My Last Post About This Election – Don’t Waste Your Vote

Please vote. Just so you know my bias before reading further, I’m voting for Hillary Clinton.

This post is not aimed at you if you have already decided to vote for Clinton or for Trump. It is aimed at you if you haven’t voted, are considering not voting, or are voting for someone other than Clinton or Trump.

At this point, especially in states like Colorado where it appears the election will be close, action other than a vote for Clinton is essentially supporting Trump. Regardless of your perspective about the candidates, the election process, our current system, or anything that needs to be changed going forward, either Clinton or Trump is going to be elected president by Wednesday.

I’ve been deeply upset about many things during this election. However, at this point, I feel extremely strongly that Trump is not a suitable candidate for president. I’m appalled that things have gotten to this point and that he’s been able to get away with things he’s said and done, but I’ve struggled with how to articulate my feelings in a direct and factual way.

Fortunately, Mark Suster did it for me last week in a post titled And Then They Came for Me … I’ve read Mark’s post once a day as I pondered what I wanted to write. As Amy and I finished Episode 5 of Goliath last night, my thoughts around this finally came into focus.

You should go read Mark’s post, but the rest of this post builds off of things he wrote.

“You don’t get to pretend for 5 years that the first African American president in US history wasn’t born in the United States and then get a free pass on running for the presidency.” (Suster)

On top of this clear racism, Trump had the audacity to both claim that Clinton started this and then he finished it. This was absurd beyond comprehension. It’s a classic example of extreme misdirection, something that is woven through many of Trump’s mistakes and misdeeds. It’s the opposite of a leader who takes responsibility for his actions.

“You don’t get to launch your campaign saying illegal Mexicans are “rapists and murderers and some, I assume, are good people.” That is racist and fear mongering and stoking the flames of those who want to vilify “the other” which has been done throughout our country to the Irish, the Polish, the Jews, Italians and yes — the Germans — and every other immigrant population throughout history. Racism is disqualifying. Immigration and assimilation are two of the unique features that have made America so great over its centuries.” (Suster)

I’m Jewish. My grandparents came here from Russia and Germany in the early 1900’s. Deep in my bones, I worry the Cossacks are coming to take me away and kill me. This is a recurring theme in my discussions with my therapist and my wife who is not afraid of this, but at least empathic to my concerns.

“You don’t get to call for a religious test to enter our country, potentially denying access to more than 1 billion Muslim people in the world including very large populations in Indonesia, Pakistan, India and Bangladesh.” (Suster)

In addition to being deeply offensive to me, it violates the basic tenets on which our country was founded. As a child growing up in Texas, I learned this in eighth grade American history.

“You don’t get to say out loud that you would kiss women against their will or grab them against their will. That isn’t “locker-room talk” it is sexual assault and you don’t get to normalize that talk and then be president of our country. ” (Suster)

I’ve been extraordinarily upset by this aspect of the election, an emotion I share with literally millions of women (and many men.) Sexual assault is a real thing, not locker-room talk.

“You don’t get to pretend that you “just don’t know anything about” David Duke especially when there is this pesky fact of public record that you do know about David Duke.”

Let’s go back to that Jewish and immigrant thing.

“But on issues of racism, race-baiting, religious intolerance, misogyny, sexual assault, white supremacy and demagoguery — there can be no gray area, …. These are disqualifying issues …  If we accept leaders who embrace demagoguery, intolerance and groups of citizens who would turn on each other and vilify “the other” then eventually they will turn on us, … I am the straight son of an immigrant father from South America whose parents on both sides are Jewish and who proudly thinks of myself as an American first and foremost and everything else second.” (Suster)

I am a son of immigrant grandparents from Germany and Russia. I probably would not exist if my grandparents hadn’t managed to get to America – there is a significant chance they would have been exterminated in World War I (Russia) or World War II (Germany). I love this country and while we have many issues, I can’t imagine living anywhere else.

I encourage you to be deliberate about everything you do. You get to choose who you are and what your values are. On November 9th, either Clinton or Trump will have been elected president.

Please don’t waste your vote by not voting.

Q316 State of Venture Capital Update With Cooley

Each quarter Cooley does a VC market update. This quarter they interviewed me as part of it on Quarterly VC Update: Brad Feld on the State of Venture Capital InvestingThe full Cooley Q3 report includes a bunch of data and trend graphs which I encourage you to go take a look at. The interview with me follows.

