enture capitalists have a strong standing with new business development. Venture capitalists must have a complete understanding of the basics and have an all-rounded knowledge base. But venture capitalists have an important role to play in the field of entrepreneurship. In short, venture capitalists help businesses grow. They act as a partner of those businesses. With the help of the best books on venture capitalists: The List. You can gain the knowledge and the foundations to start investing in your capital to earn money.
|How Do Venture Capitalists Make Money?|
|Best Books on Venture Capital: The List|
|Final Thoughts on Best Books on Venture Capital|
How Do Venture Capitalists Make Money?
Venture Capitals make money in two ways:
- Allocating fee for supervising funds of capital.
- Having an interest in the return of their funds.
The capital firms collect money from pension funds, rich families, educational endowments, and insurance companies. These enterprises allocate investment portfolios to different asset classes including bonds, real estate, and other means. Investors invest to get their original funds multiplied.
Best Books on Venture Capital: THE LIST
1 – Real Venture Capital | By Richard Thompson
According to getAbstract, “This brief book offers a sound introduction to the fundamentals of venture capital investing. Though it emphasizes the United Kingdom, it illustrates the state of the venture capital business in other nations as well. Richard Thompson gives a straightforward explanation of what “real venture capital” is. He distinguishes venture capital for new business development from private equity, or refinancing, for established companies. Case studies and anecdotes from the author’s own experience support his plain, commonsense recommendations. While this book will be particularly appropriate for readers in the U.K.”
Quotes from Real Venture Capital;
“Venture capital, properly practiced, is a long-term business, a partnership with entrepreneurs and executives.”
“The issues that normally cause the most trouble and steam on a deal relate to financial and legal matters.”
“From an investment standpoint, instrument companies can offer low risk/medium reward opportunities with a good degree of stability. Those which involve very high-cost items are, however, to be dealt with warily.”
“Having good professional advisers when dealing with overseas companies and investors is a ‘sine qua non’.”
“The U.S. is the easiest market in which to build a new company, since a base can first be established in the domestic market and then, from strength, the company can strike out into the international one.”
“Institutions need to put more money into real venture capital, partly because the buy-out market is overcrowded.”
“Usually the key to success for a young growth company is to have a narrow product focus and to exploit this as widely as practicable in the international market.”
2 – The Business of Venture Capital | By Mahendra Ramsinghani
The Business of Venture Capital, Second Edition covers the entire spectrum of this field, from raising funds and structuring investments to assessing exit pathways. Written by a practitioner for practitioners, the book provides the necessary breadth and depth, simplifies the jargon, and balances the analytical logic with experiential wisdom. Starting with a Foreword by Mark Heesen, President, National Venture Capital Association (NVCA), this important guide includes insights and perspectives from leading experts.
- Covers the process of raising the venture fund, including identifying and assessing the Limited Partner universe; fund due-diligence criteria; and fund investment terms in Part One
- Discusses the investment process, including sourcing investment opportunities; conducting due diligence and negotiating investment terms; adding value as a board member; and exploring exit pathways in Part Two
- Offers insights, anecdotes, and wisdom from the experiences of best-in-class practitioners
- Includes interviews conducted by Leading Limited Partners/Fund-of-Funds with Credit Suisse, Top Tier Capital Partners, Grove Street Advisors, Rho Capital, Pension Fund Managers, and Family Office Managers
- Features the insights of over twenty-five leading venture capital practitioners, frequently featured on Forbes’ Midas List of top venture capitalists
Those aspiring to raise a fund, pursue a career in venture capital, or simply understand the art of investing can benefit from The Business of Venture Capital, Second Edition. The companion website offers various tools such as GP Fund Due Diligence Checklist, Investment Due Diligence Checklist, and more, as well as external links to industry white papers and other industry guidelines.
3 – Mastering the VC Game | By Jeffrey Bussgang
Finding the right venture capitalist to back your start-up is a challenge. Even if you manage to get backing, you want your VC to be a partner, not some dictator who will undermine your vision and take control of your life’s work.
