Hi Venu,
Good evening. It is great to see your name on Medium. Welcome and thank you for publishing this article and for referencing my original article. I very much enjoyed reading this and understanding your perspective.
It is wonderful to compare and contrast our two sides of the investor relationship. It is important to have both sides willing to be open and transparent with their perspective. The reality can be found somewhere in the middle with each of us having our respective perceptions.
With regards to my opening lament about the offer I received: I did not want to say who brought me the offer as it is not relevant, nor right, to share their name without their permission. The wording was carefully selected so that it wouldn’t point to you or Silverton because your two firms were not involved in that offer. I am however saddened to tell you that a few of your peers in Austin that claim in person, on their website, and via others in your industry, to be venture capitalists were the ones that submitted it. Given the flurry of responses by other Austin entrepreneurs to my post, I am not alone in how I was treated. Think of me as the canary in the coalmine; the one that raised a hand and said something publicly — in what I trust was a respectful manner.
You are very right Venu that punitive terms, like the ones I received, hurt both the company and the founders. I met a company recently that fell into the Austin “valuation trap.” They are going to struggle to get their head above water in any subsequent follow-on round. This is just not right, nor should we accept it as standard operating practice here in Austin.
The reason I submitted research on Live Oak and Silverton is that you are the two biggest players in Austin. confirmed my belief when he calculated that your two firms:
have raised about 70% of all of the VC required for Austin to support the potential exits with proportional capital
Putting any other firm on the list would be more of a rounding error in the overall piece. You are very right that the offer was from a firm smaller than Live Oak and Silverton. That firm only funds 6–8 deals per year across all sizes.
Thank you for clarifying the average later-stage deal size for Live Oak. I found my information on Crunchbase and was using their publicly-available information in my calculations. Your willingness to be transparent is refreshing.
I greatly appreciate you reviewing my numbers to identify the error in how I interpreted the Crunchbase profiles. The information presented intimated that it was the investment amount but I see now that I read it wrong and it is the overall size of the round.
Do you know of any public/low cost websites that list the actual investment size for each deal? I would enjoy seeing that transparency to help us entrepreneurs as we research venture firms.
Again I have to commend you for being willing to share the information that has been missing from the websites available to entrepreneurs. As entrepreneurs it is tough to justify the pricing for Pitch Book and we beg for credentials for someone’s CB Insights account because they are so expensive.
I am very pleased to hear that you are investing in companies where there is little-to-no revenue as we on the other side of the investment relationship would not need investment if we could organically grow our companies to profitability in a short period of time. Having access to investors who are willing to stick with us early and ride the revenue up is huge. I am certain you will get a lot of emails from pre-revenue companies because of this article.
One of the reasons I reached out to Krishna and your firm in recent years was based on a recommendation from one of your early investments. They were very proud to have worked with you and your team, felt like you added a lot to their team, and they had very flattering things to say about both you and Krishna.
The overall message of my article still remains effective: Austin’s investment ecosystem has a problem and we need to get it out in the open to fix it. Without a solution we will continue to see young entrepreneurs be taken advantage of, while others go to the Bay Area to get funded.
Lastly, please consider continuing to post on Medium with such openness and transparency. I feel that this will set the bar for the rest of the Austin investment community. Communication is key and I trust that my article and yours will provide the much needed vehicles for information delivery to Austin investors and entrepreneurs alike. Let’s work together to push through to the Austin renaissance period for startup capital. Maybe we can even co-author a future article. :-)
Your brother-in-arms,
Richard