Based on Cooley data for the quarter, how does your experience in the market compare?  Similar/different?

The tone of Q3 felt like a continuation of Q2 with summer vacations tossed in. The existential freakout that occurred in January and February seemed like the distant past with the lingering hangover being a clearer focus on valuation and overall funding needs from new investors. While there are a few clear trends in the data, such as lower valuations for Series A through C rounds and more flat rounds, the overall changes from Q2 is not dramatic.

As far as deal terms, is the pendulum favoring companies or investors? Will this continue through the year?

It continues to be highly dependent on company, stage, and location. At the early stages, raising the first $2m tends to be straightforward in most geographies that have meaningful startup communities. At the same time, if you are a clearly successful growth company, there is a huge amount of capital available once you’ve reached a point of clear success (often after $20m – $40m has been raised). The stage in between – what used to be called a Series B or Series C – continues to be extremely hard to raise unless you are clearly on a very rapid growth trajectory.

So – for early stage companies (Pre-Seed, Seed, Series A), the terms tend to be clean and simple, and valuation is in a modest range that probably has a median around $5m. For growth companies (usually Series D or later), there are pretty clear market comparables based on growth rate, revenue, gross margin %, and type of company. For everything in between, good luck and be flexible.

Any current trends that stand out to you that are changes from the 2015 environment?

The word unicorn was used about 1000 times more often in 2015. There is much less focus on a $1 billion private valuation (thankfully) as both entrepreneurs and VCs have again shifted much of their discussion to what needs to be done long-term to build a successful company. There’s a lot less whining about the public markets, although there continues to be many opinions as to whether going public is a good thing along with whether it’s smart or stupid to delay the decision as long as possible. I’ve already forgotten what the trendy things of 2015 were since AI, machine learning, bots, and autonomous cars are all the rage, although it’s almost 2017 so it’s time for something new. M&A activity on one hand seems very lively, although it’s less in everyone’s face. Most importantly from my frame of reference, the amount of activity at the early and seed stage seems to be extremely robust.

How many deals do you expect to make in 2016? Are you a bull or bear?

We make around ten new investments every year. We’ve made seven so far this year and have three more that are in process, so we are right on track. I expect we will make around ten new investments in 2017. Since we are early stage investors, it simply doesn’t matter if we are a short term bull or bear. We are long-term extremely optimistic about the opportunity to invest in and help build important, new, innovative technology companies.

For a couple of years commentators in the market has talked about a “Series B” problem.  Do you see evidence of that issue, and if so it is the problem getting larger or smaller?

It’s the same. There is a huge capital supply gap for companies that are in between early startups and companies that are successful growth companies. As a result, the “Series B” problem is simply calling out something that has always been around – it’s tough to get the mid-stages funded. Early is a lot sexier, exciting, and easier – you are selling your future vision. Late-stage is more straightforward to evaluate. Mid-stage is when you are now selling reality and are often too early to show that you will be a large, long term successful business.

What is your advice to a company seeking its first capital?

Yoda was right – do or do not, there is no try. Decide to do it. Then do the work. If you want hints, my partner Jason and I wrote 200 pages of them in our book Venture Deals: Be Smarter Than Your Lawyer or Your Venture Capitalist* (*unless they are from Cooley…)

Do you see a substantial uptick in private and growth equity in the market? 

If so, how does that influence the venture market or your investment strategy? This is mostly impacting the later stages. In 2015, there was a huge influx of hedge fund, crossover, and private equity investors doing late stage rounds. Clearly the moonbeams the unicorns were riding attracted them. This vaporized at the end of the year and in Q1 as the public markets corrected. Private equity investors seemed to shift primarily to acquisitions of these companies rather than investing while large amounts of international capital suddenly showed up. For us, none of this really matters as it tends to be short term in nature driven by a variety of often conflicting forces. We try to keep our heads down and just help finance our companies continuously through all stages.

What other “macro” trends do you see affecting the rest of 2016 and 2017?

Well, there’s this thing called an election which hopefully will be over soon. In addition to creating some certainty about the dynamics in our government going forward, it’ll also result in a decrease of political advertising in all media, which I generally think will enhance my life although some adtech and media companies will be bummed out about it. Beyond that, I have no real clue about the macro.

Why Gateway Accelerate Is A Great Choice For International Entrepreneurs

On September 15, 2016, UMSL Accelerate joined the Global EIR network and began taking applications for its international accelerator program, Gateway Accelerate. Today is the last day to apply, so if you are considering it, don’t wait.

