What is ‘Venture Capital?’

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Venture capital is funding provided to startup companies that have speculated long-term growth potential. Venture capital is funding provided by a venture capitalist investor from a venture capital fund comprised of several limited partner (“LP”) investors – these limited partners do not directly own equity in the portfolio companies. Venture capital tends to focus on emerging companies seeking substantial funds for the first time, while other private equity deals tend to fund larger, more established companies that are seeking an equity infusion or a chance for company founders to transfer some of their ownership stake.

Venture capital generally comes from independent investors, venture capital funds, investment banks and other financial institutions.

Venture capital is a risky investment, but with the potential for high returns.

For new ventures with limited operating history (under two years), venture capital funding is increasingly popular – even essential – source for raising capital, especially if they lack access to capital markets, bank loans or other debt instruments. However, investors usually get equity and decision-making power in the company.

Venture Capital Deals

In a venture capital deal, shares of a company are created and sold to a few investors through independent limited partnerships that are established by venture capital firms. Sometimes these partnerships consist of a pool of several similar enterprises.

The National Venture Capital Association (NVCA) is an organization composed of hundreds of venture capital firms that offer funding to innovative enterprises.

Angel Investors

Individual investors who provide venture capital are high net worth individuals (HNWIs) often called ‘angel investors’.

Angel investors are typically a diverse group of individuals who have amassed their wealth through a variety of sources. However, they tend to be entrepreneurs themselves, or executives recently retired from the business empires they’ve built.

Self-made investors providing venture capital typically share several key characteristics. The majority look to invest in companies that are well-managed, have a fully-developed business plan and are poised for substantial growth. These investors are also likely to offer funding to ventures that are involved in the same or similar industries or business sectors with which they are familiar. If they haven’t actually worked in that field, they might have had academic training in it. Another common occurrence among angel investors is co-investing, where one angel investor funds a venture alongside a trusted friend or associate, often another angel investor.

The Venture Capital Process

The first step for any business looking for venture capital is to submit a business plan , either to a venture capital firm or to an angel investor. If interested in the proposal, the firm or the investor must then perform due diligence, which includes a thorough investigation of the company’s business model, products, management and operating history, among other things.

Since venture capital tends to invest larger dollar amounts in fewer companies, this background research is very important. Many venture capital professionals have had prior investment experience, often as equity research analysts; others have Masters in Business Administration (MBA) degrees. Venture capital professionals also tend to concentrate in a particular industry. A venture capitalist that specializes in healthcare, for example, may have had prior experience as a healthcare industry analyst.

Once due diligence has been completed, the firm or the investor will pledge an investment of capital in exchange for equity in the company. These funds may be provided all at once, but more typically the capital is provided in rounds. The firm or investor then takes an active role in the funded company, advising and monitoring its progress before releasing additional funds.

The investor exits the company after a period of time, typically four to six years after the initial investment, by initiating a merger, acquisition or initial public offering (IPO).

A Day as a VC

Like most professionals in the financial industry, the venture capitalist tends to start his or her day with a copy of the Wall Street Journal, The Financial Times and other respected business publications. Venture capitalists that specialize in an industry tend to also subscribe to the trade journals and papers that are specific to that industry.

For the venture capital professional, most of the rest of the day is filled with meetings. These meetings have a wide variety of participants, including other partners and/or members of his or her venture capital firm, executives in an existing portfolio company, contacts within the field of specialty and budding entrepreneurs seeking venture capital.

At an early morning meeting, for example, there may be a firm-wide discussion of a potential portfolio investment. The due diligence team will present the pros and cons of investing in the company. An “around the table” vote may be scheduled for the next day as to whether or not to add the company to the portfolio.

An afternoon meeting may be held with a current portfolio company. These visits are maintained on a regular basis in order to determine how smoothly the company is running and whether the investment made by the venture capital firm is being utilized wisely. The venture capitalist is responsible for taking evaluative notes during and after the meeting and circulating the conclusions among the rest of the firm.

After spending much of the afternoon writing up that report and reviewing other market news, there may be an early dinner meeting with a group of budding entrepreneurs who are seeking funding for their venture. The venture capital professional gets a sense of what type of potential the emerging company has, and determines whether further meetings with the venture capital firm are warranted. After that dinner meeting, when the venture capitalist finally heads home for the night, he or she may take along the due diligence report on the company that will be voted on the next day, taking one more chance to review all the essential facts and figures before the morning meeting.

