Posts from July 2020

When Do I Create A Board?

I’ve been asked this question a bunch in the last few weeks in response to my post about more diversity on Boards.

My answer to this question is simple.

A Company should have a Board the day it is formed. The Board should contain one Founder (or possibly two) and at least two independent Directors.

I know that many founders want to control their Boards for as long as possible. I would prefer to see a Founder give up control right away but place control in the hands of independent Directors they nominate. That way they can be comfortable that the independent Directors will have both their interests and the Company’s interests at heart.

This will also make it a lot less likely that the Investors will eventually control the Board as the Board will have institutionalized the notion of independent Directors early on and ideally they will remain the majority of the Board forever.

Finally, it’s a great idea to pick diverse candidates for those independent seats day one. Diversity means “not like us” so it could mean gender diversity, racial diversity, industry diversity, experience diversity, or ideally more than one of those things.


Not So Hyperactive

I wrote a blog post last week in which I said:

The second quarter of 2020 is now behind us and we will see the data on it soon. I suspect what we will see is a very active venture capital market, quite the opposite of what was initially expected.

Well the data is out and its not quite as active as I had thought.

Venture deal activity slowed in the second quarter, with $34.3 billion invested across 2,197 deals, a 23% decline in deal count compared to the second quarter of 2019 but only down slightly from 2,298 venture capital deals in the first quarter of this year.

Notable among the figures was a slump in seed deals to 315 in the quarter, way down from an average of 650 deals per quarter over the last year. Angel rounds were roughly steady by comparison in the quarter. The dropping investment in seed rounds is attributed to investors re-evaluating their portfolios and shoring up balance sheets for the quarters to come.

Standing out in the data is a trend for investors to double down on portfolio companies, with follow-on financing activity heavily outweighing first-time financing in the quarter. Likewise, there has not been a drop in late-stage activity as deal count tracked at a higher pace than 2019.

In the quarter there were 57 late-stage megadeals, those of more than $100 million. That brought total megadeals to more than 100 this year, on track to surpass the 175 megadeals closed in 2019. The report notes that some of those deals can be attributed to startups experiencing newfound growth amid the pandemic, while others were forced to raise additional funds to weather the economic turmoil.

So Q2 was down from Q2 2019 but almost flat with Q1 2020. The most interesting thing is that Q2 had a very slow start and a very strong finish.

Different segments of the venture capital market fared differently to others with the biggest overall slump occurring in April amid lockdowns across the U.S. The report notes that through April and into early May, many venture capital firms exercised caution, triaging and focusing primarily on stabilizing their own portfolio companies. But investment started to pick up again by mid-May.

That squares with what I have seen, although USV was quite busy throughout the entire quarter.

The strong finish to Q2 bodes well for the remainder of the year and I think for the most part the venture capital sector is very much open for business in the midst of this pandemic.

#VC & Technology

Reading On Paper

I’m staring at a pile of paper on my desk that is my stack of things I found on the Internet that I want to read.

It’s a bit ironic to write this on a blog, but if I come across something on my computer or phone that is longer than a page or two, I print it out and read it on paper.

I have found that when I read on a computer screen or phone, I tend to skim. That’s fine for a short email or a short blog post (as this will be).

But it is not great for an eight page blog post, a white paper on a new crypto project, or a memo from one of my colleagues or portfolio companies.

When I read on paper, I often will use a pen to underline or mark-up the document. I find that leads to better comprehension and retention of the concepts.

I’ve noticed that our children, all of whom are in the mid to late 20s, also read books in paper form and mark them up when reading them. So while reading on paper may be a generational thing, I believe it is also a valuable technique for all ages and all generations.

#life lessons


Growing up, I thought the price asked was the price. The only decision was whether or not you wanted to pay it.

As I moved into adulthood, started hanging out with the Gotham Gal and a bunch of friends, and entered the world of business, I learned that the price was what you agreed to pay for something, not what was asked.

