These VCs Bucked The Trend And Raised Fat New Funds In 2011

Without venture capitalists, there would be no tech startups. But without limited partners willing to invest in high-risk, high-reward venture funds, there would be no VCs. With the broader economy in the doldrums, it's not easy for a VC to raise a new fund, particularly for early stage investments. In Q3 of 2011, total VC fund raising was down more than 50% from the same time last year, and the number of firms raising dropped 4%, according to Thomson Reuters. So who bucked the trend this year? Here's a sampling...Fred Wilson's Union Square Ventures announced a $200 million fund early this year, and is reportedly looking to raise another.

Fred Wilson officially announced the $200 million Opportunity Fund on his blog back in January. It will be focused on the same areas as Union Square has always been into -- "the leverage of large networks and their resulting transformation of the global economy." In September, the Wall Street Journal reported USV was looking to raise a new fund of between $150 and $200 million. USV's list of investments includes Twitter, Foursquare, Zynga, Tumblr, and Turntable.fm. Tod Francis and Shasta Ventures got $265 million.

Its other managing directors are Rob Coneybeer, Ravi Mohan, and Jason Pressman, and it focuses on mobile and Internet investments. Some interesting startups in its portfolio include Mint.com, TaskRabbit, Zenrpise, Zuora, and Nest (which is making a new kind of thermostat). Geoff Yang and the other founders at Redpoint Ventures closed a $400 million fund in November.

The new fund will be used to invest in early stage companies that haven't yet reached scale and are still filling out their management team, Geoff Yang (shown here) told the Wall Street Journal. Redpoint had a particularly good November, as Adobe snapped up two ad tech companies it had invested in -- Auditude and Efficient Frontier. Its portfolio also includes Betterworks (corporate benefits), Machinima (a leading YouTube channel about video games), Posterous, and Scribd. See the rest of the story at Business Insider Please follow SAI on Twitter and Facebook.See Also:A Day In The Life Of 20-Year-Old VC Ernestine Fu11 Industries That Saw The Beginning Of The End In 2011Marc Andreessen: Retailers Should Be Scared About 2012

A Day In The Life Of 20-Year-Old VC Ernestine Fu

20-year-old Ernestine Fu joined VC firm Alsop Louie Partners as an associate in March and made the cover of Forbes magazine in August. She's already made a name for herself as the youngest VC in Silicon Valley. But her life for the most part, is pretty normal as she spends her days as a college student at Stanford University. Click here to see what her life is is like→ Students at Stanford seek her out, hoping that if they pitch their startup idea to her -- she just might fund them. One time, a student actually knocked on her door. (Fu wasn't there. But sure enough, she later got an email telling her about the visit.). The undergrads usually want to start the next Facebook, but they have nothing more than an idea, Fu told us. The graduate students usually have a more solid business plan. "I'd say the biggest challenge in looking at Stanford startups is quality rather than quantity; so many students want to start their own companies!" she said. This semester, Fu has been busy: She's started Stanford's Newest Entrepreneurship Course, teaches doctoral students, got admitted (2 years early) to Stanford Graduate School, and sits on Board of Trustees with the president of Stanford. It's a checklist typical of an overachiever. Even in her free time, she is a thrill seeker -- check skydiving off that list. Fu went through a couple interviews after meeting the VC Stewart Alsop back in November 2010. The firm hired her in March this year. Two months into the job, Fu sourced her first deal: $1.3M for Qwhisper. So why did Fu fund Qwhisper? Fu said "Because Qwhisper is a team of Stanford PhD's working on bringing meaning to growing content scattered across different social networks. They realize that Natural Language Processing is extremely important in search because when done right, it gets the intent of the speaker rather than relying on keys words and matching." As far as the whole work-life balance thing, Fu loves it. "If you're earnest and passionate about what you do, time flies by and work gets done," she said. So what exactly is she passionate about? "Hmm, being Ernestine. Is that okay? (: "Sill in bed, I wake up to a full inbox and take time to respond to any urgent emails.

