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Our Model1


This past week our portfolio company MongoDB went public. I think that occasion presents an opportunity to talk about USV’s model. We are a small firm. We raise modest sized funds (by modern VC standards). Our first fund was $125mm, our second fund was $150mm, and we have now settled on $175mm as a good number and our past three funds have been that size. Our typical entry point is Seed or Series A although we have an Opportunity Fund that allows us to enter later when that is appropriate. We do that once or twice a year on average. We make between twenty and twenty five investments per fund and we expect, hope, and work hard to make sure that two or three of those investments turn into high impact companies that can each return the fund. Although our entry point is typically Seed or Series A, we continue to invest round after round to both protect and add to our ownership. We have no requirements on ownership, but we typically end up owning between 15% and 20% of our high impact portfolio companies. If you do the math around our goal of returning the fund with our high impact companies, you will notice that we need these companies to exit at a billion dollars or more. Exit is the important word. Getting valued at a billion or more does nothing for our model. We need these high impact companies to exit at a billion dollars or more. Because we invest early, it generally takes seven or eight years for an investment to exit. We closed our first fund, USV 2004, in November 2004, and our first high impact exit came almost exactly seven years later when Zynga went public in late 2011. Mongo DB represents the eighth high impact exit that USV has had. They are: Zynga – IPO – 2011 Indeed – Sale to Recruit – 2012 Twitter – IPO – 2013 Tumblr – Sale to Yahoo -2013 Lending Club – IPO – 2014 Etsy – IPO – 2015 Twilio – IPO – 2016 MongoDB – IPO – 2017 Although MongoDB won’t be an exit until the lockup comes off and we are truly liquid, every other one of these impact investments has returned the fund it was in (or much more in the case of Twitter, Lending Club, and Twilio). We were the lead investor in the Seed or Series A round in seven of these eight high impact companies and three of them came from seed investments. It’s easier to identify high impact companies in the late rounds, but not so easy to do that in the early rounds. That’s where our thesis based investing comes into play. It is also important that all of our partners participate in this model. It takes seven or eight years before we can expect a new partner to contribute and Albert, who joined us in 2008, has produced the last two high impact exits with Twilio and MongoDB. John, who joined us in 2010, has already contributed one in Lending Club. I have no doubt that Andy, who joined us in 2012, and Rebecca, who joined us this week, will produce their share of high impact exits. Andy already has several in the pipeline. So this is our model. Keep the fund sizes small. Make investments early so we can buy meaningful ownership for not a lot of money. Keep investing round after round to maintain and/or grow our ownership. And have enough high impact portfolio companies that we can get two or three of them per fund. We have a good pipeline of high impact companies in our various portfolios so that we expect this model will keep working for the foreseeable future. This model has more or less been the model of all three venture funds I have worked in over my thirty year period. It is time tested and it works when applied with focus and discipline and a strong investment thesis. But with a new model, tokens, in its infancy, it begs the question of how it will impact our approach. We already have four portfolio companies that either have done or have announced intentions to do token offerings; Protocol Labs/Filecoin, Kik/Kin, Blockstack/Stack, and YouNow/Props. So we are going to figure this out in a few years. I expect the hold periods will come down as token offerings come early in a company’s life, not later. So we should know more about how this new model works in three to five years. There are a bunch of questions that come to mind. Here are a few of them: Can a token based investment return a fund with more or less frequency than an equity based model? How long are the hold periods going to be in a token based model? Will the 10-15% high impact percentage that we see in our equity based portfolios be similar in a token based model? What are the appropriate ownership levels for a token based investment vs an equity investment? We are going to continue to execute our equity based model in parallel with our token investments, at least for as long as that seems like the right approach. We have a good thing going with the equity based model but we understand that we have to adapt and react to changes in the market and we are doing that, fairly aggressively, with tokens. It is an interesting time to be in the venture capital business. The decade that came after the internet bubble burst turned out to be a fantastic time to make early stage venture capital investments and we have been fortunate to participate in those good times. But the market has changed a lot with large incumbents taking up more and more white space in the internet sector as we have known it. At the same time, an exciting new sector and model, crypto/tokens, has emerged which gives us a lot of optimism about the opportunities ahead of us. We will see how our model needs to evolve over time to make sure we can continue to deliver the results we want to deliver to the entrepreneurs and companies we back and the to the investors whose capital we manage. http://avc.com/2017/10/our-model/