When I started out in VC in the mid 80s, the investors usually started the price negotiation. The founder would come in and pitch, and if the investors liked what they heard, an offer would be made.

It is very different now. Founders have an asking price when they walk in the door. And often VCs treat that asking price like I treated prices as a kid. The only decision is whether or not you want to pay it.

The reason for this is that the VC market is highly liquid and there are many buyers out there. Investors understand that even if they won’t pay the asking price, someone will. And so they treat it like it’s “take it or leave it.”

But I am not a fan of that approach. I prefer to have a discussion about the asking price. If a founder says they are thinking of raising $10mm for 20% of the Company, I like to reply with something like “We were thinking of $6mm for 20%”, thereby setting up a discussion of the price.

It doesn’t always work. Many founders reply with something like “I’ve got term sheets at that price already” which basically means “take it or leave it.”

But even then, I have found there is a way to have a price negotiation if both sides are looking to do business with each other.

The key is doing it respectfully and honestly. I feel like the sooner you have the price conversation the better. The worst thing is dragging a founder along in a process with them thinking you are at their price when you are not.

Negotiation is an important part of any business transaction. It reveals something about both parties and helps them understand each other and decide if they want to work together. I would encourage everyone to seek a negotiation and engage in it enthusiastically. Doing a deal without a negotiation feels like a missed opportunity to me.

#VC & Technology

Reviewing The CEO'S Performance

The CEO is an interesting case when it comes to performance reviews. They manage an entire company and they specifically manage the senior leadership team. They do not have a single reporting supervisor. They report to a Board. And that Board may, like the team they manage, have differing views on their performance.

Also, some executives are strong at managing down but weak at managing up. And the reverse is often true, where an exec is great at managing up but weak at managing down.

A failure mode I have seen in CEO reviews is when a Board thinks a CEO is doing well but they are not and that CEO gets a strong review. I’ve seen the opposite when a CEO manages up poorly but down well and they receive a weak review from the Board.

Given all of that, this is what I have learned to do.

1/ Schedule a CEO review cycle with a regular frequency and stick to it.

2/ Review compensation at the same time that performance is reviewed. If performance is reviewed more than once a year it is fine to only review compensation on the annual review cycle. Do not review compensation without doing a performance review at the same time.

3/ Have a third party (a CEO coach or some other skilled facilitator) interview all of the CEO’s direct reports and all of the Board members.

4/ I like to have the facilitator interview the direct reports first and provide that data to the Board prior to interviewing the Board members. This ensures that the CEO’s performance inside the Company informs and colors the Board members’ feedback. This is the best way I have learned to mitigate the “manage up well, manage down poorly” issue.

5/ The third-party facilitator compiles a review report and shares it with one or more Board members. If there is a Board Chair, she should be part of this part of the process.

6/ The Chair and possibly one other Board member (the Comp Chair if there is one) meet with the CEO, go over the performance review in detail, and then address compensation in light of the review.

This is a time intensive process and must be done thoroughly and with care. The stronger and more experienced the third party facilitator is, the better. You cannot skimp on this work. It might be the single most important thing a Board does on an annual basis.

Feedback is so important to ensure that a leader develops in the role and functions at a high level. In my experience, CEO feedback is often an afterthought because no single person owns the responsibility. If there is a Board Chair, she owns this. But otherwise, it can be a shared responsibility that falls through the cracks.

As Board members, we can’t let that happen. We owe it to the CEOs we work with to give them clear, regular, and accurate feedback. And this process (above) works well to do that.



When the pandemic started, the conventional wisdom was that the capital markets would take a beating, including the venture capital market for startup capital.

The second quarter of 2020 is now behind us and we will see the data on it soon. I suspect what we will see is a very active venture capital market, quite the opposite of what was initially expected.

There are a number of reasons that I think we will see that.

First, venture capital firms raise funds and it is our job to put them to work. If we see interesting opportunities, it is our job to invest in them. We are not paid to hoard the cash.

