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I have spent the better part of this afternoon and evening trying to do anything other than think about the passing of my good friend Rajeev Motwani. But I have failed. The thought that Rajeev has left us is hard to fathom. Rajeev was part of the fabric of Silicon Valley. He was part of the fabric of Stanford. And he was part of the fabric of August Capital.

For a number of years now, Rajeev has attended our partners meetings every Monday afternoon. As a tenured professor, Rajeev could not join us as a partner of August Capital. But he enjoyed participating in the back and forth of the partnership discussions. He enjoyed debating the merits of every new innovation. And he was quick to share his point of view on each technology or company or entrepreneur. But he particularly enjoyed that when partner meeting talk turned to the mundane or administrative, he could give us a sly smile and quietly slip out the door.

Rajeev didn't have time for the mundane. He was too busy talking with everyone about everything. You would be hard pressed to find a more connected or more informed professor, technologist or investor than Rajeev Motwani. He worked tirelessly, meeting anyone and everyone who requested an audience with him. Students sought his advice on grad school. Entrepreneurs sought his advice on financing strategy. Investors sought his advice on technology trends. We all just wanted a little bit of Rajeev's time. And he always seemed to have that little more to give us.

For those of you who didn't know Rajeev, you might get the impression that he was your typical Silicon Valley insider -- loud, brash, full of bravado. He was anything but. Rajeev was soft spoken and gentle. He was self-confident but didn't feel the need to prove anything. He didn't speak to hear his own voice. And he didn't need to be the center of attention. Rajeev just wanted to be helpful. And he was. To so many of us.

Perhaps that is why so many of us thought of Rajeev as a friend. It is one thing to be friendly with someone in the business world. It is another thing altogether to consider them a friend. Rajeev genuinely liked people and people genuinely liked him. So it is no surprise to me that testimonials about people's friendships with Rajeev Motwani are popping up all over the Web (here are the words of friendship and admiration from Sergey Brin, Om Malik and Dave Morin, to point to just a few). I am sure that the testimonials will keep on coming in for days and weeks to come.

While I could certainly go on about Rajeev's intellect, his curiosity, his business acumen, let me just say one more thing about him and his character. Rajeev was a wonderful family man. I say that as the very highest form of praise. Rajeev loved his wife Asha (as do all of us who know her) and he adored his children. Rajeev's face lit up when he talked about his family. And he prioritized them above all else. No one will miss Rajeev more than his wife and kids and, while I can only feel some small piece of their pain, my love and support goes out to them during this tough time.

Rajeev Motwani, you are missed already. And you will be missed for years and years to come. You have left us far too soon.

Today TechCrunch posted a list of the "Top VC Blogs (According to Google Reader)." I was very pleased to find out that I came in at number three, sandwiched between Fred Wilson and Brad Feld. But I have to admit, the ranking makes me feel a little guilty. Not because I don't think there's good content on VentureBlog (after six years of blogging, there must be some good stuff in there somewhere). But because I really don't blog enough. Every couple of weeks or so, something jumps out at me that demands a blog post. In stark contrast, Fred and Brad post all the time. I have huge respect for them for that. And not just because of the quantity, but because they post great quality stuff day in and day out. So my hat is off Fred and Brad, who are the rightful owners of the top two VC blog spots without any questions.

The challenges posed by trying to maintain an active blog are only further exacerbated by the incredible proliferation of "media channels" these days. I don't mean professional media channels. I mean user-controlled media channels. Blogs. Podcasts. Twitter updates. Facebook and LinkedIn status messages. YouTube channels. Etc. The list is daunting. Yet anyone who takes seriously the idea of communicating directly with his or her "customers" really can't ignore the opportunities posed by each and every one of these channels.

What's more, each of these media channels serves a different purpose. Podcasting can not replace blogging, which can not replace tweeting. A jogger isn't going to read my blog while taking a morning run, but may well listen to VentureCast. An entrepreneur trying to quickly get up to speed on the state of Venture Capital is not likely to listen through 30 hours of VentureCast, but could easily browse through VentureBlog for relevant content. And anyone foolish enough to care what I'm doing on a day to day basis will not likely find that out on VentureBlog or VentureCast, but could certainly subscribe to my Twitter feed and get the latest and "greatest."

