Jason Calacanis just published a good post on the changing definitions of Seed, Series A, and Series B investment. I’m going to quote his definitions in full:

2004 definition
— Pre-funding: You talk about your idea & write a business plan.
— Seed Round: You build a prototype of your product.
— A Round: The funding necessary to launch your product.
— B Round: The funding necessary to get product traction.
— C Round: The funding necessary to scale your product.

2014 definition
— Pre-funding: You build a prototype of your product.
— Seed Round: The funding necessary to launch your product.
— A Round: The funding necessary to get product traction.
— B Round: The funding necessary to scale your product.

2015 definition
— Pre-funding: You talk about your idea, you build a prototype & launch an MVP.
— Seed Round: The funding necessary to get product traction.
— A Round: The funding necessary to scale your product.
— B Round: The funding necessary to get founder liquidity, build groovy headquarters, and make competitors give up (or not start in the first place).

You’ve seen the pattern here, what used to be Series C is now Series A, what used to be Series B is now seed, and what used to be Series A is now ‘Pre-funding’. All this is being driven by increased capital efficiency. In 2004 it took until Series C to scale your product because it took a lot of money. Now you can do that with Series A. (There has been some inflation in round sizes, but the main story is definitely capital efficiency).

In his post Jason goes on to give advice to founders and angel investors and talk about his incubator The Launch Incubator and the consistent theme is that there is no support for pre-launch companies anymore. Founders who can’t launch an MVP will struggle to get funded, angels shouldn’t invest in pre-prototype companies, and The Launch Incubator is looking for companies with an MVP to take into their 12 week programme.

I think this leaves a massive opportunity to support founders who are pre-launch. There are lots of great entrepreneurs with big ideas that don’t have the technical talent to build a prototype or MVP. Investing at that stage is tricky because the company needs to quickly and cheaply build product and get traction, but the key is having the people in-house who can help the founder make that happen. That’s what we do at Forward Partners.



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Last month the White House proudly announced that after completing the first year of Affordable Care Act (ACA) implementation the number of uninsured Americans is at historic lows-11.3% in the second quarter of 2014, down from 14.4% the year before. Over 10 million people enrolled for health insurance through Medicaid or an insurance exchange. But signing up for insurance does not equal access. Healthcare has to be available and affordable. The ACA did not achieve these goals in 2014 and 2015 will be worse.
Medicaid recipients have always had trouble finding care primarily because Medicaid…

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In the State of the Union, President Obama proposed higher capital gains taxes, which fall primarily on the wealthy, to pay for a series of expenditures that would primarily benefit the middle class. These expenditures include lower taxes on families with two earners, an expansion of the child care tax credit, some funding for paid parental leave, and free community college.Given the massive growth of inequality in the US in the past several decades, some redistribution from the wealthiest Americans to the middle class (and also the disadvantaged) should be welcome. Furthermore, these…

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“The sole use of money is to circulate consumable goods” - Adam Smith, The Wealth of Nations, p. 370
Back in the late 1970s, realistically the last time the world’s major monetary authorities engaged in economy-sapping “competitive” currency devaluations in unison, Switzerland was, like it is now, the responsible party. Unwilling to do that which was and is always and everywhere inimical to economic growth, its central bank communicated to the markets a plan to protect the Swiss franc.
The results were predictable, yet at the same time counter to so much of the money commentary today that…

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I was scheduled to give the embedded presentation in one minutes time to the London School of Economics SU Alternative Invesments Conference but they are running late, which gives me a chance to put it online. You saw it here first )

This will be the second time in a week that I’ve presented to an audience of students. It’s good to see such a high level of interest in startups and venture.



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We have just had a free fall in one of the most important prices in the world-the price of oil. Looking back, we are keenly aware that it dropped about 60% from its 2014 high to its recent low. Although some people thought the price of oil would go down, nobody (at least nobody that I can find) publicly predicted anything like this big a drop. Why?
Oil prices went from $108 a barrel in June of last year to an intraday low on January 13, 2015 of $44. Among those failing to predict this drop were the government’s Financial Stability Oversight Council and its Office of Financial Research….

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The problem with the federal debt is not only its size but when it needs to be refinanced. A shade less than 70% of the $16 trillion of outstanding federal debt matures in 5 years or less. A 2% rise in rates would, very quickly, almost double Treasury’s interest costs.
Why doesn’t Treasury extend the maturity of this debt to protect us? Interest rates on longer term debt are greater than on short term debt. Every 1% increase in rates today will cost the taxpayer $10 billion annually per $1 trillion; Treasury officials are playing the current low short term rates for every penny. So far…

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I just came across a post that Hunter Walk wrote last May titled Five Mistakes New VCs Make. Number three is a peach, and isn’t just restricted to new investors:

3. Imagining You Can “Fix” a Team/Product/Market

New VCs, especially those with an operating background, can see a company for what they want it to be rather than what it is. They use their own brain to fill in the blanks on an opportunity versus really understanding how the founders think. They see that the product is a little raw but imagine that if they invest and spend a few hours a week with the team, it’ll be okay because they can fix it!

