Posts Tagged ‘venture capital’

Submission deadline is fast approaching, August 8th to be exact. To help you understand what we’re all about, we turned to a former sprout and successful entrepreneur, James Kappan.

James is the founder of our fifth Sprout, Proposable. This subscription software makes creating, delivering and analyzing web-based sales proposals easy and efficient. Since his months in “the box,” James is successfully managing Proposable, and has a lot to say about how working with SproutBox has helped make his vision a reality.

What made you decide to work with SproutBox to launch Proposable?

Sproutbox offers to fund entrepreneurs based on the quality of the idea presented and the resourcefulness of the entrepreneur.

What was it like going through the application process and selection weekend?

The application process was surprisingly straightforward and fun. It helped me put some more “meat” around the idea I had been thinking about for so long. The weekend was cool, but sort of stressful as you are presenting your idea to a very top-notch group of investors and entrepreneurs. It was great meeting everyone and seeing that Bloomington is a cool town.

How do you feel SproutBox has helped your business in terms of development?

Sproutbox provided everything I needed to make Proposable a reality. From the intense planning sessions to the rapid code writing, the entire team did a stellar job of moving from the idea stage to the working site stage.

What was the atmosphere like in “the box?”

The best way I can describe the box is that it’s like your favorite uncle’s basement. Comfortable chairs, games, food and just enough distraction to make it feel like you’re not at “work”. It’s a great place for collaboration among the team.

How did the SproutBox team support you during the transition process?

They provided guidance and strategy right out of the gate. The transition process was the hardest part of the process, as you now have to actually make your idea make money. This was challenging at first, as the project needs time and development to become a stable platform.

What did you most benefit from working with SproutBox?

I think I benefited most from having so many minds to glean from. I tried to learn as much as I could from each person on the team. I realized the value in having others who think very differently from me.

What advice do you have for those who are interested in working with SproutBox?

Really understand and communicate what pain your idea solves. If you can effectively communicate the pain that your ideas solves, then your idea will sell itself.

If you would like to apply to be our next Sprout, applications are due August 8th.

Apply at

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Posted by Brad on August 2, 2010 SproutBox No Comments

In his recent op-ed in the Wall Street Journal, Tom Perkins claims that “Too often, there is confusion between investment banking and venture capital.” It’s hard to argue with that statement, but it’s investors like Tom Perkins that deserve the bulk of the blame for this confusion. Perkins says the difference between VC and Investment Banking (IB) is that “venture capitalists work with entrepreneurs to start new companies from the ground up”. I’m not sure how Perkins defines “the ground”, but I’m pretty sure I’d need to take an elevator to get up there.

Perkins’ firm Kleiner Perkins Caufield & Byers has certainly done its fair share of early investing. They became famous for being early investors in homerun deals like Amazon and Google, but even in those cases, they weren’t in ‘from the ground’. When they invested in Google, for example, Google already had 11 employees. That may seem really early considering the number of employees Google has today, but it’s really late compared to Andy Bechtolsheim’s investment a year earlier. He wrote a $100,000 check before there were any employees and before the entity was even filed!. That’s ground level investing.

More importantly, KPCB (and most of the other Sand Hill Road crowd) get most of their exposure from the massive returns they generate when one of their portfolio companies IPO’s. The returns are phenomenal (KPCB’s Amazon investment produced about a 55,000% return), so I can’t blame them for focusing intently on these opportunities. But, please don’t whine about the confusion with IB when taking companies public is your MO. For more evidence of this attitude, look no further than Sand Hill Road’s disappointment in the measly 5x return that Aaron Patzer produced for his investors.

The confusion is furthered by VC’s who openly offer ‘Founder Liquidity Stage Investments”. I’ve received calls this year from some of the most recognizable VC’s on both coasts telling me about these types of offerings, but apparently it’s been happening for a while. This is a really awesome thing for founders, because it allows them to realize a payday without dealing with the nightmare of taking a company public. But these VC ‘investments’ are nothing more than a clever way to buy options in an imminent IPO. Gee, I wonder why that would cause confusion.

Every investor loves the ‘no-brainers’ that produce certain returns, and every investor loves revenue and clear exit opportunities. Even traditional banks will finance many of these types of opportunities.  If some of us don’t step up and make pre-revenue investments based solely on our faith in the idea and the people involved, the bankers won’t have any ‘no-brainers’ to consider. Unfortunately, this banker-mentality investing has infected more than just the big VC’s. In Part 2, I’ll talk about how some prominent angel investors are giddy about later-stage, fixed-return, low-risk, loans. Some of these guys should call themselves ‘Angel Loan Originators’.

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Posted by Brad on March 9, 2010 SproutBox 1 Comment