The Paths to Breaking into Venture Capital

September 4, 2018 Amy LeeLeave a comment

Work in the TMT sector of a bulge bracket investment bank or a management consultancy for two years before being placed in a late stage venture capital firm.
Work in finance and get an MBA from a top 15 business school

Network Effect

October 19, 2017 Amy LeeLeave a comment

What is a ‘Startup’

October 19, 2017 Amy LeeLeave a comment

What is a ‘Startup’

A startup is a company that is in the first stage of its operations. These companies are often initially bankrolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand. Due to limited revenue or high costs, most of these small-scale operations are not sustainable in the long term without additional funding from venture capitalists.

BREAKING DOWN ‘Startup’

In the late 1990s, the most common type of startup company was a dotcom. Venture capital was extremely easy to obtain during that time due to a frenzy among investors to speculate on the emergence of these new types of businesses. Unfortunately, most of these internet startups eventually went bust due to major oversights in their underlying business plans, such as a lack of sustainable revenue. However, there were a handful of internet startups that did survive when the dotcom bubble burst. Internet bookseller Amazon.com and internet auction portal eBay are examples of such companies.

Startups Legal Structure

Startups need to consider what legal structure best fits their entity. A sole proprietorship is suited for a founder who is also the key employee of a business. Partnerships are a viable legal structure for businesses that consist of several people who have joint ownership; they are typically straightforward to establish. Personal liability can be reduced by registering a startup as a limited liability company.

Considerations for Startups

Startups need to invest time and money into research. Market research helps determine the demand of a product or service. A startup requires a comprehensive business plan outlining mission statement, future visions and goals as well as management and marketing strategies.

Startups must decide whether their business is conducted online, in an office/home office or store; this depends on the product or service being offered. For example, a technology startup selling virtual reality hardware may need a physical storefront to give customers a face-to-face demonstration of the product’s complex features.

Funding for Startups

Crowdfunding allows people who believe in a startup to contribute money via a crowdfunding platform. Startups often raise funds using venture capitalists. This is a group of professional investors that specialize funding startups. Silicon Valley in California is known for its strong venture capitalist community and is popular destination for startups.

Startups may use a small business loan to commence operations. Banks typically have several specialized options available for small businesses; a microloan is a low interest, short-term product, tailored for startups. To qualify, a detailed business plan is often required.

A startup may be funded using credit. A flawless credit history may allow for a line of credit to fund a startup. This option carries the most risk, particularly if the startup is unsuccessful.

What is “Private Equity”?

October 19, 2017 Amy LeeLeave a comment

Private equity is capital that is not traded on a public exchange.

Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund new technology, make acquisitions, expand working capital, and to bolster and solidify a balance sheet.

BREAKING DOWN ‘Private Equity’

Private equity comes primarily from institutional investors and accredited investors, who can dedicate substantial sums of money for extended time periods. In most cases, considerably long holding periods are often required for private equity investments, in order to ensure a turnaround for distressed companies or to enable liquidity events such as an initial public offering (IPO) or a sale to a public company.

Since the 1970s, the private equity market has strengthened readily. Pools of funds are sometimes created by private equity firms in order to privatize extra-large companies. A significant number of private equity firms perform actions known as leveraged buyouts (LBOs). Through LBOs, substantial amounts of money are provided in order to finance large purchases. After this transaction, private equity firms attempt to improve the prospects, profits and overall financial health of the company, with the ultimate goal being a resale of the company to a different firm or cashing out through an IPO.

Fees and Profits

The fee structure for private equity firms typically varies, but usually includes a management fee and a performance fee. Certain firms charge a 2% management fee annually on managed assets and require 20% of the profits gained from the sale of a company.

Positions in a private equity firm are highly sought after, and for good reason. For example, consider a firm has $1 billion in assets under management (AUM). This firm, like the majority of private equity firms, is likely to have no more than two dozen investment professionals. The 20% of gross profits generates millions in firm fees, so some of the leading players in the investment industry are attracted to positions in such firms. At a mid-market level of $50 million to $500 million in deal values, associate positions are likely to bring a salary in the low six figures. A vice president at such a firm would stand to earn something close to $500,000, while a principal could earn more than $1 million.

Transparency

Beginning in 2015, a call was issued for more transparency in the private equity industry, due largely to the amount of income, earnings and sky-high salaries earned by employees at nearly all private equity firms. As of 2016, a limited number of states have pushed for bills and regulations allowing for a bigger window into the inner workings of private equity firms. However, lawmakers on Capitol Hill are pushing back, asking for limitations on the Securities and Exchange Commission’s (SEC) access to information.

