Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist
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Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist Audible Audiobook – Unabridged

Jason Mendelson (Author), Sean Pratt (Narrator), Brad Feld (Author),
4.6 4.6 out of 5 stars 203 ratings
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As each new generation of entrepreneurs emerges, there is a renewed interest in how venture capital deals come together. Yet there really is no definitive guide to venture capital deals. Nobody understands this better than authors Brad Feld and Jason Mendelson. For more than seventeen years, they've been involved in hundreds of venture capital financings, and now, with Venture Deals, they share their experiences in this field with you.

Inspired by a series of blog posts - created by the authors after a particularly challenging deal - this reliable resource demystifies the venture capital financing process and helps you gain a practical perspective of this dynamic discipline.

Whether you're an experienced or aspiring entrepreneur, venture capitalist, or lawyer who partakes in these particular types of deals, you can benefit from the insights found throughout this book. Engaging and informative, Venture Deals skillfully outlines the essential elements of the venture capital term sheet - from terms related to economics to terms related to control. Feld and Mendelson strive to give a balanced view of the particular terms along with the strategies to getting to a fair deal. In addition to examining the nuts and bolts of the term sheet, Venture Deals also introduces you to the various participants in the process, discusses how fundraising works, reveals how VC firms operate, and describes how to apply different negotiating tactics to your deals. You'll also gain valuable insights into several common legal issues most startups face and, as a bonus, discover what a typical letter of intent to acquire your company looks like.

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  1. Listening Length
    7 hours and 19 minutes
  2. Author
    Jason Mendelson, see all
  3. Narrator
    Sean Pratt
  4. Audible release date
    October 12, 2011
  5. Language
    English
  6. Publisher
    Gildan Media, LLC
  7. ASIN
    B005V1G21E
  8. Version
    Unabridged
  9. Program Type
    Audiobook
  10. See all details
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Product details

Listening Length 7 hours and 19 minutes
Author Jason Mendelson, Brad Feld
Narrator Sean Pratt
Audible.com Release Date October 12, 2011
Publisher Gildan Media, LLC
Program Type Audiobook
Version Unabridged
Language English
ASIN B005V1G21E
Best Sellers Rank #199,840 in Audible Books & Originals (See Top 100 in Audible Books & Originals)
#108 in Corporate Finance (Audible Books & Originals)
#222 in New Business Enterprises
#412 in Venture Capital (Books)

Customer reviews

4.6 out of 5 stars
4.6 out of 5
203 global ratings

Top reviews from the United States

foobar
5.0 out of 5 stars Like having a startup super-mentor on your shelf
Reviewed in the United States on August 5, 2011
Verified Purchase
I was very pleased to receive an advance copy of Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist the other day. After reading it, I've concluded that it's like having a super-mentor on your shelf.

I have been extraordinarily fortunate throughout my career to have been blessed with amazing mentors. Men like Will Harvey and Steve Blank have been there to help me, encourage me, and push me to do better. For any entrepreneur, these super-mentors are one of the secret weapons that can make a difference: answering difficult questions, making key introductions, or offering sage advice.

However, there is one thing that the best mentors do which is most important: they can help you figure out what the $@%@$ is going on. When things get really tricky, often we find ourselves asking the wrong questions, or not even knowing enough to ask.

When raising money, for example, you might think that most negotiations happen in a rational way, over just a few deal points that have a clear meaning. You might think that "company valuation" refers, naturally, to how much your company is - you know - valued. But this kind of thinking will get you in trouble fast. Because in reality, these negotiations hinge on hundreds of hidden factors, incentives, and sources of agency bias. Nothing is straightforward, especially if you haven't done it before. These are the moments when the truly great mentors stand out in their ability to cut through the BS and help you understand the motivations and systems that are driving seemingly incomprehensible behavior.

All of this is by way of saying that if you already have a mentor of the caliber of a Steve Blank or Brad Feld on speed-dial, you probably don't need to read Brad's new book Venture Deals.

What's that you say? You don't - or you're not sure? Well then, you absolutely, positively, without-any-doubt have to read Brad's new book Venture Deals.

