The amount of the liquidation preference is usually expressed as a multiple, with the most common liquidation preference being “1X non-participating.”

This means that in the event the investor elects to use the 1x non-participating preference, the investor will receive up to 1 times the amount of the investment, but the investor will not get to participate with the common stockholders pro rata in the remainder of any sale proceeds. (Liquidation preferences that “participate” get to participate with the common after payment of the X multiple preference.)

Since an investor would only elect to use a 1x non-participating preference if the sale of the startup was for a “low” price, a liquidation preference typically is a defensive mechanism used to protect the investor’s downside.

However, 1x (or greater) participating or non-participating preferences with a multiple greater than 1 are just price negotiations, and anything better than a 1x non-participating liquidation preference is an investor offensive maneuver. The investor is maneuvering to increase returns and/or potentially blind you with a high valuation (only to be offset with a high multiple liquidation preference) so that you’ll take his or her deal.

Thus, if you see greater than a 1x preference and/or a ‘participating’ preference attached, know that your investor is just negotiating on price. If it were up to me, I’d rather have the startup and investor come to terms on the pre-money valuation rather than toying with anything other than a 1x non-participating liquidation preference.

You have to give credit to Delaware — they make paying your corporation’s franchise taxes “thrilling.”

For example, if you authorized 10,000,000 shares of common stock in your certificate of incorporation, you will receive a franchise tax bill stating “$75,075″ as the amount owed. This total is computed based on your startup’s number of authorized shares.

But it’s a good thing for your startup that Delaware offers an alternative way to compute your franchise tax bill: the “Assumed Par Value Capital Method.”

This was the topic of a post I wrote 2 years ago titled “The Delaware Freak-Out.” If you have a startup that is incorporated in Delaware, it’s probably a good time to revisit that post.

My clients put together a nice amount of seed and venture financings in 2011. On the home front, my wife and I experienced the arrival of our 3rd new addition to the family. In fact, she even let me revise a term sheet in maternity triage about 45 minutes before delivery. (startup/lawyer pro tip: Don’t try that with your 1st or 2nd baby.)

Thus, I didn’t have much time to write in 2011 and this blog was essentially in maintenance mode. However, the stats for this blog were up (259k visits in 2011 compared to 163k visits in 2010). Look for more posts in 2012 and maybe even a re-design.

I’ll also be stepping out of the office a bit in 1Q 2012: I’m scheduled to be in San Francisco in a few weeks, planning a trip to NYC in mid February, and will be in Austin for part of SXSWi. Let me know if you’ll be there, would love to connect.

Happy new year, everybody. And thanks for reading.

Startup Weekends are weekend-long, hands-on experiences where entrepreneurs and aspiring entrepreneurs can find out if startup ideas are viable. On average, half of Startup Weekend’s attendees have technical backgrounds, the other half have business backgrounds.

Beginning with open mic pitches on Friday, attendees bring their best ideas and inspire others to join their team. Over Saturday and Sunday teams focus on customer development, validating their ideas, practicing LEAN Startup Methodologies and building a minimal viable product. On Sunday evening teams demo their prototypes and receive valuable feedback from a panel of experts.

Get your tickets here:

http://dallas.startupweekend.org/tickets

Your ticket covers smeals, snack, access to exclusive resources from global sponsors, a book from O’Reilly Media and all the coffee you can drink.

Also, LaunchDFW will have a team there to work on the 2.0 version of our site. For a deeply discounted event ticket to specifically work on this project during the weekend, RSVP here: http://www.meetup.com/LaunchDFW/Dallas-TX/461562/, or email Bradley Joyce at Bradley [at] LaunchDFW [dot] com.

5. Control

“Control” of a startup can manifest itself in various forms such as equal (or investor-favorable) representation on the board of directors or a requirement of obtaining seed investor approval for new hires and/or budget matters. Whatever the form of control, seed investment is way too early to be even thinking about losing any amount of control of your startup. You need to figure out why your potential angel investor wants to control your startup.

