Search in Venture Capital Books

Monday, September 27, 2010

Creative Capital: Georges Doriot and the Birth of Venture Capital

In Creative Capital, Spencer Ante tells the compelling story of the enigmatic and quirky man--Georges Doriot--who created the venture capital industry. The author traces the pivotal events in Doriot's life, including his experience as a decorated brigadier general during World War II; as a maverick professor at Harvard Business School; and as the architect and founder of the first venture capital firm, American Research and Development. It artfully chronicles Doriot's business philosophy and his stewardship in startups, such as the important role he played in the formation of Digital Equipment Corporation and many other new companies that later grew to be influential and successful.

An award-winning Business Week journalist, Ante gives us a rare look at a man who overturned conventional wisdom by proving that there is big money to be made by investing in small and risky businesses. This vivid portrait of Georges Doriot reveals the rewards that come from relentlessly pursuing what-if possibilities--and offers valuable lessons for business managers and investors alike.

Wednesday, September 22, 2010

Carried interest.

The carried interest is what private equity executives, like investment managers, take from the profits of their funds after they have compensated their investors. The carried interest rate is typically 20%.

Tuesday, September 21, 2010

Raising Venture Capital for the Serious Entrepreneur

Dermot Berkery is an internationally operating venture capitalist with Delta Partners.

This book is a toolbox that details how venture capitalists arrange the financing for a company.

Berkery explains:
. what they look for in a business plan
. how they value a business
. how they structure the terms of an agreement.

More in detail, the book leads you through:
. Developing a Financing Map
. Getting to the First Stepping Stone
. Understanding the Unique Cash Flow and Risk Dynamics of Early Stage Ventures
. Determining the Amount of Capital to Raise and What to Spend It on
. Learning How Venture Capital Firms Think
. Creating a Winning Business Plan
. Funding Early-Stage Companies
. Agreeing on a Term Sheet with a Venture Capitalist
. Setting Terms for Splitting the Rewards
. Allocating Control between Founders/Management and Investors
. Aligning the Interests of Founders/Management and Investors

Fool's Gold?: The Truth Behind Angel Investing in America

To become a professional angel investor, start here. Scott Shane shows that business angels are not consistently targeting the best investments, or the best terms. Business angels or informal investors are not as professional as they think they are.

In Fool's Gold: The Truth Behind Angel Investing in America, Professor Shane turns his disciplined methodology and logic towards unmasking commonly held misconceptions about angel investing. This yields accessible yet robust inferences about this little understood business activity.

Each chapter has a "Key Facts to Remember" section just before an end-of-chapter "In Conclusion" section.

Monday, September 20, 2010

Angel investor

An affluent individual who provides capital, financial backing for a business start-up or entrepreneur, usually in exchange for convertible debt or ownership equity.

A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital. Angels typically invest their own funds. The capital they provide can be a one-time injection of seed money or ongoing support to carry the company through difficult times. Angel investors give more favorable terms than other lenders, as they are usually investing in the person rather than the viability of the business. They are focused on helping the business succeed.

Accredited investor

Wealthy investor who meets certain SEC requirements for net worth or income.

Accredited investors are permitted to invest in certain types of higher risk investments, limited partnerships, hedge funds, and angel investor networks. The term generally includes wealthy individuals and organizations such as a corporation, endowment, or retirement plans. The federal securities laws defines the term accredited investor in Rule 501 of Regulation D as:

1) A bank, insurance company, registered investment company, business development company, or small business investment company; or
2) An employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; or
3) A charitable organization, corporation, or partnership with assets exceeding $5 million; or
4) A director, executive officer, or general partner of the company selling the securities; or
5) A business in which all the equity owners are accredited investors; or
6) A natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase; or
7) A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or
8) A trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

Term sheet

A term sheet is a bullet-point document outlining the material terms and conditions of a business agreement. After a Term Sheet has been "executed", it guides legal counsel in the preparation of a proposed "final agreement". It then guides, but is not necessarily binding, as the signatories negotiate, usually with legal counsel, the final terms of their agreement.

Term sheets are very similar to "letters of intent" (LOI) in that they are both preliminary, mostly non-binding documents meant to record two or more parties' intentions to enter into a future agreement based on specified (but incomplete or preliminary) terms. The difference between the two is slight and mostly a matter of style: an LOI is typically written in letter form and focuses on the parties intentions; a term sheet skips most of the formalities and lists deal terms in bullet-point or similar format. There is an implication that an LOI only refers to the final form. A term sheet may be a proposal, not an agreed-to document.

Fooled by randomness: The hidden role of chance in life and in the markets

For the intelligent reader, this book is absolutely awesome.

