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Showing posts from May, 2007

Performing due diligence on VCs - before the meeting

Suzanne Dingwall has some good tips on things to check about a VC before the meeting.
You should never take a meeting with a VC until you've determined whether there is a likely fit between the two of you. Where is the VC in its fund cycle - is it at the beginning of a new fund? Is it about to start raising its next fund? Is this VC raising a fund now, and having difficulty? The answers impact your ability to build an investment syndicate (who wants to co-invest with a lame duck fund?), and suggest how you need to adjust your pitch to fit the circumstances.

If the VC is a generalist (most in Canada are), you may want to adjust your pitch so it focuses more on how the current opportunity is an extension of other industries in which they have had success - for example, pitching enterprise 2.0 as an inevitable extension of current enterprise applications, rather than as a business model discontinuity.

If your VC is focused on your sector, you need to understand where it has already inve…

"Remote leadership doesn't work"

VC Rick Segal post on how he hasn't found remote management (as against remote workers) to be successful at companies he has worked with (including as an investor).
..virtual companies are tough to manage and, in almost no set of circumstances will it work when the core team is in place A and the senior manager (or managers) are remote. When we've hired senior managers for various portfolio companies, we've insisted they be with the team and not commuting in from another remote location.

Coming in and working 3 days a week, for example, and then working from a home office the other time, has not worked well in the various situations I've witnessed. One CEO was doing it via every other week in Vancouver while living in Portland, OR. Another VP of Marketing lived in Ottawa and came to the Toronto office 2 days a week. In almost all the cases I've looked over the years, rarely does it work.
He has also provided the following extract from Jack Welch's column whi…

How start-ups can compete with MNCs for talent

Sanjay Swamy, CEO of mobile payments technology firm mChek has an interesting answeer to this question in an interview to pluGGd.in:

How do you think startups can compete with well-known players [like Y!/Google etc] when it comes to talent hunt? [sky-rocketing salary, better infra/brand name] - Do you really think Indian IT crowd is coming out of it's comfort zone and is ready to take a plunge?

If we are competing for the same talent, then one of us is making a mistake – because the talent that would naturally fit in a startup is a misfit in a big company, and vice versa. In a startup you need to have a disruptive mindset – in a big company you need to be creative but work within a relatively more rigid framework. Google is perhaps an exception to the rule to some extent. As far as being able to compete with such companies, from a talent perspective - I think ONLY startups can compete with such companies.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading pr…

Jason Calacanis interview on Venture Voice

Venture Voice has a cool interview with Jason Calacanis, one of my favorite media entrepreneurs. (The Venture Voice web site/RSS feed seems to have mixed up the audio link for the Jason interview with that of Garage Tech Ventures' Guy Kawasaki. The text of the interview with Jason is here.)

Here are some of tips offered by Jason in the interview:

Don't waste money on office space. Offices are good at creating two things: commute and politics. What's important for a start-up is people who get things done.

Thank god for a down market! Weblogs inc. It was started in 2003 - today it is so hard to get your new blog noticed about the noise

Always start your venture by working weekends and nights - so that the basic stuff like company formation, etc. are done and you have a couple of customers before you plunge in full-time.

Hire salespeople who are confident enough to take their pay only in commissions.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provi…

Lessons from Startup School

In his VentureBeat article, Mark Coker provides an interesting roundup of "the more compelling tips given by several tech industry luminaries — including Facebook’s Mark Zuckerberg, Google’s Gmail creator Paul Buchheit, Sequoia Capital venture capitalist Greg McAdoo — at the Y Combinator Startup School event.
Zuckerberg: He said it’s important to hire mostly coders, even in the marketing department, so if they want to change something on the web site all they have to do is log into the back-end and change copy on the fly.

Levchin: For user interface, Levchin told the audience to measure how their visitors interact with the sites. Slide.com tracks mouse clicks, mouse overs, abandonment rates, the funnel, and more. Levchin and his team mine the data for intelligence that helps guide future iterations of the site.

For channeling the user, Levchin says founders must step inside the minds of their target customers. In Levchin’s case, he says he must imagine himself as a 15-year-old girl …

"Entrepreneurial Lies!" - by Sanjay Anandaram

It is apocryphally said that Benjamin Disraeli said that there were three kinds of lies – lies, damned lies and statistics. He was referring to the persuasive power of inaccurate but well presented arguments. Entrepreneurs will do well to remember this and some other obfuscatory arguments as they make their presentations to VCs.

“We have no competition”
Really? This statement demonstrates either of the two (sometimes both, unfortunately for the entrepreneur) situations: (i) that either there’s no market for the offering or (b) there’s inadequate understanding of the market and competition. Rather like horse-drawn carriages being blind-sided by the arrival of motorized transportation.

“We are unique”
Because we have placed ourselves in the top right hand quadrant and have thoughtfully placed everyone else in the other 3 quadrants. Of course, it is another matter that the dimensions of the grid chosen by us are absolutely pointless. Comparing product features and more importantly benefits a…

The FOCUS approach to pitching VCs

I’ve received several questions from entrepreneurs wanting to know how they should pitch to VCs and what they should be prepared for. While there obviously are no magic bullets and no guarantees or even any apparent rationality (at times!) underpinning certain investment decisions it is important to realise that VCs have short attention spans. They are only interested in knowing the following:

- Who are you?
- What is the problem you are solving/What is the opportunity you are addressing?
- Why will you knock the socks of the competition?
- How will you knock these socks off i.e. the business model?
- How will you make money?

Rule 1: Don’t have a 50 page presentation with a 100 page business plan with fancy binding. In short, the presenters became road kill due to the unwarranted overkill of the presentation.

Don't quote abstract numbers and statistics. The VC has access to the same market research reports (e.g. "The market will be at least $25 billion by 2009, with a CAGR of 100%…