Who says European startups can’t raise serious venture capital?

Word came from ividence CEO Eric Didier this morning that 2-year old startup, ividence, closed a $4.2 million Series A financing with A Plus Finance, a Paris-based private equity firm.  ividence is a SaaS email ad network that generates traffic to advertisers’ Web sites by using targeted email campaigns.

The company’s proprietary algorithms and innovative email ad server belie the current thinking that email marketing is no longer effective. When we first met ividence in late 2009, the company was already generating revenues of about $100,000 per month. Since that time, Didier has guided the company’s expansion across Europe and into the U.S.  The new capital will allow him to move more aggressively to capture the market.

So why was ividence successful raising venture capital when so many European entrepreneurs (or for that matter, U.S. startups) struggle to do the same? See the previous paragraph.  ividence has focused on revenue from Day One.  The site now manages some 3,000 email campaigns a month generating thousands of leads for clients including Groupon, Citreon, and Dish Network.

ividence intends to use its new cash position to aggressively grow its team. The company expects to add 20 jobs to the business this year.

I had a delightful lunch yesterday with Howard Hartenbaum, a general partner at August Capital.  The lunch was offered as a “prize”  during Lunchster‘s  six-minute product launch at DEMOfall. I’d agreed to have lunch with whomever won the draw, even these are the sort of promises that can pretty rapidly go bad.  You have no idea who you’ll end up sitting across from, wishing that you’d suggested Taco Bell drive through as a speedy alternative to the white-linen dinning you had to endure.

When I got the email that Howard would be my lunch date, I felt like I was the winner.  I’d first met Howard as part of the team that launched Public Minds’ response aggregation system at DEMO 2001.  Since that time, he’d made the move from entrepreneur to VC and scored his “big win” – an early investment in Skype. His choice of Palo Alto’s Tamerine Restaurant only confirmed that Howard still picks winners; it’s a local favorite of mine).

Most charmingly, Howard didn’t seem to want to monopolize the conversation with shop talk.   Instead, shared restaurant tips, swapped medical mystery stories, railed on litigation-happy parasites, and concocted an elaborate story of long-suppressed love unleashed by a chance encounter courtesy of Lunchster.

Since I was pretty sure no one would believe that last yarn, I asked Howard what he didn’t like about being a VC.  “I don’t like saying no,” he responded without hesitation, adding that it’s made worse by the fact that as a VC one must “say ‘no’ 99% of the time.”

Okay, I’m a bit cynical when it comes to what venture guys say and what they do, and in my experience, most VCs don’t say no.  They say things like “I need you get more customer traction” or “this deal is too early for us but come back in six months” or “I’ll need to get my partners on board with this” or a couple dozen variations on these themes.

Howard seemed to sense what I was thinking. “Venture capitalists have two responses to entrepreneurs,” he said, “yes and everything else.”

To his great credit, Howard decided to take on “no” head on.  “In life and in work, when there is something that makes me really uncomfortable, I make a point of doing it in the hopes that I’ll become inured to it.”

So when he decides to take a pass on a company, he calls the entrepreneur directly and tells him no.  Has it gotten any easier?  “No.”

But he does it.  He does it because he respects entrepreneurs. He does it because he isn’t going to waste their time.  He does it so that entrepreneurs know the why behind the no.

A “no” is such a rarity in the venture hunt that entrepreneurs may not know how to act.  Here’s my advice:  don’t argue, don’t debate, don’t tell a guy like Howard that he’s wrong.

Listen for the no and be glad for it.  That VC is saving you time and heart ache.  Listen to it, accept it, and move on.

I’ve always known that Josh Kopelman is smart, but his April Fools’ prank, TheUnFunded.com, is brilliant.

Had he wanted to open a dialog on the deteriorating relationship between Venture Capitalist and Entrepreneurs he could not have found a better catalyst. While the site was intended as a joke, its coverage and commentary on TechCrunch speaks volumes about the way in which entrepreneurs and investors view one another.

In admitting to the gag, Josh acknowledges the growing divide:

The fact that so many smart people actually believed that such an outlandish site could be legitimate speaks volumes about the state of the relationship between entrepreneurs and venture capitalists. . . . while I don’t want to read too much into a silly April Fool’s Day joke, I think it does shine a little light on the level of mistrust and ignorance within the VC/entrepreneur ecosystem.

If the commentary and controversy stirred by TheUnFunded.com is to be believed, entrepreneurs believe most VCs are a waste of skin and VCs believe most entrepreneurs are a waste of time.

