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Simplicity, Clarity, Alignment: Welcome Series Seed

March 1, 2010

With today’s launch of Series Seed Legal Documents, the early stage venture industry just got a lot simpler, and a lot better.

Our good friend Ted Wang from Fenwick and West has been working on this initiative for a very long time, and Ted has long been passionate about innovating and streamlining the process of closing Seed and A-round financings. The new documents are a universal, “open-source” set of deal closing documents, and importantly they are supported by the top attorneys and legal professionals at multiple firms across the valley.

The docs are all that’s required to close a standard Seed/Series A venture capital financing. They include the most important provisions of legal docs for early stage companies, plant the flag on issues squarely in the clear and fair category, and (importantly) throw out much of the un-necessary provisions found in most legal docs. Because the docs are simpler and cleaner, the legal costs for closing a standard, clean Seed/Series A round will drop dramatically. This is good for Founders and investors alike, and it’s good for our industry. Ted and his group call these “Series Seed” legal documents, and True and a handful of other early stage investors have joined on to help launch this initiative. You can find the docs here.

At True, we’re committed to simplicity, clarity and alignment. Since we started our firm in 2005, we’ve designed and led over 45 Seed and Series A financings with these principles in mind. Since day one, all of our docs are clean and simple: no tricks, no onerous voting provisions, no multiples on liquidation preference, no participation, no board control, yes generous founder vesting and yes ample acceleration for Founders upon change of control. One of our Founders eloquently told a roomful of our LPs that True “doesn’t do any of that sneaky VC sh%t.” They might have been surprised by the word choice, but believe me they liked the sentiment ☺.

We’ve been practicing the principles of the Series Seed for the 4.5 years, so our actions speak much louder than our words, but both action and words greatly support this initiative because it’s good for Founders.

Ted and his team have taken a complicated set of documents and applied good legal judgment and pragmatic business thinking to them. Broad adoption of Series Seed documents will result in lower legal costs for the early stage market, more efficiency and much greater value creation because more of a deal’s proceeds will be used for company building. At True we’ve aggressively pushed the legal costs of closing a small seed round ($250K) to $10K total (i.e. $10K for both sides). Normally these costs total over $30,000, which is ludicrous in the context of a $250K raise.

We’re proud of this innovation and these savings, but there are more important benefits than cost. Simplicity re-affirms trust. Clarity lets everyone see in the plain light of day how a deal works in all scenarios. Alignment creates value for Founders and investors alike, and a set of standardized docs helps our industry focus more of our time on what counts: engaging phenomenally talented people to build products that change the world.

We’re very pleased to support Ted and the Series Seed, and we encourage Founders everywhere to consider forming their Seed/A round deals with this simple, Founder-friendly approach.

  • Om Speaks to BC’s Tech Trek

    March 1, 2010

    This evening Professor John Gallaugher of Boston College and his Tech Trek students visited the GigaOm offices in San Francisco to hear Om Malik speak on founding GigaOm, venture investing at True Ventures, and reporting on the high tech industry. It was a great group of students, who asked excellent questions and many of whom plan to apply to TEC 2010!
    BC Tech Trek

    Announcing TEC 2010

    February 17, 2010

    Our mission at True is to make entrepreneurs’ dreams come true. It is a bold and ambitious objective and, to make it even more challenging, we do not just focus on the entrepreneurs we fund. Rather, we would like to help all entrepreneurs, including the entrepreneurs of tomorrow. This was our thinking 12 months ago when we conceived the initial True Entrepreneur Corps (TEC) internship program. Our goal was to create an opportunity for aspiring entrepreneurs to plug into Silicon Valley and the heart of innovation for an eight week period to see what the inside of a startup looks like and feels like. We wanted the TEC interns to meet as many influencers in the entrepreneurial ecosystem as possible, we wanted them to get a crash course on venture capital, and we wanted to deliver an internship experience that they would never forget. Oh yeah—and we wanted to do all of this for college students finishing their sophomore and junior years so that they could return to campus and use the remainder of their undergraduate experience to prepare for a career as an entrepreneur, if they so chose. TEC 2009 was a great success, and we learned a lot. This year, we are using that learning to create an even bigger, even better TEC program.

    The requirements for TEC 2010 are the same as they were last summer: we are looking for smart, motivated, creative undergraduates in the classes of 2011 and 2012 who are eager to join a startup for eight weeks to share their talents and experience firsthand what it is like to be a part of the True entrepreneurial network. Students should expect to work on a variety of projects across engineering, marketing, research, business development, and other areas, depending on their backgrounds and individual company needs.

