David Cohen, the CEO of TechStars, has encountered this many times. Before starting TechStars, he was an entrepreneur who sold his company to a public company after running it with a partner for a decade. He then started a few more companies, including one that failed and one that was acquired. Finally, he started TechStars and of the 28 companies from the first three programs (there have now been 126 companies that have gone through the program to date) 8 have been acquired. He’s also invested in a number of companies as an angel investor and I know of at least a half dozen that have been acquired.

He’s got awesome advice in a blog post titled You have acquisition interest – now what? His 10 step process is:

1. Assess the acquirer
2. Notify the board
3. Set your number
4. Engage the acquirer
5. Ask for the ballpark offer
6. Identify mentors
7. Assess the ballpark offer
8. Get to know them and answer their questions.
9. Push for a term sheet
10. Decide

Go read the post now. It’s excellent and I plan to refer people to it often whenever this question comes up.

Here’s are the eight pieces of data – go read the post for more details on why all eight are necessary.

Spreadsheet data:

• Employee name
• Title/role at company
• Absolute size of grant in number of underlying shares
• Percentage size of grant fully diluted

Footnotes data (for option grants that aren’t standard)

• Special vesting considerations that differ from the plan
• For refresh grants: how many options does the employee already have and how far are those vested?

Context data

• Total size of option pool and remaining available pool (absolute numbers and percentages fully diluted)
• Grant size bands by role (if you have established those already) — if not, include existing employees in similar roles for comparison (including their start dates)

There are two runner up posts - Primum Non Nocere from Fred Wilson (USV) and How to Create an Early-Stage Pitch Deck from Ryan Spoon (Polaris). Both good extra food for thought on this wild card weekend.

This (usually) means that the VC believes the opportunity you are pursuing isn’t a big enough opportunity for them to invest in.  In other words, what you are building should be a feature to something else already out there, instead of a stand-alone company that will generate the type of returns that the VC is looking for.  For instance, assume you are building something that fits inside an email client that does X.  (Perhaps “X” translates languages).  While super helpful to some folks, a VC may take the postion that this should be a feature or tool within the email client, but not an opportunity to build a large company with paying customers around it.  Of course, we can debate whether this is a correct statement, but in the eye of the VC this is how it is.

One thing always to consider with VC feedback to your company, however, is whether or not you are getting transparent and honest feedback.  In our experience, few VCs actually give feedback like this, so always have your skeptic brain alert.  One never knows what the real reason for investing might be.  Perhaps the VC is out of money and can’t even make an investment, but doesn’t want to admit that and thus the feedback.  This is just a general comment and not one particular to your question.

Fred – as usual – has very a very focused reaction to this:

“I am not a fan of this start and stop style of investing. Nobody can time markets. You can’t deliver great returns to your investors by being a momentum investor during some periods and a value investor in others.

I believe the only way to be a top performing investor in any asset class is to have a disciplined investment strategy and approach and apply it consistently and actively in all markets all the time.”

I (Brad) strongly agree and weighed in with my own comment with a cynical view:

“I had the same reaction to the WSJ article. Actually, I had a stronger reaction: “what a load of bullshit – why does the WSJ publish stuff like this and why do VCs say things like this?”

The only thing I could come up with is that it’s actually a head fake from the people saying it with the goal of getting some of their fast followers – VCs who are investing with them, competing with them on “hot deals”, and driving prices up to “slow down and blink” so there’s less competition.”

The comment thread on Fred’s post is very interesting – I encourage you to go take a look and form your own opinion.

“Jordan Williamson, the Stanford kicker who missed three field goals in the Fiesta Bowl, will wake up today and feel like crap. Tomorrow, he’ll wake up and still feel like crap, but a little less… and a little less the day after that, and less the day after that.

His Stanford e-mail is undoubtedly filled with two things… love and hate. If there ever was a moment in someone’s life where you get to find out who your real friends are, this will be it.”

As we start a new year, Charlie riffs nicely on important lessons that come out of a failure. Powerful stuff – and a great way to start the day.

Brooks describes the Haimish line through a description “I know only one word to describe what the simpler camps had and the more luxurious camps lacked: haimish. It’s a Yiddish word that suggests warmth, domesticity and unpretentious conviviality. It occurred to me that when we moved from a simple camp to a more luxurious camp, we crossed an invisible Haimish Line. The simpler camps had it, the more comfortable ones did not.”

I spend a lot of time on both sides of the Haimish line and – as Mark says – much prefer being on the same side that Brooks describes as “the simpler camps.” Mark gives a ton of examples of how he does this as a VC, including going to SxSW, visiting companies at their offices (rather than having them come to him), participating in TechStars, having dinner with entrepreneurs, and his accelerator LaunchPad LA.

This philosophy is at the core of my passion for Startup Communities. It’s also part of the beauty of the Startup Community in Boulder.

Mark – stay haimish!

There weren’t many on 1/1/12 so Firas Raouf’s (Openview) titled What Made Alex Ferguson a Great Manager stood out amidst the silence of the morning of the new year. I didn’t know who Alex Ferguson was until I read the post; he’s the “manager” (CEO) of Manchester United and has been since 1986. Firas summarizes Ferguson’s management principles, as they apply to a CEO of an early stage company.

• Identify yourself with your company brand
• Cultivate every interest group in your company
• Gather information everywhere
• Seek total control, but recognize when you cannot have it
• Don’t let others cause you stress
• Remember that crises blow over
• Always be unsatisfied

Go read What Made Alex Ferguson a Great Manager to get the bullet points for what’s behind this post. Happy new year Firas!

This varies dramatically by firm and by school. Some venture firms do a good job of having dynamically updated job boards on their websites that list all open jobs by portfolio company. Some examples are us (Foundry Group), Union Square Ventures, First Round Capital (as you indicated), and Spark Capital. These job listings tend to be by company, role, and location – not by educational background.

Some firms actively engage with the nearby MBA programs through their entrepreneurship programs. This is especially true of places like MIT and Stanford, but equally likely at schools like University of Colorado and University of Michigan. While a lot of this is locally driven, some of this is alumni oriented (for example, see the trip that my partner Jason Mendelson and I made recently to University of Michigan, where’s he’s an alum.)

While I think MBA Entrepreneurship programs are fine, the bigger opportunity is to spend two years at business school actively engaging in the entrepreneurial community around the school you are going to. One of the big mistakes a lot of MBA students make is that they hang out at their business school waiting for all the entrepreneurial opportunities to come to them. The industrious (and entrepreneurial) students go out into the community and find the interesting stuff that’s actually going on.

I’d encourage you to ask the question directly to the school you are applying to. They should be in recruiting mode (for you as a student) and should be clear and effective about talking about entrepreneurial opportunities for you if you go through their program.