Jeffrey Bussgang is one of a very few people who have played on both sides of this high-stakes game. Now he draws on his unique perspective to offer high-level insights, colorful stories, and practical advice gathered from his own experience as well as from interviews with dozens of the most successful entrepreneurs and VCs. He reveals how to get noticed, perfect a pitch, and negotiate a partnership that works for everyone.
Quotes from Mastering the VC Game;
“Reid Hoffman, the founder of LinkedIn, observed that an entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down.”
“The most successful start-ups operate like good ensembles.”
“Money is nice, right?” he confessed to me. “Money gives you good things, it gives you a power that you can go do other things with. But it’s not a meaning of life in itself. Money is a motivator, but it’s not the motivator that I wake up in the morning thinking about, it’s not the motivator that I go home thinking about, it’s not the motivator that gets you an obituary.”
4 – The Lean Startup | By Eric Ries
Learn how to start and run a successful business with Eric Ries. In his book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses,” Ries talks about initiating a startup in the context of an institution running under new conditions full of uncertainty to achieve something new—no matter their size. Whether a one-person garage or a 500-employee mining business, they all have one goal, to confidently go past the uncertainty and achieve their professional and personal goals.
The approach by Eric Ries is ideal for startups with enough capital and those with limited money. The method uses lessons from the validated learning, counter-intuitive practices, and rapid scientific experimentation to offer optimal results in shortening product creation cycles, progress measuring, and learning customers’ needs.
Quotes from The Lean Startup;
“As you consider building your own minimum viable product, let this simple rule suffice: remove any feature, process, or effort that does not contribute directly to the learning you seek.”
“The big question of our time is not Can it be built? but Should it be built? This places us in an unusual historical moment: our future prosperity depends on the quality of our collective imaginations.”
“When blame inevitably arises, the most senior people in the room should repeat this mantra: if a mistake happens, shame on us for making it so easy to make that mistake.”
“Metcalfe’s law: the value of a network as a whole is proportional to the square of the number of participants. In other words, the more people in the network, the more valuable the network.”
5 – Zero To One | By Peter Thiel and Blake Masters
Secrets are the heart of all successes, and it’s good to note that the best secret of all time is that there are lots of inventions to be made and a multitude of uncharted frontiers for exploration. Peter Thiel, an investor and entrepreneur in the Zero to One: Notes on Startups, or How to Build the Future, tells the ways to develop new things. He starts his argument opposing the contrarian premise that the era we are in faces technological stagnation, and smartphones are our main distractors.
It’s obvious we have faced significant technological advancement in the past, and that’s way more than just Silicon Valley and computers. Doing something new is more comfortable and has more rewards, and that means you shouldn’t expect the next Sergey Brin or Larry Page to make another search engine or Bill Gates to create another OS.
Quotes from Zero To One;
“ZERO TO ONE EVERY MOMENT IN BUSINESS happens only once. The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.”
“Tolstoy opens Anna Karenina by observing: “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.”
“Customers won’t care about any particular technology unless it solves a particular problem in a superior way. And if you can’t monopolize a unique solution for a small market, you’ll be stuck with vicious competition.”
“CREATIVE MONOPOLY means new products that benefit everybody and sustainable profits for the creator. Competition means no profits for anybody, no meaningful differentiation, and a struggle for survival.”
6 – Secrets of Sand Hill Road | By Scott Kupor
What are venture capitalists saying about your startup behind closed doors? And what can you do to influence that conversation?
If Silicon Valley is the greatest wealth-generating machine in the world, Sand Hill Road is its humming engine. That’s where you’ll find the biggest names in venture capital, including famed VC firm Andreessen Horowitz, where lawyer-turned-entrepreneur-turned-VC Scott Kupor serves as managing partner.
Whether you’re trying to get a new company off the ground or scale an existing business to the next level, you need to understand how VCs think. In Secrets of Sand Hill Road, Kupor explains exactly how VCs decide where and how much to invest, and how entrepreneurs can get the best possible deal and make the most of their relationships with VCs. Kupor explains, for instance:
- Why most VCs typically invest in only one startup in a given business category.
- Why the skill you need most when raising venture capital is the ability to tell a compelling story.
- How to handle a “down round,” when startups have to raise funds at a lower valuation than in the previous round.
