Start Small

A little more background on my recent tweets, see below.

I recently had a conversation with a VC who is in the process of raising his 1st fund.  My suggestion was to start small, acknowledging that management fees would likely be minimal or close to nothing.  The benefit of starting small is that the fundraising process will likely be slightly shorter and slightly easier (although it is never SHORT or EASY).  Institutional LPs want to see how you can manage a fund, so that faster you get started and show a track record, the faster you can have a chance of raising from those big LPs.  Many funds have shown the ability to start small and then raise significantly larger funds in a handful of years.

I also threw out the idea of…hold you breath…not charging any management fees on the first fund (i.e. no salary) but with a pre-negotiated amount of draw to cover non-salary costs.  I know this is shocker for some, but several managers have done this.  The trick obviously is how do you pay your bills with no salary?  Some had savings that carried them over for a few years, some had a significant other that helped them cover their living costs and some did consulting on the side.  Hard to pull off, but can make the fundraising process even faster if you are looking to optimize for speed.

Related, here is a post by a Charlie O’Donnell of Brooklyn Bridge Ventures, who raised an inaugural $8.3M fund and outlines the economics of his fund  http://www.thisisgoingtobebig.com/blog/2014/5/12/the-economics-of-a-small-vc-fund.html

Also a post by Notation Capital, which raised a sub $10M inaugural fund and how they capped their fees https://medium.com/@NotationCapital/a-million-dollars-in-fees-762009db0cc8#.uh0xauv93

 

How Do I Rebuild My Twitter Feed ?

One of my new year resolutions was to nuke my twitter feed.  I was following about 500 people and I unfollowed all of them.

Rebuilding you twitter list takes some time, but here are the steps that I took to rebuild my list:

  1. Go through my DMs, which is any easy way to refollow people who are important for me.
  2. There are about ~50 people that I can easily remember to follow again.
  3. Use SocialRank – this awesome service gives you insights on which of your followers you should follow and who you interact with the most
  4. I go through my mentions area to see if there are some people that I should follow that I recently engaged with.
  5. I ask people who I should follow.   See this as an example.

Within a few days, I rebuilt my feed with about 250 people.  About 50 of those are people I didn’t follow before.

If you have any tips on this, please let me know.

Better Health

Got my physical results last week, without getting into specifics, the doctor says I need to take better care of myself. So I set out to five goals for myself for the next 30 days:

1. No booze. I do a lot of entertaining/networking for my job and also watch a lot of ball games, so I tend to consume a fair amount of alcohol, this is going to be challenging but I’m mentally prepared.

2. No caffeine. I hardly drink any sodas but I do drink at least two cups of coffee a day, sometimes three, so this is going to be the most challenging part for me.

3. Participate in Movember. Will raise awareness for men’s health issues such as prostate cancer, testicular cancer and mental health. Will be raising money (see link) and also growing out a mustache (see pic below).

4. Trying to reduce the consumption of red meat and sweets.

5.  Lastly, doing a 3 day liquid cleanse during the 1st week of this new diet (see pic below)

20141103_085504B1rd7ojIMAE0p1C

The $600B Opportunity

Four years ago, I wrote a post about how there is $240B on the balance sheet of some of the biggest technology companies (10 of them) in the world, which is a great sign for startups who are looking to get acquired.  Almost all of the companies in 2011 have added significant cash to their balance sheet over the past four years. I pulled up the cash on hand for an expanded list (21 companies) and now there is $600B available to make acquisitions of startups.

I included cash and short-term investments only for this and previous post.  So in reality there is much more than $600B available via long-term accounts / offshore accounts.

cash 2cash

active VC firms in NYC who invest in seed stage startups (2015)

VC Firms who do at least four seed deals per year AND are based in NYC. In addition, seed investing has to be a core strategy of the firm. I used CB Insights primarily to get data on arriving to this list. Please let me know if I’m missing any firms

Advancit Capital
Armory Square Ventures
Avenue A Ventures
Basset Investment Group
BDMI
Betaworks
Bloomberg Beta
BoldStart
Bowery
Box Group
Brand Foundry
Brooklyn Bridge Ventures
Collaborative Fund
Contour Ventures
Deep Fork
Eniac
ffVC
Flybridge
First Round Capital
Founder Collective
General Catalyst
Google Ventures
Gotham
Great Oaks
Greycroft
IA Ventures
Lerer Hippeau Ventures
Liberty City Ventures
Mesa+
Metamorphic Ventures
Neu Venture Capital
Notation Capital
Primary Venture Partners (fka High Peaks)
Quotidian
Red Swan
Red Sea
Rothenberg Ventures
RRE
RSE Ventures
Scout Ventures
Softbank Capital
Tribeca

