The first edition of Feld-Weiser One-on-One featured the topic “Feld on Finance.” The questions posed to Brad Feld by CU law professor Phil Weiser ranged from Feld’s personal story to common structures of venture deals.
The discussion began by covering Feld’s journey from precocious student to his current role as a Managing Director of the Foundry Group. Feld always had an entrepreneurial spirit: he realized as a junior in high school he could charge $30 for a math tutoring business catering to a very specific demographic – attractive senior girls. This drive led Feld to found several startups early in his career, such as Feld Technologies and Interliant. Feld then moved over to venture capital, explaining the transition as a preference for “contributing” and serving as “a resource and tool” rather than “being the guy in charge.” He also stated an inclination for VC investing rather than angel participation because he “enjoys the engagement as a big equity player.”
A topic that came up several times was where venture capital fits relative to other types of finance and investments. Feld acknowledged the essential goal of venture capital as “turn[ing] a box of money into a bigger box of money,” a mission that could easily be applied to any type of finance. Where Feld draws a distinction is in the activities and other value created through the VC process, noting a “fundamental difference between creating innovation that will have a material impact” versus “purely buying and selling assets.” He places good venture capitalists squarely in the former category, as they work as close advisers to management of companies, although the lines between VC and private equity are at times blurry. Feld also waxed poetic about VC returning to its roots as a boutique industry, where relatively small funds ($100-250M) were run by 3 to 5 people actively involved with many of the approximately 25 firms in which they invested.
The discussion also ranged into the more nuts and bolts aspects of venture investing, focusing on Feld’s experiences as Foundry raised its first fund in 2007. Venture funds are usually 10 year enterprises with initial investments made for the first half of this time. The investment vehicle is typically in the form of convertible preferred equity, which means the investor will receive a liquidity preference to at least get his money back when the firm exits, usually via acquisition or occasionally an IPO. Feld noted debt investments by venture funds are less common, with Foundry exclusively using them as a tactic (e.g. to bridge a portfolio company until another round) but never as a core investment.
Investment philosophy – that of Foundry and Feld personally – also saw significant airtime. In its most basic form, Feld and his partners seek to invest in “what [they] get and what [they] care about.” For Foundry, this leads to a focus on software and internet companies, usually excluding companies that focus entirely within a single vertical. Broadly speaking, the fund is looking for companies that serve as “glue” (“the software layer of the internet”) or play at the “human-computer interface.” Feld also noted an investment preference for “leaders not followers on the innovation curve” and companies that are beyond the “science experiment” phase. Assuming a company meets Feld’s general criteria, the most important factor in deciding to invest becomes “whether or not [he] support[s] the CEO.”
A few other quotable moments from the discussion included:
- On his personal role models: Warren Buffet because of “his clear, unambiguous approach on investment” and athletes at the top of their game like Rafael Nadal and Michael Phelps due to their ability “to be in the moment for the entirety of the moment.”
- On his belief you should practice your pitch to investors as much as possible: “Give your pitch to your dog. Stand up and give it at Chilis when you go out dinner.”
- On money: “I have always viewed money as a tool to accomplish things” as opposed to an end in and of itself.
Feld-Weiser One-on-One was hosted by Silicon Flatirons, an interdisciplinary center housed in the CU Boulder Law School. The next Feld-Weiser One-on-One will take place on Wednesday, April 16 as part of the first ever Entrepreneurship Week at CU. The focus of this session will be the nature of entrepreneurial ecosystems. A podcast of the event can be found at Silcon Flatirons and w3w3.
