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True Ventures Coffee Thursdays

September 2, 2010

Each Thursday morning from 9am to 12pm, we will be hosting True Ventures Coffee Thursdays at Pier 38. We have hired our favorite SF Barista to set up shop on Pier 38 in San Francisco. Stop by and feel free to let fellow entrepreneurs know that they can come by and hang out. Why coffee? We like coffee & we like people. Like many coffee shops, we are focused on community. What better way to start the day than by hanging out at our Pier 38 office & sharing a cup from our favorite SF Barista Joe with some entrepreneurs.

We hosted our first event today, on an unseasonably warm day – 75 & sunny – a much needed respite from the cold fog that comes with summer in San Francisco. Barista Joe made as many iced coffees as lattes. The turnout was fantastic with Founders of True-funded companies from SF, LA & Portland, as well as other entrepreneurs, friends of the firm, and our neighbors from upstairs.

We hope to see you next Thursday!

Thoughts on Y-Combinator Demo Day

August 26, 2010

On Wednesday, we traveled up the road from our Palo Alto office to the Y-Combinator (YC) office in sunny Mountain View.  True has participated in YC Demo Day since 2006, and two of our portfolio companies, Rescue Time and BackType, came out of the 10-week YC program.

This trip was my first to Demo Day in Mountain View, and I was absolutely blown away by the energy and passion of all of the companies participating in this summer’s program.  For this event, each startup had only 2.5 minutes to tell their story, and each of them rocked it.

TechCrunch has a great write-up of the companies who presented, so I will skip ahead to some high level takeaways from my experience:

Quantity of Companies

The first cohort of YC startups in 2005 featured eight startups (two of which ended up joining Reddit.)  This year’s cohort launched 36 companies with live working products gaining traction and most generating revenue.  This is a true testament to the great program the YC team has built and been able to scale successfully.

Quality of Pitches

Kudos to every one of the graduates for an awesome job on their presentations.  By the end of their introduction, each startup had succinctly expressed their core value proposition and was able to spend the rest of the time showcasing what they had built over the short summer program. The YC team has done a great job coaching each of their startups in the methodology of how to tell their story.

Traction with Investors

Of the 35 startups that pitched yesterday, most had already secured part, if not their entire round of Seed financing.  Adam Smith, formerly of Xnobi, cited this as a function of Angel Investors who are simply looking to index across startups.  Even if that is the case, the strategy only works if investors are backing smart teams who can execute – something I believe that every YC Company that pitched yesterday has demonstrated.

Trends in the Market

I’m a believer that YC companies are a leading indicator for the next generation of technology for startups so the most interesting part of the day for me was learning what tools new startups are using to develop themselves.

Some of those trends this year included:

  • Entire websites built to function as a single page (Hipmunk)
  • A focus on human actions instead of data or graphs (inDinero, FutureAdvisor, AdGrok)
  • Innovative ways to leverage tablets outside of the technology market (Brushes, Teevox, Koduco)
  • Products that leverage email as a platform (Rapporative, OhLife)



Overall, I had a great experience and met a ton of interesting new entrepreneurs.  Following the Facebook announcement yesterday, I’m looking forward to the next YC Class and seeing how these companies can better integrate social and personalization into the online experience.

Removing the Change of Control Provision from our Seed Deals

August 19, 2010

We founded True Ventures with the premise that we would create a firm that entrepreneurial founders could trust. As such, we consistently review what terms are appropriate for the size and stage of our investments into new companies.

Recently, based on internal feedback from our team and our founders, we have decided to change a key term around change of control in our seed investments.  The specific language for this is usually tucked into a longish paragraph about Protective Provisions which states that a change of control cannot occur without the consent of a majority of the Preferred stockholders.

At the earliest of stages when we have made only a small, seed stage investment, we believe that it is appropriate for founders to control the decision about the potential sale of their business.  Since launching True in 2005, we have never enforced this term nor have we ever planned to in our seed stage deals.