4. Dividend (that pays out)

By paying your investor a dividend (rather than having dividends accrue and be paid out at acquisition or other typical payable events), you are simply paying back the investor with his own money. What a deal — for the investor. This is something you might see in a late stage private equity financing with a company that has a history of generating revenue. It does not belong in any early stage deal. If your potential angel investor insists on getting dividends paid out quarterly, the angel investor should invest in dividend aristocrats or MLPs, rather than your startup.

3. Tranched Investment

Don’t agree to a tranched seed investment based on milestones. I don’t like tranched investments for 3 reasons. First, the benchmarks are typically difficult to come up with and negotiate and are often imperfect indicators of performance. Second, startups will tend to focus towards hitting these (imperfect) milestones and possibly ignore other projects or natural off-shoots that may pan out huge. Third, some angel investors like to make the additional investment at their option once your startup hits the milestone. Therefore, if you do agree on tranched investments, make sure they are at least automatic — if you hit, they wire. But even better for the startup would be to negotiate a tranched investment that was at the startup’s option upon hitting the milestone.

2. Non-Dilution

The investor wants non-dilution rights because they are either really greedy or they don’t trust you to issue additional equity. The angel investor’s best protection against “wasted dilution” is the fact that the founders are being diluted pro rata along with the angel investor — you have to get the angel investor to wrap their brain around this. Unfortunately, for some angel investors having the co-founders sit “side by side” with them is not enough protection.

1. Personal Guaranty

If the shit hits the fan and the company has to shut down, co-founders should only be out time…not additional cash to their investors. If your co-founders didn’t already have ulcers from taking the startup leap, they will soon after signing the personal guaranty.

For example, a startup requested I review a set of financing documents produced by investor counsel. The deal documents called the preferred stock “Series Seed” shares but after opening up the documents I quickly realized the deal terms were NOT the same as those in the well-known Series Seed document set. For example, the well-known Series Seed has a 1x non-participating liquidation preference, while the version I reviewed had a 1x participating preference. Ultimately, the deal document set was nothing like the well-known Series Seed set.

This confused my client, as he thought the deal was being done using the well-known Series Seed document set. However, provisions and deal terms can be different from standard sets even though a class of stock is called “Series Seed” or “Series AA” in your deal documents.

Therefore, if you think your deal is closing with a set of standard documents, you should at least run a compare document tool to see what, if any, deviations were made to the applicable standard document set. They might not be the standard set at all.

What is Tech Wildcatters?

Tech Wildcatters is a mentorship-driven startup accelerator that puts participating companies through an intensive 12-week program. Startups receive up to $25,000 in seed funding in exchange for a small amount of equity (~6%) and have access to mentors.

Why Apply?

Tech Wildcatters was recently ranked the #7 incubator/accelerator in the country.

I’ve represented about 8 startups in the first 2 TW classes. After watching them work through the program, I recommend that startups apply to TW. If you want to chat with them re their participating in the program, send me an email and I’ll get you in touch with some of them.

How to apply

Head over to http://techwildcatters.com/apply/.
If you apply, be sure to watch the video on the application page for some good ideas on how to pitch your company.

Important Dates

July 24: Application deadline.
July 27: Finalists for quick pitch day will be notified.
Aug 3: Fall quick pitch day.
Aug 10th: Fall offers sent out.
Sept. 6: Fall orientation begins.
Dec. 8: Pitch Day
Dec. 16: Fall program ends

Startup Weekends are weekend-long, hands-on experiences where entrepreneurs and aspiring entrepreneurs can find out if startup ideas are viable. On average, half of Startup Weekend’s attendees have technical backgrounds, the other half have business backgrounds.

Beginning with open mic pitches on Friday, attendees bring their best ideas and inspire others to join their team. Over Saturday and Sunday teams focus on customer development, validating their ideas, practicing LEAN Startup Methodologies and building a minimal viable product. On Sunday evening teams demo their prototypes and receive valuable feedback from a panel of experts.

Get your tickets here:

http://dallas.startupweekend.org/tickets

Your ticket covers seven meals, snack, access to exclusive resources from global sponsors, a book from O’Reilly Media and all the coffee you can drink.