What is “LP”

October 19, 2017 Amy LeeLeave a comment

What is ‘Limited Partnership – LP’

A limited partnership (LP) exists when two or more partners unite to jointly conduct a business in which one or more of the partners is liable only to the extent of the amount of money that partner has invested. Limited partners do not receive dividends, but enjoy direct access to the flow of income and expenses. This term is also referred to as a “limited liability partnership” (LLP). The main advantage to this structure is that the owners are typically not liable for the debts of the company.

BREAKING DOWN ‘Limited Partnership – LP’

Generally, a partnership is a business that is owned by two or more individuals. There are three forms of partnerships: general partnership, joint venture and limited partnership. The three forms differ in various aspects, but they share similar features.

Similarities of Limited Partnership With Other Forms of Partnerships

In all forms of partnerships, each partner is required to contribute resources such as property, money, skill or labor in exchange for sharing in the profits and losses of the business. At least one partner is involved in making decisions regarding the day-to-day affairs of the business.

Though not a legal requirement, all partnerships require a partnership agreement that specifies how to make business decisions. These decisions include how to split profits or losses, resolve conflicts and alter ownership structure, as well as how to close the business, if necessary.

Differences Between Limited Partnership and Other Forms of Partnership

A general partnership is the one in which all profits, managerial responsibilities and liability for debts are shared in equal proportion among the partners. If they plan to share profits or losses unequally, this should be documented in a legal partnership agreement, to avoid future disputes. A joint venture is a form of general partnership that remains valid until a certain project is completed or a certain period elapses.

A limited partnership differs from other partnerships in that the partners are allowed to have limited liability. This means that partners are only liable for the business’ debts up to a certain limit. This limit depends on the individual partner’s investment contribution. A limited partnership venture is run by one or two partners known as general partner(s). Other contributors, known as limited or silent partners, provide capital but aren’t allowed to make managerial decisions.

Formation of Limited Partnership

Almost all U.S. states govern the formation of limited partnerships under the Uniform Limited Partnership Act, which was amended in 1985. It was originally known as the Limited Partnership Act, created in 1916 and adopted by 49 states, plus the District of Columbia.

To form a limited partnership, the partners must register the venture in the applicable state, typically through the office of the local Secretary of State. It is important to obtain all relevant business permits and licenses, which vary based on locality, state or industry. The U.S. Small Business Administration lists down all local, state and federal permits and licenses necessary to start a business.

October 19, 2017 Amy LeeLeave a comment

Capital Markets

What are ‘Capital Markets’

Capital markets are markets for buying and selling equity and debt instruments. Capital markets channel savings and investment between suppliers of capital such as retail investors and institutional investors, and users of capital like businesses, government and individuals. Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets, where new stock and bond issues are sold to investors, and secondary markets, which trade existing securities.

BREAKING DOWN ‘Capital Markets’

Capital markets are a broad category of markets facilitating the buying and selling of financial instruments. In particular, there are two categories of financial instruments that capital in which markets are involved. These are equity securities, which are often known as stocks, and debt securities, which are often known as bonds. Capital markets involve the issuing of stocks and bonds for medium-term and long-term durations, generally terms of one year or more.

Capital markets are overseen by the Securities and Exchange Commission in the United States or other financial regulators elsewhere. Though capital markets are generally concentrated in financial centers around the world, most of the trades occurring within capital markets take place through computerized electronic trading systems. Some of these are accessible by the public and others are more tightly regulated.

Other than the distinction between equity and debt, capital markets are also generally divided into two categories of markets, the first of which being primary markets. In primary markets, stocks and bonds are issued directly from companies to investors, businesses and other institutions, often through underwriting. Primary markets allow companies to raise capital without or before holding an initial public offering so as to make as much direct profit as possible. After this point in a company’s development, it may choose to hold an initial public offering so as to generate more liquid capital. In such an event, the company will generally sell its shares to a few investment banks or other firms.

At this point the shares move into the secondary market, which is where investment banks, other firms, private investors and a variety of other parties resell their equity and debt securities to investors. This takes place on the stock market or the bond market, which take place on exchanges around the world, like the New York Stock Exchange or NASDAQ; though it is often done through computerized trading systems as well. When securities are resold on the secondary market, the original sellers do not make money from the sale. Yet, these original sellers will likely continue to hold some amount of stake in the company, often in the form of equity, so the company’s performance on the secondary market will continue to be important to them.

Capital markets have numerous participants including individual investors, institutional investors such as pension funds and mutual funds, municipalities and governments, companies and organizations, banks and financial institutions. While many different kinds of groups, including governments, may issue debt through bonds (these are called government bonds), governments may not issue equity through stocks. Suppliers of capital generally want the maximum possible return at the lowest possible risk, while users of capital want to raise capital at the lowest possible cost.

