A Conversation with Brad Feld

Liveblog

A Conversation with Brad Feld, talking with Lisa Stone, BlogHer Co-Founder about principles covered in his new book, Venture Deals.

Lisa opens. Recaps why doing conference. Where are women in tech, and how to connect. Introduces Brad. Lisa talks about how cool it would have been to have venture deals book when Lisa first started biz.

A Conversation with Brad Feld
Photo Credit: Danielle Tsi

Lisa talks about range of people with regard to venture capital process.

Lisa: What is venture capital?

Brad: partner and partner wrote 30 blog posts, did angel investing. Brad was mystified during his first deal. Lawyers and mess of process. An entrepreneur was confused about the process. First time anybody tried to demystify term sheet. When first started working on book, venture capital sent all his deal books from 70s and 80s. Term sheet was exactly the same as today's term sheet. Book tries to level playing field. Helpful for businesses trying to raise capital. Book is relevant for angel rounds too. Jason, his partner, and Brad thought it was helpful to present more information easier to assimilate. Goal was to help entrepreneur understand how to handle this process.

Lisa: Talked about her own experience in first round investing. Talked about needs evolving. Staying up to speed is tough. And asks about selling part of the com pay to get money.

Brad: Believes that money for investment is just a resource. Being able to raise money is diminished if just an idea. No biz yet. Lots of diff typed of investors. Big range. Not a single archetype. Not all investors are the same. May diff types. What comes front the money or the idea. We back those founders that are obsessed with the product or idea. If the idea is within our themes of interest, then we focus on the person and the product. The idea is the price of admission. The idea is paramount. When you present to an investor, you'll have multiple interactions over time. Investor is looking for progress over time. So many things an entrepreneur can do without a lot of money.

Lisa: Do or not do, do not try. Why the yoda thing?

Brad: What I hear over and over again, entrepreneurs don't try to do things. Many fail, incremental or total failure. Along the path of success, the path is no tentative. Tentative is not helpful. Especially re financing. Assertive positive clear thought about money is a powerful construct. Be confident. Frame that in interaction with investor. Body language and emotional connotation matters. Not arrogant, and full of confidence with not questioning. No bluster. But go after it. The money part.

Lisa: There's a lot of confidence building exercises in the book. Owning what you don't know is very powerful. It's a real gift. Brad: a company asked for specific questions. Brad gave responses to data. We teach tech stars that you're giving data instead of hypotehsies. Stick with the facts, and own what you don't know. Investors are looking for your thought prices. Looking for your confidence. What's an assertion of fact. Does the entrepreneur understand revenues and spending issues.

Lisa: Instilling a level of confidence. How do you build a relationship with an investor for a long term relationship.

Brad: Don't wait for things to come to you. Go after what you want. Focused and impassioned. Showing up. Being noisy about what you do. Amplified through others. Brad gives example. Entrepreneur needs to create a pull situation. Be tactical about approaching the investor. If compelling and making progress, it'll create a pull. Entrepreneurs need to should loudly, make voice, be active, be out there creating interest. Early round is easy right now. Series B round is much more difficult at present. it doesn't necessarily get easier over time. It's just gets more complicated.

Q from audience: How do you balance fine line between making voice and being too noisy.

Brad: Subtle thing. Content free noise and content rich noise. Content rich noise is important. Articulating a signal instead of just noise. Focus and direct that signal. Don't be too broad. What's content rich, what will people care about. Your target market. Focus but be loud re that focal point. Make sure what you're saying has meaning.

Q: Pattern matching and bias. How do you work around hidden bias, as a women or person of color.

Brad: This is a great tar pit of a question and area. Couple of ways to answer it. All are bad. It'll take another 40 years and a lot of people will have to die. We need to get rid of old white guys who are controlling things. They'll die, guaranteed. It's a crummy situation. Between 1970 and today, we've had a radical change. We're still on this trajectory. My view is that pattern matching phenomenon is idiotic. I think that the frustration is that people allow it to be reinforced. I'm not interested in that. I encourage entrepreneurs who have the right attitude. Some of the solution is to change the patterns. Takes a long time. Don't let the pattern matching slow you down as an entrepreneur. You may not be able to control bias, but you can look for an investor who doesn't have the bias.

Lisa: There's an opportunity here to meet vas. At this event women are starting companies, in this room, will find the next hot thing. We have to start our own thing.

Q: Regarding Native American community: What do you do if you don't fit into normal niches.

Brad: When you hear fit from a whole stream of people that you don't get, means you need to find an investor that is a good fit. Start from perspective of how much money do you need to raise. Maybe angel investors who you know, or money might be available through future costumers in advance of providing services. There must be some linkages. Be bold. Go to investors. Keep asking the question why if investors keep saying no. Get to the essence of the thing. Find out what the resistance point is. Get one layer down from the rejection.

Q: What comes first: advise board, money, or product. When do you start, and when do you stop raising money.

Brad: I believe that you need to be obsessed. You need to collect people. Employees, investors, customers. Goal to collect people who can help you the most, willing to give money before they get. Then category two, what am I going to get. Financing comes from that. They want to be enough for category one. They believe in your obsession with your product. They want to be engaged. Always nurture people who can be be potentially investors. When you're ready, there's a window for looking for investors. Brad asks Lisa when she's going to look for next round of financing.

Lisa: I like the art of the chess game talked about in the book. What shifted for us re investor relations, how to set about the map of demand and story for the community. Show people what you're doing. Demo products. Best alternative to any deal is another deal you're working on. Create opportunities with investors, create more prom dates.

Brad: Before you chose, look at investors. Better to have choices. Multiple choices.

Lisa: It's hard for one person to do it all. Better to have partners.

Brad: There's the outside visible partner, and sometime a behind the scenes partner. The optimal numbers of co-founders 2-4, but product focused. It's really hard to start to start a company form scratch. Incredible dedication. Lonely. Sometimes lonely even with partners. Can share victories and celebrate. Crises can be shared. When we do our best work, we like to be with a couple of people. Give your self as many resources as possible.

 

[Editor's note: The transcript above reflects what the liveblogger heard, to the best of her ability, but is not a verbatim transcript of the session. As such, it may contain abbreviations or paraphrases.]

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