Monday mornings are partner meetings for Alsop Louie Partners. I have to wake up and be ready early to participate!

Two months into the job, I found a team of Stanford PhD's and convinced my firm to fund them $1.3M. Qwhisper's still in stealth mode! I talk about them in the meeting.

See the rest of the story at Business Insider Please follow SAI on Twitter and Facebook.See Also:Meet Postmates, The Startup That's Trying To Replace The Postal ServiceCornell Wins Bloomberg's NYC Tech Campus: Here's What The 2 Million Square Foot School Will Look LikeThis 16-Year-Old Genius Scored Funding From A Hong Kong Billionaire For An iPhone App

14 Incredible Women To Watch In Silicon Valley

Hear from Kevin Systrom, Michael Arrington, and other Silicon Valley 100 honorees at IGNITION West!Last week we revealed our annual Silicon Valley 100 list of people doing the coolest things in tech. A few women stood out as movers and shakers last year. Sheryl Sandberg could become a self made billionaire as the COO of Facebook. Ernestine Fu, a Stanford student, was named San Francisco's youngest venture capitalist by Forbes.Kleiner Perkins' Mary Meeker is one of Silicon Valley's most knowledgeable tech gurus

Kleiner Perkins Caufield & Byers Mary Meeker, one of Kleiner Perkins Caufield & Byers' most prized partners, joined a lot of high-profile boards last year—including SoundCloud, as part of its $50 million round. She's one of the most knowledgeable tech gurus in the valley—so be sure to see her knock-out presentation on the state of the web from the Web 2.0 conference in San Francisco last year. Sukhinder Singh Cassidy founded Joyus, a video shopping site

Chairman and Founder, Joyus.com Most e-commerce sites have pictures of their products. Former executive Sukhinder Singh Cassidy has a startup that posts videos instead. Joyus wants to become the pioneering platform for video-driven e-commerce. Mariam Naficy already sold one $100 million company in her 20's. Now she has a new startup, Minted.

CEO and Founder, Minted.com During the first dotcom bubble, then 28-year-old Naficy and her cofounder Varsha Rao sold their online makeup company Eve for $110 million to Idealab. Now Naficy is back in the startup scene. She founded San Francisco-based Minted.com, an e-commerce company that sells emerging designers' work, and raised a $5.5 million Series B round in 2011. See the rest of the story at Business Insider Please follow SAI on Twitter and Facebook.See Also:The Silicon Valley 100Meet The 21-Year-Old College Dropout Who Founded Codecademy And Wants To Turn Everybody Into A CoderNewark Could Have Been A Billion Dollars Richer If It Had Gotten Facebook Stock Instead Of Cash*

The 24 Most Valuable Startups In Europe

There is a lot of innovation happening outside of Silicon Valley. We drew startups from TechCrunch and Gigaom articles, as well as Business Insider's own sources and found some massive startups being built abroad. Five or ten already have billion-dollar valuations. Others will soon follow.  Here's who's behind the biggest startups in Europe, how much venture capital they've raised, and why these startups have such high valuations.London-based Wonga delivers small, instant cash loans to users for up to 30 days.

Location: London Date Founded: 2007 Founders: Errol Damelin, Jonty Hurwitz Funding: ~ $101 million from Balderton Capital, Accel Partners, Greylock Partners, Dawn Capital, Oak Investment Partners, Meritech Capital Partners, Wellcome Trust What it is: Wonga loans small amounts of cash for short periods of time to people in the UK. People can request up to £750 in cash and keep it between five and thirty days. The loan is delivered within minutes of an online request. Mind Candy pivoted from a failed idea into a social network for kids that's worth more than $200 million

Location: London Date Founded: 2004 Founder: Michael Acton Smith Funding: ~ $10 million from Spark Ventures, Index Ventures, and Accel Partners, valued at $200 million but Smith says his company is worth at least $1 billion. What it is: Mind Candy is a social network with online games for children. It's most famous for its Moshi Monsters, virtual creatures Mind Candy users can adopt and buy virtual goods for.

