Monday Morning Memo


Hi-Tech Company revenue graph within the Quarter? Possibly, Yes.  C:V. posting cadence last week? Definitely!

Recap of Last Week:

We had the first regionals in Term Sheet Madness, our first “couple” VC spotlight on Fred and Joanne Wilson, Actifio got round of the week, and we provided some insight into what we consider to be a successful current investment via DocuSign.

What Lies Ahead:

This week we will have a VC Spotlight, Round of the Week, and a lot of Term Sheet Madness!!

What Makes an Investment Successful?


Metrics help identify trends and successful aspects of certain deals. ROI, Cash on Cash return, IRR, and Time to Exit are all excellent metrics when you have exited an investment, but what are some of the (publicly available) metrics that can be used to determine if a current investment is successful?  How can you spot a company that has successfully navigated from the “Crash of Ineptitude” to “The Promised Land”?

Curious aren’t you now?  Well have no fear, C:V. is here!  We decided to highlight a company that we consider to be one of the “most successful” current investments of the moment.

DocuSign was recently honored with our Round of the Week and we decided to dive into some of the aspects that we see in the company to this point that we think an existing investor would deem successful.

*Editor’s Note:  We have not included company financial performance in our metrics as it is difficult to find reliable information (the beauty of being a private company…), but we have included other aspects of publicly available information that can be used to craft decisions about current investments

DocuSign Overview:docusign

A market leader in the Digital Transaction Management (DTM) space, DocuSign is on a mission to completely change the business world.  We are bullish on them here at C:V. because of the sheer magnitude of the disruption to the DTM space they can cause.  They have raised over $200M in funding and are undergoing massive growth and expansion across all verticals and regions.

Success Metrics:

Explosive Growth of Core Company Metrics:  WhatsApp had explosive growth in MAU’s and they turned out alright. Explosive growth is (usually) an excellent problem to have and we love reading about companies who continue to obliterate the core company milestones they have set.

DocuSign’s Case:

DocuSign has done just that.  They have over 95K customers and 48M users, but their most explosive statistic is they sign up 40K users a day.  Yes, that really means 28 new users have signed up since you began reading this post….

Rising Valuations: This is a bit harder to verify, but we love seeing companies that valuations keep rising making company employees, investors, and generally everyone happier (#NoDownRounds).

DocuSign’s Case:

The last round was rumored to be north of $1B, so even with all of their prior rounds, it appears they are on the rise.

Over-subscription/Large Investor Pool: We really like it when we see rounds that are oversubscribed or have large, well known VC’s joining in on the later rounds as this only adds justification to the company’s existing thesis and adds some great mentors/board members to help navigate.

DocuSign’s Case:

While we don’t know if DocuSign’s latest round was oversubscribed, we do know they have one of the largest investor syndicates we have seen of late and had KPCB, Google Ventures, and Accel join AFTER the C round. While this may make for an interesting dynamic with almost TOO many resources at their disposal, we think this could be a huge asset for DocuSign given the MASSIVE market they are attempting to disrupt.  Having such a large network of investors allows for more doors to be opened in terms of exposure and possible strategic partnerships, let alone the advice/ability of these investors to assist the company when scaling at the stage DocuSign is. Additionally, for the investors in the company already, there should be no issue with commitment due to lack of ownership, as they should be happy knowing that even a small piece of an extremely large pie still makes for a very filling dessert.

Follow on by Prior Investors: Not so much a benefit but more of a red flag if not adhered to, we always like to see investors continuing to invest in later rounds (as able) as it is a sign of longer term commitment and buy in to the company’s vision.

DocuSign’s Case:

Even with all the investors in the company, the core early investors have remained committed in all subsequent rounds.


Round of the Week – Actifio

keep-calm-and-series-e-on-1Another week, another large (albeit later) round at a large valuation.   Boston-based Acitifo raised a $100M Series E at a rumored $1B valuation this week. We know what you are thinking, hey C:V., to quote your favorite YouTube video, “Series E, Oh No” shouldn’t we be worried about this deal?  Based on its funding history and market disruption potential (re: the VMware for Copy Data), we think everyone will be just fine…

Name: Actifio


Funding to Date: $208M (rounds A-E here!)