Our Model1


This past week our portfolio company MongoDB went public. I think that occasion presents an opportunity to talk about USV’s model. We are a small firm. We raise modest sized funds (by modern VC standards). Our first fund was $125mm, our second fund was $150mm, and we have now settled on $175mm as a good number and our past three funds have been that size. Our typical entry point is Seed or Series A although we have an Opportunity Fund that allows us to enter later when that is appropriate. We do that once or twice a year on average. We make between twenty and twenty five investments per fund and we expect, hope, and work hard to make sure that two or three of those investments turn into high impact companies that can each return the fund. Although our entry point is typically Seed or Series A, we continue to invest round after round to both protect and add to our ownership. We have no requirements on ownership, but we typically end up owning between 15% and 20% of our high impact portfolio companies. If you do the math around our goal of returning the fund with our high impact companies, you will notice that we need these companies to exit at a billion dollars or more. Exit is the important word. Getting valued at a billion or more does nothing for our model. We need these high impact companies to exit at a billion dollars or more. Because we invest early, it generally takes seven or eight years for an investment to exit. We closed our first fund, USV 2004, in November 2004, and our first high impact exit came almost exactly seven years later when Zynga went public in late 2011. Mongo DB represents the eighth high impact exit that USV has had. They are: Zynga – IPO – 2011 Indeed – Sale to Recruit – 2012 Twitter – IPO – 2013 Tumblr – Sale to Yahoo -2013 Lending Club – IPO – 2014 Etsy – IPO – 2015 Twilio – IPO – 2016 MongoDB – IPO – 2017 Although MongoDB won’t be an exit until the lockup comes off and we are truly liquid, every other one of these impact investments has returned the fund it was in (or much more in the case of Twitter, Lending Club, and Twilio). We were the lead investor in the Seed or Series A round in seven of these eight high impact companies and three of them came from seed investments. It’s easier to identify high impact companies in the late rounds, but not so easy to do that in the early rounds. That’s where our thesis based investing comes into play. It is also important that all of our partners participate in this model. It takes seven or eight years before we can expect a new partner to contribute and Albert, who joined us in 2008, has produced the last two high impact exits with Twilio and MongoDB. John, who joined us in 2010, has already contributed one in Lending Club. I have no doubt that Andy, who joined us in 2012, and Rebecca, who joined us this week, will produce their share of high impact exits. Andy already has several in the pipeline. So this is our model. Keep the fund sizes small. Make investments early so we can buy meaningful ownership for not a lot of money. Keep investing round after round to maintain and/or grow our ownership. And have enough high impact portfolio companies that we can get two or three of them per fund. We have a good pipeline of high impact companies in our various portfolios so that we expect this model will keep working for the foreseeable future. This model has more or less been the model of all three venture funds I have worked in over my thirty year period. It is time tested and it works when applied with focus and discipline and a strong investment thesis. But with a new model, tokens, in its infancy, it begs the question of how it will impact our approach. We already have four portfolio companies that either have done or have announced intentions to do token offerings; Protocol Labs/Filecoin, Kik/Kin, Blockstack/Stack, and YouNow/Props. So we are going to figure this out in a few years. I expect the hold periods will come down as token offerings come early in a company’s life, not later. So we should know more about how this new model works in three to five years. There are a bunch of questions that come to mind. Here are a few of them: Can a token based investment return a fund with more or less frequency than an equity based model? How long are the hold periods going to be in a token based model? Will the 10-15% high impact percentage that we see in our equity based portfolios be similar in a token based model? What are the appropriate ownership levels for a token based investment vs an equity investment? We are going to continue to execute our equity based model in parallel with our token investments, at least for as long as that seems like the right approach. We have a good thing going with the equity based model but we understand that we have to adapt and react to changes in the market and we are doing that, fairly aggressively, with tokens. It is an interesting time to be in the venture capital business. The decade that came after the internet bubble burst turned out to be a fantastic time to make early stage venture capital investments and we have been fortunate to participate in those good times. But the market has changed a lot with large incumbents taking up more and more white space in the internet sector as we have known it. At the same time, an exciting new sector and model, crypto/tokens, has emerged which gives us a lot of optimism about the opportunities ahead of us. We will see how our model needs to evolve over time to make sure we can continue to deliver the results we want to deliver to the entrepreneurs and companies we back and the to the investors whose capital we manage. http://avc.com/2017/10/our-model/

