Issue No. 64 - April/May 2012
Vive Le Venturepreneur
by Conor McKenna
Unquestionably, entrepreneurs without a tangible passion for their technology, product or service are soon statistics. However, the more experience I accrue from interacting with VC and developing entrepreneurial ventures, the more I appreciate the importance of the deal and how it is conceived - let alone how it is constructed and the terms that define it.
The more I learn about the nooks and crannies hidden in the VC term-sheet, the more I am convinced that too many entrepreneurs are guilty of “falling in love with love”. Too many are “technopreneurs”, blinded by the wonders of their technology or the mind-blowing size of the market. Too many abdicate their duty to learn the rules of the venture investment game.
In the fast-paced and heartless world of "Return on Investment", ignorance is no longer a defense – particularly post GFC. It only takes one run-in with Liquidity Preference Shares; Redemption Provisions and Full Ratchet Anti-dilution Clauses to crush even the most seasoned “technopreneur".
I was fortunate to win a scholarship to attend the Venture Capital Institute in Atlanta in 2008. The most memorable take-away for me was during the session entitled “Being an Effective VC Director – Coach, Confident & Killer”. VCs were instructed to ask themselves two questions at each Board meeting: “Are we going to fire the CEO...