Treat capital raising like a sales process
I’m involved in a lot of capital raising conversations – companies looking for money. One thing that never ceases to amaze me is how narrow minded many companies are in how they approach this process. Forget the obvious stuff about doing research on local VC firms and their investment focus to make sure you are a match before sending them your “next generation toaster oven/microwave” business plan (yes – I actually received this plan) or targeting VCs that are particularly knowledgeable about your industry or have made money investing in businesses with similar characteristics – I’ll assume (wrongly) that most people already do that. I’m talking about treating interactions with potential funders as relationships – listening to what they have to say in response to your pitch, taking notes about what whatever it is that’s on their mind when you’re meeting with them and then creating some kind of database to capture this information and plan regular follow-up. Many entrepreneurs treat a VC pitch as a one shot opportunity rather than the potential start to a relationship. Since the typical result of these meetings is a turn-down the relationship starts and ends there – perhaps taken up again when its time for the next round of funding or if you happen to bump into each other somewhere. This is a huge mistake. David Beisel correctly points this out in his recent post on the things smart entrepreneurs do when interacting with VCs. The kind of periodic follow-up that David talks about in his post almost never happens in my experience. It’s a shame, too, because some of my fondest entrepreneur relationships have started with me turning down an investment in their company. Venture deals can take time to come together and someone who turns you down for round 1 may be in a position to invest in round 2 (or in round 1 itself if it takes a while to come together). Reaching out to VCs that showed interest in a way that is meaningful (and as David points out aren’t overly intrusive) can only lead to positive outcomes. …
November 1, 2005· 3 min read
Getting to No
My wife and I live with a toddler and as a result are becoming more familiar with the concept of “NO” – which, incidentally, I can now assure you can contain anywhere between 1 and 5 syllables, depending on the desired effect and emphasis. It got me thinking about a VC pet peeve of mine which is how shitty a lot of VCs are at turning companies down. I’m not talking about the form e-mail that VCs send out to pass on something that they don’t want to take a look at (we all send out these e-mails, don’t we ?!?) – I’m talking about companies that we spend some amount of time with (say at least one meeting, but often several) and decide not to invest in. I’ve experienced this from the other side of the table with some of our portfolio companies, much to my frustration. I probably go too far on this one, but when I turn a company down I typically like to have either a phone conversation or a face-to-face meeting (depending on how much time I’ve spent with them) and outline exactly why I’m turning them down. I don’t break-up on e-mail or by voice-mail. More importantly, I try to give a real reason, not the VC bullshit reason, why I’m not interested (which is to say that I’m never “not comfortable with the market size” or “don’t invest in early stage deals” for example; and certainly never simply avoid phone calls so I don’t have to have the conversation at all). This has led to a few awkward conversations (telling founders that I didn’t think they were the right CEO for a business for example) and plenty of push-back from entrepreneurs who didn’t agree with my analysis of their opportunity/product/way of going after a market. But I’d rather that than honing my bs skills and coming up with new and creative reasons for not investing in something. …
October 27, 2005· 2 min read
If I Only Knew
By all measures my “date” with Ben Casnocha was great (see my original post here, his here). As he points out, you skip a lot of the get-to-know you bs when you’ve had such rich interaction before actually getting together (particularly reading each others blogs, which really do provide nice insight and context). If you’ve ever read Ben’s blog, you already know that he’s light-years ahead of most high school students and remarkably well rounded and thoughtful. From the start this was all pretty apparent (he actually bought my coffee, which sounds like a small thing, but I can assure you probably wouldn’t have crossed my mind when I was in high school). We had a wonderfully wide ranging conversation (which interestingly included a bunch of “I wrote about (or read about) this on my (your) blog . . . “). Of particular note was the concept that perhaps Ben should give ‘life college’ a try rather than going to a school for four years. Not sure his parents are into this, but it’s a great idea and, while I was definitely jaded by my own experience (which leads me to believe that people should probably go to college but skip business school, perhaps because that’s the route I took), I actually think that given Ben’s goals this may be a pretty interesting concept. …
October 26, 2005· 2 min read
George Bush Sings!
