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A Return to Fundamentals: From Hype to Hard Facts. Christine Comaford Lynch General Partner Novus Ventures. Agenda – Short and Sweet!. Facts/guidelines successful VCs and startup companies must embrace Tips to thrive, not just survive, in today’s turbulent times. VCs “Returning to Earth”.

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a return to fundamentals from hype to hard facts

A Return to Fundamentals: From Hype to Hard Facts

Christine Comaford Lynch

General Partner

Novus Ventures

agenda short and sweet
Agenda – Short and Sweet!
  • Facts/guidelines successful VCs and startup companies must embrace
  • Tips to thrive, not just survive, in today’s turbulent times
vcs returning to earth
VCs “Returning to Earth”
  • 2 new deals/partner/year
  • 6 board seats, maximum
  • Active board participation, proactive corporate governance
  • Get profitable fast
  • Small can be beautiful
  • Burn rate metrics (headcount x $10-20k = monthly gross burn)
financing guidelines
Financing Guidelines
  • Make the $ last until you have significant business traction & can get more
  • Expect 9-12+ months fundraising process
  • Best case: pre-money valuation and round size are the same amount
  • Worst case: convert all previous investors to common stock, start again with new capital structure
the financing net net
The Financing Net-Net
  • Enough “dry powder” for lifecycle investing
  • Aim for breakeven/slight profitability on first round
  • Expansion capital is a luxury
  • Hard ROI: Cost savings & Revenue Generation
  • Less competition
  • Better critique, Better ventures, Higher Bar
  • Longer Term View/Horizon
a generic early 90 s model

Round Type


Amount Raised (MM)

Pre-Money Valuation (MM)






$ 0.50

$ 2






$ 3.00

$ 10






$ 8.00

$ 32






$ 13.50

$ 100






$ 150

Total Private Capital


A Generic Early 90’s Model


Today: get profitable with < $25 million and time rounds with business traction

the startup net net
The Startup Net-Net
  • Get customers fast and scale accounts
    • Creative pricing strategies (70% maintenance, pre-pay, multi-year)
  • Marketing is only relevant to drive Sales
  • Outsource whatever you can
    • Engineering (some)
    • Finance (most)
    • Telemarketing/campaigns/”bursty” activities
  • Keep burn super low, gross margins high
  • Headcount increases only with “net positive” sales
    • COGS must be LOW
  • Have best, worst, expected case plans
  • Under promise, over communicate, over deliver
it issues we re facing
IT Issues We’re Facing
  • Skills shortage
  • Budget shortage
  • Legacy architectures & “islands of info” vs. dynamic decentralized architecture
  • Expensive, deployment- intensive applications that have multi-year ROI
  • Low systematic productivity : batch vs. real-time
  • Random acts of productivity: everyday processes are sloppy/cumbersome/archaic
market opportunities
Market Opportunities
  • Outsourcing & growth => a new (datacenter) infrastructure
  • Value-added services => new programmable network, IBM’s vision of “utilities”
  • Operations cost & complexity => Managed services, Business performance optimization etc.
  • A more decentralized IT architecture => “Real Time” enterprises, business continuity/risk management
more market opportunities
More Market Opportunities
  • Skills shortage & technology complexity => ASPs, technologies to reduce maintenance, Web services/management/integration/orchestration
  • Dynamic demand => Compute utilities, dynamic bandwidth, virtual server farms, Grid computing / distributed computing
  • IT going from 0.5% to 3.5% to ?% of a company’s sales
lessons from charles schwab
Lessons from Charles Schwab
  • Great book by John Kador coming out late September via Wiley Books
  • Only subversive questions create new wealth. Entertain these questions and have the guts to act upon them.
  • 4 phases of an organization: Form, Storm, Norm, Perform. They will repeat in cycles as an organization evolves.
  • Don’t let the power of intuition be an excuse for laziness in doing analysis.
  • Eat/kill your young.
culture shift
Culture Shift
  • Workplace:
    • Satisfaction
    • Making a difference & feeling valued
    • Liking, bonding with our colleagues
    • Work/Life balance
  • Personal life:
    • Family & Friends
    • Giving back/volunteering
    • Values & beliefs
    • High quality of life with a lower burn rate
how to succeed
How to Succeed
  • Find things that are broken and fix them
  • Do it anyway
  • Be “adequate”, “on par”
  • Have positive target fixation
  • Focus on things you can change or improve, let the rest go
  • Think of the worst case scenario – is it so bad?
  • Accelerate failure
  • Go to our site (artemisventures.com): news & events, resources, etc
  • Volunteermatch.org: find a cause you care about and volunteer
  • Books: The Monk Who Sold His Ferrari (Sharma), Tuesdays with Morrie, anything by Brian Tracy (business/motivation), Burn Rate (Wolff)