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I went to a VEF session last month where we were told why Venture Capitalists are looking for the “home-run” in all their investments

If I remember it right :

• Investors into VC funds are looking for a 20% annual return on their money

Since I did not write down the math presented at the VEF I had to look around the net or some help. I found the following info on one site:

For every 10 companies you invest in, expect:

• 1 home run (>10x return)
• 1 decent return
• 6 return your original investment
• 2 complete write-offs

which means that if you have $1,000,000 to invest and you split them in 10 equal pots, you should get back

• 1 home run (>10x return) = $1,000,000
• 1 decent return [lets say 2x] = $200,000
• 6 return your original investment = $600,000
• 2 complete write-offs=$0

for a total return, including principal investment, of $1,800,000.

While 80% return sounds good to most of us we must not forget that it might take 10 years to get to this point. So, even if we really simplify and forget about the NPV of money, and then even forget about the IIR the VC’s like to use (Read about some problems with IRR here), it does not take much to figure out that $1.8M does not give a 20% annual return over 10 years. In fact, if we forget about interest on the annual returns (to keep the language in layman’s terms)then $1M will grow to $1.8M after 4 year at the 20% annual interest required by most VC fund investors. $1.8M after 10 years only give $80,000 annually, simplified to 8% annually.

Let’s get back to the VEF presentation… since you never know which investment is going to be the home run, then ALL investments should have the possibility of reaching 10x to make sure that at least one investment reaches this level.

While 2x on an investment might sound great to many of us, it is thus not enough to make up for the losses and and zero-percent returns a VC fund is likely to see.

So, if you find a VC not to be interested in your HOT 3-4x opportunity, you now know why

roar> at roarweb dot com

I sometimes refer to Paul Kedrosky, a Venture Capitalist (VC) with his own blog at Paul Kedrosky’s Infectious Greed.

In a recent post Paul wrote that he had noticed that not many VC’s blogged.

In a comment, Jeff Clavier says:

“…. it also requires a genuine engagement, and you have to know what you want to get out of blogging before you start.”

Jeff is right, successful blogging requires engagement. It requires engagement in the form of providing interesting content and in the form of providing this content on a regular basis. E-mail newsletters and web site news sections also requires this type of content.

I wrote about similar issues about a year ago:

In planning communications schedules an organization must take their resources into account. Keep in mind it is easier to increase frequency of communications, should you find you have the additional resources, than it is to reduce frequency should your audience have gotten used to getting your updates on a regular basis.

roar at roarweb dot com

I’ve just read an article on InformationWeek.com, where they discussed the results of negative online experiences on shopping habits at brick and mortar stores belonging to the same company. Bottom line was that 33% of those asked said they might actually stop shopping at a brick and mortar store due to a negative online experience.

I had planned to link to the article, but just happened to read their “licence this article” announcement. I’m sorry, but you’ll have to find the article yourself!

While the copyright section, managed by copyright.com, did not specify how I as a blogger should deal with linking, it had some other suggestions on what I could do:

• link from my corporate or academic web site: $2.50
• include a link in an e-mail with a distribuion of one (1): $5.00
• inlcude a link in an e-mail with a distribution of one hundred (100): $25.00

While a publisher must choose on how to make their money, I question the choice they have made. While they could have included a “blogging” option (free?!), they have chosen to try to get money for every little thing. They have chosen to try to get money from me for actually doing them a favour by linking to them.

I believe they have made a mistake! While I support their right to make money on their articles, I believe their current options are too limited. As a blogger, pro or not, I am helping them to get eyeballs to their site and I should not have to pay for that. (I wonder, if I paid for the right to link, should they have to pay me for the advertising exposure to “my guests”?)

The internet was made great by access to information. In a web 2.0 world, where being a part of the discussion is becoming more and more important, companies that choose to limit linking are also choosing to say on “the outside”.

While this migh matter little to the regular reader of InformationWeek, it matters to me. I’ve been a subscriber to some of the TechWeb newsletters for a long time. Now I have to ask myself - if I can’t comment or pass on a link to an article without paying for it - is it worth it for me to continue reading these e-mails?

I guess their research is right, your online experience really impacts how you view the overall brand!

roar at roarweb dot com

I just discovered indeed.com, a job search site which allows you to create graphs showing trends for words in job postings.

It looks like “Internet Marketing” has reached its peak. “Blog” is still a keyword increasing in popularity.

roar at roarweb dot com

From allheadlinenews.com:

Study Identifies Reasons Behind Poor Cellular Phone Customer Service

Kirk Parsons, senior director of wireless services at J.D. Power and Associates says, “As more wireless companies encourage customers to try new services, it has become more difficult for the customer service representatives to be fully trained and kept apprised on the latest products being introduced. The downside is the carrier runs the risk of decreasing customer satisfaction and losing customers to other carriers.”

I don’t think this was a surprise to anyone focused on process and customer experience management. Successful product introduction goes far beyond manufacturing, sales and marketing. You need to take internal processes and capacity into account.

roar at roarweb dot com

On January 9th I wrote about my trouble in getting a reply to a Technorati customer service request.

This week, on January 23rd (Monday), I tried again! Still no reply. I wonder what it takes to get their attention? Or maybe I have their attention - they just don’t want to talk to me???

roar at roarweb dot com

I used to have a Mac … a long time ago … I had a Macintosh SE and a Mac SE30. I even used to carry it with me to school for project work.

Maybe it is time to get one again…

Apple has just introduced their MacBook Pro! With an Intel processor.

Starting at $2299 Canadian or $1999 US.

And ipod now has radio! About time!!

roar at roarweb dot com

I’m having a problem with my Technorati account. It’s frustrating! My own fault, but frustrating.

I deleted a claim to this blog - and now I cannot reclaim it!

Error: Unclaimable Blog
Sorry, the URL you entered is not claimable. If you feel that’s not correct, please contact support.

I contacted Technorati support on Wednesday. Today is Monday and I still have not heard back - with the exception of an automated reply e-mail. I know this is a free service, but still…. it’s a bug (I think) in their system!

So, how did I get “here”?

Searches on Technorati for my blog seemed to not show the latest results. It kind of all stopped 14 days prior to me deleting my claim. I deleted the claim in the hope that a new claim might speed up the listing of my newest posts. I should have known better.

However. Such a mistake is probably not unique. Why can’t I claim it back? It looks like poor programming to me. Maybe someone can explain it to me!?

roar at roarweb dot com

Jan 2 2006

roar at roarweb dot com

Jan 2 2006. Sunset photographed from the Imperial Landing walkway in Steveston, BC.

roar at roarweb dot com