Deal Notables: “If you ask most corporate CIOs if they have a copy data problem, they’ll say they don’t,” Ashutosh says (CEO of Actifio). “When we then explain what it is, they tell us they’ve spent a ton of money dealing with the problem they just said they didn’t have.” Its quotes like these that we can see why Actifio has so much backing and given they are actively referring it to the same game-changing virtualization technology that VMware pioneered in the early 2000’s, this could be the beginning of a seismic shift in the storage management space. (Props to Dan Primack of Fortune for his article on the round)Actifio

*Editor’s Note:  Speaking of Dan Primack, if you don’t already follow Term Sheet, sign up here.  One of the best daily updates in the biz and C:V. required reading.

VC Spotlight of the Week – Fred and Joanne Wilson

We are all about firsts here at C:V., our first post, our first Page View milestone, and today we have our first dual VC spotlight of Fred and Joanne Wilson.  Both are VC’s (Fred at USV, and Joanne as more of the Angel variety) and are active bloggers on a variety of topics.

Name: Fred and Joanne Wilsonfjw

Company: Union Square Ventures

Blog:  Fred: AVC Joanne: GothamGal

Bio: Fred has a varied background with degrees from MIT and Wharton and is a co-founder of USV as well as Flatiron Partners.  According to her about page, Joanne seems to have had about 10,000 roles/jobs (power couple status!) and is active in many ventures at this time.

Miscellaneous/Interesting Facts: Besides being our first VC couple to share the spotlight honor (we can only imagine what dinner conversation is like at the Wilson home…), Fred was also featured in Hatching Twitter which we will be reviewing soon!

Term Sheet Madness – Palo Alto Round 1

Regional play began today! (See original post here for details)  Full Field here!

1. Price (Valuation) vs. 4. Right of Refusal


Price (Valuation): The amount of funding received in the round.  Can be referred to in aggregate ($40M) or price per share ($6/Share). This can be used to determine pre/post money valuation.

Right of (First) Refusal: Also known as the “Pro Rata Right”, it provides context for current investors to have the ability to purchase shares in a future financing (a good thing! usually…)

C:V.’s Chief Term-ologist’s Take:  While the ability to participate in a future financing is important for all parties at varying levels, Price (Valuation) has much larger ramifications that determine the economics and ownership of the company.

Outcome:  While we love an underdog, this is not RoFR’s day. Top seed Price (Valuation) rolls in a landslide.


2. Pay to Play vs. 3. Dividends


Pay to Play: Investors will have the option to purchase their “pro rata” share in a future financing (i.e. Right of First Refusal), but if they choose not to participate (Pay), the remainder of their allotment of ownership will be converted from preferred to common stock (preventing them to Play).

Dividends: Periodic Payments made via Cash or Equity to the investors at a percentage of the initial investment.

C:V.’s Chief Term-ologist’s Take: Pay to Play seems to be more of an issue with down rounds but we agree with their general premise of earning (and continuing to earn via continued participation) what you keep, so we are fans of Pay to Play.  Dividends on the other hand, not so much….While much can be made for a case for dividends in specific business lines, in general, we view cash as king and having to part with any additional cash when trying to scale a business is a recipe for trouble (and possible future down rounds…)

Outcome: If this were a more PE-focused site we could possibly see Dividends with the upset victory, but in the end Pay to Play advances to play tourney favorite Price (Valuation) in the Regional final!

Monday Morning Memo

youWelcome back C:V. readers!  We had our best week ever last week and only hope to continue our success this week!  We hit one of our page view milestones faster than expected so we can only hope to continue on this traction trajectory! Keep sharing and spreading the love of all things C:V.!

Recap of Last Week:

We had our busiest week ever last week with our VC spotlight on Mark Suster, our Round of the week on Aquantia, our first valuation attempt on Shape, our book review on Venture Deals, and our introduction to Term Sheet Madness!  So much awesome all in a week!!