Bet you didn’t know that he had it in him. Enjoy! http://www.thepartyparty.com/ (thanks to Chris for the link)
October 24, 2005· 1 min read
My first internet date
I’m going on my first internet date tomorrow. Well – it’s actually not technically a date. For starters, I’m married and on top of that, neither of us is gay. Still, we’re meeting for coffee after many months of e-mailing, reading each others blogs and one or two times talking on the phone. I say this all in jest, but I’m actually pretty stoked to finally meet Ben Casnocha in person. I’ve talked about him on my blog before (here), and am a big fan. …
October 16, 2005· 1 min read
Bookends
I’ve had a couple of experiences in the last month that have alternately made me feel good about the human condition or wonder why people can be such jerks. First the positive experience which essentially involved two strangers going out of their way to help me out. One in particular was pretty inspiring. My car battery managed to die i the parking lot of the Safeway up in Fraser on a recent Sunday night. I had just picked up a carpet steam clearer (the kind that doesn’t work very well, but I still feel compelled to rent every once in a while). I was in the process of walking this up the hill back home when I was passed by a car who turned around to see if I needed help (it was pretty dark out – god only knows what he might have thought I was dragging behind me). This guy drove me (and my steam cleaner) back to the Safeway and jumped my car. He then gave me his card (he’s a retired Delta pilot) and told me to call him in the morning if the car wouldn’t stat again for another jump (all this after I told him that I was planning on leaving at 6:30am to get back to Denver in time for work). Pretty amazing (incidentally, the 2nd stranger in this story was the guy who ended up giving me a jump in the morning when, as I was not very surprised to learn, my battery was still dead). I’m sure many of you saw the movie Pay it Forward and I feel a little sappy saying this, but I’ve actually been looking to try to pay back this man’s kindness by helping someone else out in need. In my book its all karma. …
October 16, 2005· 3 min read
Attributes of a good venture capitalist
When I was interviewing for my job at Mobius I asked Dave Jilk interview not only with MDs and other associates, but also with portfolio – who had briefly been an associate at Mobius and was then (as he is now) running a portfolio company – what he thought the most important attributes of successful VCs were (as an aside, I don’t know that I appreciated at the time what a good sign it was that the VC I was interviewing to joined had me company CEO’s to get their take). Without hesitation he said that in a nutshell good VCs need to have attention deficit disorder. I laughed about it then, but I think its time that I acknowledged to Dave (and the world) that he was right. There are lots of attributes that are required to be good at this job, but the core of being a good VC is the ability to move from one thing to the next, often completely disconnected thing, quickly and without slowing down Rare is the time when I sit down and spend a few hours doing something (anything) without interruption.; so much so that I generally interrupt myself these days if I’m spending too much time on any one thing, but mostly because in any give day things just seem to come up constantly. With something like 8 companies that I actively work with these interruptions are all over the map – I may be helping one company sell its business, another raise capital, another plan for a strategic offsite and another with an executive search. Keeping all of this straight in my head is a bit of a task, as is shifting gears from talking about the tax considerations of a particularly merger structure with one company to looking at moving into a new vertical market for another. Its different than the jumping around I did in banking (where I would typically be working on only one or two projects very intensely at any given time) or when I was working for an operating business when my days were much less varied (and much more similar to every other day). …
September 29, 2005· 2 min read
What’s your million dollar idea?
Thanks to JB for pointing this out. Pretty interesting idea. I particularly like it from a data representation standpoint (see my post on that subject here). http://milliondollarhomepage.com/
September 26, 2005· 1 min read
Milestones
My daughter reached an important American milestone yesterday – her first credit card offer. Four months shy of her 2nd birthday I’m not entirely sure she’s ready to handle the responsibility, but I did send the response card in to see what would happen (I circled her date of birth and indicated her occupation as ‘pre-school student’). I’ll keep you posted.
September 21, 2005· 1 min read
Tagging
hAs you could probably tell from my last post, I’m getting more onto the tagging bandwagon (I haven’t posted about this, but have in the past expressed skepticism privately to a number of you in off-line exchanges). In case you missed it, NPR did a nice piece on tagging tahis evening. Here’s a link to the story. Props to del.icio.us and flickr who were both featured prominently.
September 20, 2005· 1 min read