Perspective, Pontification and Propoganda about Entrepreneurship and Venture Capital, brought to you by David Hornik of August Capital.

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» Being Diligent from Social Engineering
VentureBlog: Being Diligent - What is due diligence for a VC?... [Read More]

» VC due diligence from enterFrame
I've never run a company and I have never been involved in any kind of due diligence, but going through David Hornik's post on Venture Blog, something did not strike me as right. Here's what Hornik looks for in a company: Personal References Business R... [Read More]

» VC due diligence from enterFrame
I've never run a company and I have never been involved in any kind of due diligence, but going through David Hornik's post on Venture Blog, something did not strike me as right. Here's what Hornik looks for in a company: Personal References Business R... [Read More]

» Venture Capitalists and Due Diligence from Operationally Speaking...
The good folks over at VentureBlog have put together an excellent summary of what a VC looks for as part of due diligence on a potential investment. You will appear more prepared and better informed if you have pulled together... [Read More]

» Venture Capitalists and Due Diligence from Operationally Speaking...
The good folks over at VentureBlog have put together an excellent summary of what a VC looks for as part of due diligence on a potential investment. You will appear more prepared and better informed if you have pulled together... [Read More]

» Sunday, June 15, 2003 01:02 PM from Critical Section
Andrew Anker posted an interesting article on VC due diligence. I met Andrew the other day [Read More]

» Due Diligence from Scott Loftesness
David Hornik shares some of the due diligence items he looks for prior to considering a venture investment in a company. [Read More]

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dwlt

I'm curious to know what you would look for in a Hiring Forecast? Do you have any suggestions for preparing this?

Lukasz

I guess the hiring forecast is a good indicator that the founders do know what they are talking about - when the description of the job is very diffuse, or important positions are ommited apparently, this will likely make a bad impression.

William Volk

Good article. What's distressing to this bootstrapper is that I still see deals where the 'extreprenuers' have pulled a fast one over the VC's. Companies built on non-defensible poorly implimented technology get funding because someone on the team worked for this well known company.

I've done some technical due-dilligence work for for VC's ... it's not that hard for clever folks to pull the wool over the eyes of the investors.

dwlt

So it's more a timetable (set out against company milestones rather than specific timescale, I would guess?) for senior/key hires, rather than a more general "and this month we'll add two more engineers" type plan?

Jim Cook

An excellent article/blog! One of the most insightful and useful I've read. Great job!

Akihito

Jim Cook: it is a decent post but it doesn't justify kissing ass. Maybe I'm a jaded serial entreprenuer who fails to appreciate the Due Diligence 101 courseware provided.

Let's encourage dialog above the banal for those that are experienced company founders.

To the VentureBlog folks, don't get me wrong, your blog provides interesting information but I just didn't feel that post warranted a pat on the back which Cook provided.

David Hornik

I have seen hiring forecasts that look like simple expense forecasts and others that are lists of hires and the associated equity ranges for those hires in rank order of significance to the company. The important thing is that it gives a clear picture of both hiring priorities and the required equity to move the company forward. With those pieces of data it is possible to have a good conversation about the stage of the company and the direction in which the company is moving.

Jason Lemkin

Having recently raised venture funding and also assisted a number of companies in the past, I think David's point about equity is a very important piece of this "hiring plan" concept. I have built multiple hiring plans, and they are key to understanding gaps in the team; what it will take to get there; and reviewing it is also a good exercise to see if the team truly understands what it takes to build the company.

But then it's also an exercise for the VCs to use to try and raise the size of the option pool going into the pre-money. I.e., lowering your pre-money valuation in essence. So in my experience, you also want to have a very thoughtful and defensible equity plan tied to your 12-24 mo. hiring plan. If it's pretty strong, the VCs won't challenge your equity plan dramatically, since really you will know better. If the equity allocations in your hiring plan are not thoughful, or if the hiring plan itself is not fully defined, the VCs will come back and say you need x00,000 more shares in the pool to account for the undefined hires or the ill-defined hires.

dude

Thanks for the information.

I need more info on this..can anyone gimme more clues..

Can you give me some inputs on the exit process.

I am plannign a startup. I have only technical skills and i tested the idea on research scale. Now i need investment for more quality/performance testing and I need people to support me technically.

I am looking for all the investment from VC's from Computers to office establishment..

What is the typical process?

How much share(in percentage) should i give in that case to VC's?

Which is preferred way for exit from the entrepreneur point of view?

caprio

dude@codebusiness.com

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