Over the years VC industry has become more developed and accessible. The mysteries of first decades are gone and most of the industry practices are already common knowledge.
Yet, they may still not be evenly distributed among entrepreneurs.
Scott Kupor’s new book belongs to the must-read category for every founder who needs venture funding. Secrets of Sand Hill Road complements John Nesheim’s classic High tech start up together with a more recent Venture Deals by Brad Feld & Jason Mendelson and The Hard thing about hard things by Ben Horowitz.
The book walks through the funding process step-by-step and explains the logic and pitfalls along the way. The topic is broad so there are only so many things one can tell in a chapter or two.
Kupor manages to explain the basics and still keep it interesting for more advanced readers. Andreessen Horowitz is in the exact epicentre of venture funding and over the course of ten years they have become one if not the leading VC company in the world.
This provides some insights and views to the thinking and processes for non-Silicon Valley investors and entrepreneurs. If the fundraising is already bread-and-butter for many the latter part of the process is something that may interest industry players: discussion about exits. Most of them are acquisitions, and IPOs can be put off for 10-15 years if not forever thanks to regulations and large later stage funds.
Kupor puts his legal background in good use by explaining some legal cases that have direct impact on practical startup life and company governance. Board member rights and especially duties are something seldom thought about before the actual circumstances are already in motion. There may not be perfect solutions for conflict of interest situations but certainly one can be prepared and acknowledge the risks in advance.
VC industry is very much ruled by power law results. The best performing funds reap most of the industry profits and it is more or less self-perpetuating force in action. The best deal flow and investors flock together making diversification a bad idea among VC funds.
A very small industry by numbers have a disproportionally large impact on society. VC-backed companies shine in net jobs created and money invested in R&D among all companies, and especially vis-à-vis publicly listed ones in the States.
The role of the entrepreneur is not something to be too envious about. Secrets of Sand Hill Road shine some light on the minefields waiting for entrepreneurs before their glorious exit event in 7-15 years ahead. The gold pot may be there at the end of the rainbow together with unicorns but who gets most of it is the billion-dollar question.