Two Books About Venture Capital That Every Entrepreneur Should Read
- Posted by Erica Swallow on 12/5/16 4:50 PM
Even if you’ve raised your first or second round as an entrepreneur, venture capital can seem like a foreign world. Where entrepreneurs spend their days executing upon their own ideas, venture capitalists spend their days evaluating the ideas of others. With less than 6,000 venture capitalists at 798 firms in America, according to the latest count by the National Venture Capital Association, venture capital is also an insular community that’s tough to crack.
There are two books worth reading cover to cover that can help entrepreneurs understand venture capitalists better:
What you lack in first-hand venture capital knowledge, you can gain in venture capitalist stories and insights in these two reads.
All three authors are industry insiders worth listening to.
- Jeffrey Bussgang is a general partner at Flybridge Capital Partners, a Boston-based venture capital firm, with a decade of entrepreneurial experience, notably as co-founder of college savings startup UPromise and an early executive at ecommerce startup Open Market . He’s also a senior lecturer at Harvard Business School, from which he holds an MBA.
The three authors combined represent nearly a lifetime worth of priceless experiences which they share openly and extensively in these two books.
Though they didn’t collaborate in writing the two, they go together quite well as a paired reading.
Mastering the VC Game
The Bottom Line
Books On Venture Capital Investing Investment
What is investing? At its easiest, investing is when you purchase assets you expect to earn a benefit from in the future. That might describe buying a home you think will rise in value, though it typically describes purchasing stocks and bonds. How is investing various than saving? Conserving and investing both include setting aside money for future use, however there are a lot of distinctions, too.
It probably will not be much and typically stops working to keep up with inflation . Normally, its finest to only invest money you wont require for a little while, as the stock market fluctuates and you do not wish to be forced to offer stocks that are down due to the fact that you require the money.
Prior to you can invest any of the cash you have actually built up through investments, youll need to sell them. With stocks, it might take days prior to the profits are settled in your savings account, and selling residential or commercial property can take months . Generally speaking, you can access cash in your savings account anytime.
You do not need to select just one. You canand probably shouldinvest for multiple objectives at as soon as, though your method may require to be various. 2. Nail down your timeline. Next, identify how much time you need to reach your objectives. This is called your investment timeline, and it dictates just how much danger you might be able to handle.
The Business Of Venture Capital
Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies
A complete treatise on venture capital that explores various aspects of this field in a detailed and systematic manner. This work is divided into two parts, the first one aimed at simplifying the process of fundraising and help create a theoretical understanding of due diligence criteria for funds along with explaining technical terms while the second part focuses on the execution part. The author has also included interviews of twenty-five leading venture capitalists who have featured in the Forbes Midas List, enriching this work with practical insights of industry experts on what can make or break a venture capital deal. The people interviewed include Leading Limited Partners, Top Tier Capital Partners, Grove Street Advisors and Pension FundPension FundA pension fund refers to any plan or scheme set up by an employer which generates regular income for employees after their retirement. This pooled contribution from the pension plan is invested conservatively in government securities, blue-chip stocks, and investment-grade bonds to ensure that it generates sufficient returns.read more Managers along with others. On top of it all, the companion website offers some useful tools and knowledge resources for the reader.
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First Who Are Venture Capitalists
Venture Capitalists are financial intermediaries who raise money from investors, known as limited partners , and give private companies that money in exchange for equity .
In addition to investing capital, VCs also spend their time and resources helping the management team grow the company and become successfulâ. Their ultimate goal is to achieve an âexit eventâ such as a public offering or acquisition by another, larger company. These earnings are shared with the investors and managers of the venture capital fund and can be reinvested into new opportunities. This cycle represents the flow of funds in venture capital.
In his book Secrets of Sand Hill Road, Scott Kupor cites a 2015 study by Ilya Strebulaev of Stanford University and Will Gornall of the University of British Columbia that states since 1974, 42 percent of all US company IPOs were venture capital-backed. This accounts for 63% of the total market capitalization of public companies created since that time.
Book: The Business Of Venture Capital
Todays book recommendation, for anyone interested in venture capital, is The Business of Venture Capital: The Art of Raising a Fund, Structuring Investments, Portfolio Management, and Exits by Mahendra Ramsinghani.
A decade ago, I got a cold email from Mahendra. He was investing in Detroit and eager to write a book about the art and science of venture capital. At the time, Jason and I were just finishing up the 1st edition of Venture Deals: Be SmarterThan Your Lawyer And Venture Capitalist and I was enthusiastic about helping anyone else working on a book that demystified venture capital investing.
