Venture Studio (26): John Frankel, Founding Partner, ff Venture Capital

I recently had the pleasure of visiting with John Frankel, founding partner of ff Venture Capital, at their beautiful new NYC headquarters.

Originally from England and with 21 years at Goldman Sachs under his belt John brings an unconventional background to the table as a venture capitalist. Yet his approach is not what one might expect upon hearing this singular detail.  I learned, for example, that he's been actively investing in early stage startups (such as Quigo (sold to AOL) and Cornerstone onDemand (now CSOD on NASDAQ) for well over a decade before finally deciding to leave GS and starting his own fund full-time. I also learned that he has a unique (and refreshing) sense of the notion of "risk" in the realm of early-stage investing. Lastly, I learned that he's immensely thoughtful about the macro trends and forces at play in and around the tech space- not surprising from a guy who studied philosophy at Oxford.

Anyway- my favorite line was when he said in a tongue & cheek way that during all those years at the bank he was asking himself what he wanted to do "when he grew up". Looking at ff's formidable portfolio and the amount of fun he's having working with great entrepreneurs who want to change the world- it seems that he's found his calling.

Enjoy!

00:05    Coming to VC from  a so-called non-traditional background

01:32     Transitioning from angel investing to full-time venture investing

02:23     John's great and original take on the notion of early-stage investing being "risky"!

03:21     What motivates him as an investor? (Some great stuff here) "A better education than he received at Oxford"... "Working with great entrepreneurs who   want to change the world"

04:19     John's take on where things are going and all the "bubble talk" these days

05:50    "We continue to see an unbelievable number of amazing companies"

06:22     On getting in touch with @ffventure  (warm intros please!)

For the full interview click on the image of John just below: 

Venture Studio (13): Jeff Clavier, Founder SoftTech VC (or, "A Well-Tempered Clavier")

This is Episode (13) of Venture Studio

I sat down recently to speak with with angel investor turned MicroVC, Jeff Clavier, @jeff, founder of SoftTechVC I, II & III on a recent visit of his to NYC. (My thanks to the great people at Polaris Ventures' DogPatch Labs down in Greenwhich Village for hosting our talk.)

Jeff is a fascinating guy who saw a special opportunity in 2004 to invest in capital-efficient Web 2.0-type companies and got into angel investing in a big way, investing his own money in 20+ companies. He turned out to be enormously gifted at it. Hearkening back to my recent Series on Angel Investing, he most certainly skipped the "Mug" phase that Mark Suster and I have joked about. 

He then had the opportunity to raise a small fund and thus became what the press like to call a "Super-Angel"- but what really is more aptly-named, a MicroVC. After 65 investments in this Fund (SoftTech VC II), he has now launched SoftTechVC III, (aka "the real-deal"as he jokingly called it) which will still be a "small" fund, but certainly considerably larger than II.

It was great to hear Jeff's perspective on early-stage investing, the market segments that interest him these days and how he has evolved over the years as an investor. Enjoy.

:26  -  A little background on @jeff & how he first got into angel investing

1:19 -  Raising his first micro-fund in 2004, which was $15M in size

1:43 - The pioneers in the MicroVC space, including Josh Kopelman

2:23 - On making 65 investments in SoftTechVC II w/10 exits already(!)

3:05 - Launching SoftTechVC III & venture partner Charles Hudson

4:14 - What types of companies/sectors will III be investing in? (See Matrix)  Listen carefully here about Jeff's approach to various sectors

6:02 - After 99 investments & reaching this level- what changes in your approach?

7:21 - Epic Line: "In our business there's no pride- we basically do whatever it takes to help our companies"

7:31 - Jeff's perspective on acquisitions (of which he's had 17!) and how he works w/his portfolio company entrepreneurs in this regard

9:01 -  Has he noticed network effects amongst his portfolio companies?

9:55 - Jeff invests in a bunch of NYC companies- what are his thoughts on NYC?

11:11 - What are the biggest challenges for him?

12:47 - What's an average day like for Jeff?

SOFTTECH VC III (so far)

                  

               

Map of Boston's Early-Stage Tech Investor Ecosystem (Updated)

This is part of my Series' on Venture Capital and Angel Investing.

After I posted the recent map of Silicon Alley's early-stage venture ecosystem, a healthy number of people found it to be very helpful and several suggested I do the same for Boston.

Well, here's my first stab at capturing what is just a massive early stage venture ecosystem! Until you lay it out on a map, you just have no idea of the sheer sweep scope of the venture/tech community. Amazing stuff really.

Though I lived and ran my first business from Boston for a number of years, I'm going to ask for your help again- especially from the Bostonians among you! I'm sure I have made plenty of errors, I definitely need the twitter addresses of those investors that tweet- and I'd love to hear from the angel groups and angel investors in Beantown. Please keep the twitter addresses coming!

I'll be updating the map periodically based on people's feedback and will eventually put all these maps on an interactive and hyper-linked template.

As the print is currently quite small due to the sheer size of the map, simply click on it and it will open in a separate window. You may then use your zoom feature or simply click it again to enlarge once more at that point.

Looking forward to your feedback!

For the next post, a crowdsourceable map of the global entrepreneurial ecosystem, click here.

Avoiding Typical Pitfalls with Founder's Equity

This is part of my Series on Entrepreneurial Culture.

In meeting after meeting with first-time entrepreneurs I see many variations upon the theme of what can charitably be called unfortunate decisions about equity splits between the early participants. It is of course always a relief when I'm able to catch the entrepreneur before he or she commits this typical sort of blunder. Sadly, all too often, it is already too late and there is hair on the deal.

If you are an entrepreneur launching a new company, you really have to think long and hard about who your co-founders should be and how to involve them. 

It is most likely the single-most important business decision you will ever make.

Here are some realities and rules of thumb to go by:

• Most poor decisions made in the allotment of founder's equity are made by first-time entrepreneurs in the atmosphere of euphoria created by 'taking the leap' and starting a company for the first time with so-called 'buddies'. If you are in this category- take heed!

• Blindly going in "50-50" with someone you don't know all that well is just ludicrous.

• In most cases you should only bring on one other co-founder, (at most a second), and that founder absolutely must offer singular value and expertise to the venture.

• If you do bring on a co-founder, make sure you put their equity on a vesting schedule. (Four year vesting with a one year cliff is standard).

• With this sort of vesting in place, if they end up taking off after a dispute or a change of heart, they don't end up leaving with a huge chunk of equity in your company! Your cap table thus will remain attractive to potential investors if you execute well.

• Only partner with co-founders that are as driven and passionate about making this successful as you are. Do not partner with people who enjoy just "hanging around the hoop". Remember, every founder must be totally committed to the venture.

For my video conversations with great entrepreneurs go to: Venture Studio

The Iconoclast Speaks: David Heinemeier Hansson on the Supremacy of Profit in Startups

This is part of my Series on Entrepreneurial Culture and Philosophy.

Every start-up entrepreneur should tune-in to this fascinating debate between David Heinemeier Hansson and Jason Calacanis on TWiST. For those of you who haven't heard of him, Hansson is actually the Danish creator of Ruby on Rails and a founder of 37signals. He's a truly original thinker and makes a consistent and compelling case for the supremacy of profits (not revenue!) as the ostensible goal of a start-up. He's completely outside the conventional thinking and if you don't mind some strong language here and there, this is definitely worth your time. For Hansson it's all about your best idea and "the work" itself and not about the startup "game" and all the baggage that comes with it. Great stuff!