Klarna just raised $155 million to minimize fraud when shopping online

Location: Stockholm Date Founded: 2005 Founders: Niklas Adalberth, Sebastian Siemiatkowski Funding: ~ $166 million from Jane Walerud, Investment AB A-resund, Sequoia Capital, General Atlantic, Digital Sky Technologies What it is: Klarna's products, Invoice, Account and Mobile, allow users to buy items online and pay for them once they've been delivered to minimize fraud. See the rest of the story at Business Insider Please follow SAI on Twitter and Facebook.See Also:11 Industries That Saw The Beginning Of The End In 2011A Day In The Life Of 20-Year-Old VC Ernestine FuThese VCs Bucked The Trend And Raised Fat New Funds In 2011

11 Industries That Saw The Beginning Of The End In 2011

2011 was not a great year for traditional companies trying to hold onto their share in traditional market. We saw companies completely remaking the music industry, the payments industry and a whole host of other sectors. It's all good news for consumers, because it's now easier to share files and find new music. But all those startups face stiff competition from major companies trying to squash the insurgents. We can hope 2012 will be another great year for innovation, but in the mean time, let's take a look back at what happened this year and who got their face kicked in by innovative startups.MUSIC: Music is now a subscription-based industry

Spotify was one of the highest-profile music services to launch in the United States after seeing an enormous amount of success internationally. It was a watershed moment in the music industry, showing people really wanted to pay subscription fees to access the music they wanted to listen to. With Spotify, and other services like Mog and Rdio, the music industry is now flipped upside down. Even if Spotify can never be profitable (because the music industry consistently hamstrings it, according to MP3.com founder Michael Robertson) it has still changed expectations for consumers. Buying CDs is no longer acceptable. In fact, buying albums off iTunes isn't really acceptable any more either, because most of these services cache songs on your phone — so you don't need to buy them in the first place. Music, whether the record labels or not, is now a subscription-based industry. CAMERAS: Casual point-and-shoot cameras are dead

The iPhone 4 is the most popular camera on Flickr, even if it's more than a year old now. The iPhone 4S is already the second-most popular camera phone on Flickr. Even with half the share of the iPhone 4, it's beating out a lot of point-and-shoot cameras. Here's what it means: there probably isn't much room left for a traditional point-and-shoot camera. The iPhone 4S now has an 8-megapixel camera with a relatively good sensor (even if the flash is terrible), which is enough to replace a point-and-shoot camera. High-quality DSLR cameras probably won't go away because they are geared toward more avid photography fans. But the point-and-shoot is dead. VIDEO GAMES: Downloading and streaming games is now just as easy as it is with movies

Thanks to services like Steam, you can download a video game whenever you want. You can download games before they even come out, and the publishers can unlock them as soon as they are "released." But things are getting even crazier, thanks to a service called OnLive. With OnLive, you can play video games on your computer as if they were like YouTube videos. They're run on remote servers and then the video is streamed through the web, and you play the games as you normally would. The experience is great. Oh, and it's on tablets now. Games are a multi-billion dollar industry that's relied on selling packaged games in retail stores for decades. Now you can get a game as soon as it's out — or even before it comes out, if you steal it — thanks to the emergence of digital distribution. See the rest of the story at Business Insider Please follow SAI on Twitter and Facebook.See Also:A Day In The Life Of 20-Year-Old VC Ernestine FuThe 24 Most Valuable Startups In EuropeThese VCs Bucked The Trend And Raised Fat New Funds In 2011

10 Legal Mistakes That Trip Up Startups

Too many entrepreneurs hamstring themselves before even getting out of the starting gate. Attention to a few legal details as you are creating a business can make the difference between falling into a legal morass and realizing all that is due you. This advice comes from Yale business law professor Constance Bagley, who developed these tips while teaching at Harvard Business School. Check out the top 10 mistakes here > We offer an edited version, but you can see the complete list here. This post originally appeared at BNET.Failing to incorporate early enough.