The more I think about the relevance of each of these media channels, the more I realize that it is important for me to engage on each and every one of them. To that end, I have recently revived VentureCast -- now with my partner Howard Hartenbaum. We intend to record a new show about twice a month. The first two we've recorded are already available on iTunes, so check it out. It also means that I need to share more thoughts on entrepreneurship and Venture Capital on Twitter, which I will surely continue to do. And, of course, it means that I need to blog about the world of Venture Capital more frequently. If nothing else, this post is a good start.

As one of the leading analysts and Web Strategists in the social computing space, Jeremiah Owyang meets with a lot of companies. He has the luxury of talking with big companies and small companies, public companies and private companies, venture-backed startups and bootstrapped companies. He is constantly looking at what makes one company successful and another one less so. Not only is Jeremiah a really smart guy, but he has a ton of data to support the conclusions he draws both in his day job with Forrester and in his role as confidant and advisor to numerous startups.

Given all that, I was thrilled to read Jeremiah's post "Beyond the Money: Some VCs Provide Startups With A Competitive Edge." In his post, Jeremiah asserts that VCs (at least the better VCs) are good for more than just money. What are we good for? Jeremiah lists a number of categories: Thought Leadership, Strategic Guidance, Being Part of the Family (e.g., Keiretsu), Ancillary Services (marketing, recruiting, etc.), Umbrella Branding (e.g., "an August Capital company"), and Networking. I would probably add to this high level list Recruiting and Capital Raising, both of which VCs can be very helpful with. Jeremiah concludes that "What [VCs] do beyond the investment makes a different - I can see it."

Thank you, Jeremiah! While I recognize that my job as a Venture Capitalist is to invest other people's money and, if all goes well, turn it into more money, I have a hard time thinking of Venture Capital as a "financial services" job. It is certainly the case that the financial services aspect of the job isn't what gets VCs up in the morning. What gets us up in the morning is the prospect of working with really smart people to build new and exciting businesses. And Jeremiah does a great job of listing the fun parts of our job -- advising, connecting, recruiting, etc.

All too often I fear that VCs are thought of as fungible -- one VC's as good as the next. It is certainly true that our money is fungible -- a dollar from any other VC will buy as much as a dollar from August Capital. But the aggregate value of taking money from another VC will be vastly different from taking money from an August Capital. My partners and I work hard to deliver value to our entrepreneurs on all the fronts Jeremiah describes. And those efforts can have a big impact for a company. VCs don't build companies, entrepreneurs do. But good VCs can do a whole lot more than simply write a check.

It is a challenging fundraising environment out there for sure. And that is not just for startups. This economic crisis has far reaching-tentacles. As the public markets have declined, so too have the liquid portfolios of universities, endowments, foundations. And it is those institutions who are among the most significant investors in Venture Capital. As a result, VCs are finding it equally challenging to raise money of their own.

With that as a backdrop, we at August Capital went out to raise a new fund at the end of last year. And I believe that our experience mimicked that which startups are seeing in the market today. No matter how good your track record. No matter how good your progress to date. Fundraising is hard. Investors are swayed and distracted by external factors that may or may not have anything to do with your business or the likelihood of your success.

That said, just as the strongest startups today are managing to get funding (sometimes even in up rounds), so too are the strongest venture funds. The partners at August Capital have been in the venture business for as long as three decades and have consistently delivered positive returns to our investors in up markets and down. Just as we remain bullish about investing in great companies in these challenging times, our investors remain confident in our ability to make great investments in these challenging times.

As a result, my partners Dave Marquardt, John Johnston, Andy Rappaport, Vivek Mehra, Howard Hartenbaum and I have recently closed August Capital V, a $650 Million fund. We remain focused on early stage high tech startups throughout the technology landscape (software, hardware, chips, etc.). But we also believe that this economic environment will result in a number of larger opportunities -- spinouts, PIPEs, buyouts, etc. -- that will prove to be extremely attractive investments. Thus, we have the flexibility within our new fund to invest as much as several hundred million dollars in a single deal, should a sufficiently compelling opportunity become available. We look forward to investing on both ends of the company spectrum and now have significant resources to bet on the great companies we see, big and small alike.

