Quora has been exploding. There’s a ton of valuable content and high quality contributors on the site, but it’s definitely getting harder to find the best threads. On that note, here are some of my favorite threads across venture capital and startups. This is by no means an exhaustive list so feel free to add suggestions in the comments.

Venture Capital / Financing

• How do you run a good board meeting? – This is an invaluable topic for young VCs. Many VCs contributed to this topic including Mark Suster who nails it.
• What are the top qualities to look for in angel investors? – Great commentary by Reid Hoffman, several entrepreneurs and VCs.
• What are the best ways to manage relationships with VC contacts prior to fundraising? – Balanced thread from both VCs and entrepreneurs on how to best engage before you are fundraising.

Startups

• Two must read posts on startup failure: why and #1 reason.
• Among your lessons learned as a young entrepreneur, which are the greatest? – Good practical advice from PayPal founder Max Levchin.
• What is the perfect startup team? – A very important topic as you are getting your company off the ground. Comments from Bill Gross, Saul Klein and a few other valley veterans.
• How focused should a startup be on being acquired? – Jeff Clavier, Paul English from Kayak and others weigh in on how *not* to focus on acquisitions while building a company.
• How big a factor is luck in startup success? – Nice thoughts on luck and startup success from Jim Breyer, Marc Andreessen and many other entrepreneurs.
• What are the most common mistakes 1st time entrepreneurs make? – Long thread with great suggestions from many experienced entrepreneurs.

Company Stories

• How did you arrive at the decision to sell the Loudcloud business to EDS and become Opsware the software company? – Ben Horowitz discusses some of the reasons why they shifted their business model.
• Why did Wesabe shut down while Mint did so well? – Good perspective from early Mint employees on why they were successful.

Most VCs have a standard protocol for evaluating investment opportunities, but entrepreneurs vary greatly in their evaluation of VCs. Experienced entrepreneurs have been through the fund raising process before and know what “potholes” to avoid. There a few questions that entrepreneurs should ask of their potential VCs and some do, but most don’t. (Note: I use the term champion below to represent the partner or other investment professional at the VC firm who is sponsoring your investment.)

Here is my list of top questions that entrepreneurs might want to consider asking when raising capital:

1. What is the firm’s decision process? Every VC has its own process for evaluating investments, getting to a term sheet and getting a transaction closed. Believe it or not, some firms close a good number of their investments from opportunities junior folks drummed up (so much for avoiding Associates). The point is that it is important to get to know your potential VC’s investment process and your champion’s role in that process so you can measure progress towards closing the transaction.
2. Who will serve on the board of directors post-investment? This seems like an obvious question, but the answer is not always straightforward. Some firms may staff the board with a different partner than the one who championed the investment. It could depend on anything from geography to operational experience to the number of boards your champion serves on. In fact, some firms may even change out their board member based on the stage of the company. There is also turnover in the VC ranks and partners do leave firms.
3. How much of the VC’s current fund is invested? This question will give you an idea of how much money your potential VC has left after the investment in your company. Most entrepreneurs are so focused on the current fund raise that they don’t think about future rounds, which arguably are more important. The reality is that this fund raise probably won’t be your last. I’m in no way implying your VC won’t be able to support you in the future. There are plenty of ways VCs can handle these situations such as raising new funds, raising annex funds or making crossover investments. Regardless, this is a good piece of information to know particularly in the current environment where further VC consolidation is expected.
4. How many investments will the VC firm make this year and how many is your VC champion evaluating? The goal of this question is two fold. One, it gives you guidance on how many investments your potential VC as a firm does in a given year. Second, and the harder one to gauge, it gives you an idea of where your company lies in your champion’s priority stack. Does he or she have three other companies with signed term sheets right now? How many investments does the champion look to do this year and out of those how many has he or she already done? Typically, most partners only make 1-2 investments per year. I truly believe the “cream rises to the top” and if you have a strong company you’ll be able to raise capital regardless, but it’s always good to gain insight on your funding competition.
5. What are the barriers to close the transaction after the term sheet is signed? This is probably more relevant to late stage companies where a significant amount of due diligence is conducted by the VC. Signing a term and closing a transaction are two different things. Due diligence is typically conducted after a term sheet is signed and basically verifies everything you’ve told the VC up until then — technology/product, financials, management team, etc. If things don’t add up there is a chance you will be re-negotiating that term sheet. Some VCs do this and feel strongly about it and some don’t. Either way, it’s good to be aware of the possibility of it happening.
6. How has your VC champion specifically added value to his or her portfolio companies? The key here is specifics. Don’t accept high level explanations. VCs almost exclusively operate at a high level and are mostly good at selling (they raised the fund after all). Just get the facts and verify with the VC’s portfolio companies.
7. What does the VC like and dislike about your company and market opportunity? This might be a difficult question to ask, but it’s important to get candid feedback as early as possible. If there are challenges and concerns for your potential VC you need to address them upfront. Also, find out what the VC likes about your company and play to your strengths.