Incorporating too late, and issuing inexpensive stock to the founders at the same time that much more expensive stock is being sold to investors, can create tax problems when the IRS argues that the difference in stock price is actually income to the entrepreneur. Issuing founder shares without vesting.

Vesting protects the members of the founding team who take the venture forward against the claims of those who leave early. Hiring a lawyer not experienced in dealing with entrepreneurs and venture capitalists.

Lawyers who have no experience working with entrepreneurs and venture capitalists will most likely focus on the wrong things while failing to recognize some of the more subtle potential traps. See the rest of the story at Business Insider For the latest career news, visit War Room. Follow us on Twitter and Facebook.See Also:9 Business Icons Who Faced Utter Failure And Came Back To Kick AssHow To Keep Your Sanity During A Startup LaunchSmall Businesses Push For Credit Card Protections

How One VC Completely Blew A Meeting With A Startup Founder, And How Another Nailed It

Cash is king, so venture capitalists often have the upper hand when it comes to meeting with early-stage entrepreneurs. But when startups become big and awesome, the tables turn. Some venture capitalists get that. Others don't seem to. One frustrated entrepreneur, Andy Dunn, has met with a number of investors for his clothing startup, Bonobos. He wrote a rant that described "dumb VCs" he and other entrepreneurs have dealt with. Bonobos is an e-commerce company that has raised more than $70 million. Its clothing is sold online and nationwide in Nordstrom stores. Dunn raised $30 million in March, and that fundraising process may have inspired the rant. Dunn described one "dumb" investor he met with six times. That person never offered to invest but he also never turned Dunn down. Instead, he just wasted Dunn's time. Later, when Dunn didn't inform him about his funding round, the investor acted confused. "Dear Dumb VC, it’s not my job to call you. It’s your job to call me," Dunn writes. "And the fact that we spent all that time together, and you never got me a term sheet is a strong indicator that you’d rather do what’s in your worst interests than what’s in my best." Jeremy Lieu of Lightspeed, however, wowed Dunn. Lieu came into his first two meetings visibly prepared. "One of the reasons Jeremy Liew from Lightspeed is an investor in Bonobos is he showed up in our first two meetings wearing my pants!" Dunn writes. It proved Liew had tried Dunn's product. Dunn concludes his post with another anecdote from a fellow entrepreneur. The founder is now working on a billion-dollar startup, but early on, he was blown off by a VC. "This VC was seventy-five minutes late to meeting with me. He never called to say he was running late. When he got to the office, I wouldn’t meet with him. He groveled to get into meeting with me, and my team was pressuring me to just take the conversation, but I told them to politely tell him that he missed the meeting. That night, as he had flown into town to see me, he kept offering drinks or dinner to make up for it via email. He then went so far as to say his partners would be livid with him for screwing this up. I never took the meeting with him and I never rescheduled. I’d never get another meeting with him if I blew off his time like this, so why should he get another meeting with me?""Dumb VCs" aside, even good VCs have botched great startup deals. Here are some of their biggest regrets. I BLEW IT: 11 VCs Regret The Huge Companies They Said "No" To > Please follow SAI on Twitter and Facebook.Join the conversation about this story »    

This Startup Visa Bill Is A Heck Of A Lot Better!

The Startup Visa Act is proposed United States legislation that would allow foreign entrepreneurs to get a visa and move to the US. Making it easier for immigrants to start businesses in the US would be a boon for America, as it competes in a networked global economy which is increasingly driven by talent and entrepreneurship. Many of the greatest entrepreneurial successes in America (and by extension, the world) were started by immigrants. As a French entrepreneur who would like to move to the US some day, I opposed the original Startup Visa Act. Why? Because the original version of the bill premised the visa on on obtaining funding from venture capitalists or business angels. It's not just a bad idea because VC-funded companies are a small subset of the fastest growing companies, but also because it makes what is an already unequal relationship (entrepreneur and investor) even more unequal by letting the investor decide not just the fate of your business but of your very life. Now a new version of the bill has appeared and it's a marked improvement, as entrepreneurship researcher Vivek Wadhwa points out. The new bill would grant a visa to the following people:

