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Ego capital and the ‘Series A Crunch’

The problem isn’t too little smart money, it’s too many dumb deals

By Ronald Weissman

The meme of the month is “The Series A Crunch.” According to Crunch Theory, many worthy seed-funded startups lack follow-on capital because VCs now have smaller funds or have moved later stage. CB Insights estimates $1 billion in seed financing will be “incinerated” and at least 1,000 companies will be orphaned. Other data suggest that the number of orphans could be much larger.

Those who say the problem lies with VCs (CB Insights isn’t one of them) must argue that the number of Series A deals has fallen sharply. This is not true and the problem lies elsewhere. Whatever the cause, there is, certainly, a capital crunch for seed-funded startups and it is likely to get worse, as the backlog of seed-stage companies needing Series A funding continues to grow.

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Take the higher ground: From product to leadership positioning

As part of our series examining the ecosystem necessary to bring technology to market, we asked veteran technology executive and investor Ron Weissman to share his thoughts on how startups can achieve success. This is the next of his commentaries and we welcome your comments.

By Ronald Weissman

Product checklists are the Silicon Valley product marketers’ crutch. They are so overused as to provide more cliché than caché, as they try “prove” that their product has better features than the other guy’s—as if that’s all that matters to buyers. Myopic marketers often forget to ask whether these checkbox differences are actually important to customers. While it has its place, checkbox marketing often conveys little about the brand or the underlying quality of the vendor – factors that may be as or more important to buyers.

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Demo Daze: Five ways to turn a demo from dull to dazzling

As part of our series examining the ecosystem necessary to bring technology to market, we asked veteran technology executive and investor Ron Weissman to share his thoughts on how startups can achieve success. This is the next of his commentaries and we welcome your comments.

By Ronald Weissman

The setting: A buffet line at a Silicon Valley VC pitching event. An entrepreneur, not on the program, recognized me as a VC who had heard his pitch before.

The action: The entrepreneur drags me out of line, insists that I see his demo NOW! and corrals me into a corner, balancing his laptop on a stack of cartons.

“Ok, you’ve got my attention,” I sigh, with more than a hint of annoyance.

He launches into a demo of a complex app doing who knows what on screen. “See,” he says, “it all works, just like I told you it would!”

“Uh…,” I sputter, “what exactly am I looking at?”

“My app,” he says, “the one I told you would revolutionize multi-application business collaboration!”

In his mind, simply witnessing his demo will instantly convert me from a skeptic into an investor. In my mind, I can fake an urgent call (the surest way to flee a tedious demo) or be polite and suffer in silence. Holding a lunch tray, I can’t readily grab my phone, so, once again, I resign myself to the latter course – death by demo.

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VCs are from Mars, CEOs are from Venus: Bridging the investor-entrepreneur gap

As part of our ongoing series examining the ecosystem necessary to bring technology to market, we asked veteran technology executive and angel investor Ron Weissman to share his thoughts on how startups can overcome the challenges of securing early-stage financing. This is the first of his commentaries and we welcome your comments.

By Ron Weissman

Why do some first-time CEOs find it hard to get to first base with investors? The product story that CEOs want to tell has often little to do with the business story that investors need to hear before they will invest. Product- or engineering-driven CEOs new to the VC world beg, “Please let me demo my product! It will change the world. For $500,000 you will own a piece of the next Facebook.”

But the story that investors need to hear is different. “How does your business work? How will you scale to become a profitable market leader? Is this the kind of business that meets my investors’ financial objectives?”

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