Scott Kupor
Secrets of Sand Hill Road: Venture Capital and How to Get It
ISBN: 978-0-593-08358-1
Venture capital has a great deal of mystique surrounding it, especially for new entrepreneurs. How does one get a startup funded? How much of the company must be surrendered to investors? Why do some startups receive funding for merely a concept on a napkin, and others don’t receive any funding even with an existing customer base? What types of documents do I have to sign? I had these questions among many others when I first joined the startup scene years ago, and I really didn’t know who to ask when I first started.
Back then, I wanted to learn more about venture funding. In a previous review, I talked about the book Venture Deals by Brad Feld and Jason Mendelson and the associated online class I took right when the pandemic shut everything down. While that was a fantastic course and really opened my eyes about the world of institutional funding, Secrets of Sand Hill Road: Venture Capital and How to Get It by Scott Kupor felt like a better introduction into the world of venture funding. Had I known about this book, I probably would have read it prior to taking the Venture Deals course.
I wouldn’t exactly refer to Secrets of Sand Hill Road as “VC Funding for Dummies,” but it broke down a lot of the terms into incredibly simple terms. The book takes you through the entire process of startup formation and funding, from the initial incorporation of the startup through pitching to angel investors and venture capitalists, what to expect on a term sheet from an investor, how to successfully exit through an acquisition or an IPO, and what can go horribly wrong along the way. The final couple dozen pages are a sample term sheet that Kupor has you examine as you read chapters 9 and 10 of the book, so you can see in plain term what he discusses.
The book was a much easier read than I thought it would be – I powered through the text while I was on a cross-country flight last year. The writing flows incredibly well, and there is a wealth of information packed into each chapter. My favorite part of the book was the discussion about down rounds – something that a lot of curricula on venture investment doesn’t cover. As we move through financially uncertain times, I think we’ll see a number of investment down rounds due to massive overvaluations in 2021 and 2022. It’s vital that startup founders understand this material as they continue to require more funding prior to exit. We’re in for a rough period, and knowledge is power.
I also enjoyed the chapter on the duties of board members. One of the biggest decisions anyone who takes investment money will have to make is who to place on the company’s board of directors. Many founders have been pushed out of their own companies due to actions taken by unfriendly boards with activist investors. Bad outcomes can easily be avoided with some forethought, and this includes the structure and makeup of your company’s board of directors. On the other hand, improper actions by the board can cause a great deal of legal trouble. Founders must be careful not to conspire with the board against investors, especially if things take a turn for the worse.
Overall, 10/10 would highly recommend to those who are interested in creating a venture-funded startup or who want to know what the process is like for those who have. As dense as the book looks, it’s an incredibly easy read for both new and experienced entrepreneurs. If you’re not familiar with the language or the world of venture capital, this book can be an easy entry point into that field, so that new and experienced entrepreneurs alike have the tools they need in order to get the funding to make their ideas real.