Here’s a great statistic: Over 36% of Startup Weekend startups are still going strong after 3 months. Roughly 80% of participants plan on continuing working with their team or startup after the weekend.

Class of 2011

At the 2011 Pitch Day, you’ll get to check out pitches by startups like:

Memory Reel is an event marketing solution that enables brands and event organizers to connect deeply with attendees, while measuring marketing effectiveness and improving ROI. Their affordable mobile applications and software tools take a clients event marketing efforts to a whole new level.

Proxomo radically increases a developer’s productivity in developing web and mobile applications by providing an integrated collection of backend services into a single RESTful (JSON, XML) API. Presently, Proxomo provides the following functions: user management, event management, application data, geo location, auto scaling, social network integration, and notifications (email, SMS), with many more on the way.

SparkCrowd is a mobile social games company with a social mission to help make meaningful connections in the real world — not just online. Name tag is a real world game of Tag with the people around you and is available for iPhone and IPad in the app store

Vignature provides an image-based electronic signature service that reduces fraud, while expediting document signing. Consumers can download a mobile app, and sign anything from permission slips to business contracts. Businesses can use a web-based service to request and receive signatures online. Vignature is the only company that creates a verifiable signature, including a time-specific photograph of the signer.

mComm360 is a mobile enablement company that is developing a mobile offer platform that allows consumer brands to deliver mobile coupons and offers at convenience stores.

Nimbix is an emerging provider of cloud-based High Performance Computing infrastructure and applications. Nimbix offers hardware accelerated server platforms as a service through the Nimbix Accelerated Compute Cloud (NACC) Portal.

Rentsavvy is an apartment decision engine that helps renters find their next place based on their interests and budget.

Pitch Day Schedule

The tentative Pitch Day schedule is set forth below (although my inside source tells me there may be a panel instead of a keynote):

12:00-12:30 Check-in and networking
12:30-12:40 Opening Remarks
12:40-1:45 Company Presentations
1:45-2:00 Break
2:00-2:45 Keynote
2:45-3:30 Company Presentations
3:30-3:45 Closing Remarks
3:45-5:00 Investor / Company Networking
5:00-8:00 Happy Hour

Register for the event here: http://twpitchday2011.eventbrite.com

Don’t avoid “big boy” expenses just because you are bootstrapping. That is, make sure you have (or at least look into obtaining) insurance against life’s big risks — serious illness, permanent disability and early death.

Most tech entrepreneurs with young families are either not insured or grossly underinsured for these life-altering events. The good part is that if you are young (and healthy), a term life insurance policy isn’t that much. Even if you don’t have a wife or husband or partner or child, it can be a good idea to obtain a term life insurance policy since you can essentially “lock in” your good early health on term life insurance policies and later change the beneficiary of the policy.

Whatever your scenario, you owe it to yourself to at least investigate these things and determine what’s right for you. But cutting out these big boy expenses if you have a family isn’t “lean” or “bootstrapping” — it’s family malpractice.

6pm – 9pm Friday Night – Happy Hour and Round Table on Failure with Silicon Valley entrepreneurs:

Christian Wiklund – CEO of Skout.com
Paul Bragiel – Partner at i/o Ventures
Travis Kalanick – Founder of Red Swoosh
Matt Marshall – Founder of VentureBeat as Moderator

Come back Saturday at 1pm to share successes and meet with the Dallas community about innovation and entrepreneurship:

1pm – From Ideation to Product Success — Christian Wiklund
2pm – The Ins’ and Outs of Good Funding — Paul Bragiel
3pm – The Basic Needs Mentors, Advisors, and Board Members O-My — Travis Kalanick
4pm – Making the Buzz — Matt Marshall & Redg Snodgrass
5pm – Quick Pitch and Feedback – 90 Seconds of life and death with 90 Seconds of Feedback
6pm – 8:30pm Mixer

It’s all taking place at 2700 Fairmount Street (Tech Wildcatters HQ) in Dallas Texas.

Register for the Event here.

