Axel Schmiegelow

Forget Bubble Talk: A New Dawn for VC-funded Startups?

Msuster Chart

Marc Suster has  published a slideshare presentation that is required reading for any entrepreneur, at least any entrepreneur seeking or considering venture capital.

 

As have Marc Andreessen and Christian Hernandez, Marc Suster argues that after a 10 year “hangover” from the crash of the.com bubble in 2000 and a shift of LP investment focus away from traditional VCs after that crash, the market has bifurcated into a growing seed / early stage sector with many new funds and an increase in volumes in late-stage financing, especially after the financial crisis of 2008. This has led to the A/B-Round Crunch many have been decrying in the past 3-4 years.  However, new types of VC funds are aggressively pushing into this Gap. In other words, new VCs spot and fund new opportunities.

 

In a second slideshare, Marc also argues that far from being in a bubble, rising valuations reflect two factors.

  • social and mobile usage having hit the mainstream creates a wealth of opportunities
  • more importantly, Exits happen later, with more equity getting “in on the game” pre-IPO or pre-Exit. This is what happened with Facebook and is happening with Uber and others.

 

To summarize, comparing the 2000 bubble with today is apples to pears both with respect to the venture market, and in light of the tremendous and accelerating shifts in user behaviour, societal dynamics, technological impact, and the vastly reduced costs of creating a new enterprise today.

 

Let’s grasp these opportunities and build the future. We have no excuse.

 

 

Andreessen warns: don’t burn cash, or you’ll turn to ash

Cash Burn

Don’t burn cash, says Marc Andreessen. In a retweet of Fred Wilson’s Post on burning cash, losing money. Marc Andreessen warns that hyper valuations should be used by entrepreneurs to stash up on cash, not to have delusions of grandeur and spend it all until you have nothing left to spend.

 

This is an interesting and important point. Says Marc, we are not in a bubble unless the spending behaviour of entrepreneurs make it a bubble. Their companies can well create the value implied in high valuations, as has been proven by the many spectacular success cases of disruptive players from Facebook to Uber. But startups need to stay focused and not spend because they have.

 

As my early mentor Ken Morse was wont to say: the laws of gravity have not been repealed.

 

 

itravel’s Market is booming: 40% of Americans book trips on mobile/tablets

itravel_mobile headline

Americans are rapidly moving away from desktops and getting comfortable, real comfortable, booking all of their travel reservations on tablets and smartphones. In other words, we’re making our travel plans on mobile devices, not desktops and laptops.

 

Read more: http://venturebeat.com/2014/09/19/travel-bookings-by-mobile-devices-in-u-s-now-at-40-percent-and-growing-report/

 

Rapidly, crushingly, the market is moving to where our product vision has been since 2012. We started at 4% mobile users and now get 42% of our traffic from mobile devices and our apps.

 

 

The Winds of Change in European Venture Capital

Lights in Europe

Recently I commented on my perception of the deficiencies of the Approach of European VCs to their investment decisions, criticizing what I perceive to be non-analytical herd investing reflexes. Startups are deemed “hot” or not, irrespective of their disruptive potential.

 

Two posts prove me a bit wrong and show that their may be a set of “new VCs” who are eating the world of the “old VCs”.

 

Ciaran O’Leary (@ciaranoleary) explains why he disregards business plan targets and focuses on the startup doing what is right to build its value proposition here: http://berlinvc.com/2014/09/19/doing-what-is-needed-to-achieve-the-plan-vs-doing-what-is-right/

 

Christian Hernandey (@christianhern) describes how a new(er) set of VCs are adressing the series A Crunch and taking a different approach, helping close the US-Europe gap in Startup Funding:

 

This is very encouraging, though understanding how Venture Capitalists decide remains the most important question LPs should ask themselves.

 

 

 

Culture: Eats meets West

Wave Cookie Monster

There’s something rotten in the Kingdom of Venture Capital

It’s generally a bad idea to generalize….(pun intended).

 

And criticizing VCs when you are in the process of fund raising is probably a bad idea and puts whatever you say at risk of being perceived as whining.

 

But having raised an excellent early stage round from some of the best Angel Investors and Entrepreneurs that I know, I cannot help but reflect on the contrast between the approach of the Angel Investors we have on board compared to the process and decision making that we – and others – experience with insitutional VCs.

 

The cliché of Venture Capital investments is that Angel Investors invest on a hunch, whereas insitutional VCs follow a more rational, risk-balanced and professional process.

 

Our experience has been that the really good, tough questions have been asked in detail by our Angels – to skim just the top of these questions:

- explain your metrics?

- what is the margin of error of your financial model?

- how do expect to scale?

- how much do you get out of a dollar spent?

- how big is your adressable market?

- what is your competitive moat (Buffet terminology)

- what are the strengths of your team, what do you need movong forward?

 

Too often, these were not the questions asked by VCs. It may be that in today’s market, they simply don’t have the time to parse their deal flow in depth and instead rely on market consensus that this or that startup is “hot”. This leads to herd investing, and that may explain the disappointment of portfolios largely kept alive by follow-on rounds and convenient “exits” to friend VCs portfolio companies. It even makes sense, in a way, by “pooling resources” – if, that is, the VC initially triggering the herd did actually ask and answer the hard questions.

 

What it does not do is create an environment for the type of long shot value creation that Silicon Valley excels at. Ueber, AirBnB, Twitter, Quora would not have stood a chance with how many European VCs – obviously not all – approach their deal flow.

 

Add to that the rituals of pitching, event networking, and buzzword-slinging that are endemic, and it makes you wonder whether these VCs really are following the right path to identify truly ambitious startups correctly. Today’s hot startup often gets caught up tomorrow in business model issues that were recognizable from the outset. I sometime miss an analytical response and understanding of the market, at least from VCs that do not have an industry focus.

 

It’s hard to picture a barefoot Steve Jobs convincing any of today’s European VCs to invest in Apple.

 

 

the Hamlet VC

If you don’t think animals can experience fun and pleasure, think again

How Steve Jobs would sell a Pen.

http://www.quora.com/If-Steve-Jobs-was-handed-a-pen-and-asked-Sell-me-this-pen-how-would-he-go-about-it/answer/Jong-Moon-Kim

Sometimes a travel cliché is an awesome thing to actually do – ping me if you want to experience that Bacardi Feeling in the Caribbean!

Bildschirmfoto 2014-09-09 um 17.30.08

…aus dem itravel Blog:
“No Hurries” – das Motto der Karibik

Wenn man an die Karibik denkt, dann hat man immer folgendes Bild vor Augen: schneeweiße Strände, azurblaues Meer und Lebensfreude pur. Und genau so ist es auch, sagt unsere Reisespezialistin Kathrin. Sie war schon mehrere Male in der Karibik und ist noch immer fasziniert von den Menschen, ihrer einzigartigen Kultur und der traumhaften Natur. Kathrin stellt Ihnen in einer Serie die Karibik und ihre Lieblingsinseln vor. mehr

I just love Physics!

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