I’d love to hear from entrepreneurs on this one. Comments, thoughts and suggestions are welcome.

Boy has the financial services landscape changed over the past year. Collapse and utter failure are the first words that come to mind. AIG, Lehman, Merrill Lynch the list goes on and on. At the same time, a few survivors like Goldman are thriving in this environment and getting ready to payout record bonuses. What does this mean to entrepreneurs in the sector? Is FinTech dead? I don’t think so and here’s why:

Inefficiencies are rampant across the entire supply chain: Voice trading is prevalent in the OTC markets. Real-time risk management is almost non-existent. Real-time settlement/clearing is non-existent. Clients don’t understand and sometimes don’t know what securities they hold and their risk exposure. Managing skyrocketing market data volumes is getting tougher and tougher. I can go on and on, but you get the point.

Talent and risk have flip flopped: This is an important one and good for all startups in the NYC area. In the past, most (not all) good programmers went to work on Wall Street to make a lot of money, working for hedge funds and large financial services firms. Startups weren’t really on the radar. Maybe it was cultural here on the East Coast, but pay wasn’t comparable and the perceived risk was high (not saying I agree). That is changing. For one, there hasn’t been this much high quality technology talent available in quite a long time. Many of the large banks significantly cut their tech teams. Great programmers and software product folks with strong domain experience are available. These folks are getting hired by fast growing tech startups. Second, what I’ll call startup risk is down. I’m in no way implying startups are less risky than in the past, but merely pointing out that perceived risk is down. Lower salaries with equity stakes and options in exciting venture-backed startups are looking better and better. The staying power of large financial services firms is very much so in question.

Diverse Sectors: Capital Markets is one slice of the FinTech pie. There are vibrant opportunities in other sectors like Banking, Insurance and Real Estate (who would have thought). Most of these sectors have under invested in technology for many years and replacement cycles are coming up. The cost of maintaining legacy technology is increasing rapidly. There are also broad financial management plays like electronic billing and payments gaining traction in sectors like Government and Healthcare.

Regulation and Reform: We all know regulation is coming at some point. The specific impact is unknown, but with that comes opportunity for nimble, disruptive startups. A few areas that I’m particularly excited about are risk management, real-time analytics, OTC derivatives automation, SaaS, settlement/clearing, anti-fraud, new marketplaces and consumer financial services.

FinTech is far from dead. I believe the crisis has strengthened the need for technology, automation and transparency and am confident entrepreneurs are the ones who can change things for the better.

Cleantech has been one of the few bright spots in terms of venture capital investment in 2008. According to The Cleantech Group, a market research and financial services firm, Q3 brought a record-level of $2.6B invested across 158 companies located in North America, Europe, China and India. That’s a 37% increase over the same period last year, and a 17% increase over Q2.

While the category is growing, cleantech investment has been dominated by capital-intensive projects like clean power generation and biofuels. With the economic downturn in full effect and funding being harder to come by, there is a significant opportunity for companies at the intersection of software and cleantech. Software is attractive due to its capital efficiency and scalability. Here are a few categories and companies that I have run across:

	Energy Management – Customers can save hard dollars by adopting solutions that help better manage and monitor energy consumption. Energy efficiency in data centers, PC power management, efficient HVAC systems, lighting management, smart homes, demand response and facilities management are all key areas primed for growth. Companies in this segment include Verdiem, 1E, BigFix, EnergyHub, Adura, Positive Energy and Faronics.
	Carbon Management – Measuring, managing and analyzing CO2 emissions are increasingly garnering customer attention and budgets. Compliance is at the forefront of spurring demand, but not far behind are reputation risk, reduced costs through automation and climate change leadership. This segment is getting crowded fast with north of 20 companies, including Clear Standards, Planet Metrics, Carbonetworks, Carbonops, Supply Chain Consulting, Enviance and Greenstone Carbon Management.
	Trading – The carbon trading opportunity is pegged as the world’s largest potential market. Early this year, New Carbon Finance, a market research firm, predicted that the *US* carbon trading market could be worth $1 trillion by 2020. The market is still in its infancy and riddled with regulatory challenges, but there is significant opportunity across the trading spectrum in everything from risk management to electronic trading to liquidity providers. Companies include CarbonFlow, which is working on a platform to help automate carbon credit creation, broker Cantor Fitzgerald (CantorCO2e ) and Australia-based Tradeslot. We also can’t forget about the US-based exchanges CCX and The Green Exchange. Definitely a segment worth keeping an eye on.
	Solar – Most solar startups are either hardware or services-centric and include installers and manufacturers. As adoption increases there is an opportunity to help consumers and businesses qualify their properties, analyze financial impact, automate permit processes and monitor usage. Companies include Sungevity and Energy Matters. I came across a blog post on this topic that has a good list of companies. See here for details.
	Water Conservation – The United Nations estimates that by 2025, two-thirds of the world’s population will face periodic and often severe water shortages. Software can help monitor and curb water consumption and better manage irrigation and sprinkler systems. An example is California-based HydroPoint Data Systems who builds smart irrigation systems for consumers and small businesses.
	Waste Management & E-waste Recycling – Even with the economic downturn consumers are still spending dollars on new computers, TVs, cameras, cell phones, DVD players and rapidly throwing out old ones. E-waste is one of the fastest-growing waste categories. Consumers in the US throw out roughly 100M cell phones per year and 130K computers per day. With e-waste piling up, there is an opportunity for software to help consumers and large enterprises be smart about recycling, waste management, health & safety, compliance and asset recovery. Companies include Kashless, Soft-Pak, AllMax, Solution Foundry and CellForCash.

This list is by no means exhaustive. The category itself is nascent and it is yet to be determined if these companies can build sustainable businesses over the long haul. It is an exciting time to be a startup tasked with the added mission of making the planet a better place. Feel free to send over additional categories, suggestions and/or companies that I have missed.

I had the pleasure of recently speaking with fellow Rutgers alum Dev Ittycheria. Dev is President of the $1.2B Enterprise Service Management business and a member of the executive management team at BMC Software. He was formerly CEO and co-founder of BladeLogic, a data center automation software company acquired by BMC Software for $800M earlier this year. Dev is a serial entrepreneur and was kind enough to share some of his background and experiences with me. Here are some key points from our discussion.

Entrepreneur vs. VC

Dev has the unique perspective of having spent time on both sides of the proverbial startup fence – VC and Entrepreneur. As an entrepreneur, he co-founded and was CEO of Applica, one of the first venture-backed application services companies (a precursor to what people call cloud computing), which was acquired by Breakaway Solutions. Dev also spent time as an Entrepreneur-In-Residence (EIR) at Bessemer Venture Partners. He joined Bessemer in 2001 after taking Breakaway public a few years earlier. As an EIR, he had three options – start another company, work on new investment opportunities for the firm, or lead an existing portfolio company. He chose starting a new venture and teamed up with a former colleague Vijay Manwani, also an EIR at Battery Ventures. They raised $6M from Bessemer and Battery in September 2001, five days before 9/11, and launched BladeLogic. The rest is history.

Key Success Factors

BladeLogic was a success on many different levels, but there were a few that stand out. First, focused execution was critical. BladeLogic was very focused on a particular segment of infrastructure software – the server change and configuration management market. Next was a rapid and iterative development process that allowed the company to obtain customer input early and often. That was critical to deeply understanding customers’ needs and problems and making sure their products solved the most pressing problems. The last and arguably most important was the sales team. BladeLogic decided to go to market via a direct sales channel and spent a great deal of time hiring and developing the best sales force they could. A strong sales force is a competitive advantage unto itself.