Join us for free drinks, demos and mingle with Southern California startups.

Monday, March 14th from Noon to 3:00 PM

Parkside (6th and San Jacinto)
301 East 6th Street
Austin, TX 78701

REGISTER HERE

I’m not talking about price-based anti-dilution protection that is typical in an angel or VC round. What I’m referring to is a right given to a particular stockholder so that such stockholder’s equity in the company is not diluted by any future issuance of stock — regardless of the price.

Investors will say this “protects” their investment from issuances of equity that do not benefit the startup. But the fact that the startup’s founders are being diluted by such an issuance should provide enough protection.

Unfortunately, for some investors having the founding team sit “side by side” with them is not enough protection. My advice to those investors requesting non-dilution is: if you don’t trust the founding team from issuing stock in the hopes of increasing the startup’s value — don’t invest in the startup.

My advice to entrepreneurs is, if you have an investor asking for non-dilution, it likely means that the investor doesn’t think you’re good enough to run the company. The investor is likely in love with your startup’s idea, but not in love with you.

(1) Calculate Valuation and Determine Value.

Pre-money valuations startups receive from incubators are typically low…really low. If an incubator offers your startup $25,000 in exchange for 6% equity, the pre-money valuation is a whopping $391,667.

As you can see, I don’t think any startup has joined an incubator based solely on the pre-money valuation. Thus your startup needs to determine the intangible value offered by the incubator (and yes, a $150,000 convertible note with no cap and no conversion discount qualifies as an intangible).

Rather than assign a monetary value to the intangibles, a startup should instead assign an equity percentage value to intangibles like mentorship. As equity in the company tends to be the currency of early stage startups, the startup should have a good foundation for assigning value in terms of equity.

This advice holds true for even if the incubator’s program provides tangible items free and such items have an assigned monetary value. For example, if your startup get $2,000 worth of massages during the program, don’t add the $2,000 in free services to the $25,000 investment amount. Determine how much of your startup’s equity you’d actually give up for those services if they weren’t provided free — it may be worth $2,000 retail but it can also be worth 0% of your startup.

Thus, if your startup is willing to give a couple points to a few advisory board members, determine how much the incubator’s mentorship (and introductions) equates to an advisory board and assign a percentage. Now subtract that amount (and any additional equity amounts you have assigned to other intangibles at the incubator) from the total equity the incubator is requesting.

Using the previous example, if your startup believes the mentorship is worth 2%, then re-calculate the incubator’s offer of $25,000 for 6% to $25,000 for 4%. The “revised for the cash investment only” pre-money valuation is $600,000.

(2) Scrutinize the Investment Structure.

Incubators aren’t non-profits, therefore in addition to asking for a low pre-money valuation, they may structure their investment in a way that helps to ensure a higher return across their portfolio. Most incubators take common stock and sit “side-by-side” with the founders, but some may want some (weak) preferred stock and/or dilution protection.

Other incubators may want to set up an option pool. If so, the startup’s founders need to know this option pool lowers your pre-money valuation. Using the previous example, if an incubator wants your startup to set up a 15% option pool as part of the $25,000 for 6% of the company, the pre-money valuation gets effectively reduced to $329,167.

Like any issuance of stock or investment, one of the main things a startup should be concerned with is: Is this going to fuck up a future financing? (Technically, your startup should be asking this question for any contemplated transaction.)

If the terms won’t hinder a future financing, then your startup is good to go. If the terms will, then the question becomes: is the incubator going to waive these terms when a VC makes the request — without asking for anything in return for the waiver?

(3) Research the Mentors.

I wrote in a previous post, startups value mentorship over money when it comes to incubators. Research the mentors so you can accurately assign the amount of intangible value (in equity percentage terms as discussed in point 1 above) and justify the shitty pre-money valuation.

Analyze the mentors not just in what those mentors currently do or did when you were in middle school — but also how they fit with your team and your startup’s product. Do they know your space? Will you get to select your mentor or mentor group? How often will mentors drop in or otherwise be available?

(4) Inspect the Office Space.

