Venture Chronicles

Bunch of interesting posts on Techmeme today with respect to startup funding, and a few comments:

VC's not wanting to put more money into areas they funded but perceive as now doomed, as reported on ExpertCEO, a new anonymous online community cum Exec agony aunt :

The first post: We are a Series A funded company with tranched financing based in a milestone. The investors want to shut down the company and not provide the second tranche even though the milestone has been met!! They simply do not want to invest in the consumer segment in this economic environment. . .

The second: I am on the board of a company that had signed term sheets from Tier 1 VC's, had one VC back out after the term sheet was signed and then after all the final docs were drawn and signed, had another Tier 1 VC say they want to do more diligence at the very last minute. Has anyone else had experiences like this?

Its a sad fact of life, but its now far better for VC's to hold onto cash to invest in newer businesses once the current situation becomes clearer, rather than put more into companies formed pre-paradigm shift (and to be fair, they have upstream funders reneging as well). It happened in 2001, so expect more of the same, methinks. Big difference this time is they will be named and shamed on these various anonymous sites, which will be an interesting dynamic.

And of course what they really really want are safe bets, as Don Dodge notes:

VCs are still investing but only in high quality companies, with proven revenue models, focused on a growing market segment.

In 2001, biscuit companies were the rage . And if you have an Ad funded Biz model, beware...:

Startups with advertising driven revenue models are being pressed to prove the numbers, show comparables, and really drill down on CPM rates and CPC click through rates. The reality is that there are very few web sites or services that can build a large enough audience to generate $1M in monthly advertising revenues. CPM rates are falling across the board, especially in the social networking area.

Which is picked up on another post there, about traffic on SocNets going up while Ad revenues "fall flat".

As an aside, Techmeme reports that Mapquest (remember them) is firing on all cylinders!

Despite perceptions, MapQuest is actually a more popular mapping destination than Google or Yahoo’s map sites, and the company continues to innovate and push out new features and services

Strewth, I thought they were dead! I stopped using them because they didn't put Tube stations on London maps which makes their maps effectively useless. Just looked again, they still don't - few more cylinders clearly needed on the old 2-stroke methinks.