    More information on TEC is available here, including application materials for 2010. There are also links to profiles of the 2009 group, the blog they wrote chronicling their summers in and out of the office, and a video they produced that gives prospective applicants a great feel for the kind of experience they are in for. The deadline for this year’s applications is April 2, 2010.

    The continuation of the TEC program is another step that we are pleased to take to help provide support for young entrepreneurs and for the companies with which we are privileged to work. We look forward to meeting this summer’s TEC class in June and encourage interested students or other affiliated university staff members to contact us at TEC [at] trueventures [dot] com with questions or comments about the program.

    Urban Airship Secures $1.1m in Funding

    February 16, 2010

    Huge congrats to Founders Scott Kveton, Steven Osborn, Michael Richardson, and Adam Lowry for their new round of funding for Urban Airship. We could not be more excited about partnering with such a visionary group. Their traction since starting a little over nine months ago has been nothing short of impressive – 1500 customers, over 100 million messages pushed, and over 10 million devices served!

    The official press release is here in addition to the company’s blog post.

    With the introduction of the iPhone and Android, the mobile landscape has changed dramatically, creating robust new platforms for innovation. Most of the talk has been about the wave of cool new apps and deservedly so. We seemingly hear about a new app store being created at every turn.

    What has received less attention is the underlying software infrastructure required to enhance these very applications and enable them to run reliably and with scale. At True, we are strong believers in the next wave of mobile infrastructure with Urban Airship playing right at the center of this massive opportunity.

    We look forward to continued innovation as the company expands across multiple platforms and form factors including the iPad, augments and to some extent reinvents the SMS experience, and brings more rich, relevant content to the mobile user.

    More importantly, we look forward to working together with such a great group of entrepreneurs!

    Welcoming Scale Venture Partners to BrightRoll

    February 4, 2010

    Today BrightRoll announced it’s $10 million Series C round of financing led by Scale Venture Partners. Rob Theis is leading the deal for Scale, and will be joining me, Vince Vanelli of KPG and David Welsh of Adams Street on the Board.

    We’re incredibly proud of Tod, Dru, Charlie, Lewis and the team at BrightRoll who have built this company from a raw idea into the leading global online video ad platform. BrightRoll recently surpassed Hulu in terms of viewership, and Tod has built this company with a fraction of the capital used by his competitors.

    I first me Tod through Plaxo in 2003, where he was Director of Revenue for Plaxo and I was on the board (through an investment I made at a prior firm). We worked closely together on several initiatives over a couple year period, and Tod always demonstrated his tenacity, smarts and raw talent. I was also lucky enough to get to know Dru really well in the early Plaxo days too, largely because I was always a “problem user” of Plaxo products because I had so many computers. Dru spent countless hours debugging my setups, and we became friends.

    When they decided to leave Plaxo and start BrightRoll in mid-2006, I counted myself lucky to a) get the call and b) have True’s first fund raised so that we could invest in his idea from day one. I remember calling him to tell him we’d take all of the available room in his seed round, and if anyone dropped out, we’d take that too. At True, we place an unbelievable emphasis on Founders, so my prior experience with them meant a lot.

    The BrightRoll journey has been as challenging as any other startup, but at every turn Tod and Dru have displayed an exceptionally clear vision for the industry, and they’ve built the company with quality and care. The team is also serious about building a real business. About one month into our seed investment, Tod called me to report on the first month’s revenue. I’m normally not one to expect revenues so soon in our seed deals, so I congratulated him and laughed a bit about my surprise. He commented that he found my surprise surprising: he just didn’t understand how so many web 2.0 startups of the time were unable to focus on revenues.

    BrightRoll has been strong since the beginning, but in early 2009 we at True decided to aggressively invest behind the company. We thought the downturn presented a particularly ripe opportunity for expansion and growth, and we at True (as well as KPG and Adams Street) stepped up to fund this expansion (in a very Founder-friendly fashion). This was part of our “make the strong stronger” strategy in 2009. This was scary to some but seemed smart to us, largely due to the tremendous talent that Tod had built on his team. It didn’t hurt that he’s pursuing a great market, and did so with tremendous discipline (Brightroll’s been profitable for awhile now).

    2009 was a great year for the company, and with our new financing we look forward to continued growth.

    We were lucky to have many options for this recent financing, but the Scale team early on demonstrated an understanding of the company and market opportunity that was unique. At True we have a lot of respect for Rory, Kate, Sharon and Rob, and we really like what they’re building. We’re very pleased to have them on board with us.

    Congrats to Tod, Dru and the entire team on an important next step towards building an exceptional company.