Some incubators offer free office space. If so, check out the lay of the land to determine if your startup can be productive in the office space. Does your startup get a private office or will it share space coworking-style? How is the conference room and how hard is it to schedule time in the conference room? Can you break away for a confidential call from your girlfriend or potential VC investor? Do the chairs make your butt hurt after sitting in them for more than one hour? How is the technology?

(5) Figure Out Your Incubator’s Class End Date.

When does the mentorship and other benefits end? Can you continue to work out of the incubator’s office after your class ends? While most incubators’ class end dates fall around the respective incubator’s demo day, what type of support will you receive post-demo day from the incubator and/or the mentors? The best incubators are going to have no true “end date” and will be a forever-resource with respect to mentorship…although the incubator can likely only offer office space until the next class of companies move in.

(6) Search For the Incubator’s PR and Marketing Efforts.

If the incubator doesn’t take its class “stealth,” take a look at what the incubator does to market itself and its incubated startups. Take a look at pictures and videos from previous demo days, if any, and see if they’ll help get your startup’s name out there. It’s not really a demo day if only friends and family show up. Of course, joining some incubators give startups an instant “I’m Awesome, Fund Me Now” virtual-badge. Nonetheless, if an incubator can’t promote itself, how is it going to help promote your startup or the crucial demo day event?

(7) Reach Out To Prior Incubated Companies.

If you contact a startup that was part of an incubator’s past class know that you are accepted to and contemplating the same incubator, you should not have a difficult time getting a few minutes from one or more of that startup’s co-founders. Ask them about points 1-6 above but go further — ask them which mentors they perceived as being the most helpful or even which office to snag if you move in to the incubator’s office space. If a startup doesn’t get back to you, then that may tell you something, but don’t automatically assume that startup had a bad experience with the incubator.

(8) Determine the Opportunity Costs.

A startup that is accepted by an incubator may have an alternative funding offer from an angel investor. This can add complexity to a startup’s decision, because maybe the angel doesn’t want your startup to join the incubator. If the angel investor is offering an investment amount (greater than the incubator) that would “guarantee” your startup will reach a certain goal, it may difficult to accept the incubator’s offer. Regardless if your startup has an angel investor lined up, your startup will need to have a tangible goal in accepting the incubator’s offer that can be realized by completion of the program (or shortly thereafter). If not, the incubator is just a bridge financing to potentially nowhere for your startup.

Conclusion

Getting into an incubator is an exciting experience for any startup, but before signing up take a look at the incubator and how (much) it will help your startup. With the explosion of startup incubators, I hope the list above is helpful in determining whether your startup should accept such an offer. The more intangible value you can assign to the incubator, the more appealing the incubator’s offer will appear.

Total Visits: 162,539 visits (94,685 in 2009)

Top State Visits: 33,686 from Cali, 14,228 from New York and 12,038 from Texas.

Top University Visits: 309 visits from Stanford, 163 from MIT, 150 from Harvard

Top Visited Page: If I Launched a Startup @ 37,933 page views

Thanks for reading in 2010 and I look forward to writing for you in 2011…

Tech Wildcatters is a startup accelerator that offers up to $25,000 and 12 weeks of hands on mentorship. Here’s what they look for in a startup:

-2 or more founders (there’s way too much work for just one person)

-Web, mobile, software, SaaS, tech enabled services, or any other kind of highly scalable tech

-B2B focus (i.e. the majority of your revenue needs to come from businesses)

-Ability for all founders to attend the 12 week program in Dallas

Semifinalists will be invited to Quick Pitch day in January where you will have the opportunity to learn more about the program and pitch to the entire mentor group. A community happy hour with Brad Feld will follow where he will be signing his book “Do More Faster”. Quick Pitch is a closed event.

Tech Wildcatters is looking to work with 7-10 companies in this class. And they plan to start having 2 classes per year.
Start here to apply.

Term sheet purgatory can seem like is an eternity for a startup, although it may last from one week to over one month. Usually, the investor is just prepping the field to make the investment. While progressive discussions with an investor about the investment are fine and most revolve around pre-diligence matters, sometimes these discussions shift towards the pre-money valuation and investment amount. And this has potential negative consequences for the startup.

