On February 13, 2013 I spoke at the “Fundable Deals: Making VCs Sit Up and Take Notice” panel at Venture Summit West at the venerable Computer History Museum in Mountain View. Venture Summit West is a premier industry gathering connecting venture capitalists, angel investors, senior executives of operating companies, and over 500 early and mid-stage technology startups. My fellow panelists included leading VCs: Mark Gorenberg (Hummer Winblad), Dan Ahn (Voyager Capital), Norm Fogelsong (IVP), Stephanie Palmeri (Softech VC) and others.
I spoke on a variety of topics relevant to entrepreneurs seeking to grab the attention of VCs. Below are summary responses to the first three questions posed by the panelist, Jeff Kuhn (Managing Partner of FLG Partners). In addition, I spoke about the minimum criteria investors typically will screen for in early stage companies and expansion stage companies, the pros and cons of using bankers and intermediaries, and the “valley of death” syndrome that some companies can find themselves in, in-between rounds. I rounded out the discussion by commenting on several sectors that are of particular interest to me from an investment perspective and some of the specific factors I look for to help identify winning companies, teams, and business plans.
1. What is the right way to get to the top of the pile of deal flow you see? How do entrepreneurs stand out and get your attention? What makes you take sit up and take notice?
- Get a warm introduction through a mutually respected connection
- Clear and compelling articulation of Market, Team and Business Model
- Know the investor’s stage and criteria and tailor an elevator pitch to quickly qualify the deal
- Articulate (convincingly and with credibility) how you and your investors will make money.
2. What are the 3 biggest mistakes you see in business plans?
- Focusing too much on the “Why” and “How” rather than “Why Now”
- Selective presentation of data / misleading data – sends negative signal given limited time, credibility
- Misaligning incentives [e.g., large secondaries / one-sided terms / focusing only on a high valuation – to be a constructive partnership both parties have to do well]
3.What should founder CEOs do to enhance their personal and leadership skills so they can scale with the company?
- Self-awareness: know your core competencies and where you need to delegate
- Be able to delegate
- Surround yourself with advisors and mentors who will give honest feedback
- Remember it is harder to give feedback than to receive it
- Hard work compensates for a lot