One of the most interesting things about this presentation is that over 75% of Intel Capital’s investments by value were outside the US in the first half of 2009.

Intel Capital Investment Overview Web

Intel Capital Strategic Objectives

Intel Capital Investment Overview Web

Had a very interesting early stage investor summit yesterday afternoon with a little help from our friends at Orrick and Intel Capital. Like any good summit, this one was ‘high level’.

Tower 42, London. From the street.

View from Tower 42

A fascinating group of early stage investors participated who seem to have virtually single handedly kept early stage/angel investment alive in the the UK over the past 18 months. One topic of conversation kept coming up, ‘How do you manage relationships with VCs more effectively, and how can early stage investors prevent the venture community from taking advantage of their risk taking?’ (Or slightly more robust language to that effect). This touches on something that Fred Destin at Atlas Venture has been thinking about with respect to entrepreneurs recently but it seems there are other people who have reasons to be wary of some VCs. (And amongst this group, I would point out that Fred was seen as an excellent and honourable investor).

As VCs has grown into larger funds, there has been a gap created at the early stage market which is being increasingly filled by an emerging troupe of highly experienced entrepreneurs who have cashed out of a number of previous ventures and are now making a go of investing time and money into new ventures.

There is a problem that seems to regularly occur when those ventures go for additional rounds of funding and a small, but significant number, of venture investors enter into funding discussions with a company with the intention of screwing earlier investors whenever possible – by adding toxic, unreasonable liquidation preferences, terms and conditions. Often a term sheet is offered that is not actually a term sheet but the start of a longer negotiation that can mean that a company stops running their business and focuses on fund raising and meeting the demands of the VC. All the while the company will be running out of money and have less and less room to manoeuvre until it is forced into a deal that it didn’t want to do.

So what can early stage investors do? How can entrepreneurs, especially first timers, protect themselves?

A few thoughts emerged from this discussion that might be useful to others.

• Raise money much sooner than you need/expect to in order to allow enough room to negotiate.
• Make sure companies are doing well and hitting milestones. Companies that are doing well will have more competition from investors.
• Avoid working with partners and deal makers in firms that are not yet proven. Many of the worst stories that were discussed were perpetrated by firms that didn’t have a significant track record or experience. VCs felt they had to make a name for themselves and to do so they needed to do deals that made them look good. Often, this plus rampant egos, transforms itself into a desire to wash out early investors.
• Spend more time collaborating and co-investing with other early stage investors in order that you can capitalise a company properly and make sure that when you raise further capital, you have other options – extending the involvement of angels for example instead of being reliant on venture.
• Share information about investors that you wish to do business with, and those that you don’t, through informal networks. Reference individuals, not just the firms.
• A number of people stressed that aggressive investment behaviour typically comes from individuals wishing to make a name for themselves, rather than firms.
• Try to work with early stage investors that have experienced the cut and thrust of both fund raising and growing a business multiple times.

Would be interested in hearing any other views/experiences of the early stage/venture investor schism and how it might be solved. (Or is this all imagined by the angel?).

Darren, James and I were out last night at Chelsea Football Club for the Deloitte Fast 50 and European Fast 500 Awards. List of winners follows the picture but pleased to see that Darren achieved his ambition to (almost) lift the FA Cup before his 34th birthday even if there ere some dark mutterings about him wanting the ribbons to be the red of Liverpool FC rather than Chelsea colours.

FA Cup Winner Darren Harper

The Deloitte Fast 500 EMEA Winners.

Microsoft’s choice of the Sugababes as the faces of Windows 7 in the UK has been the subject of much commentary – Telegraph, TechCrunch. I think some of the commentary has missed the point a little.

The Sugababes story. The Sugababes started out as quite a good band that after a series of patches and upgrades to the original line up are now just not very good and only really exist for the benefit of their record company. This is almost the opposite of the Windows OS story where after producing OS after OS that almost worked but made Microsoft lots of money, they finally have something to shout about. Merits of using them to market to pre-teen girl market aside, I am not sure this is what Microsoft meant.

