This week, we speak with Scott Kupor, managing partner at Andreessen Horowitz, where he was employee #1 at the firm. Previously he was at Opsware (aka Loudcloud). He is the author of the new book, Secrets of Sand Hill Road: Venture Capital and How to Get It.
Kupor discusses the information asymmetry between entrepreneurs and venture capitalists. In his book, he provides the road map for everything a start up needs to understand the nature of venture capital. We discuss the advantages that accrue to a start up founder who knows how to successfully navigate the perils and pitfalls of the entire capital raising process.
He also discusses why Y Combinator and other seed funds was such a game changer for start ups. They educated entrepreneurs about the process form what was formerly a black box to something more accessible. The change to the information asymmetry altered the deal funnel and gate keeper relation that was previously controlled by a handful of connected VCs. These changes were quite significant: Since 2005, Y Combinator has funded over 2,000 startups, with 4,000 founders, that combine for a valuation of over $100B.
Overall, the influence of venture capital on the American economy cannot be overstated: he notes that Venture backed companies now spend 44% of the entire R&D budget for public companies, and that the 656 publicly traded firms that were VC backed are 20% of the total market capitalization of public firms.
You can stream/download the full conversation, including the podcast extras on Apple iTunes, Bloomberg, Spotify, Google Podcasts, Overcast, Castbox, and Stitcher. All of our earlier podcasts on your favorite hosts can be found here.
Next week, we speak with Allison Schrager, co-founder of LifeCycle Finance Partners and author of “An Economist Walks into a Brothel: And Other Unexpected Places to Understand Risk.”
Scott Kupor’s book
Secrets of Sand Hill Road: Venture Capital and How to Get It by Scott Kupor
Scott Kupor’s favorite books
Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor
Master of the Senate: The Years of Lyndon Johnson III by Robert A. Caro
Working by Robert A. Caro