June 2006
Internet Prospector

TOOLS

Continuing the series about venture capitalism (VC) from last month, here are some sites providing insights into how VC happens and what VCs do.

CONTENTS:


VENTURE CAPITAL

WetFeet gives a nice industry overview and a Major Players list by number of deals. There's also an industry job guide, so you can tell the players from the supporting cast.

http://www.wetfeet.com/Content/Industries/Venture%20Capital.aspx


THAT THING THAT VENTURE CAPITALISTS DO

Mitchell Berlin's article, "That Thing That Venture Capitalists Do," from the January/February 1998 issue of the Federal Reserve Bank of Philadelphia's Business Review, is still apropos. It explains the basics in a sort of "well-respected expert talking to the introductory-level college class" style. At the time the article first appeared, Berlin was a senior economist and research advisor in the research department of the bank.

http://www.phil.frb.org/files/br/brjf98mb.pdf


THE BOTTOM LINE: STOCK OPTIONS, START-UPS, AND VENTURE CAPITAL

Corante brings us an article by Arnold Kling, who compares venture capitalists to Piglet in the story of Winnie-the-Pooh and the Heffalump -- a comparison that, oddly enough, works on the economic level. The article goes on to explain why VCs want the companies in which they invest to use stock options to attract employees instead of cash compensation. That might explain all those Microsoft and Intel gazillionaires!

http://www.corante.com/bottomline/articles/20020516-788.shtml


VENTURE CAPITAL VOCABULARY

Here are six key VC terms a researcher needs to understand.

http://www.mbda.gov/?section_id=1&bucket_id=152&content_id=2511&well=col_2


SACRED COW DUNG

Christian Mayuad has developed this irreverently titled Web site for debunking business "mythocracies." The site's reprint of Gary Rivlin's May 2005 New York Times article, "So You Want to Be a Venture Capitalist," is helpful. It traces the misadventures of some major players who failed at being venture capitalists, proving that industry knowledge does not a good investor make.

http://www.sacredcowdung.com/archives/2005/05/so_you_want_to.html

Another article on this site, "Planning, Funding, Executing, and Exiting a New Venture" by Gerry Lemberg of Silver Fox Venture Partners, gives some solid VC rules.

http://www.sacredcowdung.com/archives/2006/03/planning_fundin.html


ART OF THE START: WHAT TO EXPECT FROM A VENTURE CAPITALIST

Guy Kawasaki, Forbes columnist and CEO of the venture capital bank Garage Technology Ventures, gives a good description of what a VC does and what companies can reasonably expect from a good VC.

http://www.forbes.com/columnists/2004/01/27/0127artofstartmidas04.html


VENTURE WORTHY

I liked the simple explanation that differentiates a VC from an angel investor.

http://www.ventureworthy.com/


DELOITTE & NVCA 2005 GLOBAL VENTURE CAPITAL SURVEY

The survey was administered to VCs in the Americas, Europe, the Middle East and Asia Pacific in 2005. Findings reveal that the U.S. is exporting the venture capital concept and American VCs are expanding their global investments, with China and India as their top targets. For details, read the rest:

http://www.nvca.org/pdf/VC%20Survey%20PR%20FINAL%206-22-05.pdf


COMPENSATION OF VENTURE CAPITALISTS WITH TWO PRINCIPALS

Here's a very brief and to-the-point outline of how venture capitalists are compensated in Korea, from Sung Hyun Kim of Ewha Womans University. Hmmm. Sounds very similar to how it works in the U.S.!

http://ideas.repec.org/p/ecm/feam04/524.html


Chris Mildner


 
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