The size of a nation’s capital markets is directly proportional to the size of its economy. The United States, the world’s largest economy, has the largest and deepest capital markets. Because capital markets move money from people who have it to organizations who need it in order to be productive, they are critical to a smoothly functioning modern economy. They are also particularly important in that equity and debt securities are often seen as representative of the relative health of markets around the world.

On the other hand, because capital markets are increasingly interconnected in a globalized economy, ripples in one corner of the world can cause major waves elsewhere. The drawback of this interconnection is best illustrated by the global credit crisis of 2007-09, which was triggered by the collapse in U.S. mortgage-backed securities (MBS). The effects of this meltdown were globally transmitted by capital markets since banks and institutions in Europe and Asia held trillions of dollars of these securities.

Differentiation From ‘Money Markets’

People often confuse or conflate capital markets with money markets, though the two are distinct and differ in a few important respects. Capital markets are distinct from money markets in that they are exclusively used for medium-term and long-term investments of a year or more. Money markets, on the other hand, are limited to the trade of financial instruments with maturities not exceeding one year. Money markets also use different financial instruments than capital markets do. Whereas capital markets use equity and debt securities, money markets use deposits, collateral loans, acceptances and bills of exchange.

Because of the significant differences between these two kinds of markets, they are often used in different ways. Due to the longer durations of their investments, capital markets are often used to buy assets that the buying firm or investor hopes will appreciate in value over time so as to generate capital gains, and are used to sell those assets once the firm or investor thinks the time is right. Firms will often use them in order to raise long-term capital.

Money markets, on the other hand, are often used to generate smaller amounts of capital or are simply used by firms as a temporary repository for funds. By regularly engaging with money markets, companies and governments are able to maintain their desired level of liquidity on a regular basis. Moreover, because of their short-term nature, money markets are often considered to be safer investments than those made on the equities market. Due to the fact that longer terms are generally associated with investing in capital markets, there is more time during which the security in question may see improved or worsened performance. As such, equity and debt securities are generally considered to be riskier investments than those made on the money market.

For more information on this distinction and on capital markets, read Financial Markets: Capital vs. Money Markets. Also see Capital Market History – Introduction to Capital Markets History, A Look at Primary and Secondary Markets, The Global Electronic Stock Market, The NYSE and Nasdaq: How They Work and The Birth of Stock Exchanges.

What is a “Start Up”?

October 19, 2017 Amy LeeLeave a comment

Startup

What is a ‘Startup’

BREAKING DOWN ‘Startup’

Startups Legal Structure

Considerations for Startups

Funding for Startups

A startup may be funded using credit. A flawless credit history may allow for a line of credit to fund a startup. This option carries the most risk, particularly if the startup is unsuccessful.

Top Investment Blogs of 2017

October 19, 2017 Amy LeeLeave a comment

The Best Investing Blogs of 2017

This list of the best investing blogs of 2017 is in alphabetical order by last name (so please don’t think this is force-ranked in any way).

Jim Blankenship, Financial Ducks In A Row

Jim is a financial planning expert and he shares his knowledge across a variety of platforms. His blog Financial Ducks in a Row talks about guidance for your retirement, education funding, and more. While not strictly investment focused – it really helps you understand the structure of vehicles for your investments (which can sometimes be a bigger battle).

Jim’s Blog: Financial Ducks In A Row

Follow him on Twitter: @FinancialDucks

A favorite post: Ready, Set Go! When To Start A Pension Payout

Josh Brown, The Reformed Broker

Josh has a fun blog (and Twitter account), where he shares his market insights, and insights on pretty much everything that crosses his mind. That’s what makes following Josh Brown so interesting – the guy is a pro-investor and is on every major financial news network at least once a week. Yet he blogs, and is interesting – just check out my favorite post from this year below!

Josh’s Blog: The Reformed Broker

Follow him on Twitter: @reformedbroker

A favorite post: Three Things That Will Never Change In Wealth Management

Ben Carlson, A Wealth of Common Sense

Ben does a great job explaining really complex investment stuff in a simple way. He doesn’t get too caught up in this hot trend or that, but he uses real life examples to highlight bigger, more important concepts. Be blogs almost everyday, and the articles are pretty good length. Check it out if you want some macro level insights.

