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David Teten

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31
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2015-12-09
most recent
2015-12-09
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1
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  1. “To do that much more effectively they could do by any other means. So we think drones are underhyped and are going to have impact on many different industries and Skycatch has taken a leadership role in this area.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “So most recent investment that I can disclose, I'm actually double-checking the status of the most recent one to make sure that I can share it with you. So talk about Skycatch, which is a company that we invested in not long ago. Skycatch is a drone technology company which provides a set of tools for collecting data via drones. Their current main use case is for construction. So they have a very large scale partnership with Komatsu, which is a massive Japanese construction company. And their technology allows Komatsu, on behalf of their clients, to monitor the exact status of a construction project, particularly given that Komatsu uses robots heavily in their work. It's imperative that you understand exactly where all the parts are, the elevation of the ground, etc. And Skycap allows Komati.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Pando Daily, I give a lot of credit to for being willing to write about controversial topics and make enemies. There are not enough journalists out there willing to do that.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “I am a huge fan of Edward Tufte, T-U-F-T-E, who's a professor at Yale and the world's leading expert on graphical communication of quantitative data. Anyone who prepares presentations to investors must read his book on this topic, and you will be much more effective.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “We use a combination of relate IQ, Salesforce, one of the data vendors that sells data about private companies. We use Bottlenose, which we're also an investor in to track industry information. And those have been helpful to us. We also three in-house engineers who are building tools for us that are not broadly available.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “I would probably sell on the grounds that it's not clear to me if when they eventually turn on the monetization spigot, it will be impossible for other people to compete with them. In other words, the whole theory of Amazon, not unlike a lot of early stage startups, is build lots of infrastructure and then at some magic point in the future we turn on monetization. But if tomorrow they raise their prices 15%, turn on monetization, it's not clear to me if there wouldn't be new competitors like Jeff that emerge. Right now, Jet is in, I think, challenged because they're competing head-on against a company that keeps its margins very low. But if tomorrow Amazon raises its prices significantly, someone would create jet number two. So I'm a little skeptical of them on their traditional side, but that said, on Amazon Web Services side, in other parts of their business, I think they've got great customer lock-in and a very powerful position.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I think VCs are aggressive in use of social media, certainly compared with a private equity and hedge fund world. I think that it is easy to spend too much energy in marketing as opposed to doing your job. So I am judicious in my own use of social media and don't tend to tweet about what I have for breakfast.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Actionable trading information to hedge funds and other institutional investors. They provide really insight that is not available through any other means to their clients. And that is something that justifies a very strong competitive position”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Them more efficient. We were an early investor at APAR, which is started by Joe Lonsdale of Palantir and PayPal thing. Now Formation 8. And Atapar was started because Joe was setting up a family office for himself and realized that family offices usually run on Excel and PDF. And so this is sort of ludicrous. There should be a more seamless way to do it. So he set up a company to do that. We not only invested but became a client. We run part of our back office on Atapar because we, of course, own interests in about 80 different companies with lots of different types of securities and amounts and so on. We need some mechanism to track all of those holdings. I'd also point to the data space. I used to run an investment research business, so care a lot about that. We're an investor in earnest research, which is a company that takes non-traditional data sets like credit card data or email receipts and mines them to”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “So, I'm currently leading a large research study on exactly this topic. The website is disruptinvesting.com. I'll highlight a few areas. First is security. I think that even now people don't realize just how vulnerable we are just in today's paper. I read that Russian submarines are cruising around the underseas cables where most of our internet traffic travels. You could see a lot of very bad things that they could do. So we're an investor in companies like Secure, which does identity verification, distill networks, which just raised a large round from Bessemer, which blocks bots that steal data from websites, Ionic security out of Atlanta, which has raised over $75 million since we initially invested in them, which allows for secure use of cloud-based services. So we're certainly interested in that area. We're also interested in taking manual processes and making”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “But I think that the modal VC two partners and an admin and maybe an analyst is under threat from Angelist because it can't possibly have the level of granular knowledge of different sectors that individual angels do. And my role as founder of HBS Harvard Business School Angels of New York, which is now the biggest angel group on the East Coast, I've been very involved in encouraging our member base to get more involved in angel investing to leverage their intellectual and financial capital to invest in the next generation of great companies. And we think that by creating educational materials for them and by exposing them to this ecosystem, we are not only helping them make more money, but we're also promoting economic development, which I think is also important.