Bigger isn’t better Part 2: The right size for the Venture Capital Industry
In my last post, I discussed size considerations of individual venture capital firms.
If VC firms ought to be smaller, what does that say about the VC industry as a whole? (more…)
Add comment October 12, 2009
Bigger isn’t better Part 1: Size considerations for Venture Capital Funds
What is the right size for venture funds?
Veteran investor Alan Patrikof is musing in a recent piece in The New York Times about the “good old times” when venture funds were $100 million at most.
So why should VC-Firms be smaller? (more…)
3 comments September 29, 2009
So You Bought a Copy of QuickBooks, Now What?
It goes without saying now-a-days that emerging firms do everything they can to stretch their dollar. Just about every startup that I run into informs me that they have installed a copy of QuickBooks, so the finance part of their business is “covered.” When I ask who runs QuickBooks, the inevitable answer is the “receptionist/office manager” or “I do it myself so I know things are right.”
From a dozen years of financial consulting, I have seen far too many companies go far too long without paying management attention to finance, with often fatal results. While QuickBooks is a competent system, it is not a substitute for financial management in your firm and poor input to QuickBooks will inevitably result in inaccurate output and sub-optimal decision-making. (more…)
3 comments September 16, 2009
5 Classic and Costly Start-up Mistakes
Ivan Gaviria, an attorney at Gunderson Dettmer’s Silicon Valley office, recently posted 5 classic (and costly) mistakes startups make with their people.
What made #5 on his list? Ignoring Internal Revenue Code 409A. (more…)
1 comment September 16, 2009
Liquidity in an Illiquid Market
So, your venture investors have decided to stop funding your company, and you are about to run out of cash. What are your options? There are a number of alternatives, depending on whether your company has built significant value or not. (more…)
August 31, 2009
An Alternative Model to Value Early Stage Technology Companies
A news service for the valuation profession recently profiled a discussion of the “H Model” among valuation professionals (BV Wire Issue 83-1 published August 5, 2009 by Business Valuation Resources, LLP). Since we sometimes include the H Model in valuations of early stage technology companies performed at The Brenner Group, I thought I would add a few comments. (more…)
August 24, 2009
Has the Discount for Lack of Marketability Really Doubled?
Discounts for Lack of Marketability (“DLOM”) often play an important role in the valuation of privately held companies. This is because we often develop an indication of the value of a company as if it were publicly traded, and then adjust the value to reflect the fact that its stock cannot be rapidly sold on a public exchange.
In light of the turmoil in the equity markets over the past eighteen months, some have conjectured that the difference in values between public and private companies has gotten wider. An intriguing set of studies conducted by Ronald M. Seaman shine some light on this issue. (more…)
July 24, 2009
New Education Series for Technology Community
In response to today’s current market conditions, The Brenner Group is putting our experience to work and has developed and launched “The Brenner Group Education Series” – practical, educational seminars for clients, partners and entrepreneurs to address issues that are important to the technology community. (more…)
July 15, 2009
Light at the End of the Tunnel?
Most indicators for the venture capital industry are down significantly. As indicated by the latest Moneytree Report, funding is down (Q1/09 investments are at the lowest level since 1997), valuations are down (87% of Q1/09 venture rounds are flat or down, as reported by Cooley Godward Kronish), and the industry is in a slump and is trying to reinvent itself (as remarked earlier).
Curiously, the Silicon Valley Venture Capitalist Confidence Index for the Q1/09 actually rose to 3.03 from 2.77 (with 5 indicating high confidence and 1 indicating low confidence). This is the first substantial uptick in eight quarters. (more…)
July 7, 2009
Restructurings Are on the Rise
Since 2008, more and more vc-backed technology companies are finding themselves in a very difficult situation. Their sources of capital have run dry, and even with good ideas or good products plus customers and revenue, they may still find it difficult to raise enough capital to continue business as usual.
In recent months, I have written about the problem with the venture capital industry as a whole. This post will deal with the inevitable fallout of the venture capital problems, and that is – what is a company to do when it runs out of cash and its investors can’t or won’t provide follow-on financing? (more…)
July 2, 2009
Wes Rose
Gunther Hofmann
Bill Denebeim
Rich Brenner
Rick Kadet
Peter Dupont