Interesting People mailing list archives
Cash flowing again from VCs?
From: Dave Farber <dave () farber net>
Date: Fri, 06 Jun 2003 10:45:55 -0400
------ Forwarded Message From: Dewayne Hendricks <dewayne () warpspeed com> Reply-To: dewayne () warpspeed com Date: Fri, 06 Jun 2003 06:59:41 -0700 To: Dewayne-Net Technology List <dewayne-net () warpspeed com> Subject: [Dewayne-Net] Cash flowing again from VCs? [Note: This item comes from reader Mike Cheponis. DLH] Posted on Thu, Jun. 05, 2003 Chasing innovation FRESH START-UPS ATTRACT VENTURE CAPITALISTS, SIGNAL NEW ERA OF WOOING HOT COMPANIES By Matt Marshall Mercury News <http://www.bayarea.com/mld/mercurynews/6018690.htm> Most people think it's tough now for entrepreneurs to get money. But if you have the right experience, and a good idea, venture capitalists will fight to give you their money -- and even shower you with gifts to make sure you take it. Take Scalix, a start-up that offers an e-mail system, based on cheaper and more flexible Linux software. On Wednesday, it said it received $13.2 million from two top-tier venture firms, Mayfield and New Enterprise Associates. In early April, the company's chief executive, Julie Farris, let a handful of venture firms know she was interested in raising money. Each pursued her relentlessly, wined and dined her, called constantly, and some even refused to take accept a ``no'' after the deal was wrapped up in a month without them. Scalix is just one of several hot deals in recent months that some say underscore a new era. During the downturn, most start-ups were reeling: Their sales were non-existent or declining, few could sell products to skeptical larger corporations, and venture capitalists were like deer frozen in the headlights. But lately, some companies are finding fresh ideas, showing growing sales, and boasting experienced management teams cherry-picked from a large pool of available labor. The average deal still takes about three to four months, says Jesse Reyes, vice president of Venture Economics. But hot ones get wrapped up in little more than a month. New Enterprise Associates calls the process of wooing a hot company ``love bombing.'' Partner Stewart Alsop said he ``bounced around in his chair'' when Farris called him April 10 to tell him about Scalix. Large companies were desperate for a more efficient e-mail platform for their employees, he knew, and Scalix offered that. He said he was irked, though, because Farris forced him to compete with other VCs -- even though he'd helped her get a job at one of his previous start-ups. Still, Alsop swung into action. He had the chief executives of his best companies -- including TiVo's CEO Mike Ramsey, who had earlier worked with Farris, Boingo's Sky Dayton, and MailFrontier's Pavni Diwanji -- phone Farris on his behalf. He delivered a bottle of 2000 Rochiolli Pinot Noir -- from his personal collection -- to Farris' doorstep on April 24, the day he delivered his written offer to invest. He then dropped by the Mayfield Fund, and delivered a present to Allen Morgan, the partner who helped incubate Scalix in Mayfield's basement: a bottle of Knob Creek bourbon, Morgan's favorite. As an existing investor, Morgan would play a key role in deciding. To top it off, Alsop bought Farris dinner at the well-known Bacchanal restaurant. Within 48 hours, four offers from other VC firms arrived, Farris said. Fear motivated Alsop to beat the others: ``My partners were asking every day: `How's Scalix doing? Are we in?,' '' recalls Alsop. ``You'd think we're all very cooperative. But when we want to get in a deal, the knives come out,'' he said. <snip> ------ End of Forwarded Message ------------------------------------- You are subscribed as interesting-people () lists elistx com To manage your subscription, go to http://v2.listbox.com/member/?listname=ip Archives at: http://www.interesting-people.org/archives/interesting-people/
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- Cash flowing again from VCs? Dave Farber (Jun 06)