Ben’s Blog: A Wealth of Common Sense

Follow him on Twitter: @awealthofcs

A favorite post: My Evolution Of Asset Management

Kathryn Cicoletti, Ms. Cheat Sheet

Kathryn is on of my favorite investing bloggers because she is a former investment analyst who has moved on to infuse comedy with money. Her videos about investing are hilarious, and at the same time, she’s spot on with the topic she’s covering. If you enjoy humor and money, you’re going to love Kathryn’s blog.

Kathryn’s Blog: Ms. Cheat Sheet

Follow her on Twitter: @mscheatsheet

A favorite post: Times Are Tough. Here’s an Oh$hit Investment Portfolio

Jim Dahle, The White Coat Investor

Jim Dahle has a blog focused on investing and issues facing doctors and other high net worth individuals. While that seems pretty niche, the topics he covers really apply to most investors and anybody who invests and has student loan debt (another big area facing doctors). What I love about Jim’s site is that he isn’t afraid to cover topics in detail – and some of his articles are very in-depth.

Jim’s Blog: The White Coat Investor

Follow him on Twitter: @WCInvestor

A favorite post: How To Be A Do-It-Yourself Investor

Sam Dogen, Financial Samurai

Sam from the Financial Samurai is another ex-Wall Street guy that writes about personal finance and investing. Sam has some of the most unique articles on the web – all incredibly thoughtful and well written. Everything he publishes not only informs, but creates a conversation on what is likely one of the most engaged investing blogs online as well. Not all of his articles are investing related, but many are. His articles also tend to go deeper and more complex than most.

Sam’s Blog: Financial Samurai

Follow him on Twitter: @financialsamura

A favorite post: The Average Net Worth For The Above Average Person

Eddy Elfenbein, Crossing Wall Street

Eddy is the founder of Crossing Wall Street, a very market and stock centric blog where he shares his insights on the market and individual companies. He is traditionally a buy and hold investor, which seems to be getting rarer and rarer these days. He has also beaten the S&P500 7 out of the last 8 years. Check out his stuff!

Eddy’s Blog: Crossing Wall Street

Follow him on Twitter: @EddyElfenbein

A favorite post: The Skewedness Of Stock Returns

Michael Kitces, Nerd’s Eye View

Michael’s site is self described as commentary on financial planning, but as a consumer and investor, I find a ton of knowledge from his insights on how the system works (and doesn’t work) to your advantage. He doesn’t just cover investing, but his insights into the latest on government regulations concerning your investment vehicles (like IRAs) has been incredibly helpful over time.

Michael’s Blog: Nerd’s Eye View

Follow him on Twitter: @MichaelKitces

A favorite post: How To Do A Backdoor Roth IRA (Safely)

Larry Ludwig, Investor Junkie

Larry has been blogging at Investor Junkie for several years. What I appreciate about Larry is that he is NOT an investment professional. In fact, he is a small business owner who’s had a passion for investing since he was young (very similar to my story). He focuses a lot on investing, but also takes it to the next level and focuses on investing on a bigger level – any money you set aside to grow in the end.

Larry’s Blog: Investor Junkie

Follow him on Twitter: @InvestorJunkie

A favorite post: How To Get Started Investing

Michael Piper, Oblivious Investor

Mike is one of the more well-known investing bloggers, who is now a published author several times over. He writes a lot of practical investing-focused personal finance articles, with a focus around diversification, reducing expenses and fees, and ignoring the media…funny coming from a blogger, but very valid none-the-less. Mike is also a CPA, and continually highlights that investing doesn’t have to be complicated.

Mike’s Blog: Oblivious Investor

Follow him on Twitter: @michaelrpiper

A favorite post: Why Invest in Index Funds

Ben Reynolds, Sure Dividend

Ben’s site is one of the newest blogs to make the list (even though it’s several years old). He’s done a great job of providing excellent content with a focus on dividend stocks. He provides in-depth analysis, and his site is easy to read, with charts and graphs to back up most topics. He writes new content multiple times a week, so stop by and see if it’s in your wheelhouse.

Ben’s Blog: Sure Dividend

Follow him on Twitter: @SureDividend

A favorite post: 15 Actionable Quotes From Warren Buffett’s 2015 Annual Report

Barry Ritholtz, The Big Picture

I discovered Barry’s blog three years ago, and I have been reading it weekly ever since. He posts multiple times a day, so there is always something to read. I love his combination of investing insight and general commentary. Barry is a professional money manager who has been blogging since 2003 and writing for even longer than that. He basically shares his thoughts on the market and the economy, and anything else that’s on his mind. I find it very easy to read, yet very interesting at the same time. Plus, his articles are on the shorter side (on average), which is reader-friendly.

