Financial Markets

The Times on financial markets over the summer:

I’ve been away for six weeks. Much been happening?

You could say that. Financial markets have been in turmoil. Central banks have had to extend emergency lines of credit to cash-strapped banks. Hedge funds have collapsed. Institutions have been bailed out using taxpayers money. Scores of planned mergers and acquisitions have been cancelled. Normal service in the City has, for the present, been abandoned.

Thanks to Paul Kedrosky for the pointer.

Graham on Stuff

This summer, investor Paul Graham noted that he had too much stuff.

I have too much stuff. Most people in America do. Stuff used to be rare and valuable. You can still see evidence of that if you look for it. For example, in my house in Cambridge, which was built in 1876, the bedrooms don't have closets. In those days people's stuff fit in a chest of drawers. Stuff has gotten a lot cheaper, but our attitudes toward it haven't changed correspondingly. We overvalue stuff. ... once you've accumulated a certain amount of stuff, it starts to own you rather than the other way around. ... Nothing owns you like fragile stuff. For example, the "good china"...

A historical change has taken place, and I've now realized it. Stuff used to be valuable, and now it's not.

Inspiring Entrepreneurship

VC Brad Feld is planning to sponsor a bathroom at the ATLAS Institute of the University of Colorado, after his similar offer was declined by MIT. To that end, he is looking for a good quote related to entrepreneurship for the plaque.

Perhaps the new table at Patently Silly would be a helpful addition to the facilities.

Wallstrip Reviewed

Startup Review profiles Wallstrip this week:

Wallstrip, which produces short online video pieces covering stocks, is a fascinating and unusual business. Born of the blogosphere, founded by a venture capitalist who says he never intended to run it as a long-term business, funded with seed capital and sold less than a year later, the company fairly screams “test project”. The fact that it was sold to CBS for $5M ... a mere nine months after launch proves that the test was successful.

Wallstrip carries material from other sites as well; Howard Lindzon's recent piece on Canadian oil is probably typical.

2006 AUM

Interesting note on Infectious Greed about the growth of assets under management.

Up 16.9% year-over-year, the 300 largest firms collectively added roughly three-quarters of a million dollars in assets every working second last year.

The five largest firms alone are responsible for more than $7 trillion. Lots more detail at The Institutional Investor. The Mid-Atlantic Venture Association (MAVA) provides statistics on the Mid-Atlantic investment market.

Advice for Entrepreneurs

Marc Andreessen has just published the fourth of his of his Guides to Startups. (First, second, third installments.)

From Adventures in Capitalism comes this advice, originally from Penelope Trunk, the Brazen Careerist:

"There will be times when you feel invincible. There will be times when you feel doomed. You're wrong in both cases."

Entrepreneurship is a rollercoaster ride. If you treat each step forward as a triumph, and each step backwards as a tragedy, you'll find yourself emotionally exhausted and, likely, making bad decisions. Keep your eye on the big picture, and don't let the highs and lows get away from you.

VC Power Failures

According to a recent LA Times story, VCs in Silicon Valley are suffering from frequent power outages these days.

Always on the leading edge of technology, many firms use Internet-based telephone systems. That means that when the power goes out and Internet routers fail, so do the phone lines. Mobile phones don't provide much help — the rolling hills that help make the area such an attractive one for financiers also make it notoriously bad for cellphone reception.

Perhaps they should check in with MIT students and faculty, who just demonstrated a Wirelessly Powered Lightbulb. However, one commenter observed that this was a Great lab trick, but like home nuclear reactors, not too wise.

Startup Questions

In an oddly titled post, "Flattery Will Get You Nowhere", the Early Stage VC Peter Rip gives some good advice to the CEOs of startups, in the form of questions to pose to potential partners and investors.

He concludes: But if they have a well-formed interest, they will be all too happy to share these data [the answers to his questions] with you to move the conversation along rapidly. If they don’t, they are looking for an education.

A VC on Investors

David Homik of Venture Beat has a long piece on participating in the recent Web 2.0 Expo panel "Venture Capital 2.0: Bright Future or Broken Forever"

Moderator Mike [Arrington] tried hard to get the traditional VCs (me included) to fight with the angel guys (Josh [Kopelman] and Jeff [Clavier]). His thesis was that angel investors will ultimately get all of the returns because there is so little money required to build a big internet business these days. The panelists disagreed.

The TechCrunch 2007 Conference scheduled for September has just been announced.

DeVenCI Coding

From c|net and the New York Times comes this report on DeVenCI (for Defense Venture Catalyst Initiative), a program that recently emerged from an experimental phase.

The Defense Department is using some of the nation's top technology investors to help it find innovations from tiny start-up companies, which have not traditionally been a part of the military's vast supply chain. For the investors, it is a chance to get closer to a branch of government with vast spending power that is a potential customer for the start-ups they have backed.

Bob Pohanka is the director of DeVenCI. The following VCs were selected last October:
Tom Banahan (Lehman Brothers Venture Partners)
James Barrett (New Enterprise Associates)
Kevin Fong (Mayfield Fund)
Wilber James (RockPort Capital Partners)
Mark Kvamme (Sequoia Capital)
Jeb Miller (ComVentures)
Roger Novak (Novak Biddle Venture Partners)
Don Rainey (Intersouth Partners)
Morgan Rodd (Arrowpath Venture Partners)
Ted Schlein (Kleiner Perkins Caufield & Byers)
Robert Simon (Alta Partners)

See the program Overview (pdf) for the program history and objectives, the National Venture Capital Association (pdf) for their take on the program, and FedBizOpps for registration and search.

NASVF State Comparisons

The National Association of Seed and Venture Funds has released a state-by-state comparison of venture investments comparing the 1st and 4th quarters of 2006 with the 1st quarter of this year, from the PricewaterhouseCoopers and National Venture Capital Association's Money Tree report. Virginia currently ranks number 18, with investments of $75,518,300.

In the first quarter of 2007, venture capitalists invested $7.1 billion into 778 deals, the highest quarterly dollar amount since the fourth quarter of 2001, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data by Thomson Financial. Deal volume actually declined in the quarter compared with the fourth quarter of 2006, indicating venture capitalists’ willingness to put more dollars into each round. Snippet from PricewaterhouseCooper