Software vs. Services

As a software product company it’s easy to fall into the services trap. One-off consulting engagements can improve your short-term cash flow, but can distract the company from its overall strategy. This becomes particularly challenging as you sell to large customers who typically demand “whole solutions” and pull small software companies in many directions. At BladeLogic, the key was a disciplined product management strategy that never lost sight of the company’s strategic goals.

Advice for Entrepreneurs

These economic times are extremely challenging for all companies, particularly software startups. If you are an entrepreneur or launching a new company in this environment focus on doing three things:

1. Solve a genuine pain point for the customer. There is a big difference between building products that are “pain killers” versus “vitamins”. With IT budgets tightening vitamins won’t find dollars. You’ll find out rather quickly which camp you fall into.
2. Work on building a *great* team, not just a good one. If you are an enterprise software company, focus on developing the best sales and development teams possible. These two functions are the engines for driving your business forward and will be extremely important to surviving the downturn.
3. Build a defensible technology advantage. Your competition, which will be typically larger and better capitalized, will attempt to bankrupt your company by under-pricing their equivalent products. If you have a true defensible technology advantage that customers care about that strategy simply won’t work. Furthermore, make sure your product roadmap focuses on building features that customers will pay for, not something they wish for, but will not spend any more money on.

Sequoia Capital recently made a presentation to its portfolio companies about how to try to survive an economic downturn. Definitely worth a read.

Would you rather invest in or build a startup around a great team or a great market? Obviously, it would be advantageous to have both, but that’s usually the exception. It’s a question that’s been debated for quite some time in the Startup / VC world, and doesn’t have a clearcut answer. For this post, let’s take a look at pros and cons to both arguments. I’ll let you decide.

Great team

The famous Venture Capitalist Arthur Rock once said, “I invest in people, not ideas. If you can find good people, if they’re wrong about the product they’ll make a switch.” A good number of VC’s go along with this philosophy and bet on the team above all else. Most also prefer to invest in entrepreneurs that have successful track records. These entrepreneurs either have great teams or have built them in the past. The idea here is to minimize execution risk early on. To paraphrase Jim Collins of Good to Great: great teams understand that they need to first find the right people, get the wrong people out and then get the right people in the right roles. The hope is that the great team will be able to find the fast-growing market somewhere along the way.

Now for the cons. What if the team is too early for the market? That means no matter how good they execute it will be an uphill battle. The sales cycles will be long and ROI unclear. Customers and users won’t be convinced they need the solution at all. The ecosystem you are counting on won’t exist. This happened to a bunch of startups around ‘99/’00.

Great market

Markets are like waves in the ocean. They are unpredictable, change at the blink of an eye, can be much larger than anticipated or die as quick as they came. The hard part for the entrepreneur (and investor) is picking the right wave to bet on. It takes discipline and focus not to choose the wrong one, but if you pick the right one you are in for the ride of your life. A fast growing market will propel your company forward. Customers will be pounding down your door, investors will be pouring money into the segment (further validating it) and buzz will be in the air.

What if you have a great product in a great market, but bad or mediocre team? The product could be the best in the segment, but your team can’t sell or market it. That’s a problem. Opportunity lost. By the time your team figures this out, competitors are already hot on the trail.

While although great teams are *very* important, markets take precedent and are the most important factor to a company’s ultimate success. Inevitably, mistakes will be made along the way so near perfect execution is unlikely regardless, but markets aren’t.

Jason Calacanis has a great interview with the legendary angel investor Ron Conway. Ron was an early investor in Google, PayPal and Ask Jeeves. Some recent investments include Digg, Zooomr, BuzzLogic, Perenety, PBWiki, Rupture and Vizu. Since 2005, Ron has backed over 100 companies. In the interview, Ron discusses how an entreprenur should go about contacting him, the recent increase in valuations, executive summaries and his view on whether or not we are in a bubble. Great stuff.

If you are remotely interested in the Venture Capital industry, “Venture Capital and the Finance of Innovation” by Andrew Metric is a must read. The first three parts of the book are fantastic and cover a broad range of topics directly applicable to those working in the field. Some of the key topics include the history of VC, structuring VC partnerships, term sheet details, preferred stock, and later round investments (series b or c). Definitely check it out.

Fred Wilson from USV has an interesting post on some of the key differences between early stage (or seed) and later stage investing. Both stages have their advantages, disadvantages and risk. Definitely worth a read.