A Must-Read Book For Both Startup Founders and Investors
What are the important lessons for investors and startups in Venture Deals?
“Venture Deals,” by Brad Feld and Jason Mendelson, is a book that gives the overall pictures about startups and investing from both perspectives. They've been on both sides of the coin in terms of being investors and entrepreneurs. I think that having been on both sides of the coin is a tremendous bonus to have. If you want to accelerate your understanding about startups and venture capital, you should check out this book.
Venture Deals gives a before, during and after of what it's like to build a company and what you need to be aware of as a startup founder. For example, understanding the term sheet, picking the right team for your startup, who are venture capitalists, what roles they serve for managing directors, and the people you might encounter. Another part about the book I like is it questions perspectives on both sides.
Venture Deals provides you with lessons from the perspective of the investor and the side of the entrepreneur.
Most startups think, "Well, I don't know the legal work. I don't know how to put a decent term sheet. I don't even know what a term sheet is." The book breaks down very well how you need to understand the term sheet and what each term means for you as a startup.
The book is very detail-oriented with a lot of due diligence behind the information they provide. These venture deals and term sheets don't just affect the founders, but it can affect every single one of your employees and have a strong impact on the direction of your company. Positive and negative. You have to do your own due diligence when you're building a new company. You have to know the real terms of the deal or else you can fail.
Some negatives I want to point out is it would be nice to have more narratives or case studies. I thought at times it's a little bit dry in terms of the content. There were some mention of case studies, but it wasn't comparable to what other books in the startup world provide, especially regarding successes and failures and how certain things impact a startup's growth.
You have to do your own due diligence when you're building a new company.
For example, when there's a discussion in Venture Deals about the term sheet, I'd love to hear about interviews from founders and their personal experiences on navigating business deals that came their way; what they knew about the term sheet when they first started their business and what they didn't know about it; and how their term sheet structure impacted their employees. I'd love to see more narratives and case studies from future editions of this book, especially from companies that succeeded, companies that failed and how they ended up being that way.
I'd like to see more historical perspective through real case studies. There is a level of implicit understanding that by not understanding the deal, companies have failed, but why not give key examples and why the deal mattered for them. Because I'm a visual person, I like to see graphics and visuals and get to see where things started and how things went before, during and after. Startup graphics and visuals are incredibly helpful and candid.
Overall, this is a four and a half out of five stars and if you know me that's pretty high. I'm very skeptical and cynical about many of the things I read because I get pitched all the time by startups and I think you should too. This is a great book for beginner entrepreneurs, early stage startups, and investors to learn the ropes of startup investing. It goes alongside our book Kings Over Aces which is another bestseller in the venture capital and startup section of the bookstore.