- What to do when VCs get too entangled in the day-to-day operations of the business.
- Why you need to build relationships with potential acquirers long before you decide to sell.
Filled with Kupor’s firsthand experiences, insider advice, and practical takeaways, Secrets of Sand Hill Road is the guide every entrepreneur needs to turn their startup into the next unicorn.
Quotes from Secrets of Sand Hill Road;
“In fact, you’ll often hear VCs say that they like founders who have strong opinions but ones that are weakly held, that is, the ability to incorporate compelling market data and allow it to evolve your product thinking. Have conviction and a well-vetted process, but allow yourself to “pivot” (to invoke one of the great euphemisms in venture capital speak) based on real-world feedback.”
“Over the past ten years, we’ve gone from $300 million in funds under management and a three-person team to managing more than $7 billion in funds and roughly 150 employees. Most of our employees focus on that “something more,” spending their days building relationships with people and institutions that can help improve the likelihood of our founder CEOs building enduring and valuable companies.”
“Ben Horowitz uses the difference between a vitamin and aspirin to articulate this point. Vitamins are nice to have; they offer some potential health benefits, but you probably don’t interrupt your commute when you are halfway to the office to return home for the vitamin you neglected to take before you left the house. It also takes a very, very long time to know if your vitamins are even working for you. If you have a headache, though, you’ll do just about anything to get an aspirin! They solve your problem and they are fast-acting. Similarly, products that often have massive advantages over the status quo are aspirins; VCs want to fund aspirins.”
“(To avoid this problem, some LPAs restrict the GP’s ability from being able to take any carry until she has returned the full $100 million in LP commitments back to the LP in cash. Admittedly, this is pretty rare.)”
7 – Venture Capital for Dummies | By Nicole Gravagna
Secure venture capital? Easy.
Getting a business up and running or pushing a brilliant product to the marketplace requires capital. For many entrepreneurs, a lack of start-up capital can be the single biggest roadblock to their dreams of success and fortune. Venture Capital For Dummies takes entrepreneurs step by step through the process of finding and securing venture capital for their own projects.
- Find and secure venture capital for your business
- Get your business up and running
- Push a product to the marketplace
If you’re an entrepreneur looking for hands-on guidance on how to secure capital for your business, the information in Venture Capital For Dummies gives you the edge you need to succeed.
8 – Angle: How to Invest in Technology Startups | By Jason Calacanis
One of Silicon Valley’s most successful angel investors shares his rules for investing in startups.
There are two ways to make money in startups: create something valuable—or invest in the people that are creating valuable things.
Over the past twenty-five years, Jason Calacanis has made a fortune investing in creators, spotting and helping build and fund a number of successful technology startups—investments that have earned him tens of millions of dollars. Now, in this enlightening guide that is sure to become the bible for twenty-first-century investors, Calacanis takes potential angels step-by-step through his proven method of creating massive wealth: startups.
As Calacanis makes clear, you can get rich—even if you came from humble beginnings (his dad was a bartender, his mom a nurse), didn’t go to the right schools, and weren’t a top student. The trick is learning how angel investors think. Calacanis takes you inside the minds of these successful moneymen, helping you understand how they prioritize and make the decisions that have resulted in phenomenal profits. He guides you step by step through the process, revealing how leading investors evaluate new ventures, calculating the risks and rewards, and explains how the best startups leverage relationships with angel investors for the best results.
Whether you’re an aspiring investor or a budding entrepreneur, Angel will inspire and educate you on all the ins of outs. Buckle up for a wild ride into the world of angel investing!
9 – The Hard Thing About Hard Things | By Ben Horowitz
Ben Horowitz, the co-founder of Andreessen Horowitz and one of Silicon Valley’s most respected and experienced entrepreneurs, offers essential advice on building and running a startup—practical wisdom for managing the toughest problems business school doesn’t cover, based on his popular ben’s blog.
While many people talk about how great it is to start a business, very few are honest about how difficult it is to run one. Ben Horowitz analyzes the problems that confront leaders every day, sharing the insights he’s gained developing, managing, selling, buying, investing in, and supervising technology companies. A lifelong rap fanatic, he amplifies business lessons with lyrics from his favorite songs, telling it straight about everything from firing friends to poaching competitors, cultivating and sustaining a CEO mentality to knowing the right time to cash in.
Filled with his trademark humor and straight talk, The Hard Thing About Hard Things is invaluable for veteran entrepreneurs as well as those aspiring to their own new ventures, drawing from Horowitz’s personal and often humbling experiences.
Quotes from The Hard Thing About Hard Things;
“No matter who you are, you need two kinds of friends in your life. The first kind is one you can call when something good happens, and you need someone who will be excited for you. Not a fake excitement veiling envy, but a real excitement. You need someone who will actually be more excited for you than he would be if it had happened to him. The second kind of friend is somebody you can call when things go horribly wrong—when your life is on the line and you only have one phone call.”
“Life is a struggle.” I believe that within that quote lies the most important lesson in entrepreneurship: Embrace the struggle.”
“Great CEOs face pain. They deal with the sleepless nights, the cold sweats, and what my friend the great Alfred Chuang (legendary cofounder and CEO of BEA Systems) calls “the torture.” Whenever I meet a successful CEO, I ask them how they did it. Mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. Great CEOs tend to be remarkably consistent in their answers. They all say, “I didn’t quit.”
“Early in my career as an engineer, I’d learned that all decisions were objective until the first line of code was written. After that, all decisions were emotional.”
“Hard things are hard because there are no easy answers or recipes. They are hard because your emotions are at odds with your logic. They are hard because you don’t know the answer and you cannot ask for help without showing weakness.”
“Build a culture that rewards—not punishes—people for getting problems into the open where they can be solved.”
10 – The Entrepreneurial Bible to Venture Capital | By Andrew Romans
40 leading venture capitalists come together to teach entrepreneurs how to succeed with their startup
The Entrepreneurial Bible to Venture Capital is packed with invaluable advice about how to raise angel and venture capital funding, how to build value in a startup, and how to exit a company with maximum value for both founders and investors. It guides entrepreneurs through every step in an entrepreneurial venture from the legalities of raising initial capital to know when to change tactics.
Andrew Romans is the co-founder and general partner of Rubicon Venture Capital, a venture capital fund that invests in privately held technology companies and enables its investors to co-invest alongside the fund on a deal-by-deal basis via innovative sidecar funds right up to IPO or M&A exit.
11 – #BreakIntoVC | By Bradley Miles
#BreakIntoVC: How to Break Into Venture Capital And Think As an Investor gives you the insight to understand technology investing 400;”>without endlessly scouring the internet or having access to the top venture firms in the industry.
What if a few new habits could help you understand the complex and ever-changing landscape of the technology sector? What if you could tell a great business from a good business with a few simple steps? Imagine being one of the smartest people in the room when it comes to transportation technology, drones, or healthcare technology.
Bradley Miles, in his first book, covers multiple ways to analyze and understand the complex and opaque world of technology investing.
Here are a few things that you will get out of #BreakIntoVC.
In this book, you will learn:
- The fundamentals of the venture capital industry and how it works
- The difference between accelerators, angel investors, early-stage VCs, and late-stage VCs
- How to understand any market
- The key metrics that matter to VCs
- How to value early and late-stage technology companies
- How to reach venture capitalists
- How to land a job, internship, or learning-based opportunity at a venture capital firm
- How to handle a mock call with a venture capitalist
- How to spot great technology businesses in your everyday life
- How to pitch a business to venture capitalists
- Case studies on how five other people broke into the venture capital
BONUS: A step-by-step method to pitching a company that Bradley has utilized when speaking with venture capital investors and current businesses that he recommends you use when setting up your first pitch.
Quotes from #BreakIntoVC;
“For the entrepreneurs out there: venture capitalists invest in people. Once you understand how to pitch a company, even if investors think your idea isn’t a home run, they’ll be confident enough in you to offer some advice and you can continue to build a relationship that could last a lifetime. All from a successful pitch.”
“Investment Thesis A venture capital firm invests under the premise of an upside scenario, this is to say that if the firm invests in 10 companies through the fund, they only expect one or two companies to hit a home run (an 8-10x return or more), and a couple solid returns ( >1x), while the other six or seven companies may fail (no return) or simply return the amount invested (a 1x return).”
