September 26, 2007 by admin.

As reported in Pehub.com Demand Media has raised over 100 million for domain  names. That is US dollars ( not lira or some other overinflated( defleated) currency)This is on top of the over 200 million USD raised previously.  This is the release from the previous funding http://www.3i.com/media/press-releases/3i-co-leads-100m-investment-in-demand-media.html 

Essentially a super repeat of the speculative nature of domain purchasing - but on a huge scale- (think of a wholesale ticket scalping operation -which has some similarities if you think about it) I have no clue how someone makes money on a deal like this. It is true that there is more to the story because it seems that the investors are likely betting on good selling prices for domain names for  the island of Tuval in the Pacific -(which happens to be the logically popular.tv domain) which In demand has the rights to ( not sure of the terms of that)  but even more puzzling I have no clue how 320 million USD is going to produce anything near risk adjusted venture like -returns for the funds involved- even if the company is sold for 2 billion dollars in 2 years ( a 6x times venture like return) . Is is worth the Risk? Like my great grandfather once said if someone does something stupid ( and i am not suggesting that anyone is stupid here - the investors are all smart people) and nothing bad happens - it does not make him smart- This is one investment smart money would avoid. The question is time will Demand media be at the top of the chain or is it the beginning of the end- that is not a bet I would take.

One Question to ask yourself : how much would you pay for www.soyouwanna.com and sites like that.

Posted in Venture Capital, Web 2.0 Early Investing | Print | 2 Comments »

September 25, 2007 by admin.

Corporate VCs are back - and that is not really good news for everyone else.
here is a link to NVCA’s article on corporate VC investing-http://knowledge.wharton.upenn.edu/article.cfm?articleid=1299
(obviously originally sourced from Wharton) Remember this is supposed to be a positive article- I dont see it that way-
To be sure, there are many corporate VCs who are there in the bad and good times but seeing some old busted ones come back should make anyone nervous. Obviously there are some really smart corporate VCs

Disclaimer:  (I personally know many of the corporate VCs mentioned above and interact with them on a regular basis - of course I only know the smart ones)

Posted in Venture Capital, Web 2.0 Early Investing | Print | 2 Comments »

September 25, 2007 by admin.

Ok - I finally launched , exited, launched and relaunched something else and since we will be formally relaunching Tri State Ventures  in early to mid November, (with some surprises and twists to follow in 2008) I expect that we will have frenzied activity at this website very soon. The Blog will be an important part of the new, improved Tri State Ventures- ( we will even have better food at the meetings and possibly better jokes but i cant promise the joke part)

Meanwhile,
We (our fund and other individual investors and Tri State Ventures ) have just invested in a company (sorry can’t name names) that is part 2.0 and part not. I am more interested in the “part not” .- there are way too many applications out there that have no real visible revenue streams. Yes, Advertising is great and I certainly think that if one can cheaply, they should join the advertising party (Why Not ?- free money) )with the exception of certain web 2.0 companies ( of course the ones we invested in included) -
To a certain extent the web is basically one big Amway- with Google being Amway of course, and the others sort of doing a bunch of MLM- hey it works, but in the long run businesses that sell advertising to sell advertising to they can sell more advertising will likely be the first to fall at a sign of weakness. But, So far so good- and the party goes on ..
I believe that the web 2.0 will succeed where they are leveraging an existing real business (similar to the businesses that survived the first crash)  or where they are actually selling a service ( similar to 37signals.com) right now there are too many tools and free software out there for anyone to make money on the things all the VCs are investing in. (more on VCs later)

Posted in Web 2.0 Early Investing | Print | No Comments »