We certainly consider ourselves very fortunate to have such steadfast support from our investors. And lucky to have the flexibility in our new fund to take full advantage of the opportunities that will arise out of these challenging times. As we said repeatedly during the fundraising process, we believe that an investment in August Capital is a bet on the future of human innovation, and we are very long on human innovation. We have already made four investments out of our new fund and look forward to continuing to invest in the great entrepreneurs we meet every day. We are certain that important new companies will be born during this economic downturn and we look forward to providing the funding they need to grow and prosper.

I had the good fortune of participating in the first (hopefully of many) AngelConf today. AngleConf was the brainchild of Paul Graham of YCombinator fame (although, you never know, it may well have been the brainchild of Jessica Livingston, so my apologies if that's the case Jessica). Not only is Paul a prolific angel investor, but he is also a thought leader and a mentor by nature. His AngelConf was an attempt to share the collective wisdom of the angel investor community with would-be angel investors.

The speakers at AngelConf were a veritable who's who of the angel world. Among those speaking were Ron Conway (Angel Investors, Baseline Ventures), Dave McClure (500Hats, Founders Fund), Paul Buchheit (Google, FriendFeed), Andrea Zurek (Google, XG Ventures), Naval Ravikant (The Hit Forge), Michael Dearing (Ebay, Stanford Design School), Mike Maples (Maples Investments), Ariel Poler (Textmarks, numerous startups), Aydin Senkut (Google, Felicis Ventures), Jeff Clavier (SoftechVC), and Jim Young (HotOrNot). Like YCombinator's rapid-fire demo days in which companies are given only a few minutes to present, each angel investor was given seven minutes to share his or her wisdom with the crowd. And this impressive group did not disappoint.

AngelConf was part training session, part confessional, part group therapy. Virtually all the speakers were in agreement that angel investing is not for the faint of heart. As one investor after the next stated, you have to be prepared to lose all your money. If losing your money is going to keep you up at night, perhaps angel investing isn't the thing for you to do. That said, there were plenty in the speakers lineup who have every intention of making money. Folks like Jeff Clavier and Mike Maples are investing other people's money. For them, the goal is assuredly to make money. For many of the others it was a fantastic mix of geeky pleasure at building great things, the need to stay engaged in the tech world, a desire to give back to the entrepreneurial community, etc. While for most of the speakers angel investing is essentially a full time job (even if they have another full time job), everyone in the room seemed to be there for the love of the game.

What was some of the most interesting advice imparted? Here are a few thoughts from the speakers:

* It's a small community -- if you screw one entrepreneur, you'll be out of the angel business because entrepreneurs talk (Conway)

* Angel investing is about learning on the job, which means that you can plan on screwing up your first 10 deals at least (McClure)

* If you assume that the money is gone once you've invested it -- that it is like a lottery ticket -- then you will have a better time angel investing (Buchheit)

* Work with other angel investors so that you can get the advantage of their expertise (Zurich)

* There is no rational way to arrive at valuation, so don't be overly concerned about getting it right (Graham)

* Don't worry if the idea seems crazy -- if it didn't seem crazy, it would be too late to invest as an angel (Graham)

* The lifeblood of angel investors is deal flow -- you need huge deal flow to find enough stuff that is worth investing in (Ravikant)

* The best deals come from other angels (Ravikant)

* Don't be afraid to throw a little dynamite into the status quo and see what comes out of it -- often times interesting stuff emerges (and sometimes nothing does) (Dearing)

* The Rule of 12 -- you need to invest in 12 companies to have statistical diversity -- invest in fewer than 12 deals and you run the risk of them all failing (Maples)

* Like in the movie "Oceans 11," you want to pull together the best team of angel specialists there are out there -- it increases the likelihood that the company will succeed (Maples)

* Help bring your entrepreneurs together so that they can learn from one another (Poler)

* By being a connector, you will see the most interesting stuff and work with the most interesting people (Senkut)

* Angel investing is all about the syndicate -- you can lead if you want to but it can be lonely until others join in the syndicate (Clavier)

* Angel investors need to distinguish themselves from others with money -- what do you bring to the table? Contacts. Experience. Advice. (Young)

* Only invest in stuff you actually know something about -- otherwise you're just buying a lottery ticket (Young)

All in all, a pretty jam packed few hours. The energy in the room was great. It felt very much like being in a room full of entrepreneurs. Because, in the end, like entrepreneurs, angel investors are company builders. They love technology. They love company creation. And, like me, they thrive on the fun and excitement of the startup world.

I hope that Paul will have another AngelConf some time in the future. It was a fantastic way to spend the afternoon.