Hyperbole to be sure. Still, the dialog does suggest that the co-dependent relationship between entrepreneur and investor is shrouded in misunderstanding and misrepresentation. As much as these firms position themselves as partners and catalysts for great ideas, VCs really aren’t in the business of building companies, except as a vehicle for making money. And there really are only one or two “next Googles” in any given fund life; most startups will be lucky to survive beyond their first 3 years and those that do will be luckier still to provide a respectable exit to their investors. Most of the vituperative commentary, I expect, comes from first-time fund-raisers who believe that because investors have money, they should invest it in their firms. And those who don’t are blindingly stupid for missing the golden opportunity which, frankly, may not be as golden as the next guy and certainly is not likely as golden as the entrepreneur believes.

While Josh intends to take down TheUnFunded at the end of the week, I’d love to see it stay, but as an open, transparent platform for an honest and constructive dialog between investors and entrepreneurs. Because if ever there were an industry that needed more transparency and a lot more trust, it’s this one.

On the evening of March 13, I’ll be moderating a panel of CEOs of VC-backed companies to explore issues of leadership, skills, pressures  and balance that every startup CEO faces.   I’ve had the pleasure to work with Frederic Lucas-Conwell, principal at Growth Resources, in preparing for the event, and have been impressed with the work he does helping CEOs identify their leadership style and the points of stress between individual style and the requirements of the CEO role.   

Frederic uses a quick and simple (at least on the surface) surveying tool to help executives analyze their leadership style in their role as CEO,  as well as the style differences in their management team.  It’s fascinating stuff. By understanding the points of convergence and divergence, you really can adapt style and expectations to drive to stronger leadership.

In advance of the March 13 event, Frederic is surveying CEOs of VC backed companies to identify points of similarity and strength in startup leadership.   Results will compiled anonymously and presented March 13^th at the event, but you’ll have access to your individual results and have the opportunity to glean more understanding from Frederic.

I found my results fascinating, and I’d encourage any VC-backed CEO to participate in the survey.  It only takes a few minutes, and you can do it online.  To participate please send an email to Frederic Lucas-Conwell and mention that you learned about the survey here.

I’ve known Frederic for many years and I’m confident you’ll extract a lot of valuable learning from the experience. 

I woke up Friday morning to discover that I’d become a cat herder. You know the role: trying to get dozens and dozens of pieces and people corralled into some semblance of order. I should come to expect it in the few days before a DEMO Conference is set to begin. After all, I’ve been reprising this role twice a year for most of the last eleven. Still, it always strikes me that otherwise smart business people can get so caught up in the weeds that they lose focus on their own objectives.

Here’s a case (and would that it had only happened once these last few days): An exec from a demonstrating company scours the news wires, looking for mentions of other companies also participating in the event. Spying a perceived competitor (for the record: we don’t think these companies compete), the exec searches for every mention anywhere in the media, on blogs, on the company site, that might serve as evidence that the company “broke the rules” of DEMO. The “evidence” is packaged into a stern e-mail — usually couched in a tone of “far be it from me to call out another company, but…” — and sent along to DEMO’s PR team. I then get a call, confirm that the assumptions of the exec are, in fact, wrong. This is followed by an e-mail or phone call that assures the exec that we’re “on the case,” politely thanking him for his diligence.

Normally, I’d let this sort of thing slide, and it certainly wouldn’t be fodder for a post. But this time, the predictable tattle-tale thread dropped onto my desk at about the same time my Guidewire Group co-founder at and I were talking about focus. Guidewire is fund raising for the capital to bring to market an exciting (I think), scalable (we’re confident), very large (the comps confirm) product offering.

If you’re raised capital before, you know that the process is, to some degree, pitching followed by objection handling. If you’re not careful, you can quickly bastardize your pitch and your business incorporating VC “feedback,” and trying to anticipate every conceivable objection. And it’s only made worse when the objections are so completely out of your control: “What if Bush declares marshal law to preserve his presidency? How will your user acquisition model scale then!”

So Mike and I were talking about which venture commentary to accept and which to reject. Quickly, the line became apparent. We focus on the things we can control and refuse to waste an ounce of energy trying to get planets to align or otherwise commit unnatural acts that distract from our focus. (Frankly, it’s pretty good advice for life, too.)

So what’s this have to do with nervous demonstrators? I figure that any moment a company is focused on its competitor is, at this juncture in the young life of a product or a company, is a waste of time and energy. (Never mind that it’s annoying to me and my staff.) As I wrote to one person late last week, “keep your eye on your prize.” Focus on the things you can manage and don’t waste time speculating about what others might do.

In a market place that provides immediate feedback via blogs and other means, you’ll find out quickly how you stack up with potential customers and against real and perceived competitors. Agile companies can react quickly to those known conditions. Spending time anticipating, guessing, and supposing . . . well, that’s just borrowing trouble and taking your focus away from the things you really can do to affect the outcome of your business.