It’s early in 2006, and thoughts of many in business turn to new ventures. And of finding the money to finance them.
So who ya gonna call? One option is your friendly neighborhood venture capitalist. For those of us a long way from Sand Hill Road, we can spend a lot of time looking.
When you finally meet one, you might want to really listen closely to what is said. It may be one of the Top 10 Lies of Venture Capitalists, courtesy of Guy Kawasaki.
â€œThis is a vanilla term sheet.â€ There is no such thing as a vanilla term sheet. Do you think corporate finance attorneys are paid $400/hour to push out vanilla term sheets? If entrepreneurs insist on using a flavor of ice cream to describe term sheets, the only flavor that works is Rocky Road. This is why they need their own $400/hour attorney too–as opposed to Uncle Joe the divorce lawyer.
Updates (08 Jan 06):To be clear, there are some shining examples of VCs in the blogosphere. Brad Feld is one, and Fred Wilson is another. Mr. Feld had a great series on term sheets last year. As Rob Hyndman notes, Mr. Wilson has a devastating view of the recent disclosure that some telcos may be trying to charge extra for iTunes or Google downloads that go through their systems. Hugh Macleod is also a fan of Mr. Wilson, and offers a great sign-off on the view initially raised by Mr. Kawasaki: