250K Or 500K: How Much To Raise?

Image via WikipediaI am in mind to raise 250K from Union Square Ventures. That would be my first choice. I can guarantee you I can get Fred Wilson to give me 15 minutes of his time any day for me to able to pitch him. That much I know. But the deal is up in the air. I am not going to assume it will happen. That part is not in my control. What is in my control is I am going to leave no stone unturned to get him. My part is in my control.

Serenity Prayer - Wikipedia, the free encyclopedia

Another idea that is being floated by some people on my team is that I raise 500K, but without giving equity. It would be like I get 500K, and in my next round - which could happen in as little as six months - I give that money a 600K valuation. I would be very open to that.

Founder CEOs And Google

Image via WikipediaThe Chrome OS needed to kill Windows yesterday, five years ago. And Google is still not looking to kill Windows. Google not having a Founder CEO is the reason why. The early venture capitalists who put in the early money messed up. They should have brought in someone like Eric Schmidt as a COO, the Chief Operating Officer. Larry Page should have been CEO all along.

Bill Gates was young and he was CEO. Mark Zuckerberg is still young. He even looks the part. You can't dismiss a Founder CEO just because he or she is young. That is extra true for history making companies. It is a DNA thing. Founder CEOs come with the DNA.

The Stink From The New York Times

Image via CrunchBaseNetflix has a market value of $10 billion. The New York Times has a market value of barely one billion dollars. Articles like this one are the reason why. This feels like a hachet job done by a Vinod Khosla enemy.

The title of the article itself is so out of the whack. The microfinance industry in India is nowhere close to collapsing. Not even close. The article itself talks about how 1% of those who borrowed the money might no longer be able to pay. That is not a collapse. That is an excellent default rate. The default rates at big New York City banks that rich people and companies borrow from are much higher. And I am talking pre Great Recession numbers.
Image via CrunchBase
Just like the default rate remains low, yes, there are borrowers who have committed suicide because they could not pay back. But the article makes it sound like the microfinance industry in India has given rise to a country wide epidemic of suicides. People are committing suicide left and right by the roadside. That would be like taking the news of one Congresswoman in Arizona getting shot and making it sound like now there was a raging civil war in America.

My Tech Partners Sunil Madhu, Marty Monaco

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So Marty Monaco got a room at General Assembly for my mock pitch to Brad Hargreaves yesterday. 11:30-12:30 Room 1. I sent a text to Rachel. "Top Guy, running late, 15 minutes."

I had five slides prepared on Google Docs. My machine does not have Microsoft Office, never has had one. The five slides were barebones. White background, ugly black letters.

"You did not talk about the market at all!" Marty later said. How could I have forgotten to mention the market!

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The Most Popular Dish In New York: Shake Shack Burger, Madison Square Park

The Stink From India

Image via Wikipedia

New York Times: November 2010: India Microcredit Faces Collapse From Defaults: India’s rapidly growing private microcredit industry faces imminent collapse as almost all borrowers in one of India’s largest states have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor. ........ Indian banks, which put up about 80 percent of the money that the companies lent to poor consumers, are increasingly worried that after surviving the global financial crisis mostly unscathed, they could now face serious losses. Indian banks have about $4 billion tied up in the industry ........ for-profit “social enterprises” that seek to make money while filling a social need ...... microfinance in pursuit of profits has led some microcredit companies around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay ...... microfinance could become India’s version of the United States’ subprime mortgage debacle, in which the seemingly noble idea of extending home ownership to low-income households threatened to collapse the global banking system because of a reckless, grow-at-any-cost strategy. ...... legislators in the state of Andhra Pradesh last month passed a stringent new law restricting how the companies can lend and collect money. ..... local leaders urged people to renege on their loans, and repayments on nearly $2 billion in loans in the state have virtually ceased. Lenders say that less than 10 percent of borrowers have made payments in the past couple of weeks. ..... the industry faces collapse in a state where more than a third of its borrowers live. Lenders are also having trouble making new loans in other states, because banks have slowed lending to them as fears about defaults have grown. ..... “They aren’t looking at sustainability or ensuring the money is going to income-generating activities. They are just making money.” ...... the industry had become no better than the widely despised village loan sharks it was intended to replace. ...... SKS and its shareholders raised more than $350 million on the stock market in August. Its revenue and profits have grown around 100 percent annually in recent years. This year, Vikram Akula, chairman of SKS Microfinance, privately sold shares worth about $13 million. ...... a few rogue operators may have given improper loans, but that the industry was too important to fail. “Microfinance has made a tremendous contribution to inclusive growth,” he said. Destroying microfinance, he said, would result in “nothing less than financial apartheid.” ...... Indian microfinance companies have some of the world’s lowest interest rates for small loans. Mr. Akula said that his company had reduced its interest rate by six percentage points, to 24 percent, in the past several years as volume had brought down expenses. ..... many lenders grew too fast and lent too aggressively. Investments by private equity firms and the prospect of a stock market listing drove firms to increase lending as fast as they could ..... the number of borrowers who are struggling to pay off their debts is much smaller than officials have asserted. He estimates that 20 percent have borrowed more than they can afford and that just 1 percent are in serious trouble ...... microfinance firms had lost sight of the fact that the poor needed more than loans to be successful entrepreneurs. They need business and financial advice as well ..... the industry was now planning to create a fund to help restructure the loans of the 20 percent of borrowers in Andhra Pradesh who were struggling. ..... The television, the mobile phone and the two buffaloes she bought with one loan were sold long ago.

Home ownership by the poor is not what caused the global financial meltdown. It was bad behavior on the part of bankers. This crisis in India can also be attributed to bad behavior on the part of bankers. But this crisis is overblown. Before I ever came to America I thought New York City was all about crimes and crimes alone.