Pivoting

After a great experience at 500 Startups, I’m pivoting 🙂 (i.e. my last day is Dec 30th)

Over the last 15 months, I’ve had the opportunity to work on several parts of the venture business.  I helped raise the $44M Fund II (sourced our largest LP), launched the NYC coworking office, led four investments, worked on 20+ other investments, helped with portfolio management, assisted in finding/screening startups for the accelerator, organized community events and also covered several geographies (NYC/Boston/Israel).

The #500strong family is a special one, truly unique, happy to say that I was part of it and hope to stay involved in some capacity.  Thanks Dave for the opportunity.

Will be taking a little bit of time off and also explore several opportunities within the startup ecosystem and will let you know in February as to which company I end up choosing to work with.  If you want to get in touch, you can find me on Twitter or LinkedIn.

New York Tech Meetup (NYTM)

For the very first time in my life, I’m running for a position.  The New York Tech Meetup (NYTM) is one of the pillars of the NYC startup community and they have a few board seats available and have opened those up to the general community.

I believe that I’m a great candidate for the open position, here is why:

  1. The current board of directors in mainly comprised of investors or entrepreneurs, which is very important.  However, the board could be more diversified and with my background of supporting both investors AND entrepreneurs, it provides me a very unique perspective into both worlds.
  2. I recently relocated to NYC, so I have unique perspective of what it means to move to a new community with limited contacts.  A lot of people are now moving to NYC to be part of the startup community and we need to make sure they have smooth transition to NYC and are feeling welcomed
  3. Having spent nine years in the Bay Area, working with startups and investors, I bring a unique perspective as to what a thriving tech community has done well and not so well.   We can learn from other communities and make NYC an ever better place for startups to do business

Here are some initiatives that I would focus on if I am to join the Board of Directors of NYTM.

  1. NYTM can be the platform to assist people who want to relocate to NYC.  Given how fast the community is expanding, startups need more experienced professionals and NYTM can be utilized to inform people about the opportunities in NYC and how to integrate into this community more effectively
  2. Startups don’t have a collective voice when it comes to politics and laws that can positively/negatively impact them.  NYTM could create a Political Action Committee (PAC) so the voice of NYC tech community is heard in NYC, New York State and in Washington D.C.  Topics such as net neutrality, wireless spectrum, immigration laws, patent laws, etc are all topics that are important to this community and NYTM could serve as a platform to communicate our opinions
  3. NYTM should serve all the sub-sectors of the NYC startup community.  Committees could be formed around various sub-sectors such as ecommerce, fintech, enterprise software, mobile, healthcare IT, etc.  These committees could be formed to highlight trends and also make sure that the NYTM monthly meetups have more diversity in terms of the presenters on stage

For more information about NYTM and the upcoming election, please visit http://nytm.org/election/

Zynga IPO S-1 Filing

This blog post was also published on Betabeat.

Zynga, the biggest casual gaming company in the nation and the maker of popular games titles such as Farmville, CityVille and Mafia Wars, filed for its IPO today.

To summarize quickly,  Zynga is performing extremely well. They were profitable in 2010 and will continue to be profitable in 2011 (based on 2011 Q1 figures). They are looking to raise $1B through the IPO and have $996.7 in cash on the books.

One of the highlights is that top line revenue is growing quickly, from $19.4M in ’08 to $121.5M in ’09, roughly 600% growth. It jumped another 500% to $597.5M in ’10 and their 2011 revenue run rate is $941.7, roughly 150% growth. Although their run rate is $941.7 for 2011, revenue expectations are closer to $1.5B, which would be 250% growth from 2010.

Zynga has raised over $500M from New York City investors such as Union Square Ventures, who own 5.5%. Based on this IPO, it would be safe to assume that Zynga’s valuation would allow USV to make back their entire fund $125M 2004 vintage fund.

Other investors include Foundry (6.1%), KPCB (11%) , IVP (6.1%), DST (5.8%), Avalon (6.1%), Andreessen Horowitz, Softbank, Google, Tiger Global, Reid Hoffman. The CEO of Zynga, Mark Pincus owns 16%.