“Sam Altman is the current president of Y-Combinator and was previously a founder at Loopt, which sold to Green Dot Corporation for $ 43M. As head of YC, Sam often dispenses an entire guide’s worth of information through his blog. Sam’s “Startup Playbook” will walk you through everything a great startup should have from ideation to product instantiation and is an invaluable tool for aspiring venture investors. Additionally, Sam’s been kind enough to host the 20-episode video series, How to Start a Startup—originally a lecture at Stanford—on his blog. The series includes talks from luminaries like Paul Graham, Marc Andreessen of Andreessen Horowitz, and Reid Hoffman, founder of LinkedIn.”
“Do Things That Don’t Scale” taught me the importance of the ‘dirty work’ startups have to accomplish in the early days, like focusing on a deliberately narrow market to test the product or going out of their way to acquire users and make them happy with insane attention-to-detail as if they’re a consultant with only one client. These are just three of the 174 essays currently on Paul’s site. There are a few resources that summarize the content or present a “Top 10,” but at this stage, I think the best move is to read the above blogs and a few other articles where the title catches your eye.”
12 – Measure What Matters | By John Doerr
In the fall of 1999, John Doerr met with the founders of a start-up whom he’d just given $12.5 million, the biggest investment of his career. Larry Page and Sergey Brin had amazing technology, entrepreneurial energy, and sky-high ambitions, but no real business plan. For Google to change the world (or even to survive), Page and Brin had to learn how to make tough choices on priorities while keeping their team on track. They’d have to know when to pull the plug on losing propositions, to fail fast. And they needed timely, relevant data to track their progress—to measure what mattered.
Doerr taught them about a proven approach to operating excellence: Objectives and Key Results. He had first discovered OKRs in the 1970s as an engineer at Intel, where the legendary Andy Grove (“the greatest manager of his or any era”) drove the best-run company Doerr had ever seen. Later, as a venture capitalist, Doerr shared Grove’s brainchild with more than fifty companies. Wherever the process was faithfully practiced, it worked.
In this goal-setting system, objectives define what we seek to achieve; key results are how those top-priority goals will be attained with specific, measurable actions within a set time frame. Everyone’s goals, from entry-level to CEO, are transparent to the entire organization.
The benefits are profound. OKRs surface an organization’s most important work. They focus effort and foster coordination. They keep employees on track. They link objectives across silos to unify and strengthen the entire company. Along the way, OKRs enhance workplace satisfaction and boost retention.
In Measure What Matters, Doerr shares a broad range of first-person, behind-the-scenes case studies, with narrators including Bono and Bill Gates, to demonstrate the focus, agility, and explosive growth that OKRs have spurred at so many great organizations. This book will help a new generation of leaders capture the same magic.
Quotes from Measure What Matters;
“Bad companies,” Andy wrote, “are destroyed by crisis. Good companies survive them. Great companies are improved by them.”
“If the heart doesn’t find a perfect rhyme with the head, then your passion means nothing.”
“The OKR framework cultivates the madness, the chemistry contained inside. It gives us an environment for risk, for trust, where falling is not a fireable offense- you know, a safe place to be yourself.”
“And when you have that sort of structure and environment, and the right people, magic is around the corner.”
“We don’t hire smart people to tell them what to do. We hire smart people so they can tell us what to do. —Steve Jobs”
“Leaders must get across the why as well as the what. Their people need more than milestones for motivation. They are thirsting for meaning, to understand how their goals relate to the mission.”
“Here are some reflections for closing out an OKR cycle: Did I accomplish all of my objectives? If so, what contributed to my success? If not, what obstacles did I encounter? If I were to rewrite a goal achieved in full, what would I change? What have I learned that might alter my approach to the next cycle’s OKRs?”
“An effective goal-setting system starts with disciplined thinking at the top, with leaders who invest the time and energy to choose what counts.”
13 – Raising Venture Capital for the Serious Entrepreneur | By Dermot Berkery
Written by Dermot Berkery, an internationally known venture capitalist with Delta Partners, this complete tool book thoroughly details how venture capitalists arrange the financing for a company; what they look for in a business plan; how they value a business; and how they structure the terms of an agreement. Within its pages, you’ll find everything you need to successfully raise new business capital with the most attractive terms possible.