A huge number of web startups were funded over the last five years. Anyone who reads TechCrunch has seen them chronicled; the Web 2.0 menagarie was dizzying. And, like in the late '90s before, the hopes (if not expectation) for each and every company were high. So why do I believe that we will see a big number of web businesses shuttered in 2009? Because the change in economic climate has made it more difficult for Venture Capitalists to suspend disbelief.

Early stage venture investors have relatively little information upon which to based our investments. We certainly have the most important clue as to the likely success of a company -- we know who the founders are. But otherwise we are necessarily making predictions about user growth, market expansion, monetization, etc. And in order to invest, we need to suspend disbelief about all of these metrics and assume growth, adoption, monetization....

At each stage of investment, VCs need to suspend disbelief about some criteria or other. Initially it may be the ability to build a product with universal appeal. The next investor may see a product with universal appeal but need to suspend disbelief about the company's ability to monetize that audience. The next investor may see a product with a big audience that is in the early stages of monetization but need to suspend disbelief about the ability to scale the scope of the business and the economics. Even expansion stage investors ultimately have to suspend disbelief that even with a working product and monetization that a company will be able to maintain growth and ultimately reach liquidity. So the investment lifecycle of a startup necessarily requires a fair amount of faith.

What happens in a down economy? Investors become less willing to suspend disbelief. Entrepreneurs need to make more progress between financing events before they are able to find investors willing to bet on their ultimate success. And while some startups will be able to manage that transition, others will not be able to reach this heightened bar. I suspect the end result will be a large number of web startups funded in the mid-2000's will run out of money and, unable to find investors who are willing to suspend disbelief, will have to close their doors.

I don't think that this is necessarily an indictment of those startups or the venture process. It is just a byproduct of a system that necessarily involves a huge amount of risk. In up economies, the system is more forgiving. In down economies, less so. But, in the end, the strongest startups survive and thrive.

So, will I continue to suspend disbelief? You bet. Early stage venture investors have no choice but to believe and build. Otherwise, we will invest in nothing. I realize it is a challenging environment out there for company building. But the best antidote to disbelief is real progress. The startup world is always a meritocracy but never more so than in a tough economy. Those companies that show results will continue to get funded. Those that don't, won't. My hope is to continue to invest in those that do. And then work hard to bridge the disbelief gap.

I just flew back from Europe and boy are my arms tired [insert rimshot here]. Actually, I just flew back from Europe and boy are my eyes tired. I have this bad habit of accumulating magazines until I have a long plane flight then powering through 30 pounds worth of reading.

My typical airplane reading starts out with a zillion of those alumni magazines we all get. If you can wade your way past the inevitable articles on anthropology, sociology and pop psychology, you can often get a first glimpse into some really interesting scientific and technical innovation in these magazines. I'm tempted to go get a masters degree in anything from Carnegie Mellon just so I can get their alumni magazine.

But the magazine I probably spend my most time reading, en route to wherever, is Wired. It is such a great combination of entertainment, info-porn, and deep dives into things that really matter. This trip I had managed to accumulate 5 months worth of Wired's -- good thing I was flying to Europe, there's no way I would have gotten through them by Denver or Chicago. (The other great thing about reading your way through so many accumulated magazines is that it is a little bit like eating your provisions on a long hiking trip -- my load gets noticeably lighter with each magazine I've finished and discarded in the seat back pocket in front of me.) While I don't always act on it, I often times find myself reading something in Wired on which I want to blog. I'll rip out the pages and then forget about them or just never find the time to write. But not this time. This time I'm going to remedy that by writing this post on the plane flight back home. Right now (Jeesh, I'm three paragraphs into the post and I haven't really written about anything yet -- my apologies to those of you who are looking for pithy commentary on technology and the venture community -- I seem less and less capable of pithy these days).

How to score venture capital.

August's issue of Wired this year was the "How To" issue. How to stop a fight. How to crash a party. How to twitter an event you're not even at. . . . One of Wired's how to's was "How to score venture capital." Now there's a topic near and dear to my heart. So I read on with great anticipation and discovered that whoever wrote this did not, in fact, know how to score venture capital -- at least not from me. So here is Wired's advice with my commentary.

1. "HAVE AN IDEA. We'd say it has to be good, but many Web startups demonstrate otherwise."

Despite Wired's snark about Web startups, there is a reasonable point in here. It is true that you need to have an idea -- you've got to build something and, eventually, you even have to sell something. But "good" is in the eye of the beholder. I think you would be hard pressed to find a single startup that managed to get a term sheet from every VC they pitched. One VC's next Google is another's wasted hour. That doesn't mean one idea is good and the other is bad. It just means that venture capital is still more art than science. Trying to pick winners is what we do for a living and some of us are better at it than others.

2. "STICK WITH what you know. If you've spent the past few years building MySpace plug-ins, don't propose launching a chain of bowling alleys."

On the one hand, it is true that VCs love the idea of "domain expertise." On the other hand, it is silly to say that you need to stick to only what you know. What if there isn't a business to be built from MySpace Plug-Ins? Are you doomed to never create an interesting startup just because that's what you know? Look at Joshua Schacter. What did Joshua know before creating Delicious? He knew how to build huge scale, high performance, enterprise applications for the financial services sector. Does that mean the VCs were foolish to invest in Delicious? Should they have urged him to start an enterprise software company? VCs love passion and energy more than expertise. I probably wouldn't fund Joshua to create the next generation nuclear power plant. Then again, he's a really smart guy -- if he spent enough time getting himself familiar with the space and thinking differently about the problem, you never know.

3. "SPEND an inordinate amount of time crafting your business plan's executive summary. It's the first thing VCs read -- and the last if it's poorly written or long-winded."

The two things that I look at when first getting up to speed on a company are either an executive summary or a PowerPoint. So it is certainly the case that you would be well served by a concise and compelling executive summary. On the other hand, you may well want to stop there. A full blown business plan is rarely necessary to raise venture capital. VCs tend not to read business plans because a) they are too long and b) your business will likely have changed by the time anyone gets around to reading your business plan So focus on the things that matter -- understanding your competition, building great products, innovating on your business model, etc.

4. "SEARCH FOR VC firms that have recently funded startups similar to yours. Then hit those firms' Web sites, where they'll likely have instructions for submitting business plans. Don't worry -- the best do actually mine their slush pile."

If Wired's advice falls on a spectrum from "sort of right" to "way off the money," this one is deep in "way off the money" territory. It doesn't start off terribly wrong. You should definitely do a lot of research on the VCs that you will approach for funding. And the ones who have funded related businesses in the past are potentially good targets for your business as well. But not always. Imagine you are building a gaming startup. Some VCs who have invested in the gaming space may be signaling to you that they are excited about the gaming sector and would be happy to fund other gaming companies in the future. Other VCs may feel that they have made their bet in the gaming space and will be hard pressed to invest in another gaming company. So previous investment can be a double-edged sword.

The place where this advice goes far afield is the suggestion that you should go to a Web site, find instructions on how to submit a business plan, and "drop it in the mail." Wired claims that "the best" VCs actually look at unsolicited business plans. It may be true that many venture capital firms look at unsolicited business plans. But rest assured that it isn't Mike Moritz or Dave Marquardt or John Dooer reading these plans -- it is the most junior person at the firm. More importantly, the way to get your executive summary read is to have it passed on to a VC by someone he or she trusts. This is a referral business. Your credibility as an entrepreneur will be bolstered by the credibility of those individuals who vouch for you. So rather than spending time writing a business plan, go spend time pitching your business to technology influencers who can help you build a business and can introduce you to the right people to fund your business. My advice would be to never ever submit a business plan through a Web site -- if you can't get it directly to the person who you want to read it, don't bother.

5. "ONCE INVITED to present your plan, remember that brevity is a virtue: Use no more than 30 PowerPoint slides, and keep your presentation under 45 minutes."

Yikes. 30 slides. Unless you are Lawrence Lessig, I don't think the words "30 slides" and "brevity" can possibly be used in the same sentence. I completely agree that you should aim to keep your presentation to about 45 minutes. If a VC gets excited about what you're working on, they'll spend more time with you in future meetings. But, as with entertainment, you are way better off leaving them begging for more. Get in. Pitch. Get out. There is no way that should take anywhere near 30 slides. I've blogged here before about the 6 -- yes, 6 -- slides you need to pitch your business. Even if you feel that 6 slides is too spartan, don't confuse quantity for quality. The fewer the slides and the more discussion the better.

6. "KNOW EXACTLY how much cash you need."

