E-Mail Marketing Still Works

APRIL 21, 2008

But consumer standards of relevance are high.

First, the good news: permission-based e-mail is great at getting consumers to buy.

Half of US adult e-mail users surveyed in April 2008 for Merkle’s “View from the Inbox” study, conducted with Harris Interactive, said they had made an online purchase in the previous year as a result of permission-based marketing.

Need data for presentations? eMarketer subscribers can download charts instantly — over 50,000 choices.
Learn About an eMarketer Subscription

In addition, e-mail was second only to customer reviews on Web sites for influencing online purchases, according to DoubleClick Performics‘ “Green Marketing Study,” conducted by Opinion Research Corporation in February 2008. E-mail was roughly equal to search results in terms of influencing online purchases.

Bad news for e-mail marketers included the fact that consumers are increasingly willing to revoke permission that they have previously granted and that the bar for relevance remains high.

About one-third of respondents in the Merkle study also said they had stopped doing business with at least one company as a result of poor e-mail marketing practices.

In the same vein, more than half of US adult e-mail users told Merkle in 2007 that they were only willing to get marketing or promotional messages in status or transactional e-mails if the offers were relevant to them.

“There is a substantial gap between what marketers believe is relevant to the consumer, and what consumers rate as valuable,” said Lori Connolly, director of research at Merkle.

“Traditionally, marketers believed that relevancy meant pushing content that is based on stated preferences or behavior, but companies need to update their view of what is relevant,” Ms. Connolly said.

Consumer wariness is often justified. Some marketers are the victims of spammers, who ruin it for everyone, according to David Hallerman, senior analyst at eMarketer.

“Consumers welcome relevant, opt-in e-mails from companies they have a relationship with,” said Mr. Hallerman. “But the broad spectrum of spam—any unsolicited message—continues to degrade the e-mail environment for all parties.”

The eMarketer US Online Ad Targeting report will be published next month. Click here to be notified when it is released.

Sequoia wants to be Blackstone, Carlyle going through shift — Sequoia Capital, Silicon Valley’s top dog venture capital firm, is trying to broaden its franchise, looking to do asset management and advisory work, according to Dan Primack, who says it is looking to become the venture community’s Blackstone Group. Among other things, PE Wire says Sequoia is raising a $750M hedge fund and has hired Eric Upin, former chief investment officer for the Stanford University endowment, and Michael Beckwith, former principal with Maverick Capital. We’ll look into this (let us know if you know more). Meanwhile, Primack also mentions that Bob Grady, who has led venture capital activities for The Carlyle Group, an investment firm with close ties to the Bush Administration, is moving into a lesser role. It’s part of a larger transition happening at the firm. The firm has lost two partners, and it replaced them with Nick Sturiale (formerly of Sevin Rosen Funds) and Greg Rossman (formerly of Pequot Capital). According to Primack, it also has hired Jeb Miller as a principal. Miller was previously ousted from ComVentures when that firm merged with Velocity Interactive Group.

Sequoia wants to be Blackstone, Carlyle going through shift

Updated

Make-your-own-social-network company Ning has raised a $60 million fourth round of funding.

Co-founder Marc Andreessen, who also founded Netscape, says the funding came at a whopping $500 million pre-money valuation.

Update: Marc Andreessen just emailed us. Here’s what he said:

The valuation was $500M pre-money, about $560M post-money.

The size of the round was the money we have raised minus a fee to Allen & Company. About $60M net.

We raised the money to enable us to keep scaling given our accelerating growth (over 230,000 networks on Ning now, growing at over 1,000 per day) and to make sure we have plenty of firepower to survive the oncoming nuclear winter. At current growth rates, we don’t need it to get to cash flow positive, but having lived through the last crunch, it’s good to be conservative with these things.

A reader asks:

“My question is how do we value a company with no sales? I understand it’s an arbitrary valuation but is there anything we can possibly base it on? Is there a “default” valuation for companies in a seed round?”

We’ll answer this question with some questions (and answers) of our own:

1. How much money do we need?
2. How do we set a valuation from this budget?
3. How do we express our valuation to investors?
4. What’s the range for seed round valuations?
5. How low do seed round valuations go?
6. How much money can we raise in a seed round?
7. How much dilution should we expect in a seed round?

1. How much money do we need?

First, figure out how much money you need to run at least two experiments^*. Then tack on 3 more months of runway so you can raise another round before you run out of money. This is the minimum amount of money you should raise. For example, let’s say you need $100K.

^* Your experiments should be constructed such that a positive result will let you raise more money at a higher valuation.

2. How do we set a valuation from this budget?

Now decide what percentage of the company you will sell for $100K. Pick a number between 10% and 20% of the company’s post-money. You can go below 10% but that probably means your valuation will be too high or you will raise too little money.

For example, let’s say you’re willing to sell up to 15% of the company—that’s your bottom line dilution. This implies a bottom line post-money valuation of $666K.

3. How do we express our valuation to investors?

Finally, tell investors that,

“We think we can make the company significantly more valuable if we raise $100K—that’s our target. And we’re willing to sell up to 10% of the company to reach that target.”

10% is your aspirational dilution. It’s the lowest dilution you can justify. It’s the lowest dilution you can say with a straight face.

Notice that you didn’t explicitly state your valuation. Combining the dilution (10%) with the amount you’re raising ($100K) implies a post-money valuation of $1M. But the valuation is not explicit. This gives you room to raise your valuation if you raise more than $100K (and we suggest you raise as much money as possible).

4. What’s the range for seed round valuations?

If $25K buys 1% of company, your post-money is $2.5M—that’s on the high end.

If $25K buys 5% of company, your post-money is $0.5M—that’s on the low end.

5. How low do seed round valuations go?

Y Combinator has set new lows for seed round valuations. They get away with it because they also set new highs for helping seed stage companies.

According to the YC FAQ, they buy about 6% of a company for $15K-$20K. So the post-money valuation of their investments is $250K-$333K.

But don’t fixate on valuation. Low valuations aren’t bad if you keep the dilution down too. 6% dilution is very low if the company makes a lot of progress with $15K-$20K.

6. How much money can we raise in a seed round?

If you sell 20% of your company at a $2.5M post-money, you raise $500K. That’s about the maximum for a seed round. Beyond that is Series A country.

7. How much dilution should we expect in a seed round?

Take as much money as you can while keeping dilution between 15-30% (10%-20% of the dilution goes to investors and 5%-10% goes to the option pool).

Compare this to a Series A which might have 30%-55% dilution. (20%-40% of the dilution goes to investors and 10%-15% goes to the option pool.)

A seed round can pay for itself if the quality of your investors and progress brings your eventual Series A dilution down from 55% to 30% (for the same amount of Series A cash).

Don’t over-optimize your dilution. Raising money is often harder than you expect, especially for first-time entrepreneurs.

Smart investors don’t over-optimize dilution either. They want to buy enough points to own a good chunk of the company. But they want to leave the founders with enough points to keep them highly motivated to build a lot of value for the founders and investors alike.

Skyflying Media Group
16.60
www.skyflyinggroup.com
Operates as an outdoor media advertising company.

Sequoia Capital China II, L.P.
Neil Shen

China Nuokang Bio-Pharmaceutical Co., Ltd.
8.50
www.lnnk.com
Develops, manufactures and markets pharmaceutical products.

Sequoia Capital China Growth Fund, L.P.
Neil Shen

Comsenz, Inc.
1.00
www.comsenz.com
Provides Internet community solutions.
Sequoia Capital China Growth Fund, L.P.
Steven Ji

JinTV Co., Ltd. (DBA: TVJ.com.cn)
0.00
www.tvj.com.cn
Produces Popular TV Talk Shows.
Sequoia Capital - Unspecified Fund
Neil Shen

Universal Education Group (AKA: Wanxue)
0.00
www.hwkaoyan.com
Provides graduate pre-test training services.
Sequoia Capital - Unspecified Fund
Shauna Xie

Dear Venture Capitalist,

You have complained that the public ratings are gamed or manipulated or vengeful or inaccurate. You may be right or you may be wrong. You have certainly called me a few times asking for a public review…

Your personal rating was just revealed publicly for the first time yesterday. The only people who have rated you are people that know you, since there is no incentive for users to secretly bash or compliment your performance when nobody was looking. You can actually see if you are any good at what you do.

Your ego may be bruised, but you are not going to get 20 reviews. You probably worked with 20 CEOs in your entire career. You’ll be lucky to get 5 reviews, and they are going to be honest. Guess what, if you score below a three, you should be concerned. The mediocre button for partners is number three out of five. So, even if you score a three, this means that people think you are… mediocre.

My guess is that the wheels of manipulation are already starting to turn, as you are asking “who can I call to rate me?” I am going to recommend that you take the feedback to improve your performance, rather than manipulate the outcome to look better. Being better is actually better than looking better. If you are scoring below a two, you’re not doing your job well and the people that you work with probably do not like you, either.

You can improve. Here is your chance. Run with it.

白总，赫赫。

　　IDG未公布此次的具体注资金额，但据业内人士透露，其首轮注资额约数千万元人民币。

　　IDG中国总裁及首席执行官熊晓鸽表示，此次注资康比特公司，首先基于生命科学这一领域是IDG持续关注的投资领域之一，同时“随着北京奥运会的契机在中国逐渐受到关注，这一行业将在中国迎来高成长机遇，……我们希望康比特早日上市，最好是在中国的创业板，但这取决于市场情况和多种因素。”

4 Things to Do After You Get Your First Term Sheet

1.去拿第二份Term Sheet

2.忽视TermSheet中的终止日期

3.自己先做些DD

4.谈判

I’ve recently been involved in helping a couple companies with their first major round of VC financing.  It’s actually been pretty interesting for me because I have histroically been on the other side of the table.  In addition to generating several stories worthy of “The Funded” and getting a better appreciation of the trials and tribulations that entrepreneurs must go through when trying to raise money, I also gained a better appreciation for just how important it is to properly manage the “end game” of a VC financing.

What is the “end game”?  The End Game generally takes place after you have gotten a term sheet, but before you actually sign it.  How well you manage this process can make a big difference in the actual terms and pricing you ultimately get, so it pays to approach this process as thoughtfully and diligently as you do any other part of fundraising.

With that in mind I present 4 things that you should definitely do after getting your 1^st term sheet:

1. Get a second term sheet:  It may sound flip, but this is the single most important thing you should do upon getting your 1^st term sheet.  Nothing loosens up a VC’s purse strings or makes them more flexible on a particular term than the threat of competition.  Without competition (real or perceived) you have very little leverage against a VC.   Now getting one term sheet, let alone two, is tough enough, but getting two must be your goal and you must not waiver in pursuit of that goal even you after you get the 1^st one.  The biggest problem most entrepreneurs have executing on this strategy is that they have mismanaged the sequencing of their fundraising.  Many entrepreneurs make the mistake of pursuing an “in order” fundraising process whereby they take one meeting, run that process to its logical conclusion and if that doesn’t work out try to get a meeting with another VC.  VC fundraising must be pursued concurrently!  You must put as many irons in the fire in as short a time as possible so that all the firms start the process at roughly the same time. As firms progress through the process, you should do your best to try and “herd” them along by trying to slow down the ones pushing ahead and speed up the ones lagging behind.  The ultimate goal is to ensure that when you receive your first term sheet you have several other firms that are very close (within a week or so) to potentially issuing their own term sheets.  Proper sequencing ensures that you are not forced to take an inferior “bird in hand”.
2. Ignore term sheet “expiration dates”:  Most VCs put “expiration dates” in their term sheets (usually at the end).  In almost all cases these are artifices that are inserted into the term sheet in order to put pressure on the entrepreneur and to try and prevent them from “shopping the sheet”.  The reality is that as long as you are negotiating in good faith with a VC they are not going to pull a term sheet.  That’s not to say that VCs won’t pull a term sheet if they feel like you are being dishonest with them or have no real interest in taking their money, they will, but as long as you deal with them professionally and explain to them why you need more time to consider their offer, they will extend their phantom “deadline”.
3. Do some due diligence of your own:  One of the more unfair aspects of VC fundraising process is that VCs are allowed to take months probing every orifice of your company, but entrepreneurs are expected to make one of the most important decisions of their life in a week or two and often with little or no information.  There’s no good reason for this and all entrepreneurs would be well served by taking some time to do some basic due diligence on any investor who has offered them a term sheet.  I suggest, at a minimum, talking to at least two entrepreneurs that the VC has funded and then talking through with the VC A) all the deals they have done and what happened to them B) the current status of their fund and partnership.  Doing your own due diligence has 4 main benefits 1) it may help you avoid making a bad decision  2) it will create the perception of a competitive process 3)  it will make you appear more savvy and diligent to the VC  4) it can come in handy when you are trying to stall while you get your second term sheet.  Don’t go overboard and act like a VC by asking lots of annoying questions and drilling to the center of the earth on irrelevant/tangential questions; just ask for a few reasonable pieces of information and be very gracious about it.
4. Negotiate:  By the end of the fundraising process most entrepreneurs are so fatigued and shell shocked that when they finally get a term sheet they are loath to do anything that might upset the apple cart.  This situation generally leads to some pretty one sided “negotiating” sessions in which the entrepreneur meekly asks to eliminate the triple participating preferred, the VC says “NO!”, and the entrepreneur quickly retreats.   The reality is that VCs expect some negotiating and their first offer is never their best.  That means you should, within reason, feel free to push back on their initial offer.  Of course, if you have a second or even a third term sheet you can push back even harder, but even if you only have one term sheet you should still push back.  As they say, it never hurts to shake the tree.

If you follow these four pieces of advice you will put yourself in position to get the best possible outcome.  The most important thing to remember is that once you get a term sheet, the whole dynamic of the fundraising process changes and the ball is now in your court.  How you “return serve” can make a big difference in the outcome as I’ve seen VCs increase their initial offers anywhere from 25–50% when these principals are applied.  Your mileage may very, but its definitely worth a shot.

Wondering Which Partner at a VC Firm to Pitch? TheFunded Now Breaks Out Individual VC Ratings.

这下有好戏看了，如果你想对某个国内vc打分，也可以登录上去评论哦

下面是几个典型例子

Bill Tai, Charles River Ventures: 5.0
Joshua Kopelman, First Round Capital: 4.4
Fred Wilson, Union Square Ventures: 4.3
Tim Draper, Draper Fisher Jurvetson: 4.2
Steve Jurvetson, Draper Fisher Jurvetson: 3.0
John Hummer, Hummer Winblad Venture Partners: 1.2

UK internet advertising market £2.8bn in 2007 and still growing fast

New IAB data reported in the FT today has the UK internet advertising market at £2.8bn in 2007 up 38% on 2006.

That is an incredible growth rate for a market this big.

The other piece of data reported is that internet advertising now accounts for 15% of total advertising.

That is well below the percentage of media consumed on the internet, which last I saw was at 30%+. Hence we can expect the market to continue to grow, and early signs are that internet advertising spend is standing up in the face of the current economic problems.

This market is made all the more exciting for me by the fact that despite the growth we have real issues to sort out - with poorly monetising social media inventory and declining effectiveness of display advertising to name but two.