The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies, 2nd Edition

Foreword

I often get asked how I ended up becoming a venture capitalist (VC). My wife, Amy, likes to remind me that when I was an entrepreneur, I used to regularly give talks at MIT about entrepreneurship. I'd say—very bluntly—“stay away from venture capitalists.” I bootstrapped my first company, and while we did a lot of work for VCs, I liked taking money from them as “revenue” (where they paid my company Feld Technologies for our services) rather than as an investment.

Feld Technologies was acquired about 20 years ago. Over the next two years, I made 40 angel investments with the money I made from the sale of the company. At one point in the process, I was down to under $100,000 in the bank—with the vast majority of our net worth tied up in these angel investments and a house that we bought in Boulder. Fortunately, Amy was mellow about this—we had enough current income to live the way we wanted, we were young (30), and generally weren't anxious about how much liquid cash we had.

Along the way, a number of the companies I had invested in as an angel investor raised money from VCs. Some were tough experiences for me, like NetGenesis, which was the first angel investment I made. I was chairman from inception until shortly after the $4m venture capital round the company raised two years into its life. Shortly after that venture capital investment, the VCs hired a new “professional” CEO who lasted less than a year before being replaced by a CEO who then did a great job building ...