Our Model1


This past week our portfolio company MongoDB went public. I think that occasion presents an opportunity to talk about USV’s model. We are a small firm. We raise modest sized funds (by modern VC standards). Our first fund was $125mm, our second fund was $150mm, and we have now settled on $175mm as a good number and our past three funds have been that size. Our typical entry point is Seed or Series A although we have an Opportunity Fund that allows us to enter later when that is appropriate. We do that once or twice a year on average. We make between twenty and twenty five investments per fund and we expect, hope, and work hard to make sure that two or three of those investments turn into high impact companies that can each return the fund. Although our entry point is typically Seed or Series A, we continue to invest round after round to both protect and add to our ownership. We have no requirements on ownership, but we typically end up owning between 15% and 20% of our high impact portfolio companies. If you do the math around our goal of returning the fund with our high impact companies, you will notice that we need these companies to exit at a billion dollars or more. Exit is the important word. Getting valued at a billion or more does nothing for our model. We need these high impact companies to exit at a billion dollars or more. Because we invest early, it generally takes seven or eight years for an investment to exit. We closed our first fund, USV 2004, in November 2004, and our first high impact exit came almost exactly seven years later when Zynga went public in late 2011. Mongo DB represents the eighth high impact exit that USV has had. They are: Zynga – IPO – 2011 Indeed – Sale to Recruit – 2012 Twitter – IPO – 2013 Tumblr – Sale to Yahoo -2013 Lending Club – IPO – 2014 Etsy – IPO – 2015 Twilio – IPO – 2016 MongoDB – IPO – 2017 Although MongoDB won’t be an exit until the lockup comes off and we are truly liquid, every other one of these impact investments has returned the fund it was in (or much more in the case of Twitter, Lending Club, and Twilio). We were the lead investor in the Seed or Series A round in seven of these eight high impact companies and three of them came from seed investments. It’s easier to identify high impact companies in the late rounds, but not so easy to do that in the early rounds. That’s where our thesis based investing comes into play. It is also important that all of our partners participate in this model. It takes seven or eight years before we can expect a new partner to contribute and Albert, who joined us in 2008, has produced the last two high impact exits with Twilio and MongoDB. John, who joined us in 2010, has already contributed one in Lending Club. I have no doubt that Andy, who joined us in 2012, and Rebecca, who joined us this week, will produce their share of high impact exits. Andy already has several in the pipeline. So this is our model. Keep the fund sizes small. Make investments early so we can buy meaningful ownership for not a lot of money. Keep investing round after round to maintain and/or grow our ownership. And have enough high impact portfolio companies that we can get two or three of them per fund. We have a good pipeline of high impact companies in our various portfolios so that we expect this model will keep working for the foreseeable future. This model has more or less been the model of all three venture funds I have worked in over my thirty year period. It is time tested and it works when applied with focus and discipline and a strong investment thesis. But with a new model, tokens, in its infancy, it begs the question of how it will impact our approach. We already have four portfolio companies that either have done or have announced intentions to do token offerings; Protocol Labs/Filecoin, Kik/Kin, Blockstack/Stack, and YouNow/Props. So we are going to figure this out in a few years. I expect the hold periods will come down as token offerings come early in a company’s life, not later. So we should know more about how this new model works in three to five years. There are a bunch of questions that come to mind. Here are a few of them: Can a token based investment return a fund with more or less frequency than an equity based model? How long are the hold periods going to be in a token based model? Will the 10-15% high impact percentage that we see in our equity based portfolios be similar in a token based model? What are the appropriate ownership levels for a token based investment vs an equity investment? We are going to continue to execute our equity based model in parallel with our token investments, at least for as long as that seems like the right approach. We have a good thing going with the equity based model but we understand that we have to adapt and react to changes in the market and we are doing that, fairly aggressively, with tokens. It is an interesting time to be in the venture capital business. The decade that came after the internet bubble burst turned out to be a fantastic time to make early stage venture capital investments and we have been fortunate to participate in those good times. But the market has changed a lot with large incumbents taking up more and more white space in the internet sector as we have known it. At the same time, an exciting new sector and model, crypto/tokens, has emerged which gives us a lot of optimism about the opportunities ahead of us. We will see how our model needs to evolve over time to make sure we can continue to deliver the results we want to deliver to the entrepreneurs and companies we back and the to the investors whose capital we manage. http://avc.com/2017/10/our-model/

