day 1143: The Long View Investor

"Be honest in your estimate of yourselves, measuring your value by how much faith God has given you"

I've been having lots of conversations over the past few weeks about the current state of venture and angel investing and how those companies that are good, profitable and viable, but because they will never grow to be $100MM in revenue or beyond, can't find investment money.  It's bothered me because it might well be that these small tech companies (profitable and with $5MM - $20MM in revenue) may well be the small businesses of tomorrow, like local hardware stores, restaurants, dry cleaners were the small businesses of yesterday.  I find this exciting as it means that every Main Street in America could have their own Silicon Alley.  But, we have to find a way to value and find investments for these smaller ventures that will never go public or get bought out by the larger company that is looking for big acquisitions. There has to be a model that values the long term, small and steady growth companies if we want to create lots of long-lasting jobs and support small private business owners.  If you are a venture investor, angel investor, or small business owner reading this, I'd be interested in your thoughts on how to solve the problem.

As believers, we can think of our own spiritual lives as individual, long-lasting, growth oriented spiritual ventures.  Our ministries are likely with those we work with daily as we work in the secular world.  We may wonder at times if our contributions to kingdom expansion are significant enough for God to care or take notice.  That is one thing we should never be concerned with, as God values us each individually and tells us that in Romans as we are to measure ourselves by our amount of faith.  God is the greatest of all people investors.  He accepts us where we are and values us way beyond what we are truly worth!  And, he takes an eternal view for us.  As we go into this day, let's think about how we can lift Him up through our example and giving glory to Him for what we have and what we do.  That is, after all, our purposed worKING!

Reference:  Romans 12:3 (New Living Translation)

day 944: Grown Ups

"Then we will no longer be immature like children. We won’t be tossed and blown about by every wind of new teaching. We will not be influenced when people try to trick us with lies so clever they sound like the truth."

There have been a number of articles written over the last years about the changing face of Venture Capital and the type of companies now funded by VCs.  We are now, depending upon who you ask, in the third generation of West Coast Venture Capitalists.  From the early days of guys like Bill Draper who made Sand Hill Road synonymous with venture capital, to today when we are seeing those who reaped rewards from early successes like AOL, Yahoo!, PayPal, Google and Facebook become the next generation of VC's.  

I tend to think that this current generation looks more like the first in that we've learned a lot over the years and are now back to following the basic principles of business before the majority of investments are made.  Sure, venture investing is like trying to predict what an eight year boy will be like when he is 24, but it's been encouraging to see that the focus has returned to underlying fundamentals.  The second generation had some growing up to do and it seems to have worked. As we consider approaching investors now, we better have our ducks in a row because this time around we are pitching to grown ups.


Paul tells us clearly that we all have to grow up and put our immaturity aside and stay close to the truth. In our spiritual journey it is easy to fall back into our immature ways and lose discipline, focus and discernment.  It's no different than how we try to grow in our business life so that we become more knowledgeable, prepared, broadening our perspective and finding our points of view.  We don't get there by being lazy or flitting around our work.  We rise to the occasion because we are ready and have put in the hours, work and energy to do our best when called upon.  That is what Jesus wants from us too.  We can't expect to do our best if we continue to allow ourselves to develop spiritually in an immature fashion.  Consider today what you are doing to act like a grown up in the eyes of God?

Reference: Ephesians 4:14 (New Living Translation)

day 879: Capital: Part One - Input

"So neither he who plants nor he who waters is anything, but only God who gives the growth"

I'm working with a number of companies who are are obtaining their next round of capital funding to support their business growth.  It's a funny thing because regardless of the stage, the pattern is much the same.  The company/entrepreneur/founder/CEO puts together a story of the company, sometimes shorter or sometimes longer, then reaches to his/her network of investors who begin to set up meetings.  Then there is a dating thing that happens while waiting to see if someone falls in love with the company.  Once they do then the company tries to get others to fall in love with better terms, finally, hopefully, ending up with the best terms for the company and ones that the new investor feels like they got a bargain. What neither side knows at that time, like the beginning of any relationship, is how well it will go, but on the day of an executed term sheet and wired money, it all about a hopeful and optimistic good future.  How do we make the best decision about capital input, we certainly must do our homework an reference check, etc.  but at the end of the day, we make the decision like we do in many cases, based on how we "feel" about the new people who will be making the investment.  Yes, once again, it comes down to a set of shared values and principles that make us feel like the best capital input is occurring. 

As believers we see out all types of input in our lives.  We look for prayer, encouragement, fellowship, support, etc. We gather in small accountability groups to keep us on course and provide advice and counsel that is beyond that we might receive from those who don't share our same beliefs.  Yet, at the end of the day, there is one place where we must lean, listen and learn, and that is for the voice of God.  Of course, God shows up with words from other believers and from the pulpit, but we also have to do our own listening and only we can read God's word for ourselves and we have to enter into prayer with Him individually, if we want to hear His voice for us. Each and every day we are needing and seeking input for our growth.  Let's today not forget that that growth comes from Him and what He has and will give us.

Reference:  1 Corinthians 3:7
 

day 849: While We Are Waiting

May your Kingdom come soon. May your will be done here on earth, just as it is in heaven."

Business is by nature impatient. No where do I see that like I do in the world of Private Equity. Private equity and Venture Capital are different and also similar. Both are other people's money. Both are outside influences on a business and on the leaders of the business. Both are in a hurry, but for different reasons. Venture Capital is in a hurry because they are usually racing to be first or largest to market. Venture Capital is like feeding the 16 year old boy as much food and nutrients as the boy can take to keep him growing as fast as he can. Venture Capital creates and expands. Private Equity is different. Private Equity is extremely impatient and will go to extremes to pare and prune back a business to see if the new shoots will grow the business more efficiently with a greater return to the shareholder. Rather than feed, Private Equity starves and limits the overall intake in hope that "fat" will be reduced so muscle is what is left. I have friends in both industries and I must say that the harder job is Private Equity because the draconian actions necessary to cost-cut to increase shareholder value is very, very difficult. The two ways of business building, with neither being better than another, are still both impatient in their own way and demand founders/teams to bend to the will and pace of the investor.

Jesus teaches us to pray for the Kingdom of God to come soon. We are to desire and reach to God for Him to deliver the Kingdom. However, in the next sentence, Jesus tells us to be patient and wait for the will of God to be done. There is much in life that we can influence to go our way, but the will of God is not one of those. This we must trust to happen and then follow the path that God puts in front of us. Maybe in this we are more like Venture Capitalists that we are to be as additive to God's will as we can to assist in His will being done. And, still we are to be like those in Private Equity in paring and removing the distractions and the superficial that distract or take us away from the main reason we are here. Regardless of the similarities or the differences, we are to learn and have patience to allow God to work in our lives to His will, not ours. This week, let's have a look at who is leading whom? Is it us trying to pace and lead God, or have we surrendered enough to let Him take the lead?

Reference: Matthew 6:10 (New Living Testament)