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10 Lies Angel Investors Tell

I came across a fun blog post the other day – Frank Peter’s post on 10 Lies Angels Tell. Frank has been an angel investor for quite some time and an active member of Tech Coast Angels. I have taken the liberty to convert the post into a nice little slideshow. I hope you enjoy it.

How Much Equity Do VCs Really Get?

In challenging economic times like this many folk are tempted to break out of their personal economic straight jackets by launching a technology startup. ‘Capital-light’ startups are the rage today, thanks to the extremely low costs of hosted services and the plethora of open source infrastructure software solutions. Many newbie entrepreneurs look to venture capital as the best way to finance the launch and development of their business. A common question raised by many of these entrepreneurs is ‘how much equity do VCs typically get?” Thanks to the folks at OwnYourVenture.com, entrepreneurs can now use a web based tool to model the impact of multiple rounds of venture capital funding. This post explores not only the math behind how founders’ equity gets diluted by venture capital, but it also models what founders’ ultimate payoffs can be in various exit scenarios. One pof the key takeaways is that you should worry more about how much VCs will own at the end of the fund raising process and what your exit will look like versus how much equity you give away in your Seed or Series A round.

Why I’d Prefer 1,500 Mid-Market Customers over 25 Fortune 1000 Customers

As the reality of 2010 sales forecasts settle in, enterprise software firms are beginning their annual hunt for new revenues. Many of them are considering moving ‘down-market’ into the mid-market space. This is a re-post of a piece I did last summer that talks about why I’d rather have 1,500 mid-market versus 25 Fortune 1000 customers.

Manufacturing Revenue 2010

If your company’s products/services are in the middle to latter parts of the life cycle, it is harder to sell new customers. In 2010 a lot more companies will be looking to acquire social media analysis/monitoring platforms, hardware/software virtualization, and cloud computing services than those looking for ERP solutions, mainframe job scheduling, or electronic data interchange. This does not mean that there are not significant revenue opportunities for older technologies – it just means that you have to work a lot harder since most buyers do not wake up in the morning and say “I really need to buy some middle-aged technology today!”

Manufacturing revenue is a harsh reality for most tech companies today. Over the next few days we are going to be exploring a few techniques you could leverage at the start of 2010 to get you closer to hitting your revenue numbers. The first approach is euphemistically entitled “The Bowling League Sales Program.” This program focuses on building awareness of your brand and customers’ successes via a geographically focused customer success blogging, social media broadcasting, and digital body language monitoring program. It’s a lot of work but it enables you to effectively leverage some of the most active and effective marketing technologies in today’s world to drive new revenues for your business.

Mary Meeker on Steroids

Morgan Stanley’s Mary Meeker, the “Queen of the Net”, is famous for her in-depth analyses of technology markets. In 2009 Mary and her team have been heavily promoting mobile Internet as the next big wave in the technology market. Several copies of her 68 slide October “Economy & Internet Trends” presentation from the Web 2.0 Summit have circulated around the web. Recently Morgan Stanley released the 671 slide presentation, the Mobile Internet Key Themes Report, that underlies Mary and her team’s research. Click through to the full post to review the entire presentation or to download it from Morgan Stanley.

Suing Gartner Won’t Solve Your Magic Quadrant Problems Part Deux

The ZL Technology/Gartner litigation continues. After having their first case dismissed, ZL has filed an amended complaint charging Gartner with defamation and trade libel. Given the high standard of proof in American libel litigation it is unlikely that ZL will fare any better this time around than they did the first time. Perhaps ZL might consider the advice of Vivek Wadhwa, an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. In a recent TechCrunch article Vivek describes how he turned his developers into the best enterprise sales people in his market. Vivek’s experiences are interesting for not only startups, but mature companies as well. His strategies certainly have a much higher probability of success than ZL’s quixotic litigation approach. See more details inside the post.

Supply Chain Management Exits

Supply Chain Management is not the most glamorous or valuable software market. In Q309 public Supply Chain Management companies had media EV/Revenue metrics of 1.3x and EV/EBITDA metrics of 9.8x. According to the Software Equity Group Supply Chain Management ranks 19th out of the 24 software technology categories they track. Interestingly enough, there have six major exit/corporate development events in the past two months in this market space including a major dividend, two major acquisitions/mergers, a large secondary offering, and two IPO filings. If boring old Supply Chain Management can generate this much activity then perhaps the rest of the tech market can look forward to a happy new year as well.

Suing Gartner Doesn’t Work After All

Recently ZL Technologies Federal lawsuit against Gartner was dismissed by the Federal Court for the Northern District of California. ZL had sued Gartner over their placement in the email arching Magic Quadrant and Gartner’s supposed bad acts that had cost ZL millions in sales. ZL will not be able to cash in on the $1.696 billion in damages they had claimed. This post explores the details behind the Court’s ruling on the seven claims ZL made. We also provide some advice from a noted industry expert on how companies like ZL can actually use marketing, sales, and branding to positively influence their relative MQ positioning.

Product Management Financial Literacy

Earnings for tech companies continue to grow, but revenues are declining. Tech heavyweights like Microsoft, SAP, Oracle, & IBM saw their revenues declined anywhere from 7% to 31% in the third quarter. If these tech giants are struggling to grow their top lines, then you are probably having a hard time as well. One of the most common complaints cited by sales teams and sales management is that prospects simply cannot appreciate the value a company’s offerings bring to the table and the significant economic benefits they could achieve if they simply implemented your solutions. Often, the root cause of these problems is that product managers and product marketeers lack the financial literacy skills needed to express compelling value equations for their products and services. This post explores the importance of financial literacy for product managers, a quick test to assess your team’s financial literacy, and some resources to help close any knowledge gaps that might exist.

JDA & i2 Part Deux or The ‘New Normal’ for Tech M&A Deals

In late 2008 JDA attempted to acquire i2 by primarily funding the deal with new senior debt. As the credit markets melted down JDA was unable to close the financing and ended up walking away from the deal by paying i2 a $20 million termination fee. Barely 11 months later, JDA and i2 have struck a new deal at a higher price, but with a radically different transaction structure that is engineered to ensure certainty of closure for the i2 shareholders. This post explores the history of these two transactions and the creative structure that JDA is proposing. This new structure has the potential to become the blueprint for technology M&A transactions in the post-credit-crunch world.

[ More ] November 11th, 2009 | 1 Comment | Posted in Management, Private Equity, Product Management, Venture Capital |

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