Venture Capital Blog : Venture Blog : VC Blog : Florida Venture Blog by Dan Rua: March 2006 : Blog Archive

Web 2.0, Old-school Style

Frank Gruber from Somewhat Frank posted a nice web-based feed reader comparison over at TechCrunch. The readers he reviewed included:

In summary, he declared Google Reader and FeedLounge the best for speed. He liked Bloglines and Rojo for best features. That said, he felt none of these web-based readers had the speed and agility(?) of the best desktop readers like NetNewsWire and FeedDemon.

I share this first for my readers trying different feed readers, but also to pose a dashboard question I've been wondering about. Given that we already have good tools for email, messaging and browsing, do we need a new desktop tool for feeds? I know it's hard to resist new=good, but if the answer is no, then which of our existing tools is best for reading feeds? The ones reviewed above leverage your browser, but that's not where I'm headed.

My inbox, and specifically Outlook, is the closest thing I have to a daily dashboard. I do significant research via browsing and, less frequently, instant message friends/colleagues, but spend an order of magnitude more time working with my inbox. Therefore, I have chosen the feeds-by-email provider FEEDblitz to deliver my feeds so that I can read/organize them as part of my ordinary email ritual.

It doesn't hurt that I also use FEEDblitz to manage subscriptions to my blog and I've noticed that over half of my subscribers are choosing email instead of another feed reader (desktop or web combined). Admittedly, that may be due to my blog template having a big left-side button that says "Email Subscribe", but I also have a text "Subscribe" link and the feed-linked orange logo for subscribing via other readers.

So, is the inbox a superior dashboard, am I abnormal, or is there substantial market for all reader forms? Before you answer that, especially you "RSS-rules!" digirati, try out my "Email Subscribe" and then tell me if FEEDblitz isn't onto an interesting old-school play for Web2.0...

TechJournal Journeys South

One of my favorite publications when I was investing across North Carolina was the TriangleTechJournal and I was sad to lose it when launching Inflexion further South. In fact, I pushed a few folks to connect with TTJ about launching a Florida version.

Well, brighter days are here: TechJournal South recently launched coverage across North Carolina, Virginia, South Carolina, Georgia and Florida. They even have state-specific sections.

I'd encourage everyone in our entrepreneurial ecosystem to check out TechJournal South and subscribe if you like it. The publication is good and my past experience with the people is even better.

Welcome TJS and keep up the great work!

Supreme Diagnosis

This week should be a fun one for diagnostic companies and the venture funds who back them. On Tuesday, March 21, the Supreme Court will hear oral arguments in LabCorp v. Metabolite (04-607). Dennis Crouch over at Patently-O has done a fine job documenting the issues to be considered, including links to briefs from big guys and small weighing in on this case (including one jointly submitted by Mohr-Davidow Ventures).

The case revolves around whether Metabolite's claim 13 (U.S. Patent No. 4,940,658) is too broad to enforce:

13. A method for detecting a deficiency of cobalamin or folate in warm-blooded animals comprising the steps of:

assaying a body fluid for an elevated level of total homocysteine; and

correlating an elevated level of total homocysteine in said body fluid with a deficiency of cobalamin or folate.

Thus, the method comprises two steps, (i) assaying a body fluid and (ii) correlating the measure with a mineral deficiency. Metabolite has other, more specific claims for assaying a body fluid for an elevated level of total homocysteine, but those aren't in dispute. LabCorp (and other briefs) contend that patenting the correlation step goes too far, stopping even doctors from mentally correlating a homocysteine test result to specific deficiencies. They claim that patenting that correlation is just patenting natural laws -- a big no-no in patent caselaw.

I haven't read all the briefs myself so I won't venture to guess who should win here. I will, however, guess there are a lot of venture dollars riding on the outcome -- particularly where diagnostic correlations and business methods drive value. A key hope, by both sides is that whatever result will be narrowly tailored to avoid whacking IP value across the spectrum of startup and conglomerate patent portfolios.

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On a different note, Dennis also provides some great coverage on eBay v. MercExchange (05-130) coming before the Court later this month, and, specifically, whether an injunction should issue once a patent is found to be valid and infringed. On its face it sounds pretty simple, but there are significant equities to weigh -- particularly when plaintiffs aren't practicing their art anyway.

Put the Wow up Front!

Hackoff.com author and serial entrepreneur Tom Evslin has been posting a nice VC Primer from an Entrepreneur's POV. He is on target with most of his thoughts and his recent post regarding VC presentations is a good read. Guy has also chimed in on VC presentations, such as his 10/20/30 rule. Although I have a host of thoughts/posts for that topic, I'll share one right now that is near the top of my list: Put the Wow up Front!

It's sad to say, but when a VC, or better yet, the whole partnership settles down to hear your 30 minute pitch, you have about 5 minutes to win or lose the whole battle. This is Presentation 101 to investors, customers, partners, management talent, but I've seen it especially pronounced in VC meetings. I've had the pleasure of hearing more than a thousand in-person entrepreneur presentations either solo or with my partners and have come to this conclusion: You create either excitement/curiosity or skepticism/boredom in those first 5 minutes and your audience spends the rest of your presentation justifying that initial impression.

I'll go ahead and say for you "that sucks" and "how dare those arrogant VCs judge my baby in 5 minutes", but it's a message worth remembering. I've been on both sides of the table and try to remember this phenomenon so I might find opportunities the arrogant bastards miss. That said, I coach my portfolio CEOs to "Put the Wow up Front" (and revisit it throughout) because if that won't get investor greed glands going, describing your company mission statement, history and round expectations sure as hell won't.