While the company is performing very well, there are some significant risks to consider. The main issue is that Zynga continue to be very dependent on Facebook for distribution and monitization. Can Zynga find alternative avenues to lessen the dependency on Facebook?

The other challenge is that casual gaming in still a hits-driven business. Can they continue to produce great titles to retain existing players and entice new users to their games? Another challenge is that casual gaming has a very low barrier to entry. There are a lot of competitors who are developing good casual games: Angry Birds (Rovio Mobile), Crowdstar, Pocket Gems, Papaya Mobile, Disney (Playdom – $763M acquisition), EA (Playfish – $400M acquisition, PopCap, Firemint, Chillingo), DeNA (Ngmoco – $400M acquisition).

The evolution of gaming is mobile, which is not Zynga’s core strength. Zynga needs to become dominate in the mobile gaming market and develop on platforms such as iOS, Android and Windows Phone 7. While mobile games lessen the dependency on Facebook, there are still gate keepers in the mobile space including Apple, Google, Zong and Boku. Lastly Zynga is only four years old, which is still relatively young to be going IPO. If you look at the history of casual gaming, dominant players have come and gone, just look at the ups and downs of Atari, Sega and Capcom to name a few. The point being that remaining a dominant player in the casual gaming world is challenging and maintaining this level of growth, even tougher.

To summarize, Zynga is legitimate company that diminishes the argument of those who proclaim a tech bubble. The company faces many challenges but what is certain is that gaming is a huge market and Zynga has the opportunity to remain dominant.

Data in this story is taken from Zynga’s S-1 filing and acquisition numbers on Crunchbase. This post reflects Shai Goldman’s personal views and are not the views of his employer.

Hiring in NYC

Working in the NYC startup scene is really exciting right now.  There is so much energy and enthusiasm in the tech community.  There are many VC firms setting up shop, new incubators, growing list of co-working facilities and increasing amount of service providers, all of which are there to support this exploding (in a good way) startup environment.

Silicon Valley Bank has had an office in New York City for 10 years and we are expanding quickly!

I’m looking for a talented person to join our efforts.  Do you know someone who fits this criteria?

Requirements:

  • Passionate about technology, startups and entrepreneurship
  • Passionate about providing excellent customer service (see – Delivering Happiness)
  • Ability to interact with Founders and CEOs
  • Ability to manage a large portfolio (hundreds) of technology companies
  • Experience in financial services is a big plus
  • Ability to develop strong relationships with referral sources such as incubators , lawyers, accountants
  • Attention to detail
  • Ability to work independently but also work as part of a team
  • Ability to do administrative tasks
The perks:
  • Competitive salary
  • Great benefits (insurance, 401K, stock purchase plan, 4 weeks of vacation) – more info
  • Flexible work schedule and location (home, office, coffee shops, co-working facilities, etc)
  • Working for a company that has a great culture. We work hard, are passionate about entrepreneurship and like to have fun
  • You get to work with awesome NYC startups!
  • The office has less than 20 employees, so it has a startup feel even though SVB has 1,400 employees
About Silicon Valley Bank:
  • Started in 1983
  • We serve three groups: technology companies, venture capital firms and premium wineries
  • Traded on NASDAQ, ticker symbol is SIVB
  • Company is performing well and expanding
  • Global commercial bank with offices in Israel, UK, India and China and 27 offices cross the US
  • Headquarters in Santa Clara, California
What is the role:
  • So you have gotten this far, which is great.  So what are you going to be doing?
  • Primary responsibility will be to manage a portfolio of NYC startups, a few hundred
  • You are the primary point of contact for NYC startups (self funded, angel funded, VC funded)
  • This includes fielding phone call, emails, in person meetings, etc
  • Need to educate startups on the products/services offering of SVB
  • Open accounts for startups
  • Provide awesome customer service, I’m talking about 5 star service
  • If you do your job well, the startups you work will refer their startup friends to you
  • Allocation of time for this role: 40%  opening new deposit accounts, 40% managing the portfolio, 20% networking
  • The two of us will be part of a team and will work closely together

Interested?

  • Don’t email me directly (unless you know me already)
  • You must receive a referral from someone I know.  Leverage LinkedIn, Facebook, Twitter to get an introduction.  This should be pretty easy, I have a lot of contacts, someone you know probably knows me
  • Resume AND cover letter are required.  I received several emails with no cover letter, you need to provide one to be considered for the position.
  • If you are looking for a VC type position, this is not it (I received several inquiries, who assume this is a role to get on a path of a VC career)