They waited until the final piece of advice to nail it. I just wrote a whole post about this. Don't just ask for a specific amount of money, explain precisely what it is you intend to do with that money and why it is the right amount of money. This should be the last slide of your PowerPoint presentation and is your chance to summarize the strengths of your company: you're building something important; you understand the competitive pressures and how they impact how much money your are raising and how quickly you are spending it; you have the right team to build it (or know where to find the right people to add to the team); and you can make meaningful progress on the very reasonable amount of money you are seeking to raise.

Those of you who are still reading have incredible endurance and I appreciate that. My apologies for further testing that endurance. (But have no fear, there will be no pop quiz at the end.)

How to get a plug on TechCrunch.

In the very same issue of Wired, there is a blurb on "How to get a plug on TechCrunch." The thing that I think is interesting about Wired's advice for enticing Mike Arrington into writing about you, is that it is better advice on how to get funded by a VC than Wired's missive directly on that topic. It isn't perfect advice for either getting VC money or getting written up in TechCrunch, but it makes some reasonable points.

1. "Casually mention you hold the women's record for javelin in Tajikistan. People (especially women and minorities) with unusual backgrounds pique his interest -- maybe enough to propel him past paragraph one."

The simple fact is that both Mike and the typical VC get pitched on a lot of businesses in any given year. So anything you can do to stand out is helpful. Maybe I shouldn't say "anything." There are all sorts of ways that you can stand out in a bad way. But if there are things that you have done that are both interesting and demonstrate major commitment to achieving a crazy goal, they will help get you noticed and give you a certain amount of credibility as a go-getter (you'd be surprised how many successful entrepreneurs are triathletes or have climbed Mt. Everest).

2. "Cozy up to his friends. Comment on their blogs. Meet them at industry events. An introduction from someone he trusts wins you a few extra seconds."

This is the best advice by far. But it sounds far more cynical than it really is. Don't confuse Wired's advice about "cozying up" to mean that you should suck up to Mike and his friends. VCs and journalists alike hate suck ups. But, as I said above, getting to know the right people who can help you build your business is essential to your success. That isn't "cozying up" in some cynical sense. It is about convincing other smart people that what you are building is meaningful and that they want to be involved in that success. Those people will then sing your praises to Mike and the VC community -- not because they're your buddy, but because they believe in what you are building.

3. "Get a pro to write your pitch. Arrington hearts good writing and catching intros. Sometimes all it takes is one great sentence."

Who doesn't like good writing? So much about building a startup is selling your vision. The better you are at doing that in person and on paper, the more likely you'll be successful. But don't trade your ability to articulate your vision for the ability of a professional scribe to do so. If you can't pitch your own business anywhere, any time, any how, you will not succeed.

4. "Minimize the chitchat. 'it's not like we're going to be BFF,' [Mike] says, 'Just get to the point.'"

This is where Mike and I may differ. Mike is going to talk with you long enough to understand what you're building so that he can write in an informed way about your business. But that's about it. He doesn't need to be your BFF. On the other hand, if a VC funds you, he or she could be working with you for the next decade and beyond (My partner Dave has been on the Microsoft board for 25 years -- after that much time, Gates is legitimately one of his BFFs). So the "chit chat" is important. We don't need to be your BFFs, but we do need to feel that we can have a great working relationship with you for many years to come.

5. "Then back off. If he doesn't respond, don't 'check in' again and again. He's just not that into you. Come back when you have a better idea."

This one is a delicate balance. I agree that Mike doesn't want to be bugged by an entrepreneur when he decides not to write about that business. The same is true to a point with the venture community. "No" really does mean "no" when a VC passes on investing in your company. And arguing the point will do you little good. On a number of occasions, I have passed on investing in a company only to get an angry response from the entrepreneur explaining to me why I was wrong to do so. Even if the entrepreneur is correct, that tactic will not likely get him or her funded. On the other hand, there are two sorts of "No's" in the VC community -- there is the "no, I am not interested in investing in your company" and there is the "no, I am not interested in investing in your company ." I will often say that I am not interested in investing in a company because of X, Y or Z, but if they make progress on any of those fronts, I'd love to hear the story again. When I hear back from those entrepreneurs it is very much welcomed. In fact, on more than one occasion, I have passed on the company in the first instance, only to give them a term sheet at a later date. So don't make a pest of yourself, but don't be sheepish about being persistent when the door is left open.