    Jive Software Acquires FiltrBox

    January 7, 2010

    Today Jive Software announced the acquisition of Filtrbox. True seed funded Ari Newman and Tom Chikoore in the winter of 2008, and we have worked closely with Ari and his team as Filtrbox developed a market leading product in the real-time social media monitoring marketplace.

    We’re extraordinarily proud of Ari, Tom, Patrick and the rest of the team at Filtrbox for this fantastic outcome. Filtrbox will become Jive’s Boulder, Colorado team, and the Filtrbox products will enable Jive to “drill deeper to drive business value from the real-time web with unique applications to bridge related internal activities and market-facing activities.”

    This is a terrific outcome for everyone involved, and we’re particularly proud of the way Ari and his team navigated the waters of the social media landscape over the past two years. The team built a robust and powerful product that rapidly distinguished itself in a competitive and rapidly changing marketplace.

    Ari and Tom are a shining examples of the types of entrepreneur we strive to work with at True. Starting on day one, they diligently and rapidly built a solid product, launched it early and often, and attracted customers to the platform. Filtrbox exemplified agility, as the team kept their eyes and ears close to their customers and tuned and iterated their sales process and business model to stay ahead of a rapidly growing market.

    Ari and his team worked incredibly hard to build Filtrbox, and we really love the way that they always found time to contribute meaningfully to the True Founder family.

    We are immensely grateful for the team’s efforts and dedication over the past two years, and we look forward to supporting Ari and Filtrbox on the next leg of their journey.

    Join Us For A Glass or Three To Celebrate True’s Best VC Crunchies Nomination

    January 6, 2010

    As you may know, True has been nominated for a Crunchie Award as the Best Venture Capital firm – you can vote for us here if you like how we operate:

    The award ceremonies are on Friday. Prior to the festivities, the True gang will be celebrating at the Absinthe Brasserie & Bar – if you’re in the neighborhood, we’d love for you to join us for a drink – just stop by the bar, we’ll be there @ 5:30! The address is 398 Hayes Street (at Gough).

    Looking Back on 2009

    January 5, 2010

    It was the worst of times. It was the best of times. 2009 was a year to remember.

    We’ve been reflecting a lot during the past few days on 2009, and the past year was by far our busiest and most impactful year in our firm’s four-year life. Like the rest of the industry, we entered early 2009 with questions and doubt. It was a scary, unnerving time with venture firms publicly announcing no new investments, and everywhere you looked were reminders or admonishments to let “good times rest in peace.”

    Both sides of the venture capital equation, investors (limited partners) and entrepreneurs, were under tremendous financial stress as the world around us all had changed. For True, the timing of the meltdown created opportunity and significant risk, because we had just successfully closed our second fund in September 2008, literally 48 hours before Lehman Brothers failed. Although we were incredibly lucky because we were in a position to invest, expectations and tensions were high given that the financial world had changed so dramatically.

    As a young start-up ourselves, we knew that the path of least resistance would be to follow the crowd and play it safe while the downturn worked its way through the economy, but what would be the opportunity cost for that strategy? In order to figure this out, we went straight to the very heart our model: our Founders. After spending considerable time with each of our Founders and their teams, it became abundantly clear that despite the global economic turmoil, our sector (very early stage technology) was undergoing a fundamental resurgence. The largest trends in technology were creating substantial new markets, in which start-ups had significant opportunity, and these trends were minimally impacted by the global credit/liquidity crisis.

    Core innovations in internet-based technologies over the previous ten years were beginning to manifest themselves into large segments. These segments included the social and real-time web, cloud computing infrastructure, mobile products and services, enterprise 2.0 and even new computing devices and hardware. Though a prolonged recession and curtailed consumer spending would eventually impact these segments, in reality these markets were extremely nascent, and, in our view, it was time to build for the future.

    We thought 2009 was particularly timely for True because of our very early stage strategy. It’s basic, but it’s true: early stage venture capital has a 5-10 year investment period, which means today’s investments are not directly correlated with current market conditions. The idea of an early stage venture firm cutting its investment in 2009 made no sense to us. For example, it just didn’t stand to reason that because the world was reeling from a (severe) housing and credit crunch, enterprise IT wouldn’t undergo massive re-architecting over the next six years.

    As we concluded our research, we formed a thesis: our strategy of investing behind truly great entrepreneurs in early stage technology businesses who are highly capital efficient was well timed for the 2009 market.

    We took a deep breath and decided to double down. In January 2009, we doubled our forecast for new deals, and we encouraged our portfolio to become more aggressive in the downturn.