Second, the stock market for tech companies has been on a tear in the last three months and that weighs on the minds of investors. A bullish stock market leads to a bullish venture capital market.

Third, the pandemic showed that software based businesses, e-commerce, software infrastructure, and other sectors popular in startups and venture capital are resilient and attractive right now.

Fourth, sitting at home all day, not being able to travel, not being able to socialize, creates an efficient work environment for many (but certainly not all).

And finally, there are so many great founders out there coming up with excellent business ideas. The pandemic has not slowed that down. If anything, it has sped it up.

It is possible that some sectors of the venture capital market have slowed. Some areas which have attracted big growth investments over the last few years were quite negatively impacted by the pandemic and I would imagine we will see parts of the growth market negatively impacted as a result.

But looking back on the second quarter of 2020, what I see is a hyperactive venture capital market firing on all cylinders. And that is good news for founders and innovation.

#VC & Technology

Doubling Up

Regular AVC readers may have noticed that after blogging about my once a day routine, I posted twice yesterday.

What happened is that I had been planning on blogging about Summer Bridge, a project we’ve been working on for the last few months, first thing Monday morning after the July 4th holiday.

But when I woke up, I had a DM from my friend Jonathan with some data about the content on AVC over the years and got excited to share it and did.

A colleague reminded me about doing the Summer Bridge post and so I published as planned mid-morning.

For those that may have missed my post about Summer Bridge, it is a new youth summer employment program for the neediest kids in NYC. It is a virtual/remote internship program that runs most of the month of August. The City and State are providing the stipends and companies provide remote “workplace challenges” for the kids.

USV is planning a workplace challenge around finding interesting startups working to address the climate crisis. I am excited to work with our teenage interns on that project next month.

If your company wants to work on an interesting problem with inner-city youth this summer, please consider participating in Summer Bridge. You can sign up here.

#Current Affairs#NYC

NYC Tech Companies: Please Consider Participating in Summer Bridge

NYC’s Summer Youth Employment Program is the nation’s largest youth employment program, historically connecting NYC’s neediest young adults (between the ages of 14 and 24) with a paid work experience every summer. The COVID-19 pandemic threw a wrench into it this summer and it was canceled. In response, the City and State and over 50 nonprofits have come together to design the Summer Bridge program for summer 2020. Summer Bridge will provide low-income NYC students with City and State-funded professional workplace experiences in the tech industry and beyond.  

Summer Bridge will provide summer internships to 35,000 young adults this summer.  Student interns will participate in workplace challenge projects for 10-20 total hours (2-4 hours per week for 4 weeks.) The program begins on August 3rd and finishes on August 28th.  Summer Bridge and its non-profit partners will match student interns with companies, compensate students with a stipend ($700-1000 for the summer), and manage day-to-day-student relationships.

We want the NYC tech sector to be a big part of Summer Bridge this summer. Please consider having your company involved. Here is our ask of your company:

  • Design a “workplace challenge” for students based on a real business need or problem in one of four areas: product, engineering, marketing, or design.  Tech: NYC is providing templates for these challenges.
  • Recruit employee volunteers to meet weekly with small groups (15-20 students) for hour-long virtual interactions. Ideally, each volunteer would see 2-3 groups a week.
  • Offer feedback to students at a virtual final workplace challenge presentation.

We hope your company will participate in Summer Bridge this summer. If you would like to participate, go here and sign up.

#Current Affairs#employment#NYC

Short and Sweet

My friend Jonathan sent me a couple graphs he made of the content on AVC over the years.

Here is how word count has evolved over the years. I started out with short posts, got longer for a while, and am now back to the short post.

Here is how post count has evolved over the years. In the early days of AVC, I would post multiple times a day (like many people use Twitter today). I moved to the once a day post around the time Twitter came along, although I don’t think they are related, and have been doing that ever since.

So that’s how the short daily post format evolved here at AVC. It is neat to see it visualized like this.