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “So Put it this way. Our cache, we believe, is greener than the cash from other sources because it comes with a brand, it comes with the resources. And so I think our firm is well positioned, relative dangerous, but I would say that, wouldn't I, right? Absolutely.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “So we invested in Indiegogo at the seed level when it was not as apparent as it is today how they might impact the broader ecosystem. Right now we of course wouldn't invest in the crowdfunding space defined as competitive with Indiegogo because we don't invest in competitive companies. There are also over 500 crowdfunding sites and most of them will fail. So we're glad we invested in one of the clear winners of that game. We are certainly monitoring Angelist because there is no question that they are working up the food chain to make themselves the fundamental operating system of this asset class. We as a firm are not significant users of it but we might possibly over time get more engaged in using our service services. We are certainly interested in other variations of this marketplace lending and other versions of crowdfunding.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Very, very powerful long lasting liquidity premium to people who are willing to countenance investing in an illiquid asset class. Our view is that's true, and even the liquid asset classes tend to get illiquid when you really need liquidity. For example, in 2008, when lots of people wanted to get out of different things and found that the doors were closed.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “We educate our LPs that this is a highly illiquid asset class. We have collected 12 different academic studies on angel investing, which show median returns of 18% to 54%. So it's the highest returning asset class out there. Of course, there's a cost, which is it's highly liquid. Most of your investments blow up. And in the best case scenario, it can take 10 years to actually see cash returns. As a result, this is an asset class which is highly unattractive to most institutions. We're one of the few institutional VCs who focus on this early stage of companies. So RLPs are fine with our model because by definition they wouldn't have invested if they weren't comfortable with the illiquidity of it. In the institutional investing world, one of the most famous investors is David Swenson, the head of the Yale Endowment, who has amazing returns over the past decades, and has argued that there is a”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Motivates them to do so. When the market turns down, which it will, I think you will see some shrinkage in this model by the people who are not fully dedicated to it and who haven't built it out as a core part of their business.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “So that is certainly a trend in the VC world, but it's actually a relatively short list of VCs who do this. The reason is it's really, really expensive. So I would highlight besides us and Google Ventures and Andreessen Horowitz, first-round capital, OpenView does some work on this area, a lot of other firms talk about it, but they've hired one or two people, right? They don't have a whole set of resources because what that means is they're foregoing current management fees in the hope that 10 years later they're going to have greater capital gains. That is a very long-term bet. Of course, VCs are supposed to make long-term bets, but nonetheless, this is a difficult bit because it means your current cash compensation as a partner at FC goes down. So it requires a certain level of self-confidence to pursue this model. That said, at this point in the cycle, they are certainly more VCs who are trying to do this because competitive pressure”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Number one is reference check, and number two is do the math on their resources versus their portfolio? In our case, we have about 60 active portfolio companies. We're significantly involved with about two-thirds of them. The other one-third are companies that are either way outgrown us or they're somewhat less active. And we've got over two dozen employees. So I would look at other funds and say how many folks do you have in your team how many portfolio companies do you have? How many checks do you write per year? And you can do a rough calculation of how many person hours you can expect to get from the firm. Of course, that's not the only measure. You also have to look at what sort of technology platform they have to support your company. But I think that's a really important test. It's easy to talk about value add, but it's harder to deliver, particularly given the limited scalability of the VC model.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Third is recruiting. We have built out a set of resources to have our companies identify appropriate talent and bring them on board.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “It's totally normal, but it is ironic by historic standards, right? That's not the normal state of a business. That is the norm in our space. And I have to acknowledge that and then address it by focusing on figuring out ways that they either get profitable or raise their next ramp. So we have worked with over 200 other VCs who have written follow-on checks in our companies, and our relationships with them are critical to our company's continued growth. Number two is our finance and acceleration team. We have a team of nine accountants who provide outsourced CFO services to our companies. Our companies usually don't have their own CFO until they hit about 30 employees. And this gives our companies a lot of comfort that the numbers are in order and it makes it easier for Kleiner Perkins and Google Ventures and other later stage VCs to invest in our companies because they know that the numbers aren't in order.