Our Model1


This past week our portfolio company MongoDB went public. I think that occasion presents an opportunity to talk about USV’s model. We are a small firm. We raise modest sized funds (by modern VC standards). Our first fund was $125mm, our second fund was $150mm, and we have now settled on $175mm as a good number and our past three funds have been that size. Our typical entry point is Seed or Series A although we have an Opportunity Fund that allows us to enter later when that is appropriate. We do that once or twice a year on average. We make between twenty and twenty five investments per fund and we expect, hope, and work hard to make sure that two or three of those investments turn into high impact companies that can each return the fund. Although our entry point is typically Seed or Series A, we continue to invest round after round to both protect and add to our ownership. We have no requirements on ownership, but we typically end up owning between 15% and 20% of our high impact portfolio companies. If you do the math around our goal of returning the fund with our high impact companies, you will notice that we need these companies to exit at a billion dollars or more. Exit is the important word. Getting valued at a billion or more does nothing for our model. We need these high impact companies to exit at a billion dollars or more. Because we invest early, it generally takes seven or eight years for an investment to exit. We closed our first fund, USV 2004, in November 2004, and our first high impact exit came almost exactly seven years later when Zynga went public in late 2011. Mongo DB represents the eighth high impact exit that USV has had. They are: Zynga – IPO – 2011 Indeed – Sale to Recruit – 2012 Twitter – IPO – 2013 Tumblr – Sale to Yahoo -2013 Lending Club – IPO – 2014 Etsy – IPO – 2015 Twilio – IPO – 2016 MongoDB – IPO – 2017 Although MongoDB won’t be an exit until the lockup comes off and we are truly liquid, every other one of these impact investments has returned the fund it was in (or much more in the case of Twitter, Lending Club, and Twilio). We were the lead investor in the Seed or Series A round in seven of these eight high impact companies and three of them came from seed investments. It’s easier to identify high impact companies in the late rounds, but not so easy to do that in the early rounds. That’s where our thesis based investing comes into play. It is also important that all of our partners participate in this model. It takes seven or eight years before we can expect a new partner to contribute and Albert, who joined us in 2008, has produced the last two high impact exits with Twilio and MongoDB. John, who joined us in 2010, has already contributed one in Lending Club. I have no doubt that Andy, who joined us in 2012, and Rebecca, who joined us this week, will produce their share of high impact exits. Andy already has several in the pipeline. So this is our model. Keep the fund sizes small. Make investments early so we can buy meaningful ownership for not a lot of money. Keep investing round after round to maintain and/or grow our ownership. And have enough high impact portfolio companies that we can get two or three of them per fund. We have a good pipeline of high impact companies in our various portfolios so that we expect this model will keep working for the foreseeable future. This model has more or less been the model of all three venture funds I have worked in over my thirty year period. It is time tested and it works when applied with focus and discipline and a strong investment thesis. But with a new model, tokens, in its infancy, it begs the question of how it will impact our approach. We already have four portfolio companies that either have done or have announced intentions to do token offerings; Protocol Labs/Filecoin, Kik/Kin, Blockstack/Stack, and YouNow/Props. So we are going to figure this out in a few years. I expect the hold periods will come down as token offerings come early in a company’s life, not later. So we should know more about how this new model works in three to five years. There are a bunch of questions that come to mind. Here are a few of them: Can a token based investment return a fund with more or less frequency than an equity based model? How long are the hold periods going to be in a token based model? Will the 10-15% high impact percentage that we see in our equity based portfolios be similar in a token based model? What are the appropriate ownership levels for a token based investment vs an equity investment? We are going to continue to execute our equity based model in parallel with our token investments, at least for as long as that seems like the right approach. We have a good thing going with the equity based model but we understand that we have to adapt and react to changes in the market and we are doing that, fairly aggressively, with tokens. It is an interesting time to be in the venture capital business. The decade that came after the internet bubble burst turned out to be a fantastic time to make early stage venture capital investments and we have been fortunate to participate in those good times. But the market has changed a lot with large incumbents taking up more and more white space in the internet sector as we have known it. At the same time, an exciting new sector and model, crypto/tokens, has emerged which gives us a lot of optimism about the opportunities ahead of us. We will see how our model needs to evolve over time to make sure we can continue to deliver the results we want to deliver to the entrepreneurs and companies we back and the to the investors whose capital we manage. http://avc.com/2017/10/our-model/

