Today I came across a blog post by Steve Barsh in which he posted his slide deck from a talk he’s gave in SF recently.

Flipping through the deck, I came across one of the most straightforward and insightful presentations of the numbers that a VC is basing investment decisions on, often called “magic ratios.”

If you are trying to raise $2 mil from a VC at a $5 mil valuation, you will need to be able to show a path to a $100 mil exit in 5 yrs to show a 10x return assuming 50% dilution through future rounds.

The implication of this is very clear.  It’s easy to talk about raising $2 mil, but you need to be focused on whether there is an exit for your company at $100 mil, and how you are going to get there.  That’s what your VC is thinking about.

Check out slide 4 of the slide deck embedded below.  Thanks for the insight & clarity Steve.

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VentureBeat reports that Draper Fisher Jurvetson is heading to Russia:

Besides Russia, the fund, called DFJ-VTB Aurora, will invest in the neighboring Commonwealth of Independent States, including Belarus, Georgia, Ukraine (home of another DFJ fund), and others. The fund plans to invest between $2 million and $16 million per company.

Initially, DFJ is not contributing directly to the fund. But, by helping pick companies, it will have the opportunity to co-invest in them down the line. Half of the money will come from the Russian government and twenty percent from the European Bank of Development and Reconstruction.

Thousands of highly-educated engineers and scientists in the region have the skill, talent and motivation to build big companies, said DFJ’s managing director in Russia, Don Wood, in an interview with VentureBeat — they just haven’t had the resources or role models to do so, he says.

This is great to see VC getting on board with the technology opportunities in Russia. Oleg, are you ready to start putting a business plan together for Flatsourcing?

Long time friend of Voodoo, Marc Nathan was profiled yesterday in the Houston Chronicle.   We met Marc just over a year ago at a BarCamp event in Houston.  He was one of the first Angel Investors / VC’s that I had ever actually met in person.  He’s been extremely helpful to us and always willing to listen and bounce ideas off.

He shares some great red flags that when he hears, he walks:

No. 1 is ‘I don’t have any competition.’ When I hear that, my shutters go up. I put the note on the door that says closed for business. When somebody says that, it means two things: They don’t know who the competition truly is, or they don’t have any competition because nobody wants what they’ve got.

No. 2 red flag is you tell me your numbers are conservative. I automatically cut them in half anyway, so we could go around in circles. At the end of the day, don’t tell me anything. Just show me what you’ve got.

No. 3 — and there are so many of them — but No. 3 is probably saying that you as a management team or CEO are going to be with the company for the life of the company. The opposite of that is telling me that your CEO is going to step aside when more talent comes on board

Glad he’s getting some props over in Houston. Click here for the full article.  Thanks to Blake Poutra for sending this our way.