Perhaps the most common flavour of this mistake is investing in a company with a fantastic market opportunity and a team they don’t fully believe in. It’s especially easy for thesis based investors to make this mistake when they find a company that perfectly fits their thesis. The usually secret plan is then to fix the the team with a couple of key hires.

In reality the only person who can fix a company is the person who is running it. Investors can help, and I certainly like to think that we do, but the key is that the founder knows the gaps and solicits assistance. If that’s happening then what we have is a company working to overcome it’s challenges and there isn’t really anything to fix.

 



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The great wage mystery deepens. In economic recoveries, there usually comes a time when strong job gains lead to strong wage gains. Businesses must pay more to recruit and retain the workers they need. Not this time - or at least not yet. The unemployment rate has dropped from a peak of 10 percent in October 2009 to 5.6 percent at the end of 2014. But hourly wage gains haven’t accelerated. They’ve plodded along at about a 2 percent annual rate, roughly matching inflation.
Economists are baffled. “This labor market recovery looks different from anything since World War II,” says…

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For the past two years most of the discussion about interest rates has centered on when the Federal Reserve will start to raise interest rates. As the unemployment rate has dropped over the past year and economic growth has finally accelerated, people have been moving forward their forecasts of when the Fed will begin pushing rates up. Recently, the only debate has been about exactly which month the rate increases will begin. Yet, investors and borrowers should be cautious about assuming that interest rates are certain to rise.
Two factors are complicating the previous certainty about…

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Currency Crisis: The abrupt move by Switzerland’s central bank to remove the cap on the franc-euro exchange rate has created turmoil from Europe to Wall Street. This is what you get when monetary policy runs amok.
The move caused an unprecedented 18% one-day surge in the Swiss currency’s value against the euro. Since Switzerland’s franc is one of the world’s major currencies, the sudden surge has impacts far and wide.
The reason: The franc has long been a safe-haven currency, and an alternative to the euro, dollar and yen. A good chunk of Eastern Europe’s debt is denominated in Swiss francs -…

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“Let’s be honest here. Islam has a problem.”
Those are key sentences in an incredibly hard-hitting speech that Louisiana governor Bobby Jindal will give in London on Monday. It is the toughest speech I have read on the whole issue of Islamic radicalism and its destructive, murdering, barbarous ways which are upsetting the entire world.
Early in the speech Jindal says he’s not going to be politically correct. And he uses the term “radical Islamists” without hesitation, placing much of the blame for the Paris murders and all radical Islamist terrorism on a refusal of Muslim leaders to denounce…

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There’s a good piece up on Forbes today which offers the following advice about choosing board members:

  • Look for integrity and communication skills
  • Do due diligence, and then do some more
  • Make sure they are committed
  • Don’t expect everything from one person

That’s all good advice, and you can read the post for more detail (linked above). There’s more good stuff on the subject here too.

One thing that I think is important which doesn’t get mentioned very often is to make sure you think the same way about strategy. You want challenge, which means you don’t want board members who think in exactly the same way as you do, but you don’t want them to think too differently either. It’s likely that you will hit a fork in the road at some point and if you come to a different conclusion to your board member then you may have an issue. It’s hard for a board to function well when there are fundamental disagreements over strategy.

I always advise talking through future scenarios as a way to gauge whether disagreements in the future are likely.



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As I’m sure you’re aware, oil prices have cratered, from $85 a year ago to just $46 today. That’s nothing. The value of Bitcoin, which peaked in November of 2013 at $1242, has dropped from $847 in January of 2014 to all of $201 today. Heck, it dropped 32% in two days this week! Bitcoin has since bounced, up 19% to $210 yesterday.
Now granted, most people could not care less about Bitcoin. I’m not even sure I care - a fool and his money, blah blah blah. I think the technology used to implement the Bitcoin payment system is fascinating - public ledgers and crypto and block chains will all be…

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If only there was a global savings glut. The term originated with Ben Bernanke in the middle 2000’s as a means to express a partial guess about what was troubling Alan Greenspan at that time. He termed it a “conundrum” in that long-term interest rates were not following the Fed’s emphasis in raising its federal funds target. All monetary theory to that point had more than suggested long-term rates existed as a function of some form of stacked premiums, and thus an increase in the shortest rate, taken as the risk-free, would move the entire curve in near-unison.
Instead, from 2004 onward,…

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