Entrepreneurs living outside the U.S.—if a U.S. investor agrees to financially sponsor their entrepreneurial venture with a minimum investment of $100,000. Two years later, the startup must have created five new American jobs and either have raised over $500,000 in financing or be generating more than $500,000 in yearly revenue. Workers on an H-1B visa, or graduates from U.S. universities in science, technology, engineering, mathematics, or computer science—if they have an annual income of at least $30,000 or assets of at least $60,000 and have had a U.S. investor commit investment of at least $20,000 in their venture. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue. Foreign entrepreneurs whose business has generated at least $100,000 in sales from the U.S.  Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.

The last item is the key one. It should be possible for entrepreneurs to move to the US if they can raise money from US investors, but also if they build a business that can be evaluated on the basis of revenues and profits. This frees the entrepreneur from being at the mercy of a VC, and broadens the universe of entrepreneurs who can apply. No bill is perfect, but this is a great improvement and its passage would be a boon for America, and thousands of men and women. Previously: The Startup Visa Act Must Be StoppedJoin the conversation about this story »

VC Tim Draper Got Down With MC Hammer Last Night At This Crazy Pink Party

Last night, Jesse Draper threw one heck of a party to celebrate her fourth season of Valley Girl, her Silicon Valley talk show. The Circus Room looked completely different than the way we saw it last week at the Kleiner Perkins holiday party. It was, well, much more pink. Jesse Draper used her family's Silicon Valley connections to get started -- her dad is famed VC Tim Draper -- but it now has legs of its own with all sorts of distribution channels, including Roku and Boxee boxes and TV sets at Taco Bell and Arby's. At her first party celebrating the show last night, Jesse asked the Undrip startup guys who rapped to get funding to come sing live. Guests from Facebook, Twitter, Google, Square, Von Church, Giftiki were on the guest list. MC Hammer came late, but just in time for the dance party. Check it out...The Circus Club was decorated in pink.

Episodes from Jesse Draper's Valley Girl show was playing on the TV near the bar. She took a year off to work on distribution deals, now she's hard at work filming 50 episodes for the fourth season.

Jesse said this is the first party she has thrown for her show. She's busy greeting guests.

See the rest of the story at Business Insider Please follow SAI on Twitter and Facebook.See Also:How Fab.com Raised $40 Million With A Lot Of Data And Not Much PainHow To Raise Millions From VCs With 12 Slides And No PrototypeHow To Get Your Startup Bought By Apple

A Startup Entrepreneur Wrote A Brutal Open Letter To 'Dumb' VCs

Andy Dunn, founder and CEO at clothing startup Bonobos, recently wrote and posted a pretty harsh letter to "dumb" venture capitalists.  Dunn argues that "dumb" VCs are going out of business. He compares them to retail stores, saying that many of them won't be there in the long-term.  Here's the criteria of what makes a "dumb" VC, according to Dunn: "You don't realize you are going out of business." Dunn admits he doesn't know the exact math, but from what he's heard, roughly 2% of VC firms generate 98% of returns in venture capital.  "You think you can help entrepreneurs." Dunn says investors from the top 2% of VC firms never sit down and strategize with their entrepreneurs.  "You spend a ton of an entrepreneur's time before deciding." Dunn argues that VCs should be able to quickly decide whether or not they want to invest.  "You have lots of advice about what entrepreneurs should do." Dunn claims that the top 2% of VC firms never talk to their entrepreneurs once they have already invested.  "You never tried the product." If VCs want to get the deal, Dunn says, they need to show that they care about the mission. "Your portfolio sucks." If at least two companies in a VC's portfolio haven't reached $1 billion in enterprise value, Dunn says, it's not very good.  "You are late." Only top-notch investors can be late to meetings, Dunn says. Head on over to Medium to read Dunn's full letter to "dumb" VCs.SEE ALSO: Why Y Combinator Is The Hottest Startup School In Silicon Valley Please follow SAI on Twitter and Facebook.Join the conversation about this story »