Well, I guess I've come to the end of this unruly post. Thanks for slogging through it. I hope it's useful. And I hope I haven't crossed the "fair use" line with Wired. I really have tried to use no more of their original article than necessary for my commentary (you worry about these things when you teach IP Law). Thanks to Wired for occupying my long plane flight and giving me such useful food for thought. I look forward to my next journey when I can again catch up on my magazine reading.

(Pop Quiz! Ok, I know I said there wouldn't be a quiz at the end of this post, but since you made it all the way through, don't you want to test your comprehension skills? Here's the question. Who is one of my partner Dave Maquardt's BFF's? :) Answer below in the comments.)

Over the course of the last week, Fred Wilson has been writing about "Venture Fund Economics" at the newly-redesigned AVC. Fred has tackled topics like how venture capitalists are measured, the impact of management fees and carry on net returns, and the impact of big winners on venture returns. What's more, Fred has done the unthinkable -- he has described venture economics in the context of his own fund's specific economic terms. While he hasn't posted the economic performance of his fund to date (that is probably more naked than even Fred is willing to get), he has posted the model he and his partner Brad built when assessing the attractiveness of raising a hundred million dollar fund. The model is fascinating and brings to light the challenges venture funds face to achieve index returns, let alone the outsized returns associated with top tier venture firms. (Great stuff, Fred!)

Given the challenges faced by venture investors to drive market returns, one reasonably might ask the question, "why do limited partners continue to flock to the asset class?" Who better to answer that question than a bona fide Limited Partner. Enter Chris Douvos. Chris is the co-head of private equity investing for TIFF (The Investment Fund for Foundations). Before that he was with the Princeton Investment Company. Chris is a wildly smart, experienced investor who I always love chatting with. Give one read of his new blog and you'll understand why. In the course of discussing the intricacies of the LP business, Chris makes analogies to baseball, the lottery, greek tragedy and uses classic Chris words and phrases like "horseplay," "impish," "hotties," "livin' la vida loca!" and "Caliente!" Chris's blog is just plain fun to read. And that is saying a whole lot when you consider that Chris is talking about investing in VC and PE firms -- not exactly scintillating material by its nature.

Interestingly, in one of his first posts, like Fred, Chris addresses the challenge of venture economics. Only instead of discussing venture fund economics in the context of a $100M fund, Chris talks about the more daunting $500M fund (Chris prefers the smaller funds -- he says he likes being "long idiosyncrasy and short momentum"). According to Chris's math, a $500M fund needs to create between $12B and $17B in company market capitalization in order to deliver a 3X return (the bar Fred set for himself as well). In Chris's words:

"Here's where it gets dicey for the masses, though (and I'll make some gross simplifying assumptions): if you're an LP and investing in an run-of-the-mill $500 million fund hoping to get a 3x net return, that fund has to generate $1.75 billion in returns ($1.25B in profit less 20% carry equals two turns of profit). Of course, that's just the capital that accrues to the firm's ownership stake. Since a lot of firms end up owning only 10-15% of their companies at exit, you've typically got to gross the $1.75 billion up by a factor of between 6.67 and 10. That suggests that those firms need to create between $12 and $17 billion of market cap just to get a 3x fund-level net return to their LPs. Caliente!

Let's unpack that box a bit more: at the $15 billion midpoint of the exit range above, a firm that invests in 25 early-stage companies will have to get, on average, $600 million exit valuations for each and every one of them. That's a pretty daunting number when you consider that the typical M&A valuation has hovered in the high double-digit millions for quite some time."

It is a daunting task for sure. To deliver those returns it almost assuredly requires a huge hit or two in your portfolio. So does that mean VCs need to swing for the fences? I don't think so. As Fred rightfully points out, "There are hitters in baseball, the best hitters in fact, that hit balls out of the park when they are just trying to make good contact." (Fred and Chris share a love of the baseball analogy). The power hitters are the guys Chris is trying to back. And those are the guys who will deliver the best returns.

For more great insights into the VC and Private Equity markets, you should definitely check out Chris Douvos's blog. This is stuff no one has blogged about before, and certainly not in such an entertaining way -- another fantastic addition to the blogosphere.

