Fund: Artiman Ventures
Posted by mach4 on 2017-09-01
We went to them through a referral.
Though they started off slowly, they moved through diligence pretty quickly. Even early on, they mentioned that they would bring in a new CEO which seemed strange (as our CEO had gotten us thus far). Our founding team had discussed this issue earlier amongst ourselves and felt that we would bring in someone for a Series B or C. So, while we all (including our CEO) were OK with it, we felt it was rude as it was suggested early on without giving him a chance.
While we had Alpha customers in a particular vertical, one partner insisted that was a wrong market. Another partner (who was in that vertical) told us to ignore the first partner.
They went through a very detailed diligence and spoke with our customers and references. Their own network of CTO/CIOs seemed rather modest and it was not clear whether their network would be valuable.
While they claim to be "white space", this is completely FALSE. They are quite risk averse and the term sheet was designed to further minimize their risk.
They also explicitly tried to set one founder against another (asking him privately "Are you sure you have enough equity?").
They had some average EIRs who they seemed to want to push onto us. They seemed to position these pushes like suggestions, but their attempts were clumsy.
We did get a term sheet from them. We wanted a syndicate. Interestingly, many of the other VCs we talked to asked if they could bring in their own syndicate partner. To their credit, the term sheet did NOT have egregious terms). There were some issues that penalized the entrepreneurs too much and we negotiated on some of those.
While we got a term sheet and had initial agreement on most points, the deal did not go through. Their approach seemed sleazy. In fact, based on our conversations with the VC, our lawyer (from the largest bay area startup law firm) told us that the founders should not be surprised if they are fired to allow the VC to recoup some of the (founders') equity stakes.
Many of my experiences seem to mirror previous comments. I will not go to them again.PRIVATE: Members Only (515 Characters)
Fund: Benchmark Capital
Posted by SuperUber on 2017-08-24
The behavior of Benchmark with Uber and Travis Kalanick is repressible, and no good entrepreneur should work with this firm. Someone needs to speak out. Leaving aside allegations of sexism within the company, a closer look at the "invisible hand" of Benchmark is needed.
Why did Benchark give Travis key Board allocations if he were so bad? Why did they orchestrate a maneuver to kick him out after his parents suffered a terrible accident? Why have they been meddling in day-to-day operations at the company? Why are they suing with defamatory and knowingly false allegations lifted from another lawsuit? Why are they tormenting other Board Members?
Travis himself may have the answer in a 2011 video, in which there is a slide titled, "VCs tend to kill founding CEOs:"
It's time that the true inside story gets told. The Board Members do not like Benchmark, and with good reason. Everyone is sitting on a diamond, and, like the scorpion and the frog parable, Benchmark had to kill the frog. It's in their nature.
Why did they kill the frog? There are three reasons:
1. Liquidity - Each Benchmark partner will make $250 MM to $500 MM on Uber. Tnis is more profit more than many of the founding engineers and executives. Any of the sexism scandals have delayed an IPO, so why not create turmoil to get bought out?
2. Liability - Bill Gurley is the first institutional investor. He was a close advisor and mentor. Lawyers at Benchmark warned that the fund may be liable for the actions within Uber. So, why not blame the CEO as you boot him out the door to shift the blame and the liability?
3. Bank Heist - Benchmark owns only 13% of the business. By removing Travis and opening the three Board Seats that he controls, this allows Benchmark to gain control of the business. If they can not get bought out at a high price by threatening other Board Members, then why not control one of the largest private companies in Silicon Valley and do as you please?
Abuse of power has returned to the world of venture capital, and Uber is the poster child of this new movement. Their Machiavellian schemes are reprehensible. Over the coming days, the story will start to come out. Chris Sacca is involved. False stories have been planted. It's ugly.
"A scorpion asks a frog to carry it across a river. The frog hesitates, afraid of being stung, but the scorpion argues that if it did so, they would both drown. Considering this, the frog agrees, but midway across the river the scorpion does indeed sting the frog, dooming them both. When the frog asks the scorpion why, the scorpion replies that it was in its nature to do so."PRIVATE: Members Only