Cambridge Cluster

Interesting article concluding:

The key to promoting innovation (and productivity in general) lies in allowing vigorous new companies to grow big and inefficient old ones to die.

So support efficient start ups and efficient big companies.

Big companies do have three advantages over small companies:

- economic activity is driven by big ecosystems

- globalisation puts a premium on size

- challenges for innovation involve vast systems such as education and health care.

So start in the Cambridge Cluster and sell to a big company - what we have always done?

Hat tip: Schumpeter in The Economist 17 December 2011, page 122

It is not until the USA companies file for their IPOs that you can find out the shareholding structure.  Zynga is big and has raised big sums and is raising some $1billion at the IPO.  More details at All Things D and other sites such as Dealb%k.

It is good to see that the big winner is the CEO and founder Marcus Pincus.  He has done it before at Support.com.  He cashed in some $109.5million before the float and collects some pocket money (for him) by being the company’s landlord.

Do go and read all the details and when people in Cambridge, UK, say that VCs only do wash out rounds, add Zynga to the list of great companies they have helped create.

Good to see that Fred Wilson and Union Square Ventures have done well investing in the second VC round.  With Fred Wilson no doubt sharing 20% of the gain with his business partner at USV he will be able to rent some more bikes on holiday.  Strange that Fred is always shy about talking up his successes.  I read his blog most days and whenever he is cashing in, you get no posts or updates on his blog.  Nice that he behave so well!!

Also the founder of Silicon Valley Comes to Cambridge (UK), Reid Hoffman is listed as a shareholder.  I guess we hear about the home runs and not the washouts!

Then there is the interesting aspect of the Russian VCs buying shares before the IPO and allowing the founders and others who created the business to cash in without raising the number of shareholders.  It looks so easy and they do it so well - the investors!

I was listening to one of the motormouths of the Cambridge Cluster talking about washout rounds.  Why does he not concentrate on the many companies that have been built by VCs in the Cambridge Cluster?  One of the troubles, an example is Xensource, that everyone goes very quiet in Cambridge, UK, when things go well.

I warned the founder of a company I am trying to invest in that a potential angel is a high class act.  Please do not be taken in by his diffident manner and just grab him as an investor.  But let me in first, please!

Merry Christmas and happy new year.  Wishing good luck to all entrepreneurs and never forgetting the billions of people not so lucky.  But hopefully one of the products of our success will be a better world.

More tips on raising funds from a guest post on TechCrunch by Rodolfo Rosini, Founder/CEO at Storybricks, a new MMORPG out of San Francisco.  All great stuff and agree that VCs never say No.  Saying No cuts you out if the deal changes.  So if a VC is not saying Yes he is saying No, not now, go change the deal - the team, the product, find a customer etc.  But as the post says, VCs spend their time looking at deals so always listen carefully.

Quick trip to IdeaSpace in Cambridge, UK.  Great to meet people who have raised funds and are building a business.  Just hope that they have used a great business plan resource.  For the founders and shareholders, it is all about building value between rounds.

Also heard from an entrepreneur who I have backed who is based on the Cambridge Science Park.  After a tough start, things are picking up.  He is kept on his toes no only by the thrill of building his/our company but with the competition of people around who are building fast.

But back to IdeaSpace and the Hauser Forum.  I had to listen to someone talking about wash-out rounds.  Lets talk about companies that did well with VCs.  One of the big problems in Cambridge, UK, is that the people who get washed out - the ones who fail to build value - talk loud whilst those who have done well keep a low profile.  For example there is little “noise” from Xensource founders which was sold after eighteen months for $500million and funded by VCs.

It was good to get out and about in Cambridge and hear all the success stories.  But I did meet some people who are still doing the same old thing and staying small and not making any progress.  Let them follow their dream but it can be a tough and lonely business being an entrepreneur.  It is capitalism on the sharp edge.

Hat tip: Amar

 Amazing comments by the billionaire chief executive of Formula One (talking about the Silverstone circuit) that:

“People in Europe have got to understand that Europe will be sold to the Chinese or India or these people in the Middle East,” he said. “It is gradually happening now.

“We are in no position to compete and this circuit here in India is a good example. This is private enterprise here. There is no government money but these people got on and did it. We [in Europe] sit back and hope it will happen — these people get on with it.”

Earlier he also makes the damming comment that “The new owners will put proper people in, commercialise it and run it properly. I don’t have any problem with it at all. They will get the job done. They won’t muck around.”

And to think that we thought that we were quite good at managing.  So the BRICK countries arrive with money and management.  Some big changes going to happen in Europe.  Who will need a business plan resource?

Hat tip: Daily Telegraph Ecclestone backs Qatari Silverstone bid by TOm Cary 31 Oct 2011

 Another great interview by Robert Scoble, the Scobleizer, on a new social search company called Topsy.  From watching the video, I understand that whilst Google looks at links and content, Topsy looks at the social network activity.  They process the “social signal” and rank on the influence of the commentators and what they are talking about.  This sounds very good and the Scobleizer is all excited.

But I go to the Topsy home page and it reminds me of the home page of dBase11 - it does not help me.  With Google, I know that I want to search for something but when I go to Topsy what am I searching for that is different.  It is all so new.  I need help.

Just hope that Topsy does well as the two founders are great people and great communicators - except for their home page!

Hat tip: Robert Scoble on Google+