More on BVP's Top 10 Rules for Being SaaS-y [Adventurista]

If any of the "Bessemer's Top 10 Rules for Being SaaS-y" from my previous post resonated with you but left you wishing you had more background, you should check out my colleague Byron Deeter's recent guest post on Sandhill.com: Bessemer’s Top 10 Laws for Being “SaaS-y.” Definitely great reading.

Also worth checking out is my colleague Philippe Botteri's blog post "Launch of the SaaS 13 Index" in which Philippe tracks how a selection of the public SaaS comps are doing. Great idea.

Why Am I Passing? [Feld Thoughts]

Every day I tell at least one entrepreneur that I am passing on investment in their company.  Some times I tell 10.  I don't know what the most in one day is, but it's probably more than 25.  I try to respond to all emails so a lot of these are in the "never were appropriate to pursue" category, but at least one each day is someone that I've actually engaged with beyond a cold email that was randomly sent to me.

While I try to give a short explanation - which often is that the company is not in an area that I'm interested in - it gets harder when I've actually spent some time looking at the company, like the idea and the people, and find it relevant to one of the investment themes we have active at the time.

Over the years - I've come up with a set of filters to quickly turn down deals.  This is an important process as I want to limit the time I spent investigating companies that I don't investment in.  Rather - I want to! maximize my time working with my existing portfolio companies and quickly / deeply evaluating new companies that have a high chance of us funding them. 

My first pass filter has three parts to it.  The top level filter is "is this in a theme that I'm currently interested in."  If yes, then I try to determine whether or not I think the people involved can create a huge company.  If yes, then I often at least spend some time going deeper.

Assume something falls in the "yes - this is interesting / relevant to my current investment themes and yes - I'm at least interested in the people."  Before I spent a lot my time (and their time) I try to figure out where this lives in the context of all the other companies we are looking at investing in.

This is where it gets fuzzy for the entrepreneur.  You don't know the other active companies that we are working on.  We do.  Since all of my partners an! d I work across all of our deals, we all have good knowledge of the de pth of our current pipeline.  As a result, I can ask myself the question "is this deal potentially in the top five things we are currently looking at."

If not, I usually pass right away.  We'll only make a half dozen new investments or so a year and we are always looking at many more than six companies that we think are potentially fantastic investments.  As a result, if something is merely good (or even great) in our mind, it's not going to ultimately make the cut, so it doesn't make sense to spend time on it.

This is one of the benefit of having a fund our size.  While we aren't a slave to a specific annual deal pacing, we've learned through the lessons of the bubble the value of having time diversity in our investing activity.  To be hugely successful, we don't have to do every great deal we see.  In fact, we don't have to do every fantastic deal we see. 

Now - just because you get through the first pas! s filter doesn't mean we'll do the investment.  The cumulative number of "top five deals" we are looking at in any given year might be 50 to 100.  We are going to do five or six of them.  So we are going to spent real time with a lot of companies that we won't invest in.  This doesn't mean they aren't great companies or aren't great investments - they just aren't "for us, right now."

We always try to be respectful of the entrepreneurs and pass as soon as we hit the "this isn't going to happen" point.  There are different triggers for each company and it's not predictable.  I imagine this can be frustrating for an entrepreneur because it feels like you are making process with us when we suddenly say "we are passing", but I'd like to think it's an efficient way for you since we unambiguously take ourselves out of the hunt when we realize we aren't going to get there.  Ultimately, this is better! for you since you don't have to consume a bunch more time with us on a low priority outcome.

As I run out of gas on this post, I'm wondering how entrepreneurs that I've passed on perceive this.  I know many of you read this blog because you mentioned that to me in our initial introduction.  I encourage public or private (whatever you are comfortable with) feedback on this - did you feel like the experience with me was a rational one or an arbitrary one?

Boneless Bernanke: Why Ben Has to B.S. Congress [Silicon Alley Insider]

Barry Ritholz explains why a smart PhD like Ben Bernanke has to sound like Prozac-infused pollyanna every time he gets near a microphone:

If the Fed were to come clean about the present circumstances, it would cause a market panic. That's why we get this very gradual shift in assessments, all designed to be somewhat reassuring as it slowly feeds measured dollops of reality into the marketplace.

Yesterday's dovish congressional testimony from Bernanke (and in Vice Chair Don Kohn's speech the day prior) will be continued today. It is, as it has always been and always will be.

Why? Imagine if the Fed Chair told the unvarnished truth: The Dow would see a 1,000 point intra-day drop.

We're sure Barry's right that that's the logic Ben uses when he crafts his sugar-coated happyspeak, but when the chips are actually down (as they are) Americans are a tough lot, and we think the country would actually benefit from hearing a bit of the truth.

Hulu CEO: Viewers Love 'A-Team', 'Airwolf' [Silicon Alley Insider]

Hulu CEO Jason Kilar is a busy guy these days, inking last-minute content deals and sweet-talking advertisers on the eve of the March launch of the News Corp.-NBC joint venture. After months of beta testing, Kilar says a few surprises have emerged: namely, the popularity of 80s action series "The A-Team" and "Airwolf."

We'll take credit for at least some of the interest in the exploits of Mr. T and crew, thanks to our SAI A-Team Channel. But "Airwolf?" Said Kilar: "Airwolf happens to be kicking the pants off a lot of current TV shows."

Guy Hands and True Values [PE HUB]

The great weather in Munich has given way to the typical cold and cloud of Northern Europe. And the mid-market players have given way to the mega funds. Guy Hands of Terra Firma lectured on returning to the true values of private equity in the current financial market. Such platitudes are often batted around at conferences, but what [...]

Apple: iPhone Software Kit Coming March 6 (AAPL) [Silicon Alley Insider]

Better late than never! Apple (AAPL) will hold a media briefing on March 6 at its HQ to focus on "the iPhone software roadmap," Barrons' Eric Savitz reports.

On tap: Information about the iPhone software developers kit, originally scheduled to launch this month, "and some exciting new enterprise features."

We hope that means the iPhone will be able to receive BlackBerry-like "push" email from Microsoft Exchange servers, which many big companies use for their email. If so, Apple will have a big, new opportunity in the business smartphone market, currently dominated by Research In Motion (RIMM) -- which just jacked guidance for Q1 subscriber growth.

See Also:
iPhone Sales Stunted? No, Apple Can Still Hit 10mm
Five iPhone Apps We Can't Wait To Install
RIM On Fire: What Recession? iPhone Who?
Apple's "Useless" iPhone Takes 3rd Place In Q4
AT amp;T Corporate iPhone Deal: No Thanks
The iPhone Effect: Sucky Software Won't Cut It
Smartphones Soaring: Good News For Apple, RIM, Nokia

Right and Wrong Way to Pitch Me [Venture Chronicles]

Two emails from PR people this morning, interesting contrast.

The wrong way is to address it as “Dear Venture Chronicles”. I guarantee I will not pay any attention to your email.

A much better way is to express some degree of personalization, such as “Hi Jeff. Even though you’re in sunny Florida at We Media, I wanted [...]

Yelp Raising More Money, Opening NY Office [Silicon Alley Insider]

Web dining/nightlife/shopping review startup Yelp, one of the Valley's darlings of the last few years (and one of the few useful mobile Web sites) is raising more money and is opening a New York office.

Yelp "will soon announce" a new $15 million round led by DAG Ventures, giving the company a valuation around $200 million, TechCrunch reports. Yelp will use the money to open a New York office, expand to other regions, and grow their sales team. The company has raised about $31 million, TechCrunch says.