. Further, they’d experience first hand how, in a startup, the devil is in the details of execution and deliverables.
Newly-minted partners are a big problem for entrepreneurs (and VCs too). And Steve’s suggestion that they get a dose of reality before opining on stuff in board rooms is great. If a super talented young person in our firm shows an interest in a partner track, I would strongly consider Steve’s approach.
John Doerr famously said that it takes $30mm of losses to train a VC. I am proof of that theory. But as Steve points out, you can start a company and operate it for a year for less than $500k these days. That sure sounds like a less expensive way to learn how to be a VC.
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