The VC Way: Investment Secrets from the Wizards of Venture Capital

by Jeffrey Zygmont

Book Overview

Venture capitalists have played a pivotal role in hatching the technologies that are redefining our work and life. Alongside the brilliant innovators who dream up the ideas, VC's contribute the business acumen and development capital that feeds Silicon Valley. And it is through this process of high-stakes investing that unimaginable fortunes are made. The VC Way is the first book to take readers into this private world of extreme investing, showing...

• Format: Paperback
• Language: English
• ISBN: 0738205923
• ISBN13: 9780738205922
• Release Date: May 2002
• Publisher: Basic Books
• Length: 240 Pages
• Weight: 0.70 lbs.
• Dimensions: 0.6" x 6.0" x 9.0"

Customer Reviews

Gain insight into how investors think

"An entrenched enterprise usually doesn't have much incentive to change the world, because it has so much staked in the world as it is presently ordered." The VC Way shows the true nature of Venture Capitalists. Zygmont explains how Venture Capitalists offer more than just money, they offer expertise and connections. Starting off with An Adventure Capital Story, the author quickly gets to the point - Venture Capitalists are interested in rapid growth companies with potential for high impact, lifestyle companies need not apply. Venture Capital is more than just about money. It's about changing the world we live in. Through money, experience in building companies, and cross-industry connections, VC's are able to bring to bear a tremendous amount of energy to effect change. If you've ever wondered what Venture Capitalists really do, The VC Way will give you the insider's view. And if you're serious about transforming your ideas into market reality, you'll most likely need external funding from investors. The VC Way and Confessions of a Venture Capitalist (April Byvation) will help you gain insight into how investors think. With this knowledge you'll certainly be able to put your best foot forward when asking for money. Michael Davis, Editor - Byvation

Venture Capital 101 (Not Suitable for Individual Investors)

In The VC Way, Zygmont delineates the common character traits of venture capitalists. In that task Zygmont does a credible job, having interviewed a number of well known VCs such as James Swartz (Accel Partners) and Donald Valentine (Sequoia). His prose is well-balanced between commentary and primary data, and this book will serve as a good primer on the VC world for those that are seeking either VC cash or employment.If you fall in either category, you should consider purchasing the book. Among other things, you'll learn the following:(1) Venture capitalism is a competitive industry where VCs are effectively "money salesmen" selling money in exchange for a equity stake(2) The Internet is not a technological revolution but simply a new communications medium. In that way, it was appropriate that there were a spate of ideas generated by MBAs with no technical background, because the Internet is a marketing revolution rather than a technical one.(3) The personality of the entrepreneur is critical. In particular, VCs look for energy, conviction, and above average intelligence ("smarter than the average bear"). Educational pedigree matters because it's just another filter the person has gone through. (4) VCs are willing to step in and make changes. Zygmont cites the common example of Donald Valentine (Sequoia) replacing the founders of Cisco with more able managers.(5) VCs have specific domain expertise (the "big picture knowledge" about an industry including the trends and competitive pressures that an entrepreneur might not be aware of.(6) VCs market themselves as well as the companies that are parts of their portfolio. Zygmont raises the example of Ann Winblad's Tuesday Madness college business plan competition.(7) Entrepreneurs must be optimistic. Izhar Armony (Charles River) in fact equates optimism with entrepreneurialism.Unfortunately, the book does not target itself to the proto-venture capitalist or entrepreneur but instead the individual investor. Zygmont touts the book as a "precious resource for anyone who wants to imitate the strategies and successes of these money masters." I believe that this was a marketing mistake that was driven by the need to differentiate itself from the myriad VC 101 books on the market today and capitalize on the personal investment boom.Be forewarned: VC investment strategies cannot be profitably be applied by the individual investor. By the author's own admission: (1)"A venture capitalist is closer to the mutual fund manager than he is to the pick-your-own stock shopper, especially if you're talking about the manager of a focused fund." Only those with sufficient cash basis can afford to spread their money across the recommended 10 minimum investments. (2) "Involvement and participation in the companies they invest in is key to top-shelf VCs". However, unless you are Warren Buffet, it is highly unlikely that you as a individual investor will be able to cajole your way into a company's board room.Ergo, if you

Actually, A Variety of Ways

Zygmont offers "investment secrets from the wizards of venture capital" but I think the greater value of the book is the direct access it provides to the minds of various VC decision-makers as they interact with him in casual but remarkably candid conversation. "This book is about their methods." There are no "secrets", per se. "This book also compares [and contrasts] venture-investing rules and principles to general investing practices. The idea is to let general investors mine for insights that might help them when they're putting together their own portfolios." Zygmont organizes his material within 12 chapters and then offers his conclusions about "The Composite VC" followed by a list of VC firms and investor and entrepreneur resources. His formula is really very simple and straightforward: "Ask them." He interviewed a number of the most successful venture capitalists who, at the time of the interviews, were associated with the most prominent VC firms. What do they share in common other than the obvious (intelligence, courage, ability to tolerance risk, high energy level, etc.)? Commitment, idealism, honesty, charm, pride, and reverence (or humility). This book will be of greatest value to those who are preparing to seek venture capital, obviously, but can also be of substantial value to senior-level executives who ask this question: "What would a venture capitalist have to say about my company?" Although the responses from those whom Zygmont interviewed would probably vary, perhaps significantly, all would probably ask essentially the same questions before making an evaluation. If you share my high regard for this book, I urge you to check out Done Deals and Inside the Minds.