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “So I publish a large research study on this. I will highlight for you the top three most important ways that we have found to support our companies. First is capital raising. By definition, our companies are virtually all losing money, I'm embarrassed to say. So we have to either invest in them ourselves or help them raise capital from other VCs in the ecosystem.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Brand building is a bit of a farce unless you have something underneath it to sell. So there is an old Yiddish proverb that the coin box that rattles the most has the fewest coins and there's certainly some investors I know who are very very noisy but lack underlying returns or empirical ability to add value to their companies. So I would focus on figuring out your differentiation. Angelist is very, very clearly working to disrupt the generic VC, any of the GC that doesn't have an edge and the conventional VC that doesn't have something special that they bring to the table. Will I suspect find themselves challenged in the next two fundraising cycles?”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “So I'm biased, of course, but I really like the FFVC model because I think it's a much more efficient model. One of the great frustrations of our friends who work at most other VCs at our stage is they spend 80% of their time talking with companies with whom they can't consummate an investment. It's sort of like going to a lot of parties but never meeting anyone that you actually want to spend time with. In our model, we have no one at FFVC despite our large hypothesis.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “I think that that is not a proven thesis as a way of investing, but it is one with a significant chance of success. So there is a very small number of people who are actually experimenting in this area. Google Ventures also is doing work in this space, and more people will do work on it. However, there is certainly a paucity of data available about private companies. There's a lot by historic standards, but low relative to, say, public companies. And even the public company universe, there's still plenty of room for fundamental analysis. So it will be an increasingly important tool in the VC's toolkit, but it will never be the only tool.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Of it as both to the outbound model where you're trying to get people interested in your firm when they don't know if you can actually help them when you in fact invest in them.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “The short answer is I admire the outbound approach of a TA or summit, a more sophisticated version of that is something like signal fire, which was a new VC started by my co-author Chris Farmer, which relies on mining publicly available data to identify growth companies. That, however, is not the model of FFVC. Our approach is we devote very disproportionate resources to support our portfolio companies and lower their failure rate. We have a one out of six write-off rate, which is well below industry norms. And that attracts to us over 2,000 inbound companies per year. And we filter through them for the approximately one dozen new companies per year in which we invest. So we think that you can't invest until you have attractive deal through which you can filter. And we prefer to invest our calories in doing good work with our companies and then making people”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “So I wrote the first research study on this topic. So I have written tens of thousands of words on it. So that's the long answer. The short answer is...”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “The remainder are scattered across the U.S. in both major and minor geographies. And as I mentioned, quite a few international investments as well.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “Neither, actually. So the philosophy of FF Venture Capital is that as seed stage investors, we should be generalists. We should keep our doors open wide to the broadest possible array of companies. We do not invest in life sciences because we don't have any domain expertise there, but we have invested in drones, in software, in food companies like Plated, and a whole host of other sectors. We believe that the growth areas of 2019, we cannot predict in advance, so we don't like to label ourselves a content VC or a social media VC. Instead, we're just a VC that invests in interesting companies with high growth potential, and we think that that helps account for the diversity of our portfolio and their relatively good performance. We have invested in about 40% of the portfolio is in the New York tri-state area.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “Briefly in strategy consulting and then moved into investment banking for the tech industry, working with Mike Grimes, who later went on to lead the Facebook IPO. Then went to business school, was CEO of a number of startups in Israel and in the US, and joined FF Venture Capital in 2011 when we were three people. We are now 10X as large by headcount with over 27 people, FS Venture Capital is, we believe, the largest by headcount seed focused VC on the East Coast. We invest across the US as well as abroad with investments in Canada, Israel, the UK, Amsterdam, and potentially elsewhere, depending on what deals come through.”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “I grew up in Marin County, Northern California, so I was playing with computers from a very young age. I was earning money through computer consulting and teaching people how to use Excel when I was a kid. My Bar Mitzvah project was making a test of your knowledge, like a true false quiz on my Atari 800. And so that was something that started very, very early. I got fired when I was about 16 because I was working at a very prominent financial services firm and I wrote a memo to IT saying I've uncovered some very weak security in your IT system. It seems the password password is getting me in and that got me fired because I didn't like 16 year old admins. It's about security vulnerabilities, particularly highly embarrassing ones. So when I finished, when I was in college, I ran a computer consultancy and when I graduated,”

    2015-12-09 · The Twenty Minute VC · 20 VC 095: How VCs Find Startups and How To Add Value Once Invested with David Teten @ ff Venture Capital · IDENTIFIED FROM THE TRANSCRIPT · source