Heimat, Naturopathy, Nobels, and Factory Farming – Saturday Quartz goodness


Every Saturday morning, I look forward to spending time reading the Quartz newsletter. I thought they outdid themselves this morning and I thought I’d share these notes with you. On Saturdays, one of the lead journalists or editors pens a 4-5 paragraph Editorial of sorts. It is always thought provoking. Today’s struck a similar chord to my note a few days ago about Nobel prizes being a celebration of science. Good morning, Quartz readers! Even if you’re not a scientist or literary critic, you likely couldn’t help but notice that this week was Nobel Prize week(the last prize, in economics, will be announced Oct. 9). Though most people may not remember any winner’s name next month, these 10 laureates will walk as demigods among colleagues for the rest of their lives. They will also walk past more than a few raised eyebrows. Awarding a prize to a few humans for such grand achievements is inherently unfair. Prizes by nature require arbitrary limitations; the science Nobels, for instance, don’t recognize large collaborations, and are restricted to anachronistic categories (where’s the technology Nobel?). Interpretations of achievement are subjective; the peace Nobel seems to reward hope more than actual peacemaking, with US president Barack Obama and Colombian president Juan Manuel Santos. And prejudice complicates the entire picking process; science Nobels overwhelmingly go to white men (women have won 18 of 593 prizes), while the literature Nobel has been criticized for excluding worthy contenders—such as Leo Tolstoy—that don’t fit the Swedish Academy’s political world view. But as our attention careens between disasters, massive sporting spectacles, and overhyped entertainment awards, there’s still something valuable in setting aside a week to celebrate knowledge itself. Other disciplines have their “Nobels” too, like the Fields Medal in mathematics or the Turing Award in computer science. But it is only the Nobel Prize that manages to draw attention from beyond the ivory tower, turning even the man and woman in the street to marvel at our ever-growing pyramid of human invention and ingenuity—in a vital counterbalance to calls from politicians to reject “experts.” Arbitrary and subjective as they may be, prizes and competitions seize the public’s attention precisely because they give us heroes. They make people care about abstract subjects through the story of an individual, even if our desire for role models is flawed to begin with. Critics of the Nobel Prize, often journalists or academics, tend to take a zero-sum approach when they decry the Prize’s selection flaws. But perhaps a better approach would be to shed light on even more prizes and deserving individuals on the frontiers of human knowledge, instead. After all, Nobel week doesn’t have to be the only week each year when we celebrate what it means to be an advanced species.—Akshat Rathi In addition the editorial note, they bring together some of the most noteworthy articles from the week. I try to read a couple and skim a few more. Here are a few that were, in equal parts, fascinating. China’s blockchain ambitions—politics be damned. In a journey from Inner Mongolia’s bitcoin mines to a palatial villa for the Beijing’s bitcoin elite, Joon Ian Wong parses the reason why China has become dominant in the stateless cryptocurrency, and why its corporate establishment is now taking aim at the underlying technology. Snapchat has become the perfect tool for understanding tragedy. The social network makes a surprisingly effective window into real-time news events—especially when disaster strikes. Mike Murphy reveals the deeply intimate perspective of Snap Maps, surfacing user views from Las Vegas, Catalonia and Mexico City, even after the news trucks leave. An ex-“healer” sees the light. Information bubbles don’t just block political discourse, they filter out scientific evidence—and can end up endangering people’s health. Akshat Rathi profiles a former naturopath turned skeptic for a look at how even thoughtful people can end up blinded by false belief. Germans are increasingly obsessed with “Heimat.” Anxiety over globalization, digitization, and migration has spurred a nationwide soul-search about the concept of “homeland.” At Reuters, Andrea Shalal explores Germany’s surging demand for dirndls, cuckoo clocks and detective novels. How Breitbart took white nationalism mainstream. BuzzFeed reporter Joseph Bernstein takes a damning behind-the-scenes look at the right-wing US website, its editor Steve Bannon, and the billionaire Mercer family that funds it, based on a cache of emails exchanged within the site’s inner circle. WANTED: Two piglets named Lucy and Ethel. Why is the FBI is hunting down escaped baby pigs from Smithfield Foods, the world’s biggest pork producer? At the Intercept, Glenn Greenwald examines the ties between the US government and Big Food, and explores animal rights activists’ powerful new tool: virtual reality experiences of factory farming. Thank you, Quartz team, for shipping quality content daily. Thank you for all you do to make us think. Share this: Facebook Twitter LinkedIn Like this: Like Loading... Related https://alearningaday.com/2017/10/07/heimat-naturopathy-nobels-and-factory-farming-saturday-quartz-goodness/