If you’re a web startup, venture capital has not been easier to find. Just ask Aaron Levie.
According to The Wall Street Journal, his web business, Box.net, not only succeeded at finding funding, but he had to turn some investors away. Isn’t that a problem we all wish we had?
Mr. Levie’s experience underlines one of the dynamics of the latest Web boom: the growing clout of many entrepreneurs. As venture-capital firms pile into deals in order to find the next Facebook or Twitter Inc., some entrepreneurs are calling more of the shots, picking and choosing whose money they will take and at what price.
The shifting power balance has pushed some investors to be more entrepreneur-friendly. Some investors are no longer insisting on a board seat in a start-up. Many venture firms are simplifying deal terms by reducing provisions that dilute the stake of an entrepreneur. Other investors are more willing to work with convertible debt instead of equity, which gives them less say in the start-up’s business.
Indeed, “it’s an excellent time to be an entrepreneur,” said Cheryl Cheng, a partner at venture-capital firm BlueRun Ventures in Menlo Park, Calif., which has stripped out some dilutive provisions in its deal terms. By doing so, she said, “it’s a way to stay competitive and to stay relevant to entrepreneurs.”
Photo by Shane Adams