When I received my advance copy, I was a little worried. I generally try and stay away from topics like "how to raise VC" or "how to sell your company" because the startup landscape is already saturated with tips and tricks. And reading a term sheet has all the entertainment value of watching dried paint get even drier.

But Venture Deals is quite a surprise: it's readable, engaging, and addresses issues way below the surface.

It is not a how-to manual or a collection of tips. It's an in-depth explanation of what the @$%$ is going on when an entrepreneur considers raising money or doing an M&A transaction. And even if you don't think you're going to do that for your startup, this is very valuable information to have - because you never know who might approach you in the future. This is a book you'll want to have handy, just in case.

I've dealt with a bunch of different kinds of investors over the years, from so-called "dumb money" all the way up. The hardest thing to understand when working with them is that they are subject to forces and incentives that are rarely disclosed openly. When I came to Silicon Valley, I was inducted into a body of accumulated wisdom about how to handle them. This is the same advice I hand down again to entrepreneurs who are seeking my counsel. That advice is completely consistent with what's contained in Venture Deals.

For example, the right way to think about a term sheet is as a negotiation over just two things: economics and control. Everything in a term sheet is negotiable - if and only if you already have sufficient leverage. (Do you know the sources of leverage in a VC deal? Wouldn't you like to?) There are many founder-friendly terms you can push for, from automatic acceleration to reduced vesting - but each risks reducing the alignment of interests between founders and investors. And even if you're an old pro at raising money, you're likely to find a few surprises in here. Are you sure you know the formula for how your VC reserves capital for your future rounds (I didn't)?

And even the most battle-tested entrepreneur would be forgiven if they were a little confused by the following bit of poetry in a term sheet:

"Antidilution Provisions: The conversion price of the Series A Preferred will be subject to a narrow-based weighted average adjustment to reduce dilution in the event that the Company issues additional equity secuities..."

Now even though us old pros know that there are different kinds of antidilution provisions, are you absolutely sure you remember which one is the good kind and which is the horrible kind that caused all those problems in 2001? Are you sure your lawyer will catch it if the formula isn't quite right? Wouldn't you rather be sure? I've lived through a crisis where a company's antidilution provisions kicked in and nobody could agree on how the formula was to be interpreted. I wish I'd had this book on my shelf back then.

Which brings me back to my claim at the top about having a super-mentor in book form. Venture Deals explains not just what to do but why it works that way. Every VC term sheet I've ever seen has come with a claim that its terms are all "entirely standard" and "as simple as possible" - whether it was one page or a dozen pages long. That can be frustrating, but what do you do about it? Which terms really are standard for good reasons, which are standard for bad reasons, and which are just gotchas designed to skew the negotiation?

Venture Deals has negotiating tips, same as other books, but - much, much more importantly - its negotiating section is called What Really Matters? When you're in the thick of it, only a truly great mentor can tell you which provisions are negotiable, which are negotiable-but, and which are really non-negotiable. ("negotiable-but" means you can possibly win that fight, but it will damage your reputation in the process.)

Now, it's important to keep in mind that Brad and Jason are themselves VC's, albeit ones with an entrepreneur-friendly reputation. So you always have to take their advice - like anyone's - with a grain of salt. But they've thought of that, too. Throughout the book, they've given space for brief commentaries by an experienced entrepreneur, Matt Blumberg, CEO of Return Path. In several places he gives an important counterpoint to Brad and Jason's perspective. It's a combination that is unique to this book.

I hope all of you who are reading this - no matter where you live, no matter what kind of company you have - will one day get to make the pilgrimage to Sand Hill Road in Silicon Valley, or another famous startup hub. It's an exhilarating experience. But it's not without its risks. As the old saying goes, "watch your wallet." And bring your copy of Venture Deals.
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Scott
5.0 out of 5 stars Essential Guide to Venture Capital for Entrepreneurs
Reviewed in the United States on February 5, 2012
Verified Purchase
Overall a very clear, concise, well-written guide to venture capital for entrepreneurs. This book demystified a bunch of things I had wondered about or misunderstood for years based on snippets of information I picked up living in Silicon Valley and working in tech. It's compact and easy to read; I think the authors struck a good balance between including enough material and keeping the book to an easily-digestible length.

