Occam's Razor

Market heat wave

The current increase in transaction price, and entrepreneur value expectation can be observed in today's VentureOne private equity market metrics. According to VentureOne, Valuations of venture-backed companies for 2005 reached their highest point in four years as sizable acquisitions fueled an increase in the price of later-stage companies.

The median premoney valuation of U.S. start-ups reached $15.2 million, up from $12.5 million a year ago, according to a report released today from VentureOne, a unit of Dow Jones Enterprise Media Group. In 2001 overall annual median premoney valuations hit $16 million. Later-stage information-technology company valuations rose the most, by almost $8 million over 2004, to $30.3 million.

Within IT, the median largest valuations were $42.8 million for later-stage electronics and $44 million for later-stage semiconductor companies. Among round classes, U.S.premoney valuations increased for all but first rounds, which were relatively flat at $5.4 million, down from $5.6 million a year ago.

Meanwhile, in Europe, the median premoney valuation increased to $4.1 million, the highest since $4.8 million in 2002. The median value of European IT companies increased to EUR3.9 million from EUR3.2 million a year ago.

Are we going to all get burn again ?

Euro consolidation

Interesting new European-centric consolidation player around MySQL

MySQL AB, a Sweden-based developer of an open-source database, has acquired Netfrastructure Inc., a Manchester, Mass.–based provider of server software for building Web-based applications. No financial terms were disclosed.

MySQL has raised significant VC funding from  Institutional Venture Partners, Intel Capital, SAP Ventures, Presidio STX, Benchmark Capital and Index Ventures.

Meeting with Chris Shipley on March 7 in Paris ?

I had the opportunity last year to speak at the first edition of Innovate Europe, the European innovation conference put together by the Guidewire Group – which is also organizing DEMO.

The planning of Innovate Europe 2006 is under way, and the selection of startups that will have the opportunity to present at the conference is taking place soon. Chris Shipley will do a tour of Paris, London, Dublin, Tel Aviv, Barcelona, Madrid and Zaragoza between March 7th and March 17th.

If you want to meet with Chris and company, go check this post that explains it all, and fill in this form if you are interested in participating, or contact me at the Paris Occam Capital office.

Tag: innovateeurope06

I had the opportunity last year to speak at the first edition of Innovate Europe, the European innovation conference put together by the Guidewire Group – which is also organizing DEMO.

The planning of Innovate Europe 2006 is under way, and the selection of startups that will have the opportunity to present at the conference is taking place soon. Chris Shipley will do a tour of Paris, London, Dublin, Tel Aviv, Barcelona, Madrid and Zaragoza between March 7th and March 17th.

If you want to meet with Chris and company, go check this post that explains it all, and fill in this form if you are interested in participating, or contact me at the Paris Occam Capital office.

Tag: innovateeurope06

Measure it, Manage it!

Great post on how and management by metrics, with some smart comments by Ed Sim on the same topic:

When you can accurately predict your results in each operating unit, it means less risk and a greater opportunity to scale your company without blowing your capital (missed quarters get more and more expensive as you grow!). Being able to make accurate predictions also means that:

• You have an operating model (not just a collection of people), which allows you to scale better,
• You understand the key drivers of output in your operating model,
• You are consistently managing the unit to your operating model,
• You have a set of early warning signs (your key drivers) that you can focus more attention on when they get below certain thresholds (i.e., it helps you to know where to spend your time),
• You have a set of measures that you can benchmark against other companies to understand where you have opportunities to move to best practices, and
• You know when you need to add staff or other resources well before you get caught short.

Finally, the understanding of the above gives you a solid platform for experimenting with new approaches and accurately evaluating the effectiveness of the new approaches (thereby allowing you to kill the approaches that don’t work and expanding the approaches that do work).

Most technology driven businesses tend to be under-managed, with board meetings organized as social gathering and public reading  of  very thick board pack that lack the simple data about the top 5 metrics and trends from one quarter to the other (furthermore, one interesting metric seems to be that the more confused a project is, the larger the board-pack is (NB of pages = function  of square of (confusion))).

Blog Fight Club

Good pearls of wisdom's from the cocomment guys:

Rule #1: The last word does not matter
Rule #2: Trust the readers
Rule #3: 99% of times, ignorance is the answer
Rule #4: Be aware than 10% of people make 90% of the noise
Rule #5: Don’t look for instant confirmation you won
Rule #6: Don’t let anger answer
Rule #7: Stick to the facts
Rule #8: Fight on your own turf
Rule #9: Fight the big guys. Only the big guys.
Rule #10: Irony = arrogance

I particularly like rule 4...