In keeping with that theme, we have decided to remove the “Change of Control” provision from our seed stage deals moving forward.  We believe that entrepreneurs are our customers, and we believe this small word change exhibits the much larger issue of mutual trust that our Founders and True maintain.

Want to Know? Ask True.

July 29, 2010

“Sharing knowledge is not about giving people something or getting something from them. That is only valid for information sharing. Sharing knowledge occurs when people are genuinely interested in helping one another develop new capacities for action; it is about creating learning processes.” ~ author Peter Senge

Our mission at True is to make the world a better place for entrepreneurs & to help them make their dreams come true. Investment is only a part of the process. For us, this means all entrepreneurs, not just those we fund. For Team True, if you are willing to chase your dreams, we want to help you.

There is no better way to do that than by answering your questions. Today, we are launching Ask True, a platform that allows you to ask questions and get feedback from venture investors and other entrepreneurs. We are using the Q&A platform developed by one of our portfolio companies, Sponge.

Hope you can stop by and simply Ask True.

Next Week: Heading up to Stinson

July 9, 2010

Each year our team heads up to Stinson Beach for a 4 day offsite. It’s a highlight of the year for our team for a lot of reasons. We genuinely have fun together, and four days gives us the chance to have countless conversations and ample time to think through ideas that are broader than just deals and portfolio. This annual ritual is essential for our team and our culture.

Stinson also gives us time to reflect and ruminate on the past year. Each year we ask ourselves whether or not we are living up to “the promise” we made when starting True. The promise was something we talked about at our original Stinson offsite. The time was 2006 and we had just closed Fund I at $165 million. We had the opportunity to create a new kind of venture firm that really did stand first for Founders and the entrepreneur. We really did have an opportunity to re-align (true) the venture industry to shift more power and value to the people creating value (the entrepreneur). We really did have the chance to change the relationship between investor and entrepreneur through better practices and communication, and appropriate structuring to create true alignment. And we really did have a chance to create a new kind of partnership in our firm.

We promised each other that we’d make this happen, and it wasn’t just b/c we are nice people. We are, nice people, (☺), but all we hold a core belief that tremendous value and innovation existed in the talents of the early stage entrepreneur, and we saw it as our job to unlock it. We saw the chance to create a much bigger pie.

So each year we check our progress.

We also do a deep dive product review. No, not of our portfolio companies, but literally a review of our own products. True is a startup just like any other. We have a customer (the Founding entrepreneur) and we build a product (a deal, or in our case three types of deals: Super Seed, Seed, Real). We think long and hard about product, and we’re all dedicated to making ours the best ones in the marketplace. We frequently talk to our customers about how our deals are working for them, and when we see problems in how a product is working, we’re quick to improve it.

We’ve done a lot of product development at and after Stinson. Two quick examples: our “$10K both sides legal docs” that make it easy and inexpensive to get a seed round done with the appropriate structure. There’s been a lot of great attention on this area in the past 6 months, but we’ve been doing this for 4 years at True.

Example 2 is last year’s launch of our $250K “Super-Seed” deal. We noticed tremendously talented Founders who just wanted a tiny bit of money to either engage in early customer development or testing. Raising even $500K or $1mm made little sense to these customers, so we launched the Super Seed. Our process is lightning fast, but our criteria no different. This product “flew off the shelves,” because it hit a sweet spot for many entrepreneurs, and a year ago there weren’t many options in this category. A year later there are many, many options in the $250K category thanks to the proliferation of the super-angels. This is an incredibly good thing, because it offers Founders more choice.

I’m not sure what we’ll conclude next week at Stinson relative to our product set. We have a few ideas for some adjustments to make our deals more competitive. We haven’t noticed a ton of “bugs” in the existing set, but we’re interested in staying ahead of the market, so we’ll be engaged in a deep dive.

If you know of ways we can build better deals for Founders, please comment here, tweet or email us. We’d love your help improving.

