If the exciting world of venture capital, where you can make a billion dollars from a measly $50,000 investment or lose it all interests you, you better start with a baseline of knowledge before finding where to put your money, where to raise money, and how the deal cycle is managed so you can speak, listen, and understand coherently when doing your necessary networking and the expected “how can I be helpful” mantra.
Being at the forefront of new technology, whether artificial intelligence, robotic body parts, a new space station, or even a flashy new manufacturing logistics software, is where all the most innovative, fast-paced minds gravitate. Yet, learning everything about an industry that has existed for almost 80 years is no small feat, and can be intimidating if you aren’t pushed in the right direction. Venture capital was formally created in 1946 to invest in private-sector companies started by soldiers returning overseas from WWII, by a company known as ARDC (the minimalist naming style was the rage back then I suppose). Since 1946, venture capital has exploded to hundreds of billions in investor capital, all looking to help fund the hungry, innovative founders sacrificing a social life to change their industry, or even the world.
In our free time, we mentor students from our alma maters, and venture capital is always the focus during Q&A sessions. What I always tell them to get a stronger grasp on what venture capital is, how a deal gets funded, and what should a founder be wary of when getting a capital injection (investment) from a venture capital firm is always the same. Read Venture Deals by Brad Feld, who runs the VC firm Foundry Group, and is also the founder of Techstars, who runs a top-tier accelerator program for startups to provide their initial capital, mentorship, and community during the “0 to 1” phase.
Why do I tell them to read this book? Why not a textbook? Why not investor letters from Reid Hoffman (LinkedIn) or Brian Chesky (Airbnb)? Venture Deals is the perfect amount of granularity for someone who has a strong interest in honing their expertise in the industry. The book is not completely elementary where it is unreadable and a pain to get through, (looking at you), Valuation by McKinsey & Co (reader beware of this behemoth). However, it contains virtually every question that would come up from the intellectually curious, as well as anecdotes of what not to do, tricks to be aware of and to utilize to save yourself hundreds of wasted hours and thousands of dollars when fundraising, using a lawyer, etc.
The book covers various stages in financing and the trouble one will go through within each, what to be aware of on term sheets, how a venture capital fund is raised, negotiating, crowdfunding, and I could go on and on. This book is simply a value bomb and the perfect introduction to a novice/intermediate who wants to sharpen their sword and not be at an informational disadvantage when going through one or all the topics discussed in the book.
Concurrent with Venture Deals, we recommend all startup founders (and investors, and anyone looking to get savvier on the growth side) to check out YCombinator’s youtube channel, where there are near-unlimited amounts of videos created by some of the most intelligent investors and entrepreneurs going in-depth on just about everything one would need to know to successfully build a startup. Combine these two resources and you will become unstoppable with the right amount of grit and determination to back it up.
Final note: notice how both of these resources are rooted within the two best startup accelerators in the country? Providing such a high amount of value creates trust and showcases their expertise, making the founders want to work with them, give them a piece of their equity, and in return, they grow it to new heights (remember, “50% of a watermelon is better than a 90% of a grape” - homage to Mark Cuban).
An obligatory no, we are not sponsored by or affiliated with Brad Feld, Venture Deals, or YCombinator in any way, but believe that good, value-driven creations should be rewarded via word of mouth.