The centerpiece of the book is a term-by-term analysis of the term sheets commonly presented by venture capitalists to entrepreneurs. The authors provide sample language for each term, describe the common variations, explain what each term means, and indicate which terms you shouldn't worry about, which you should negotiate strongly, and which you should care about but will probably have to take as-is. They also categorize the terms as "economic", "control", and "other", which I found very helpful.

Apart from the term sheet, the book includes a very helpful discussion of the structure of venture capital firms and the VC industry. For example, they cover different roles and job titles in VC firms, answering questions like what a "principal" is vs. a "managing director". I always thought "principal" sounded super-important and I was amazed when I heard of people receiving this title soon after business school, but it turns out I was confused. They also discuss the relationship between the management company and the individual "funds", how VCs raise money, and so forth. One thing I didn't know that is very interesting is that when making an initial investment in a company, VCs reserve an additional specific amount on their books for future investments in that company.

Finally, the book includes shorter chapters on negotiation, letters of intent (the "term sheet" of acquisitions), and legal things entrepreneurs should know.

Overall, this book is packed with useful information and written with just enough personality to make otherwise dry information more palatable.

What didn't I like? There were a couple of things that I thought could have been explained more clearly. I was able to understanding participating preferred stock, but it took me longer than I think it should have. I still don't know what registration rights are or exactly how weighted-average antidilution works. (Granted, registration rights are one of the terms they consider unimportant.)

Finally, I have mixed feelings on the chapter on negotiation. It was interesting and useful (I particularly liked the advice to keep the entire deal in mind, rather than getting drawn into point-by-point agreements), but I'm still not sure if it's worth the space--there seem to be lots of good books out there on this topic. I do appreciate the effort to make this book one-stop shopping, though.

These shortcomings aside, an incredibly helpful book and highly recommended.
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Top reviews from other countries

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Eric Shufflewood
5.0 out of 5 stars Hinter die Kulissen blicken
Reviewed in Germany on May 8, 2013
Verified Purchase
Verständliches Englisch, interessant geschrieben und man erhält einen guten Einblick in die Funktionsweise von Venture Deals. Kann das Buch jedem empfehlen, der sich generell für das Thema interessiert, gerade selber ein Startup aufzieht und Investoren sucht oder wer eben mal hinter die Kulissen blicken möchte ("Facebook, Twitter möcht ich auch!").
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Jean-Guillaume
5.0 out of 5 stars Very interesting book
Reviewed in France on April 24, 2013
Verified Purchase
A must read for anyone interested in entrepreneurship and looking to launch their first startup.
Full of very practical and helpful insights.
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Long distance runner from the UK
5.0 out of 5 stars A must read for anyone looking for investment for the first time
Reviewed in the United Kingdom on September 11, 2012
Verified Purchase
In the process of looking for investment for my startup I was recommend this book to read before doing anything else, and I wasn't disappointed. The biggest fear in going to ask for investment is worrying you won't understand what they are talking about or that you will look a fool for not being able to answer questions because you don't understand any of the terminology. Reading this book will go a long way in helping you overcome those fears. It explains everything in an easy to understand and easy to read manner and the Entrepreneur's perspective sections are also insightful.

In short if you are looking to grasp a better understand of venture capitalists and the terms used this is a must read.
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Consulter
5.0 out of 5 stars The ultimate guide to VC financing
Reviewed in Germany on March 2, 2013
Verified Purchase
Every entrepreneur seeking VC financing should read this. Don't ever talk to a VC before. I mean it. The book covers the basics of an industry that as an outsider is impossible to understand.
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oneafrikan
5.0 out of 5 stars Recommended for anyone raising money
Reviewed in the United Kingdom on June 2, 2012
Verified Purchase
Read Venture Deals on a flight from London to Johannesburg recently, and really enjoyed it, so wanted to write something positive ;-)

Busy with a supportive investor convertible note negotiation so we can keep the top line growing, and the book has given me a broader perspective than I had before I read it -> "Economics and Control" is probably the best three word wisdom I've read in a long while. Book is written in an engaging style, and tone of voice is not preachy. Easy to read and digest.

For first timers, definitely recommended.
For old times, think there is definitely enough meat to add to or change perspectives.

Recommended. #JFDI.

gareth
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