[Source B Giussani]

Preparing for Kinnernet 2006

I'm starting to prepare for the forthcoming Kinnernet 2006 conference which will be held by Yossi Vardi and co.  in Israel starting March 30.

I'll be at the conference on March 30/31/April 1 and at The Marker conference in Tel Aviv on april 1/2/3 , available if you want to meet.

Remembering Gilles Kahn

This picture from Gilles Kahn was taken during the 2003 RVC conference than Jeff Clavier and myself organized that September in New York. 

It captures a lot of the incredible qualities of Gilles from it's sheer passion (which radiates here), to his great strength, to his incredible humor and gentleness.

I spend today's afternoon at his funeral, where a large, sadden group of family, colleagues, friends pay their last respect to him. Gilles was only 59, and had been an adviser of RVC and of Occam Capital.

We spend of lot of time taking about leadership, and what the quality of a leader in action are, and how to recognize them. Watch the short 3 min (in French) video of Gille's new year greating to the INRIA staff, and observe and remember what an incredible man he was. I will only quote here the last sentence from his speech :

We must focus on seeding new trees, and hope that one day, when we will no longer be around, they will have mature, and bear new fruits...

Gilles Kahn was educated at the Ecole Polytechnique (class of 1964), then at Stanford University in the United States (1968-71). During his career he would have the opportunity to take two long sabbaticals in renowned scientific institutions: University of Edinburgh, UK (1976-76) and the Isaac Newton Institute at Cambridge, UK (1995). Twenty years later, in 1997, he would become the first member of the Institute to be elected to the French Academy of Science as a researcher in information systems. On his return from Stanford, he entered the CEA (atomic energy commission), then joined IRIA in Rocquencourt in 1977, at the head of a project for the development of programming environments. In 1983, he was one of the founding members of the INRIA Sophia Antipolis Research Unit, where he continued to head a research project while simultaneously coordinating research activities alongside the Unit's director. In 1993, Gilles Kahn became part of the Institute’s General Management, where he took up duties as Vice-President for Research, and later, in May 2004, became Chairman and Chief Executive Officer. As Vice-President for Research, then as Chairman, he had a major influence on the definition of INRIA’s last two strategic plans. The last strategic plan (2003-2007) paved the way for joint research in information systems and life sciences.

Dos and Don't of VC NDA

Good post from Brad Feld on Why VC do not sign NDAs. The comments below his post are also worth reading.

1. Even if I was inclined to sign an NDA, I’d have to go through the process of reading it and deciding if it had any problems (many of them do – they are usually overreaching for the information being disclosed), dealing with my lawyer to change it, and you dealing with (and spending time with your lawyer) to accept or reject my requests.  In some cases, I’d probably spend more time dealing with the NDA then with the entrepreneur and his idea.  How stupid.
2. I’d have to keep track of all the NDA’s I signed.  It’s “yet another legal document” in the pantheon of documents we have to keep track of.  Hmmm – maybe we should consider funding a startup to automate the creation and tracking of NDA’s.  Nah.
3. In 20 years of high tech (as an entrepreneur, angel investor, and VC), I’ve never been involved in a situation where an NDA in enforced except in an M&A context.  It’s simply a waste of paper and time for anything but M&A

This is a question I get on a weekly basis, and yes, Occam policy is that we do not execute any NDA when we talk to a potential investment.

The only NDAs that we take seriously are the M&A ones also, as there is a point to signing one in that case. Someone said why not sign a simple one. What is the point then? A simple one page NDA leaves way too much room for interpretation and margin for errors when it really comes down to it. I symphathize with the entrepreneurs' logic that what they are working on is indeed the most important thing to them and deserves protection. But if I have to negotiate an NDA for even 1/3 of the deals that I look at, I would spend my days reviewing NDAs and have to have an attorney on staff full time. That is not practical. I have had to leave a couple of times because the company insisted on an NDA before they would even do the elevator pitch. I never found out if they were a billion dollar idea that I missed....

Better than NDA are simple but real Due Diligence on the VC, What is their reputation? Have they funded companies in similar space? How do they work with the companies?