More to come from Stinson, and please do let us know any thoughts or suggestions on stuff you’d like us to tackle as a group.

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!

Welcoming Andreessen Horowitz

July 9, 2009

This week Marc Andreessen and Ben Horowitz announced their new $300 million venture fund. This is really good news for the very early stage venture market. It’s yet another visible indicator of the ongoing reinvention occurring in venture capital, and it represents a significant step in the re-emergence of institutionally-backed early stage venture capital. We’re excited to have Marc and Ben working in this segment, and the addition of more talent and resources in the early stage market is great news for entrepreneurs.

Our mission at True is to help entrepreneurs realize their dreams. In 2005, we spotted an opportunity to build a firm that was more adaptable to the needs of today’s entrepreneurs. We innovated by re-defining the relationship between investor and entrepreneur in a fundamental way, simplifying previously complicated structures, and amassing talent and resources to ease the specific process of starting and building a new company.

We did all of this as former entrepreneurs ourselves, and our overarching goal was to re-align capital with creativity. At True, we firmly believe that the entrepreneur is the center of all power, creativity, and wealth creation in the venture capital model. Our firm and our deals are designed with the entrepreneur as customer.

When we launched in 2005, there were only a handful of super-angel investors in the very-early market: Ron Conway, Reid Hoffman, Ram Shriram, Josh Kopelman (then with his evergreen funds) – to name a few. Institutional capital was scarce, and this was a problem because entrepreneurs had fewer resources in the beginning, and less choice

The great news for entrepreneurs is that this is changing rapidly. Since 2005, we at True have raised 2 institutional funds totaling approximately $375 million, Josh and the team at First Round closed on an institutional fund, as did Stewart and Gilman at Alsop-Louie, and Brad Feld at Foundry. Back East, Spark and Union Square Ventures have each raised two institutional funds, and Alan Patricoff started Greycroft. In addition, many very talented angels such as Mike Maples, Jeff Clavier, Ron Conway (Baseline and Ron’s other angel investments), and Paul Graham at YCombinator have raised institutional dollars.

We estimate that there is now well over $1 billion of institutional capital available to startup entrepreneurs. Make no mistake, there are many talented groups willing to write checks as small as $50K to get a good team and a good idea off the ground.

This could not have happened at a better time. The combination of great entrepreneurial talent, high capital efficiency, widespread broadband infrastructure, and the maturity of mobile and social computing platforms has resulted in tremendous product innovation and massive market opportunities. True witnessed this dynamic first in our consumer investments like Meebo, Automattic, and Sphere, but, since 2005, we have also seen Moore’s law blast away cost in enterprise 2.0, infrastructure, and hardware. We have steadily expanded our investment focus and products into these markets, and we are about to close on our second hardware investment this month.

We are fortunate to live in an incredibly disruptive time.

Which brings us back to reinventing venture capital. The best entrepreneurs want less from VCs today: less capital and fewer constraints in order to take more risk earlier. But the the best are demanding more in terms of new products, services, alignment, attitudes, and business practices from their investors. This means new expectations around board roles and responsibilities, more flexible deal structures, aligned efforts to add value, broader syndicates that amass the resources and participation of multiple groups and multiple angels. This means innovation in venture capital.

We’re excited about the arrival of Andreessen Horowitz to this segment because it means more choice and power available to the early stage entrepreneur. More talent, dynamism, and focus on these challenges will help us all to better serve our customers (entrepreneurs), more quickly modernize the early stage capital markets, and foster fundamental innovation. In removing barriers to entrepreneurial creativity, we will reinvigorate the US economy.

If you are an entrepreneur today, this is an historic time to chase your dreams. With over $1 billion in fresh seed capital in the very early stage market, what are you waiting for?

The True Story

June 26, 2009

Connie Loizos at PE Hub dropped by the Pier yesterday to chat with Jon about the True investment strategy.