It can be a mistake to arrive at a consensus with your investor on pre-money valuation & investment amount before receiving the full term sheet. Terms like the option pool, liquidation preference, and board composition are just a few other investment terms that have a meaningful impact on your startup. You’ll feel real solid about that $6,000,000 pre-money until you receive the term sheet and it specifies a 25% option pool, 1X participating liquidation preference, and an investor-favorable board.

Of course, you can re-negotiate the pre-money and/or investment amount, but it still makes for potentially awkward conversations and/or feelings of mistrust. Neither is a good way to kick off your relationship with your future investor. (Even worse, a startup may feel like they can’t re-negotiate because they’ve already “agreed” to those numbers.)

Thus, if your potential investor continues to verbally discuss investment terms with you, consider asking for the term sheet.

Even if you are comfortable negotiating verbally on one facet of your startup’s capital raise and blindly on the rest — what’s the point of talking about the color of your corsage if you haven’t received a (non-binding) invitation to the dance?

Request that all key terms of the investment are laid out in front of you in the form of a term sheet. This may be the quickest way to get you out of term sheet purgatory and avoid negative consequences along the way.

Give us the background on your fund and what you guys are up to?

Sure – AOL Ventures is the VC arm of AOL, focused on early stage investing in consumer internet businesses. We formally launched the fund in January of this year and are a small team of investment professionals supported by some great Senior Advisors and the entire AOL family.

Overall, we focus exclusively on investments where we can add the most value, blending our personal expertise with some element of parent company involvement. We’re broadly interested in a bunch of different opportunities within the consumer web, and tend to focus on Seed and Series A investments in content, advertising, mobile and local spaces in the US of A.

What stage of startups are you looking at and what do you look for initially?

We’re a small fund with $30M of committed capital, so we focus on Seed and Series A opportunities. Typical investment amounts at the Seed level range from $50k to $500k and from $500k-$3M at the Series A level.

Other than the standard things, we like to play around with a working prototype at the Seed level and like to see some key inflection points met if you are looking for Series A funding. We also tend to focus on repeat entrepreneurs but are not opposed to funding first time founders who have significant domain expertise.

Have you invested in any startups thus far?

We’re just through our first year and pleasantly surprised with where we’re at – Rather than single anyone out you can see a full list of our announced portfolio companies and other relevant investment information on CrunchBase. (CrunchBase Profile for AOL Ventures)

What are you not looking for and/or what is a bad way to pitch you?

People email me sometimes and say, “if we only had AOL’s traffic we would be huge!” I get it, but that’s not a logical investment thesis for us to deploy capital against. We’re not looking to be anyone’s 80% customer and we frankly pass on a lot of entrepreneurs who have unrealistic expectations about what they want out of the relationship with us (it is a marriage after all).

We are not really interested in anything other than consumer Internet, so it’s not good to send me your telecom idea or new consumer electronics device that you need to raise money for. Later stage opportunities are also out of the mandate of our fund.

I’ll make a point here – we are not opposed to getting emails from people seeking partnership opportunities and recognize that this is a product of where we sit. By virtue of our gig we are highly accessible to the external world and also know almost everyone or can get to anyone within our parent company. If you think there is a relationship that doesn’t make sense from a funding standpoint but might be interesting to AOL, Inc., we’re happy to make the intro and they are definitely open for business. Feel open to approach us and don’t be shy.

How active or passive is AOL Ventures in deals?

That really depends on how involved the entrepreneur wants us to be. We tend to be passive-active in nature and will help when asked, but most of our entrepreneurs honestly like us to get pretty involved.

During the investment process we really try and hone in on exactly what the entrepreneur wants out of the relationship and what are the specific tasks that we need to accomplish to help them take the company to the next level. If these align with our own abilities and we feel we can meet the expectations then we’re happy to get involved.

Do you look at portfolio companies as future acquisition targets?