A little over five years ago, Andrew Anker and I started chatting about blogging. There was plenty of blogging going on already for sure. But no one in the Sand Hill crowd was thinking about it. At the time there was still a prevailing sense that venture investing was a black box and any view into the box was a bad idea. Andrew and I talked about the fact that we didn't buy that. We thought there were all sorts of things VCs could talk about that would be interesting and valuable to entrepreneurs. Andrew proposed we start VentureBlog and came up with the tagline "A Random Walk Down Sand Hill Road" -- we laughed and VentureBlog was born.

Five years ago (technically, five years ago tomorrow), Andrew posted our "Hello, World." Andrew wrote that we would chat about what we do as early stage venture investors and concluded, "Mostly, we'll figure it out as we go along. No idea if this is a sustainable idea or not, but we're going to give it a go. Enjoy!" Since that first post there have been a few different folks come and go on VentureBlog, but, for better or worse, I have stuck around and kept on writing. I have tried my best to give a view into the black box and bring a little humor to it in the process. It has been a blast.

One thing has changed for sure since we started VentureBlog. There are now dozens of VC bloggers. From Sand Hill Road (Jeremy Liew, Susan Wu, etc.) to New York City (Fred Wilson, Ed Sim, etc.) to Colorado (Brad Feld, Ryan McIntyre, etc.) to Boston (Mike Hirshland, Jeff Bussgang, etc.) to Philadelphia (Josh Kopelman, Chris Fralic, etc.?). The problem entrepreneurs have is no longer finding information, it is sorting through it. So much has been written and so much more will be written about startups and entrepreneurship and Venture Capital. And I learn a pile from all of you every day. So thank you.

As for the question of whether or not VentureBlog is a sustainable idea, I guess the answer is "yes" and "no." I have been writing with varying degrees of frequency over these past five years. It is great to have a venue to share my thoughts when something jumps out at me. And I hope to continue writing for the foreseeable future. On the other hand, in the face of superhuman VC bloggers like Fred Wilson and Brad Feld, I feel deeply inadequate. How they manage to write day in and day out while finding time to do anything else is truly beyond me. My hat's off to them. And my apologies to those of you who feel that VentureBlog is too infrequently written to be relevant. I will try harder.

I greatly appreciate the conversations we've had here at VentureBlog. And I am thrilled to see the massive ecosystem of VC bloggers that has emerged. Many thanks to those of you who continue to read, link and comment. It has been a monumental education and a great privilege. And a huge thanks to Andrew for getting this whole thing started. Here's to the next five years.

There are a lot of networking events in the Bay Area every day of the week. If you wanted to be a professional networker, this is undoubtedly the place to do it. But not all networking events are created equal. The massive gathering at a local bar may result in you rubbing shoulders with lots of like minded individuals but it will be loud and crowded and not particularly conducive to building real relationships. The nighttime panel on the startup topic of your choice is equally dubious when it comes to growing your professional network. While the conversation afterwards will require less shouting, it will probably be with other startup neophytes -- it is hard to attract seasoned professionals to take part in such events. The monthly trade organization gathering may well get you chatting with a number of similarly situated professionals, but it will do little to expand the breadth of contacts you have.

What is the solution to these networking woes? Dodgeball. After contemplating the profound networking opportunities on the dodgeball court, YouTube's Hunter Walk, Mint's Noah Kagan and I went about organizing the "First Annual Labor vs. Capital Dodgeball Tournament." And it was a big success. Lots of smart, fun entrepreneurs and venture capitalist came together to throw balls at each other's heads. And in between games of riotous ball-chucking fun, there were lots of opportunities to get to know each other. When folks headed back to work (or home) on Friday afternoon, there were lots of requests for the next Labor vs. Capital event on the circuit. We are still in planning mode but are contemplating Labor vs. Capital miniature golf, or Labor vs. Capital Paint Ball. Whatever it is that we choose, I think the result will be a pile of fun and some good clean networking on the side.

For those of you who didn't make it to the First Annual Labor vs. Capital Dodgeball Tournament, check out the latest installment of VentureCast. Craig and I recorded it at the dodgeball courts. You can even get the play by play of the finals of the tournament. It may well be our best remote VentureCast yet. And if audio from the dodgeball court isn't scintillating enough, check out the great video the folks at the Mercury News made.

It really was a pile of fun. I look forward to the next in the "Labor vs. Capital" series of networking events. Perhaps Labor vs. Capital curling.