This is the original Sugababes line up.

Original Sugababes

These are the most current ones.

Lets not forget though, that however ‘bad’ the advertising seems on all sorts of levels, it is definitely getting talked about. And now I know that Windows 7 has a Parental Controls feature that switches a PC off. The original Windows 7 launch party video was so bad, and so easy to parody, that it has probably got its message over to 10 times the number of people that it would have expected to in the first place.

This is just one example of a slightly doctored version:

Thinking about IPOs reminded me of a piece I read recently about how long it actually takes to build a technology empire. An excellent analysis by Christian Chabot of the top 100 technology companies in the US public markets today and when they reached their first $ 50million of sales. Even allowing for the fact that Google is not included (this is a list taken from Google finance and Google considers itself a media business), this is very interesting reading.

Explosive Growth is nowhere near as common as either entrepreneurs or investors would like to believe.

IPO Growth Dashboard

With approximately three quarters of the world’s surface covered by water, it is not surprising that there is so much undiscovered stuff at the bottom of the oceans.

Dumbo the Octopod

It is a bit of a mystery to us why so much time and effort is spent exploring space when there are probably far more resources available to us by looking down, not up.

Sea cucumber

For some more extraordinary photographs of weird sea creatures, spoil yourself by checking out the Census of Marine Life website here. It does seem odd that people spend so much time looking for aliens from outer space when they are less that 2 miles from the surface of the earth.

IMPORTANT!!!

Following a very interesting conversation with the good folks at The Economist today, (Thursday 19th November), I am more than happy to point out the The Economist has absolutely NO PLANS to scrap their print version.

I am very sorry if anyone who read this blog thought otherwise. The point of this post was to use, for rhetorical purposes, an example of a strong, influential, thoughtful and powerful print publication (with a circulation of over 1,000,000 and rising consistently over a 20 year period) and suggest that even they, may one day, move away from paper publications. Who knows whatthe future of digital paper, ebooks etc etc will mean for the world? If they ever did, AND THEY HAVE NO PLANS TO DO SO, they would still be a very powerful brand. Of course they have no such plans at the moment.

I also made the point that The Economist is a great brand and actually writes intelligent stuff. This is in contrast to the way that news spreads on Twitter. So Twitter users have apparently stuck my headline into Tweets without reading the post and now some short attention spanned sensation seekers have the impression that The Economist has scrapped their print version. Oh dear. Fortunately, such Twitter users are unlikely to be part of the core readership of The Economist.

Sorry anyway. My bad.

Today Haymarket announced that the print versions of Revolution and Media Week were being scrapped and Media Week would be available in an online only version. At some point in the future the Economist will do the same.

The Economist will become more influential online.

It has a reputation and a brand predicated on insightful, intelligent analysis, whereas Revolution was churning out the same stuff that tons of other news organisations were, with increasing competition from free commentators. In a world filled with lots of free stuff, and in a world with a vast number of sources of the same insights, where news organisations sometimes measure, their value by being able to say, ‘I broke a story 4 seconds before anyone else on Twitter’, it is very meaningful to be able to show value -add analysis.

At a recent ecommerce discussion dinner we ran, Michael Ross argued eloquently that for online retail, ‘Proposition was the new location’. The same argument holds true for news and editorially driven organisations.

If you go down the route of producing cheap mass-produced content and use ‘eye balls’ as your measure of success, you will leave yourself open to being taken out by others. Focus on real value add, understand your market and ensure you have a proposition that is focused on meeting their needs and your brand will continue to thrive.

Google is driving empty calories to news sights. They do better from the traffic that they know and manage themselves. I think this is why Tom Foremski has a great point about Google not necessarily being crucial to Rupert Murdoch’s success in this post.

Our next open event is CEO Tales, 3rd December, London.