I immediately introduced Mahendra to a bunch of Foundry Group LPs, partners, and entrepreneurs. He made progress quickly, and I fondly remember the first edition with the green cover.
Mahendra and I kept in touch. During a book tour for the 1st Edition of Venture Deals, Jason and I visited the University of Michigan. Mahendra cornered me in a hallway and pitched the idea of doing a book together around how a board of directors works at a startup. A few months later, we started working on it.
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Technological Revolutions And Financial Capital: The Dynamics Of Bubbles And Golden Ages
Technological Revolutions and Financial Capital is an academic book by British-Venezuelan Carlota Perez, a scholar specializing in the collision of technology and economic development. The book deconstructs the centuries-long relationship between technology and financial bubbles. Her model shows repeated leaps of technological advancement over 300 years and how these events impacted the economy .
Why is all this relevant? Because her theories will help you understand a rapidly changing economy. If a technological boom precedes economic change, how can you as a venture capitalist position yourself to benefit? This book shows you how to identify a technological revolution and address upcoming economic problems.
Be warned: This is not a book for novices. Perez doesnt pull her punches. She expects you to understand complex finance, investing, and tech concepts.
How Do Venture Capitalists Make Money
Venture Capitals make money in two ways:
- Allocating fee for supervising funds of capital.
- Having an interest in the return of their funds.
The capital firms collect money from pension funds, rich families, educational endowments, and insurance companies. These enterprises allocate investment portfolios to different asset classes including bonds, real estate, and other means. Investors invest to get their original funds multiplied.
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Best Books On Venture Capital
enture capitalists have a strong standing with new business development. Venture capitalists must have a complete understanding of the basics and have an all-rounded knowledge base. But venture capitalists have an important role to play in the field of entrepreneurship. In short, venture capitalists help businesses grow. They act as a partner of those businesses. With the help of the best books on venture capitalists: The List. You can gain the knowledge and the foundations to start investing in your capital to earn money.
The Lean Startup: How Todays Entrepreneurs Use Continuous Innovation To Create Radically Successful Businesses
Its easy for a startup to fail. But what if I told you that these failures could be avoided? When creating a startup, you would have to overcome trials and uncertainty to find the way to success and sustainability. How exactly do you overcome uncertainty and how do you appeal to your customers needs? The Lean Startup is a method gaining popularity and is being used to rapidly develop products before your business makes its big break.
A lean startup is a method that aims to shorten product development time. This is by taking action on customer feedback and developing products to their needs. By selling products that people need, you are implementing sustainability and the sure success of your business. Yes, the lean startup is a form of innovation and not just innovation. Its a scientific approach to adapting and adjusting to your customers early on in your business.
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Term Sheets & Valuations
An excellent practical guide for entrepreneurs and finance students to acquire a detailed understanding of the terminology employed in a venture capital term sheet and step-wise valuation. Seemingly limited in its scope, but that is what makes this of real practical value for readers who need to study a term sheet using appropriate valuation parameters. The authors describe West Coast and East Coast rules and offer a section-by-section treatment of a term sheet, using an actual term sheet from a leading law firm. In short, an immensely helpful guide for studying a venture capital term sheet in all its subtleties.
Eboys: The First Inside Account Of Venture Capitalists At Work
Randall Stross- a business historian and author who has been studying Silicon Valley for decades, takes readers behind the scenes and inside the heads of the six men who founded Benchmark, one of The Valleys most storied VC firms. With investments in eBay, Uber, Twitter, and many other technology giants, Benchmark is undoubtedly a titan in the world of venture capital.
Even though this book was published over 20 years ago, Strosss unrivaled access to the partners at Benchmark gave him a front-row seat to the conversations, meetings, and decision-making process of the most brilliant minds in the business.
We like this book because it provides a first-person account of the partners at Benchmark and how they became intimately involved in each of their portfolio companies by advising them on strategy, execution, and recruiting. Regardless of their success, the partners had their feet planted firmly on the ground, never deviating from their original goal to find and nurture new businesses.
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Faster Higher Stronger: How Sports Science Is Creating A New Generation Of Superathletes
I really enjoyed book #FasterHigherStronger. Talks to the intersection of sports and technology. Great read!