Nicholas Nasseem Taleb is a polyglot writer who delves into many subjects where even intelligent people make the wrong decisions because of misinterpretation of statistics.

But being a securities trader himself, above all, Taleb demonstrates the foolishness of the myriads of stock traders who all boast of having an unfallible system, but in reality just have a misplaced trust in pseudo scientific nonsense.

Taleb describes, with lovely sense of humor, some examples of those Masters of the Universe, who build up a fortune over the years using their infallible trading system, and then lose everything in a matter of a few days, because the system was inaccurate after all.


The exit is the sale or exchange of a significant amount of company ownership for cash, debt, or equity of another company.


Closing is the final event to complete the investment, at which time all the legal documents are signed and the funds are transferred.
At that point ownership of a business or property passes from the seller to the buyer.
The process includes the delivery of a deed, financial adjustments, the signing of notes, and the disbursement of funds necessary to complete the sale.


A buyout is defined as the purchase of a company or a controlling interest of a corporation's shares or product line or some business. A leveraged buyout is accomplished with borrowed money or by issuing more stock.

Sunday, September 19, 2010

The Tipping Point: How Little Things Can Make a Big Difference

The best way to understand the dramatic transformation of unknown books into bestsellers, or the rise of teenage smoking, or the phenomena of word of mouth or any number of the other mysterious changes that mark everyday life," writes Malcolm Gladwell, "is to think of them as epidemics. Ideas and products and messages and behaviors spread just like viruses do." Although anyone familiar with the theory of memetics will recognize this concept, Gladwell's The Tipping Point has quite a few interesting twists on the subject.

Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and Middle Class Do Not!

In this third book, Robert Kiyosaki continues from where he left off in Cashflow Quadrant.

In his 1st book Rich Dad Poor Dad, Kiyosaki addressed the differences in mindsets between the Rich and the Poor. Then, in his 2nd book Cashflow Quadrant, he spoke of the 4 quadrants from which one can generate income.

To be wealthy, Kiyosaki recommended that we learn to generate our incomes from the "B" (Business-owner) and "I" (Investor) quadrant as opposed to the "E" (Employee) and "S" (Self-employed) quadrant.

Cash Flow Quadrant

Kiyosaki presents a quadrant with four types of people. Employees, Self employed, Business Owners and Investors. Kiyosaki argues that the road to financial freedom requires either being a business owner or an investor."

1434: The Year a Magnificent Chinese Fleet Sailed to Italy and Ignited the Renaissance

Gavin Menzies' main thesis is that the Chinese appear to have started the European Renaissance.

Menzis has received a lot of scorn for this position, specially from scholars.

Still, I have read the book and it suprised me in a positive way. In "1434", Gavin Menzies builds upon a previous book, "1421", wherein he submits that the Chinese have discovered America before Columbus.
In 1434 he defends the theory that a Chinese fleet has reached Venice in 1434 and brought about a massive transfer of knowledge from then advanced China to backwater Europe. For what reason would the Chinese do that, one would ask.

The Black Swan: The Impact of the Highly Improbable

Taleb's second classic again displays the intelligence, insight and wit that characterized his first book Fooled by Randomness.

Taleb is known for his philosophy of playing the stock market, covering his positions against unusual events (Black Swan events) like market crashes. Taleb became financially independent after the stock market crash of 1987 and has been pursueing The Black Swan ever since, in trading as well as in intellectual discourse.

Little Black Book of Connections: 6.5 Assets for Networking Your Way to Rich Relationships

This booklet can serve you as a repository of tips, advice and suggestions for building and growing your network, when commercial sales are your aim.
The experienced networker however will find little original thinking in this book, as the tools that are provided show much similarity with many previous books about networking.

Rich Dad Poor Dad - Robert T. Kiyosaki

Entertaining, informative and above all, it works!

Millions of people have read this book by now. It is the true story of Kiyosaki's two fathers. One, his real dad had a high income but was poor. The other, his friend's dad, was a high school drop out and ended up filthy rich. This man became Kiyosaki's mentor and Rich Dad.

The strength of this book is Kiyosaki's elaboration of his basic premise, that rich people take different decisions about their life and money than poor people do. The basis of getting rich is creating or buying assets. A business is one of the best examples of an asset.

The book is riddled with examples of the different decisions that rich and poor people make and how the choices one makes influence one's prosperity. Kiyosaki argues the importance of financial literacy, a skill that is even more gravely needed in financially turbulent times.

The "rich dad" refered to in that book was an angel investor. Many of the lessons Robert Kyosaki talks about in the Rich Dad books are a result of what he learned from that angel investor.