Not really. While we definitely understand that AOL is a large media company and acquisitive, we’re not really involved in those discussions. Remember we’re a minority investor in early stage companies, so the best we can do for our companies is present options for them – at the end of the day those decisions are up to the entrepreneur and the company board.

What’s the difference between Corporate VCs and Independent VCs and how is AOL Ventures similar/different?

Assuming a Corporate VC is operating a traditional fund vehicle and not just investing off of the balance sheet (probably the first real difference), I would say the most recognizable difference is in the single vs. multiple LP structure. Corporate VCs tend to have their parent company investing in their fund whereas Independent VCs tend to have multiple LPs (like endowments, pension funds, etc) investing in their fund. In addition to the nuts and bolts of things like governance, investment committees, etc, also being different Corporate VCs have also tended to be more strategic in nature, making investments in companies that have significant strategic value (and potential BD or M&A synergies) back to their parent company.

Note that this is a broad generalization and I’ll caveat it by saying that with the emergence of models like Intel Capital, Steamboat Ventures, Comcast Interactive Capital, Genecast and new players such as us and Google Ventures, the model of non-strategic Corporate VC is also starting to play a meaningful role in the early stage ecosystem.

In terms of our day-to-day, I would say there isn’t much difference. We think and act like any fund from a sourcing, diligence, execution and management of investments standpoint.

Where do you see corporate venture as a meaningful piece of the ecosystem?

That’s an interesting question. Historically I’d say that corporate venture has been most meaningful at the later stages of a company’s life cycle but that has primarily been product of fund sizing and strategic mandate of the corporate funds. I’d say it’s a relatively new phenomenon that corporate venture funds play in the early stages of a company’s life. While I am a believer that corporate venture can also be meaningful at the early stages, the fact is that it is largely unproven and pretty new in the overall game.

Corporate VC generally has gotten a bad rap – what are some of the things that you think you need to do to be successful?

Haha, who said it has a bad rap?! In all seriousness though, I think there are a few key issues that we looked at from the outset and felt needed to be in place to make this model work effectively.

First and foremost, we have carry in our fund and share in the upside if we earn a financial return for our LP. I don’t think many Corporate VCs operate this way and we feel it creates a lot of mis-alignment with entrepreneurs.

Second, we operate autonomously with a small investment committee (3 ppl) and separate governance structure. We’ve written a check as quickly as 72 hours (obviously not ideal but we have done it). We believe in the ‘quick yes / quick no’ philosophy and we’re not out to waste an entrepreneurs’ time. We co-invest with people we know and don’t ask for any egregious terms above and beyond the lead investors terms.

Third, we tend to only invest in situations where we can add measurable value and really give entrepreneurs that unfair advantage they need. The perfect deals for us are those where we can blend our personal expertise and value-add with a flavor of parent company involvement and value-add.

Thanks Mike!

This Dallas-based startup is looking for people to fill the following positions:

· Ruby on Rails Developer
· Mobile Developers (iPhone, Android, Windows Phone 7, Blackberry)
· B2B Sales; Background in DB marketing, Loyalty marketing, Retail
· UI Designer / Graphic Designer

Benefits are likely to include (i.e., talk to them about this):

· Health Insurance
· Stock options
· Ability to work with a very casual but professional team in a non corporate environment
· Comfy chairs, ok desks and unlimited keurig coffee

If you are interested, contact the guys at Key Ring directly via email at info@keyringapp.com

TRUE linkswear is a Dallas startup, co-founded by Sean Eidson, Robert Rigg and Ryan Moore. Even though they aren’t technically a tech startup, they incorporate a great deal of technology and design into their line of golf shoes:

They’ve been generating some amazing buzz in the golf community for being “the most comfortable shoe — of any kind”, received press on PGA.com and made the ESPN.com holiday golf gift guide.

Of course, it also works if one of your co-founder’s stellar performance helps validate your product. Like most successful startups, they have a great team with a diverse-yet-complementary skill set.

I’ve only been able to get 9 holes of golf in since July, but I’ll definitely be wearing their shoes on (and off) the course soon. Get your pair here.