    For new deals, True closed 21 new investments in 2009, which compares to 14 in 2008 and 10 in 2007. We can be judged by the company that we keep, and we are fortunate to have invested with an incredible group of entrepreneurs such as Tim Young at SocialCast, Peter Rojas & Ryan Block at GDGT, Howard Lindzon & Soren Macbeth at StockTwits and Jack Abraham at Milo.
    (Click here to see a full list of our portfolio.)

    Simply making more new investments, however, was not enough. We also had a large portfolio of existing companies that could use our dollars to make the downturn their advantage. We set aside approximately $20 million of our reserve capital to invest in the existing portfolio with an emphasis on making the strong stronger. We believed 2009 would be a good time for our break-out companies to further their lead. Many of these companies took advantage of our reserve capital to acquire competitors (who were distressed), grow market share, deepen product teams, and hire sales folks. We structured our investments as friendly bridges to future rounds, as our intent was not to take advantage of the timing to buy more equity but rather enable our strong companies to get stronger.

    We’ll know the real results from our actions in 2009 over the next 5+ years, but the early results of these moves look incredibly promising.

    To cap off a big year for the firm, we were recently nominated for the Crunchies for Best VC Firm of 2009, and two of our portfolio companies, Milo and StockTwits were nominated for Best Startup or Product and Best Social App, respectively. We are honored to have been nominated by the industry, and we think this is really a reflection of the great entrepreneurs in the True family. Our mission at True is to help make an entrepreneur’s dream come true, and we founded our firm on the core belief that all power, creativity, and energy in the venture capital ecosystem starts (and ends) with the entrepreneur. We have a total of 51 investments in the portfolio, which equates to 92 Founders and 483 employees. This is an incredible group of people, and each of them has endowed us with their faith and confidence. Our Founders are our biggest source of inspiration for our firm, and their efforts and energies are most responsible for our success.

    Thank you to everyone who helped our efforts in 2009. It was a very busy year, and as entrepreneurs ourselves, building True has been and continues to be incredibly gratifying.

    Now is not the time to rest on our laurels. Venture capital needs more innovation, and we have an ambitious agenda for the years ahead.

    We look forward to working hard for you in 2010 and beyond.

    Happy company building!

    Its All About the Data . . .

    December 23, 2009

    We hear the phrase all the time and deservedly so given the explosion in digital data. Google, Twitter, and Facebook have helped consumers gain a certain level of context around the data by enabling us to search the past, find out what’s happening now, and connect with our friends.  We are also continuing to see a whole slew of new services that are innovating and providing more context to the end user.

    One of the bigger questions that remains, however, is where is the equivalent on the IT side?  The traditional enterprise search market has matured, is consolidating, and primarily focused on structured data.  We believe there is a huge opportunity with the “dark matter” in the IT world, which exists in raw log files generated from web, application, and database servers.  It’s a massive amount of data – in aggregate far more than what exists on the web – that still needs to be indexed, searched, and better understood.  It is data that actually pre-dates the Internet and is as old as any computer system but without any affordable search solution until now . . .

    We are extremely excited to announce our recent investment in Loggly, a SaaS solution for storing, reporting, and alerting around log data.  Loggly will provide developers and admins a way to easily and affordably search log data.  The true value will be in being able to correlate data across your back-end in near real time for application debugging, operations monitoring, security auditing, analytics, and a whole bunch of applications we haven’t even thought of.  Think Twitter for your IT machines with the appropriate context added.

    Loggly founders Kord, Raffy, and Jon bring a wealth of experience around log data, search, and building great product.  We are excited to partner with them and look forward to learning more about their discoveries!

    Also, see Loggly’s blog on the funding announcement.

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    StockTwits Closes a $3M Round

    December 2, 2009

    Congrats to Soren Macbeth, Howard Lindzon and the StockTwits team on their well deserved new round of capital.

    Mike Arrington at Techcrunch broke the story this morning that StockTwits has added $3 Million in capital from our good friends at Foundry Group with continued strong participation from True Ventures and seasoned Wall Street executive and investor Roger Ehrenberg .

    Since launching a year ago, StockTwits has been moving very quickly to build a real time financial media company amid a landscape of transformation within the industry. With tens of thousands of users, StockTwits’ success is a testament to the power of the real-time web, where users customize their experience rather than simply accept destinations as-is. We are extremely happy to see their impressive traction and fast growth recognized.

    One of the things we prioritize at True is partnering with entrepreneurs and investor groups with whom we’ve worked with in the past. Thus, we could not be more thrilled to add Foundry Group to the mix. We’ve worked closely with Seth Levine, Ryan McIntyre and Brad Feld for a very long time and we love the added perspective and energy they bring to the table.

    You can read Howard’s and Seth’s thoughts on the investment here and here. Congrats to all.

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