Barry’s Blog: The Big Picture

Follow him on Twitter: @ritholtz

A favorite post: Do Youths Graduating In A Recession Incur Permanent Losses

Jeff Rose, Good Financial Cents

Jeff is an amazing blogger and business person. He doesn’t always blog about investing, but when it does, it’s typically practical advice that anyone can follow. Outside of his blog, Jeff is a Certified Financial Planner and often posts about struggles he sees on his Facebook page or Twitter. Besides that, his blog is probably the best designed finance blog out there.

Jeff’s Blog: Good Financial Cents

Follow him on Twitter: @jjeffrose

A favorite post: 11 Ways To Invest $100,000 With Confidence

Todd Tresidder, Financial Mentor

Todd is the founder of Financial Mentor, where he is a financial coach that helps people figure out their financial lives and invest for the future. Todd is a very no-nonsense guy, and from the few times I’ve met him and reading his articles, I enjoy his style. His goal is to help people almost from a behavior finance perspective, with some common sense reality thrown in. Check it out – he covers 80% investing and 20% personal finance.

Todd’s Blog: Financial Mentor

Follow him on Twitter: @FinancialMentor

A favorite post: A Ridiculously Simple Way To Build Wealth

Tadas Viskanta, Abnormal Returns

Tadas Viskanta is the founder and editor of Abnormal Returns since it was launched in 2005. He is a really smart guy, and shares a lot of great content every day on his site. If you want something to read in the financial world, stop by and check out his daily round up posts. The gold, though, is when he actually shares his thoughts – typically by aggregating some other peoples thoughts together and adding to it, or lambasting them. Either way, it’s good stuff.

Tadas’ Blog: Abnormal Returns

Follow him on Twitter: @AbnormalReturns

A favorite post: Good Investment Advice Doesn’t Need Updating All That Often

Jim Wang, Wallet Hacks

Jim Wang is the founder of Wallet Hacks, and before that he ran Bargaineering, which he sold for $3,000,000. Today, he runs Wallet Hacks and shares what he’s learned about personal finance, business, investing, and wealth. While some of his content isn’t investing focused, his investing articles are top-notch. Check it out.

Jim’s Blog: Wallet Hacks

Follow him on Twitter: @wallethacks

A favorite post: How I Built A Dividend Growth Investment Portfolio

Roger Wohlner, The Chicago Financial Planner

I stumbled upon Rogers blog last year and have been impressed by the content. Roger is a fee-only financial advisor who started to blog to share his knowledge and experience as a financial planner. While I don’t always completely agree with everything Roger writes, that’s okay – because as I mentioned above, you just can’t learn everything in one place, and seeing different perpectives from these best investment blogs is a great start.

Roger’s Blog: The Chicago Financial Planner

Follow him on Twitter: @rwohlner

A favorite post: Avoid These 9 Investing Mistakes

The Dividend Guy Blog

The Dividend Guy Blog was another early read of mine, and I appreciate their continued research and insight over time. What I enjoy about the Dividend Guy Blog is that not only do they continually put their opinion out there for others, but they back it up with concrete facts or other underlying rationale. While they’re not always right, they aren’t afraid to put it out there. They also track their favorite dividend stocks, and aren’t afraid of losers (which is rare in the investment blog space).

The Blog: The Dividend Guy Blog

Follow on Twitter: @TheDividendGuy

A favorite post: My Investing Pains and How I’ve Solved Them

Don’t Quit Your Day Job

Don’t Quit Your Day Job (DQYDJ) is another site that I started follow last year, specifically because of the awesome macro-economic insight. DQYDJ is much more technical than any other site on this best investment blog list, and it’s much more macro-economic focused, but it provides a ton of great insights that are relevant to investors everywhere. Furthermore, they put together their own economic calculators and showcase how they made them and what data they used. Amazing!

The Blog: Don’t Quit Your Day Job

Follow on Twitter: @dqydjHQ

A favorite post: S&P 500 Return Calculator

The Mad FIentist

The Mad FIentist is a play on words – it’s a site about a scientist achieving financial independence (get the FI part now)? The goal of the site is to show you strategies that can help you retire even sooner. There are a variety of articles that focus on tax avoidance strategies, and ways to invest to get the most out of your money if you plan to retire early.

The Blog: The Mad FIentist

Follow him on Twitter: @madfientist

A favorite post: Lessons From Business School

Other Investing Blogs Of Interest

A lot of readers have asked for a full list of investing blogs out there. There aren’t a lot of good lists out there that share all of the investing blogs. Here’s the list we’ve been working from to highlight “the best”. If you know of a site that’s not listed, please share it below.