Of course, the Wow for each company can be different. For one company, the serial entrepreneur team that has 3 big exits under their belt may be the key. For another, the bulging customer pipeline and revenue traction may be it. Whatever it is, say it early and with enthusiasm or you just might glimpse a partner texting someone to call his cell in 60 seconds...

Speed-Dating for Entrepreneurs

The MIT Enterprise Forum of South Florida is hosting a "Speed-Dating for Entrepreneurs" event March 16 and I've agreed to help out on the investor panel. BusinessWire just got the press release and event details are now finalized.

My last fund used to host one of these and they're a great opportunity for committed entrepreneurs and fence-sitting entrepreneurs to share their ideas, make connections, get fast feedback, and improve their plans. Feedback can range from "don't quit your day job" to "you've really got something here", but the practice of pitching to investors and listening is valuable on its own.

I hope you'll join us and, particularly those sitting on the fence, this could be the key next step in your journey...

Do Good to Do Well

To be honest, I've heard various perspectives in my business on the topic of helping/networking entrepreneurs when there is no investment to be had. However, one of my DFJ alums, Matt McCall, captured my approach in his latest post: A Glass of Milk. OK, so the chain-mail story is kinda sappy, but the moral still holds and I'm not the only VC who agrees.

Whether as an investor or an entrepreneur, I've found that helping others pays dividends in the long run. Yes, there will be times when it feels like you spend time, effort or political capital and get nothing in return, but in the end it all works out. I'm not chalking it up to metaphysical payback, but I do believe there a near-term psychic rewards and long-term material rewards for helping other people succeed.

Whether it's the golden rule of "Treating others as you would like to be treated" or my current favorite "Do Good to Do Well", try to create as many successes as you can around you and odds are you will reap rewards from some of them. You'll also make a lot of friends along the way...

A Little BS Can't Hurt

As a follow-up to yesterday's post, and to completely confuse my readers, I thought you'd get a kick out of the BS site ValleyWag -- focused on Silicon Valley gossip and entrepreneur antics. It's heavy on S, but entertaining nonetheless. Enjoy...

No-BS Venture Thoughts for No-BS Entrepreneurs

OK, so nobody take it personally. Given that one of my goals with FVB was to add some non-Boston/Silicon valley balance to the VC blogosphere, I've adopted the tagline "No-BS Venture Thoughts for No-BS Entrepreneurs." It's a double entendre intended to quickly differentiate what you'll find here and as a nod to my favorite entrepreneurs -- the ones who know how to cut through the noise and build great businesses no matter where they've chosen to live and raise their families.

I've been lucky enough to build funds in the two largest venture networks focused on non-traditional venture markets (DFJ and VV). I grew up in the Draper system learning its Silicon valley (S) style and now manage a fund in the Village network with its Bain/Highland roots in Boston (B). However, all three of my funds have been in no-BS regions where great technology/entrepreneurs ("smart people") outnumbered quality institutional funds ("smart money"). Many of the VC/entrepreneur lessons are the same everywhere, but I've learned there are some unique problems/opportunities in no-BS regions and hope to share some of that experience here.

So, I'll try to keep the BS to a minimum and welcome questions/comments from those "smart people" building companies where "smart money" is in short supply...

AxoGen Strikes a Nerve

Gainesville-based AxoGen, Inc. has landed $7.75M to help people walk, write and maybe even smile like "Smiling Bob" again. AxoGen's team of Jamie Grooms, John Engels, Marlo Walpole and Jerry Chang spun an exciting nerve regeneration technology out of UF with promise across peripheral nervous system injuries. Even for this talented team, which included RTI founder Grooms, it's been no cakewalk to get this far, but their vision and entrepreneurial commitment has put them in a strong position to change the standard of care for nerve damage.

They are neighbors here at Gainesville's tech incubator GTEC and good friends. Congratulations, enjoy the moment and make a difference in people's lives...

Venture Capital Termsheets

A friend recently asked about the typical terms in a venture capital term sheet and I realized that a source I take for granted isn't readily known in entrepreneur circles. The National Venture Capital Association (NVCA) website is targeted at venture funds and partners, but there is plenty of candy for entrepreneurs there as well. In fact, one NVCA page includes model documents that have been blessed by some of the leading venture and legal firms (company and fund counsel). Those documents include:

The docs aren't gospel and there was plenty of heated debate when "model" docs were being drafted. For example, east coast docs are typically "thicker" with rights/protections than west coast (having learned the business in a West coast system and now managing an East coast fund, I'll leave the fingerpointing to others). That said, reviewing these docs can provide a thorough view of what to expect institutional venture deals to look like. A decent companion resource for deciphering some of the legal mumbo-jumbo is Alex Wilmerding's Deal Terms book.

Some of the stuff is pretty dense so I wouldn't recommend anyone running wild with these docs without experienced counsel at your side. Likewise, I wouldn't look to these as the standard if your courting friends and family or angels. F&F/Angel deals should be much cleaner, often using a convertible debt structure to simplify negotiations and avoid significant mistakes (e.g. setting the wrong valuation/expectations) that could hamper your ability to raise institutional venture capital when you need it most. There are a host of resources/books on angel investing, some of which are collected in my Angel Investing Bible at Amazon.

I hope you find these model docs useful and take me up on reviewing them. If the VC is the only guy at the negotiating table who understands key deal terms, your deal and your company will likely suffer.

If you have (non-legal) questions after review, feel free to comment here or email me...