Category Archives: Capital


I am enjoying this new Q & A part of Term Sheet.

Some interesting sections…


What are your thoughts on the future of cryptocurrency and the blockchain as it relates to venture capital?

I struggle with two diametrically opposed positions on this. On the one hand, I absolutely love the innovation that the blockchain is bringing and see a lot of need for financial industry innovation and removing friction from that ecosystem. On the other hand, I believe that Bitcoin and Ethereum are wildly overvalued relative to any notion of what is value. I do fear and suspect that a lot of the short-term price escalation is driven by speculation and/or improper uses for things like money laundering.


What’s going on in the cloud space right now that you think Term Sheet readers should know about?

The massive replatforming of software continues, and cloud is that next evolution. We are doubling down in every way on the space now and absolutely believe that the trend is ripping through the software ecosystem.

It’s created a number of related trends where cloud is the enabler for enterprise mobile, and this notion that mobile workers can get access to great software products is now taking hold. We went from clunky heavy software, to a browser interface with cloud, to your phone with mobile. The next iteration will actually have the interface disappear, and you will interact with software much more naturally. The pace of innovation is accelerating, and each of these cycles is compressing.


You often point to a section on your website entirely dedicated to your biggest misses called, The Anti-Portfolio. Why does Bessemer showcase winning investments the firm decided to pass on?

We’ve had people call and notify us that our website’s been hacked: “Oh my God, someone put up an anti-portfolio on your page. You guys should know so you can take it down.” It’s hilarious, and I tell them, “Guys, just step back. You can’t take yourselves this seriously. Can you not enjoy a little bit of humor?”

We need to be able to make fun of ourselves. As good as we can be in this business, we still wake up every day and read articles of great companies that we missed or didn’t quite understand, and they materialized. We hope every entrepreneur we meet with ends up on one of two pages on our website — either the portfolio or the anti-portfolio. And we’re sincerely happy for their success either way. It’s not a zero-sum game. The spirit of the anti-portfolio is to acknowledge that even the best investors screw up all the time.

This is something we tracking internally over at SeedPlus.

World Domination 

This past week was busy with switch, slush, venturecon, VC-PE summit and then walkabout. I hit or spoke or cheered them all on. I love 💕 being in Singapore and it was awesome to witness everyone from around the world coming out to support the city/state that continues to punch well above the weight class that everyone thinks it might be in.

I won’t lie – I am Singapore fanboy. 

When I read stories like this about America, startup slump, I am thankful to be in Asia and specifically at the center of SEA. Pro startup with a government mindful of the challenges ahead but super supportive of tech and the role it will play in future societies.

I worry about America but remain hopeful.

Overall I continue to be concerned about the role of the huge tech companies in our lives and their impact on startups and capitalism.

I can’t wait to read The Four.

And on this subject his weekly newsletter is very timely ::

The biggest opportunity for the Four

The Four could pull off one of the greatest moments in business, addressing a huge social issue while disrupting an enormous, wildly profitable sector that hasn’t innovated in decades. One or more of the Four should launch a tuition-free university that blends offline and online learning, and charges firms to recruit. Student debt and corporate profits are at an all-time high, meaning we need to flip the model — charge firms, not students, for education.

Apple is also well suited to do this as its brand has roots in education. I estimate the economic value of credentialing is, if taken as a market, likely the largest industry in business with 80%+ gross margins. There would be several ways to create $100B+ in shareholder value and catalyze desperately needed competition. We (universities) have stuck out our chins and deserve fists of stone. Feeding like insecure vampires on the scarcity of our product (dopamine surges through our brains at faculty meetings as we revel in how impossible it is for kids to get into our programs), and praying on the hopes and dreams of families. Education used to be the upward lubricant and a social good. It’s now just one of those things.

Other than each other, there is only one thing between the Four and $1T in market value: the perception of poor citizenship. The small-ball strategies of tax avoidance, obfuscation, and the idolatry of youth and the dollar, may turn big tech into smaller tech.

Thoughts to ponder for sure.

I hope one of the companies steps up and challenges the perception of the role they could play and make America proud.

Structured Financing

Over a quick bite today I continued to read the latest edition of Venture Deals, it has been enlightening to read it post working in VC for over a year now. I have been able to validate some of the principles first hand while gleaning a thing or two to help me in stuff I am currently dealing with.

I wrote,, the other day and was thinking more about the book in light of how some founders may not understand how various rounds of venture financing works.

A couple of things to note is that usually once you raise money – you will probably be raising until exit or profitability. So an angel round will turn into a seed round, which will lead to an A and most likely a B. Maybe somewhere in that mix you might exit or generate enough cash to no longer need to raise money. It could also be that venture financing makes way for debt financing instead. 

The point being that as you look at your very first fundraise, one must have a view to how the follow on rounds will work and the milestones you will achieve during the rounds. Usually this will map to burn rates and the hopeful product or revenue targets that match rounds and the end of cash cycles.

Being careful about valuations during this process is important but also realizing that more than one round will happen helps to put it all in context.

Long story short if you are a founder or thinkjng abor becoming one? Read the book before you start your fundraising journey since it will probably help you more than my ramblings.

Enjoy the weekend!

Take a discount.

This is such a great read. I am tempted to take item 1-3 and send it to every startup prior to our first meet up.

It is always hard to explain this stuff as a VC without a founder assuming that it is just our ploy to buy more of the company for less money but it is not – it is us doing the best we can to ensure that we are helping to build the foundations of a great company.

Best to read the whole article but let me drop the three main points here.This one is so true and I have seen it first hand. A top tier VC will do the math, model the stages and model the exits. They will use these numbers to create their valuation but also take into account the stage and any other important signals. A founder, most likely not using any models, will decide they think the company is worth more and then go find another VC to give them that valuation. Usually the other VC is not top tier and is using valuation as tool to win the deal. Founder will think they have won but honestly they didn’t.

If you still aren’t convinced, here are three more reasons to take a discount on your valuation:

First, you get better investors. I’ve seen too many cases where second-tier investors outbid the top-tier. But a lower valuation ensures the very best investors want in.

Which VC do you think will do the hard yards down the road? The one that does the hard yards going into a deal or the one that just throws out the number you want to hear?

Second, a lower valuation helps protect you from a down round. Even great businesses face unexpected challenges like market downturns; I raised money during the 2001 and 2008 market corrections, and it was rough. Valuations got slammed, and the end result for many was a down round that seriously hurt their companies’ stature and ability to raise more money.

If you raising to perfection on the high-side any sort of issue might cause your next round to be a down or flat round. Less revenue, miss some metrics, tight funding environment or politcal/environmental issues can all create an event that might cause a flat or down round. If you raise with the discount or some “wiggle room” you can weather the storm much easier.

The third and probably least understood reason is that a lower valuation allows you more headroom for an exit. I’ve seen many entrepreneurs raise money at valuations that are higher than any buyer would be willing to pay. The result is that they get themselves boxed in, and when they see an opportunity to exit they can’t get a deal investors will agree to because their last round was done at too high of a price.

This is the one that trips of founders the most, it is also the one that SEA founders should think on the hardest. Most exits in our region will be from acquisitions and if you are not exiting close to going public then most likely you exiting somewhere between your seed and B round – if so then price is going to be a huge factor. On top of these regions being more expensive to get a deal done in, the acquirers may not have funny money and will be somewhat price sensitive. You may get an offer only to find out that your valuation means the exit isn’t going to be very meaningful.

Best to make sure you really grok how to fundraise.

Reminder to read Venture Deals and then superset it all with these three nuggets of gold.