Final Thoughts

There are a lot of great investing blogs coming out all of the time. And some of these may fade away. If you know or run a great investing blog, please share it with us for potential inclusion in net year’s list.

Crowdfund with Cryptocurrency

October 19, 2017October 19, 2017 Amy LeeLeave a comment

Blockchain crowdfunding the way of the future.

In the traditional model of tech crowdfunding, an entrepreneur has an idea, pitches it to the world via a platform like Kickstarter, then collects down payments from excited future customers. After paying the platform commission and payment processor fees, the project creator uses the remaining funds to create prototypes, hire staff, rent office space, etc., eventually bringing the product to market. If everything works out, those early investors are rewarded for their foresight by being the first on their block to receive the new Smart Sock or Bluetooth Q-Tip, with some T-shirts, coffee mugs, or other whimsical merch thrown in to sweeten the deal.

But all that is changing. The explosion of Bitcoin, Ethereum, and other blockchain-backed crytpocurrencies has inspired a whole new model by which inventors can get funding for products that are too niche or too visionary to appeal to traditional investors. So if there’s a design for an antigravity hoverboard gathering dust in your bottom drawer, the moment may have arrived to dust it off.

How It Works

The basic concept of cryptocurrency is pretty simple (just look past the nosebleed-inducing math that makes it possible in the first place). Rather than asking the public for investments of old-fashioned money, the inventor issues a new virtual currency tied to a specific product, each unit of which represents a defined share of future profits. Just like shares in an actual stock market, these coins or tokens can then be freely traded or collected, letting those who truly believe in a project build an actual financial stake in its success. T-shirts and mousepads are fine, but nothing parts people from their money quicker than the prospect of getting rich.

Of course, if the product fails to make it to market—for any of the thousand reasons that most products and businesses fail—those virtual coins won’t be worth the metal they aren’t made from. But now, some enterprising firms are exploring ways to minimize that risk, and stack the deck in investors’ favor.

One firm, Hackspace Capital, oversees a number of promising, carefully vetted products, and has issued a cryptocurrency—the HAC token—that represents an investment in the entire portfolio. In the event that a product doesn’t make it to market, investors are thus protected from loss. They retain full possession of their HAC tokens, which they can either invest in one of Hackspace’s other products, trade for Bitcoin or other cryptocurrencies, or simply cash in for what anarchists refer to as “fiat currency” (“money,” to most of us) and go on their way.

The lower the risk, of course, the more attractive the investment, which in theory means more money, more quickly, for the inventors. It’s a virtuous circle, a classic win-win…if not a win-win-win, with the third win going to anyone passively holding HAC tokens in their portfolio of cryptocurrencies, whether or not they care about investing in a particular project. Because HAC tokens entitle every bearer to a 20% discount on any and all of Hackspace’s products, the ancient and infallible laws of the free market should exert a perpetual upward pressure on the dollar value of a HAC token, a pressure that won’t just increase but multiply as Hackspace expands its range of products.

R&D

Even better, by the time any product is offered to the public for preorder, Hackspace (via partner EnCata) has already worked with the inventor for three to six months, ironing out kinks and legal issues, writing a realistic business plan, conducting market research, and—that holy grail of the startup world—constructing a working prototype. In other words, these aren’t the pie-in-the-sky ion drives and teleport machines you tend to find on other crowdfunding platforms. These are fully developed, reality-tested products seeking a specific sum of money—usually somewhere between $500,000 and $2 million—for their first round of mass production.

Products that have already run the gauntlet include HandEnergy, a white ball that harnesses the motion of the human hand to charge phones and other devices while somehow doubling as a game controller. In the pipeline is the Smart Pourer, a high-tech bottle cap that can determine the alcohol content of whatever liquid flows through it (finally vindicating your suspicions that the bar on the corner waters down its Scotch), cut drinkers off when they’ve had enough, and even bill them through their smartphones for what they’ve already consumed.

If all this sounds too good to be true, keep in mind that 20 years ago you could have said the same (and people did) about the economics of the Internet as a whole. When you’re changing the world—particularly when it involves the elimination of middlemen and speeding the flow of capital to where it’s needed—non-zero-sum math is the rule, not the exception. Yesterday’s “too good to be true” becomes today’s “duh, obviously” with an awesome regularity.

Well, except for hoverboards and flying cars. We still don’t really have those. So, actually, yes. Let’s do this.

PM: Project or Product Management?

October 19, 2017October 24, 2017 Amy LeeLeave a comment

The difference between project manager and product manager is a frequent point of discussion.