Using informative case studies, detailed charts, and term sheet exercises, Raising Venture Capital for the Serious Entrepreneur discusses the basic principles of the venture capital method, strategies for raising capital, methods of valuing the early-stage venture, and proven techniques for negotiating the deal. The author leads you step-by-step through:
- Developing a Financing Map
- Getting to the First Stepping Stone
- Understanding the Unique Cash Flow and Risk Dynamics of Early Stage Ventures
- Determining the Amount of Capital to Raise and What to Spend It on
- Learning How Venture Capital Firms Think
- Creating a Winning Business Plan
- Funding Early-Stage Companies
- Agreeing on a Term Sheet with a Venture Capitalist
- Setting Terms for Splitting the Rewards
- Allocating Control between Founders/Management and Investors
- Aligning the Interests of Founders/Management and Investors
This invaluable guide also includes term sheet exercises that test your understanding of various financing situations facing companies. In addition, the book features three extensive case studies: the first covering a fictional start-up company used throughout the book, the second offering a stepping stone map, and the third presenting a term sheet used in practice by venture capitalists.
Quotes from Raising Venture Capital for the Serious Entrepreneur;
“The entrepreneur must structure the challenges and milestones for each stepping-stone in order to provide the proof required by the likely investor in the subsequent stage. In”
“The ability of entrepreneurs to hire people of a quality far superior to the norm (without paying them an excessive level of compensation) is a key attribute sought by investors. Investors see hiring great people as a significant milestone.”
14 – Creative Capital | By Spencer Ante
Venture capitalists are the handmaidens of innovation. Operating in the background, they provide the fuel needed to get fledgling companies off the ground–and the advice and guidance that helps growing companies survive their adolescence.
In Creative Capital, Spencer Ante tells the compelling story of the enigmatic and quirky man–Georges Doriot–who created the venture capital industry. The author traces the pivotal events in Doriot’s life, including his experience as a decorated brigadier general during World War II; as a maverick professor at Harvard Business School; and as the architect and founder of the first venture capital firm, American Research and Development. It artfully chronicles Doriot’s business philosophy and his stewardship in startups, such as the important role he played in the formation of Digital Equipment Corporation and many other new companies that later grew to be influential and successful.
An award-winning Business Week journalist, Ante gives us a rare look at a man who overturned conventional wisdom by proving that there is big money to be made by investing in small and risky businesses. This vivid portrait of Georges Doriot reveals the rewards that come from relentlessly pursuing what-if possibilities–and offers valuable lessons for business managers and investors alike.
Quotes from Creative Capital;
““rarely, if ever, took a hands-on role and helped to nurture a company. In his later years, Georges Doriot realized how critical such nurturing was in determining the success of a new venture. “I don’t know anyone on Wall Street who ever built a company,” said Doriot. “They simply furnish money, and that’s the least important part of it.”
15 – The Little Book of Venture Capital Investing | By Christopher Browne
Without giving any false hope, Christopher H. Browne succeeds in presenting the central ideas of the stock market investment in an uncomplicated and straightforward manner. You will see that the process of stock market investing is not that difficult as he compares it to as simple as shopping for groceries, giving the readers an entirely new perspective of it. He also provided instructions on how to take advantage of online stock screening tools and P/E ratios. In The Little Book of Value Investing, investors are encouraged to their due diligence before they expect a positive return. Brown stressed that the aggressive trading approach is not always the best course of action. Instead, there are scenarios where doing nothing reaps the better result.
Quotes from Creative Capital;
“The beauty of value investing is its logical simplicity. It is based on two principles: What’s it worth (intrinsic value), and don’t lose money (margin of safety).”
“Such opportunities do not come on the heels of great times; they are preceded by much pain.”
“Most people tend to look at…everything they buy with an eye on the value they get for the price.”
“When prices drop, they buy more of the things they want and need. Except in the stock market.”
Final Thoughts on the Best Books on Venture Capital
Do you see a book that you think should be on the list? Let us know your feedback here.