The goal of this program is to contribute to St. Louis’s local economy and UMSL’s curricular and non-curricular offerings to its students by attracting talented entrepreneurs from around the world to relocate their business to St. Louis. There are numerous benefits to the program including assistance with cap-exempt H-1B visas applications, enrollment in a 12-week boot camp, access to discounted office space, network development, mentorship opportunities, and access to capital.

I’m excited to have a Global EIR state besides Colorado in the middle of the country. Missouri is our fourth state to go live following Massachusetts, Colorado, and Alaska. New York has a similar program, so let’s count them as five, even though they aren’t formally part of the Global EIR coalition. We’ve got another half a dozen states in different stages of launching, so look for more soon.

St. Louis has a great startup scene and a vibrant business community. I ran a marathon there several years ago with Matt Shobe and have several long time entrepreneurial friends there like Keith Alper. There are a number of accelerators in town, including Capital Innovators, Arch Grants, SixThirty, Standia, and The Yield Lab. Business growth over the last five years has been significant and 26 Fortune 1000 companies are headquartered in St. Louis across many industries including Express Scripts, Emerson Electric, Monsanto, Ameren, Sigma Aldrich, and SunEdison.

St. Louis is a good example of a vibrant city. Having stayed in a hotel in 2011 overlooking Cardinals stadium when they won the World Series, their fans definitely show up loud and proud. As I ran the marathon, I got a sense of the city, which felt healthy and diverse. With the help of the St. Louis Mosaic project, the city aims to have the fastest growing immigrant population in the U.S. by 2020.

Gateway Accelerate is a one of a kind program where 100% of its funding comes from local companies rather than the university. I hope more cities engage with immigrant entrepreneurs the way St. Louis has – it’s a great model.

Our New Theme – Arts, Crafts, Design, and Marriage

We’ve just closed a financing in Borrowed & Blue and Jason joined the board. Given that Jason is also on the board of Craftsy and Havenly, I’m going to bring up the idea with my partners today that we create and design a new theme around arts and marriage. See what I did there?

A friend of mine sent out a wonderful note (well – actually an FAQ) last night about eloping. He and his now wife are in Hawaii at an event and tied the knot over the weekend. I’m psyched for them as we talked to him recently about whether they should elope or not. Amy and I eloped so while we are a fan of weddings, we realize how stressful and expensive they can be.

Enter Borrowed & Blue, whose tagline is the ‘Smarter Way to Wed’. B&B is taking a content and data-centric approach to serving the wedding industry. B&B is focused on helping couples discover vendors through their work. Every photo on the platform is tagged with the relevant vendors whose work is featured, and links to more detailed information about that vendor. To build up this repository of content, the company publishes more weddings than anyone else online, adding 350+ new weddings a week to its platform. The company has doubled its audience in just the last four months, and already has 18,000 vendors actively engaged on the platform. Borrowed & Blue has also recently launched an iOS app available in Apple’s App Store.

On top of this foundation of content, Borrowed & Blue is building the first transactional marketplace for the wedding industry, so couples will be able to book their venue, photographer, planner, etc. on the platform. Borrowed & Blue’s goal is to provide vendors with a true pay-for-performance model, while offering couples a one-stop shop to both discover and book all their wedding vendors online. Our marketplace theme posits that technology can be the answer to galvanize the two communities of wedding vendors and planning couples, and create a highly attractive business. We were particularly attracted by the company’s product focus and data-driven model.

So – you can elope, stress out, or try out Borrowed & Blue. And, if you have a good name for our pending Arts, Crafts, Design, and Marriage theme, leave it in the comments.

Late breaking news: Ryan reminded me that fashion should be included in the mix, as Jason is also on the board of Betabrand.

My Kauffman Fellows Summit Talk

I attended the 20th Reunion of the Kauffman Fellows on Monday and Tuesday. I’ve recently joined the board of directors and enjoyed spending two days in Kansas City immersed in things with the Kauffman Fellows, a bunch of friends, and a number of LPs and GPs that came to the event.

As part of it, I gave a talk and did Q&A with Lesa Mitchell (now the Managing Director of Techstars Kansas City). We covered a lot of ground around startup communities, investing, government, multi-turn games, and other things I can’t remember anymore. Buried in the middle is a story of my experience with Startup Weekend Tehran and a long rant on transcending geographic borders.

If you are looking for a Saturday morning video to run in the background, enjoy.