Product management Tasks

product strategy
roadmap planning for WP Engine’s developer tools and customer experience product lines.
overlaps with project manager as well. In digital products, applications/features/software/services which need to be built go through a software development lifecycle (much like a manufacturing process in a factory).

Product Manager

the product manager is responsible for discovering a product that is useful, usable, and feasible

A product manager is responsible for digital/technical products (such as software, websites, apps, etc.) They are responsible for driving the ideation and launch of innovative products and features, thereby creating new opportunities for the business while staying abreast with the current industry trends. They need to be able to strategize and streamline the product operations in order to deliver a healthy product which is aligned with the initial expectations and goals of the organization.

discover>define (vision)>launch(execution)

Five attributes of PMs

has product sense=the ability to usually make the right product decisions – both macro and micro
smart
doer
culture fit
technical skills = has domain expertise + understands technology
work effectively with sales/eng/ux

What people think PM is: face of product, highly compensated, leader future CE, visionary, utilizing business acumen, jack of all trades

downside of PM: angry customers, buggy product, incompetent staff, loss of engineers to other projects, disastrous exec reviews, sales driver culture, high level boss, no authority

Project Manager

A project manager is a subset of the above. A project manager applies his project management skills to the “when” part of the equation. He needs to setup detailed milestones, timelines and processes keeping a holistic view of the budget and resources for ‘projects’. Note here, that a set of projects can make a ‘product’.

A Project Manager leads key deliverables, creates accurate technical project documentation, leads and plans the project from a functional and quality assurance perspective to achieve the project objectives.

Eg. As an Ecommerce Product Manager for a publishing/consumer products’ company, my overarching role was to manage the ecommerce and other online channels for the entire brand i.e. the online version of the company became my ‘product’. However, being a small team within a bigger corporate structure (and because product/project management is not really a thing in a publishing house), we used to regularly take on ‘projects’ not related to ecommerce from regional marketing teams (eg. if a Harry Potter 9 book was up for world wide release). In this sense, we were ‘project managers’ since these projects had a set deadline — though these projects in totality made up the ‘product’.

Thus a product manager of an electronics’ brand might need to think about the customer pain-point in the market, research about how a particular type of laptop needs to be designed, validate and decide the initial blueprint (logical ideation) of the system and let his project manager take care of the actual deliverables from a technical standpoint. This is akin to a project manager of a construction firm who oversees the progress of an architectural construction work and gets it delivered by a particular timeline.

In many cases, these roles often overlap. There might be different use-cases in various circumstances.

A product manager in a startup might have to do the goal-setting as well as the actual delivering of the product from a technical standpoint (deadlines may or may not be involved in this case). He/she would validate the findings, make sure there is a product-market fit and accomplish all the other tasks involved in customer research. He may also create the sprint and release plans, work with the engineers to deliver the features in a timely manner and take care of the budget and resource restrictions. Hence there are aspects of both product and project management in this case.
Agencies or companies that take on product development work from an assortment of clients may have to deliver on a ‘project-by-project’ basis and hence would require project managers. In this case, strict timeline would be involved since these projects would be billable to these clients. These ‘agency’ project managers might work directly with the ‘product managers’ of the client companies (who are the ones setting the actual goals and product strategy).
In bigger corporations, a product manager might collaborate with a project manager (internal or external) in order to manage a software product/service on a continuous basis. Even though there might not be any strict deadlines in place, the role of the product manager will be to set the goals and let the project manager lead the actual delivery of the individual projects.
Almost similar to the third point, a product manager in a ‘physical’ consumer products’ company (eg. P&G selling its products in retail stores) or a consumer service company (eg. Rogers telecom offering its wireless internet or mobile simcards in retail shops) might be the one determining the strategy of the product in question or laying out the grand design of the pricepoint of a particular product line or shaping other hundreds of business-level decisions.
The actual delivering (manufacturing of the physical product or service) might be handled by various ‘project managers’ who might be more knowledgeable with the actual jerry-building process.
Timelines will be key in these cases since a product once manufactured and sent off to retailers/warehouses/publicized in the media, in most cases, cannot be ‘optimized’ easily or ‘patches’ cannot be released every day or even every week. To manage these timelines, project managers will play a vital role.

Thus, a product manager pre-emptively address risks, address future problems, and sets and actualizes goals in the broader sense of the term. He may have to handle a complex portfolio of “projects” which make up the entire product or handle a portfolio of ‘products’ themselves.

A project manager on the other hand, handles projects from a ‘get down and dirty’ perspective since he will be the one making sure the project is on track and the locked-in goals are achieved.

These roles often overlap and I believe an awesome product manager should at some point experience both sides of the coin.