Are VCs Still Funding Startups?

Posted by Richard Moran.

Nearly every university is plowing money into academic programs on entrepreneurship. Nearly every major city is sponsoring and funding centers for innovation in the hopes of attracting startup companies. But wait, now the news is out that venture capital funding for early-stage companies is way down. And everyone is ignoring the fact and knocking on VC doors anyway.

According to TechCrunch, since 2014 the amount of VC money pouring into tech companies worldwide has nearly shrunk in half from 19,000 that year to 10,000 in 2017. And here is the point worth noting for entrepreneurs: the amount of dollars invested is about the same – it’s just going into later stage companies, not into Series A companies. For the first time entrepreneur just starting out this is not good news.

Everyone has theories about why this is happening including the shift away from funding apps and increasingly risk-averse angel investors. For some there is also the belief that fintech, edtech and SasS startups are so last year.

As an investor and former big firm venture capitalist, I have my own ideas about why the VC community is shying away from early stage companies. Entrepreneurs take note!

Too many early stage company ideas are just not big enough. When the venture community is talking about flying cars and curing cancer, it’s hard to get any attention. Entrepreneurs – make your idea big or don’t bother with VCs.

Early stage entrepreneur naiveté. Having a good idea does not mean it is right for a venture firm. Too many early stage entrepreneurs just don’t understand how venture firms operate. Venture firms stake out the industries and areas in which there could be interest in investing. Any idea outside of that staked out area is not fundable. Entrepreneurs – know who might fund you and don’t waste your time with others. And don’t get your feelings hurt if all you hear is no.

Venture fatigue. Startups are hard work. Some VCs just don’t want to put in the energy to work with a pre-revenue startup, no matter how good the idea. Entrepreneurs – make it easy for a VC to help you.

Do we really need that? My favorite phrase from the venture world is, “There is an infinite demand for the unavailable.” Meaning, maybe there is no market for that early stage idea.

  • Maybe we don’t need another app for finding coffee shops.
  • Maybe we don’t need Siri with more accents.
  • Maybe we don’t need a smarter pool sweep.
  • Or, maybe we do but the VCs aren’t biting.

A big bunch of companies are waiting to scale up. Think of the pig in the python metaphor. Sometimes digestion takes a long time. Based on many investments in early stage companies that happened earlier, we are now waiting for them to scale from a three million dollar company into a forty million dollar company. When that happens, there will be more capital available for the startups. Entrepreneurs – make sure you are always thinking of scaling up.

Entrepreneurs, take heart. The VCs are not abandoning startups. A huge amount of venture capital is still interested in big ideas and great entrepreneurs.  Many great firms only focus on and invest in early stage companies. All the good ideas are not gone. Take a deep breath and think of BIG, NEW ideas.

When the Boss Takes All the Credit

Posted by Richard Moran.

It happens. You (and others) work like maniacs, put in hundreds of hours, eat bad pizza in the office at midnight, incur the wrath of loved ones for never being home, break out in acne from stress, and live in fear of missing a deadline. The boss checks in on the team every once in a while, asks how things are going and then moves along saying, “OK, keep me in the loop if we fall off the tracks.”

Finally, the project is complete and it is a big success. The data is accurate, the findings are important, the recommendations are perfect and the story is complete. High fives are exchanged all around. The finished product is well worth the time and effort spent. The boss acknowledges the good work with big THANKS.

But wait. What happens now with all that good work? How will it play with the more senior executives who need to see it? Who will make that presentation? Who will be in the room?

Ugh. It turns out the boss is just knowledgeable enough to give the presentation to all the bigger bosses. No one on the team is in the room. Worse, it turns out that during the presentation of all that good work that you and the team slaved over, the credit is given to the boss. You know this because the low level person in the room assigned to take notes tells the team. Now what? It’s time for some hard questions.

Should you confront the boss? WTF! You say. How dare the boss do that! If you are young, marketable and willing to relocate, this could be a good strategy. Confrontations with the boss generally don’t work out well.

Should you wait to see if the credit shows up in your next performance review? The answer could depend on the timing of your next review. If the review is a long time from now, no one will remember the late night pizza you endured. Reviews are all about recent events. If you are going to wait, be sure to document all that went in to the project that the boss took the credit for.

Should you tell your boss’s boss that you deserve the credit? Another risky move. Going over the boss’s head could result in you losing your head. The saving grace could be that no one really believed the boss did the work in the first place and that is often the case. This strategy is best implemented when you have another job offer in hand.

Should you not work as hard next time and see what the boss does? No boss likes this strategy and most will sniff it out quickly. When it comes to slacking off, organizations have a long memory. Slackers are easily identified and it is not the label you want.

As is obvious by now, there is no good response to the boss who takes the credit, especially if you don’t want to leave. Take solace in the fact that people know who really did the work and deserves the credit and that the truth will win out. Sometimes it feels too painful to wait for that credit. But, trust me, bad bosses are winnowed out and the solid performers do rise and reap the credit they deserve.  It’s just the process can be excruciating.

When Your Office Might Burn Down

Posted by Richard Moran.

The recent Northern California fires were frightening.  The damage is heartbreaking and in the area, no one is untouched.  I know because I have an office in the Calistoga area, which was heavily damaged.   The office did not burn but as the fire approached decisions were at hand.  What is important?  What should I take when evacuated?

With the benefit of a few weeks of perspective and no smoke in the air it is useful to reflect on some thoughts that rattle around when all hell is breaking loose.

Things you notice and consider when your office might burn down…

  • Relationships matter. Relationships are more important than anything else I can think of. Take a moment to introduce yourself to your neighbor – at your office or at home. Neighbors can really step up to help each other even if the acquaintance is new.
  • We are all spoiled.  Or at least most of us are. Firefighters don’t worry about what kind of espresso machine is in the break room. The next time you see a first responder – buy them coffee. Or lunch. They deserve it.
  • Teamwork and communication are skills necessary for any type of success but both are essential during emergencies. Always have a plan. Make sure at home or at work you have a plan, and communicate it.
  • The shelf life of old PowerPoint presentations is less than an hour. Any hard copies can be thrown away with most documents that have been saved in a stack on the credenza.
  • Lucite cubes that commemorate a corporate event are not important.
  • When the power goes out, there is nothing: no Internet, no elevator, no lights, no anything.  Electricity is an undervalued resource. Try not to take it for granted.
  • Possessions can be replaced. It is not worth trying to sort through possessions in the face of a fire.
  • Giving back is important. Give back, to neighbors, co-workers, or those in need. You never know when you’ll end up on the other side of the fence.
  • Fire fighters are always welcome and however much money they make, it’s not enough.

Emergencies can bring out the best in people, be they corporate or natural.  The spirit of being compassionate should be a part of the workplace too.

In the US, the Thanksgiving Holiday is approaching.  It is the one day a year when we take time and try to be thankful.  We should be thankful for all the first responders who are truly brave men and women.  Be thankful for your family and friends and that you are alive with them to share the holiday.  Be thankful for what you have every single day.  Be thankful for colleagues and a meaningful career.  In the last month I learned to be even more thankful.