Faster, Higher, Stronger comes highly recommended by Jeff Jordan, a General Partner at Andreessen Horowitz and former CEO of OpenTable. It explores the intersection between sports and science, with a first-hand look at how athletes at every level can incorporate cutting-edge science into their own workouts. It asks us to question how far we can push the boundaries of our bodies and minds. There are many parallels to VC and entrepreneurship. How do we find hidden champions? Is the 10,000 rule valid? To what extent is fatigue a manifestation of the mind? Can we optimize for greatness? After reading this book, youll learn to rethink you can apply cutting edge science to improve your own focus and impact.
Roald Dahl once said, If you are going to get anywhere in life you have to read a lot of books. Follow in the footsteps of some of the most successful VCs and add some of their recommendations to your reading lists.
Have a recommendation for a good venture capital book, wed love to hear it!
The Qualified Sales Leader: Proven Lessons From A Five
Image Credits: John McMahon
Recommended by Venrocks Brian Ascher, who said hes given this to many of my portfolio CEO and CROs, as well as by Chase Roberts, principal at Vertex Ventures, via Tessa Chen: Most founders that raise capital are looking to grow and scale their sales teams. They have to hire their first sales leaders, but many dont know where to start, especially in enterprise SaaS. Chase has been sending this book rec to a few of our founders for practical tips on creating a sales motion from the ground up.
Bad Blood: Secrets And Lies In A Silicon Valley Startup By John Carreyrou
Image Credits: Knopf
Daisy Garcia at JetBlue Ventures recommended it alongside Reeves Wiedemans Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork, describing both books as good reminders to invest in what you know and also fun. Alex and Anna both read Bad Blood, and from our desks, this book is the rare must-read in the business book pantheon. You must read it to understand how far things can go off the startup rails, and, frankly, learn a hell of a lot about the world of business.
The Top 9 Books On Venture Capital
Its the start of the year, which means its just the right time to start searching for new books to learn about startups and the world of investing. Ive put together a brief list of the best books for those interested in launching a new career in venture capital, or for those who are simply looking to learn more about the process behind VC investments. Many of these books are also suggested reading for those joining Rebel One where I lead the investment team.
Some of these might be familiar to many of you, such as Peter Thiels Zero to One, while others might be completely new. Below Ive given a brief description of each book, and why I believe they are important in learning more about the world of VC:
2. Venture Deals by Brad Feld & Jason Mendelson
Purchase the book here: Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist
3. The Entrepreneurial Bible to Venture Capital by Andrew Romans
4. Mastering the VC Game by Jeff Bussgang
Purchase the book here: Mastering the VC Game
5. Raising Venture Capital For The Serious Entrepreneur by Demot Berkery
6. The Innovation Blind Spot by Ross Baird
Creative Capital: Georges Doriot And The Birth Of Venture Capital
Georges Doriot first created the industry of venture capital. In this venture capital book, Spencer E. Ante, the author, gives us a look at Doriots life as a Harvard Business School professor and a brigadier general in WWII. As well as the founder and architect of the worlds very first venture capital, American Research, and Development.
Doriots life itself already provides substantial advice. His business philosophy and stewardship of startups led him to his success. He had played an important role in the rise of successful and globally infamous companies. As the behind-the-scenes supporters of startups, venture capital have a duty to pick these starting companies off the ground and lead them to success.
This is clearly one of the best venture capital books recommended for both investors and founders. The advice in this book was taken from the founder of venture capital himself. By knowing how venture capital was made and its purpose, you can apply these to your own business or company and know what the next best thing to do is.
Little Book Of Venture Capital Investing
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The 5 Best Books To Read On Venture Capital
Over the course of 2020 the RLC Ventures team have had a bit more time to read. Below is our list, in no particular order, of the 5 best books you can read in or to demystify and understand Venture Capital.
What it’s about: Zero to One shares Thiel’s lessons on how to build a truly disruptive company, leveraging his journey as both an entrepreneur and successful Venture Capitalist to inform his perspectives. The main takeaway from Zero to One is that a company that is built to last will not build its foundations by emulating, or adding incremental value to what its competitors are doing . They will escape the competition all together by creating something entirely new – going from 0 to 1.
Highlights: Zero to One has insights for all players within the VC ecosystem, from entrepreneurs to investors alike. As someone who has recently entered this space, it served as a great guide to understanding why a startup should be entirely differentiated, and why, as a VC, the startups that do so are the only opportunities worth pursuing.
Highlights: Getting a first-hand account of the formation and establishment of one of the most internationally recognised VC firms is incredibly interesting. From seeing how they hire, support founders and think about ‘value-add’ . It’s a must read for anyone interested in the history of the industry.