What Lies Ahead:

This week you can expect a VC Spotlight, a ROTW, and some Term Sheet Madness!!

The Term Sheet Madness field has been set!


This is it folks, the field is now live, let the games begin!!

*Editor’s Note: Another huge thanks to Foundry Group and Venture Deals as without this book, our (limited) knowledge of these terms would be non-existent.

Regional Breakdown:

Palo Alto Regional:

1. Price (Valuation) vs. 4. Right of First Refusal

2. Pay to Play vs. 3. Dividends

Denver Regional:

1. Board of Directors vs. 4. No-Shop Agreement

2. Vesting vs. 3. Protective Provisions

Boston Regional:

1. Liquidation Preference vs. 4. Employee Option Pool

2. Antidilution vs. 3. Conversion Rights

Introducing Term Sheet Madness!


Do you find yourself wondering which terms and triggers in a term sheet or financing negotiation are most effective or powerful?  Losing sleep over whether or not to accept fully participating liquidation preferences with a full ratchet provision (hint: don’t)? Want to get a better understanding of the true power rankings of what is valuable and what is lawyer “boilerplate”?

If so, then you are in for a treat! In honor of “March Madness” we have decided to create our own version of the madness, C:V. style!  Over the coming days and weeks, we will be holding our first ever “Term Sheet Madness” where we will be matching up some of the key terms and triggers in a financing against one another and having them battle it out until a victor is crowned!

In the process, we will also give an explanation (as best we can, we are neither VC’s nor Lawyers…) on what the term means and why it is so often (or not often) used/in vogue/SAT word eligible.

Early “term-ologists” have Price and Liquidation Preference as early favorites, but Board Seats have made an impressive run in their conference tourney and is by far the hottest term in the field….

Term Sheet Central:

Full Field

Palo Alto Regional

Denver Regional

Boston Regional

Palo Alto Finals

Denver Finals

Boston Finals

Term Sheet Madness Finals

Book Review – Venture Deals

If you can’t tell by the book list on the side of this page, we “read” (technically, listen to) a lot of books on business, startups, and VC.  One of our favorite books is Venture Deals: Be Smarter than your Lawyer and Venture Capitalist by none other than Foundry Group’s own Brad Feld (See our VC spotlight on him!) and Jason Mendelson.  Seriously though, if there ever was a “Foundry Group Fan Club”, C:V. would be a charter member…

Name: Venture Deals: Be Smarter than your Lawyer and Venture Capitalist


Overview: This book literally boils down a Term Sheet in all its Legal jargon glory and makes it so basically anyone can understand.  It takes you through each topic, term, and component and gives you a no-nonsense explanation of what it means with specific examples of it in action.  It has sections that cover all aspects of economics and control in a financing and even a foreword from Twitter CEO Dick Costolo!

Invest, Invest with Participating Liquidation Preferences, or Pass: Invest!

Investment Thesis:  This book should be a MUST READ for all aspiring Entrepreneurs and VC’s!  Brad and Jason have an uncanny ability to break down the most difficult and dry legalese into engaging and informative advice.  Another one of our favorite parts of the book is the “Entrepreneur’s Perspective” as it gives a viewpoint for many of the topics from the founder’s standpoint and not just the VC’s.  This book receives our highest recommendation.

Round of the Week – Aquantia

To quote our favorite YouTube video “Series F. Where’s my IPO, Series G: Gettin Low”, whenever we see a later round investment we are always intrigued as to what the status of the company (and cap table) is.  In that light, we have given semiconductor company Aquantia and their $16M G round the honor of Round of the Week.

Name: Aquantia


Funding to Date: $154M (too many to list!)

Deal Notables: Even with strong headwinds of VC’s movement away from semiconductor investments, Aquantia has raised yet another round and is apparently on an IPO path. Thankfully, they own about 70% of the market and are expecting phenomenal growth with  “large revenue opportunities”. So if anyone has the chops to go public amid all the chaos, they seem to fit the bill.  We just hope the founding members have some equity remaining to compensate them for their hard work all these years…