Want To Be A TechStar? Read Brad Feld & Jason Mendelson's New Book: Venture Deals
I recently reviewed Brad Feld and Jason Mendelson’s book Venture Deals, in this entry. I concluded that it is an effective tool for leveling the playing field between sophisticated investors and emerging entrepreneurs. I have subsequently recommended the book to number of students as well as emerging entrepreneurs, all of whom expressed positive feedback.
Thus, I was excited when Brad agreed to chat with me via Skype and discuss the book’s genesis, along with the reaction of his fellow venture capitalists to the book’s revelation of numerous fundraising “secrets.”
You can watch my interview with Brad below or on YouTube
Brad and Jason are both former entrepreneurs and current Partners at Foundry Group, a highly successful, early stage venture firm. Brad is also the Co-Founder of TechStars, an acclaimed startup boot camp which has spawned a number of promising companies. Of the 80 companies that have completed the program since its 2007 inception, 49 have received funding, 8 have been acquired and 8 have ceased operations.
I began our discussion by asking Brad what motivated him to co-author Venture Deals, rather than continuing to share venture capitalists’ secrets via his Ask The VC blog. “At one level it’s a terrible return on time investment, but on another level, it’s a really positive one. Writing a book is very different from writing a blog.
There were a couple motivations. One, I wanted to know what it was like to write a book. Second, both Jason and I felt there was a lot of timeless information…the state of the art of the Venture Capital Term Sheet hasn’t changed that much in the last 30-years. We felt it was a topic that we could create something that would be really lasting for entrepreneurs. We decided to do it in a way that was accessible.”
I then asked Brad what he thought would be the most surprising lesson that emerging entrepreneurs will learn from Venture Deals? “There are several. One is we really try to shift the discussion from a negotiation with the venture capital firm to a negotiation with an individual. We spend a lot of time… talking about negotiations, negotiation theory and how to think about it. It’s remarkable…how poor negotiators many VCs and many venture-backed lawyers actually are. The vast majority are not very good negotiators. An entrepreneur doesn’t need to know that much to be in a pretty strong negotiating position.
The incentives of the VCs matter a lot. We… take apart how venture capital firms actually work and how the VCs get compensated. We try to do it in a very direct way. The dynamics of the venture capital industry have changed a lot over the last dozen years and probably will continue to change and entrepreneurs really need to understand that.Continued on the next page