Silicon Valley Startups

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SVASE VC Breakfast Club on 4th August 2011 featured Brian Ascher from Venrock

SVASE VC Breakfast Club on 18th August 2011 featuring Brian Ascher (http://bit.ly/DeTbR) of Venrock (http://www.venrock.com).

Venrock focuses on technology, energy and life sciences and the intersection of these spaces with a total fund size of $350M.

Venrock seed investments range from $250K to $1M. Typical Series A would be $3MM to $5MM.

Over the life of a deal an average $8MM to $10MM invested for technology companies (more for biotech and energy.)

VC: How many markets are there that your solution matters in?

VC: Your value goes up if you go beyond IP and licensing and actually develop the system.

VC: Has your technology been proven?  

VC: What is the market size and what are the constraints that prevent you from going to market?

VC: Focus on a specific pain point.

VC: Pick one really pervasive pain point and tailor your solution to resolve that.

VC: It is unclear that QR codes are working as a sustainable market.

VC: Most internet based businesses do not have technical barriers to entry.

VC: Network effect – people who can scale first and get traction with users.

VC: The BEST internet businesses grow virally, but it is rare, especially at scale.

VC: Days for venture to fund marketing to find initial customers are long gone.

VC: There will always be copycats for successful businesses and they keep coming faster.

VC: Get products to market cheaply and get customers and then build a defensible story around this.

VC: Portfolio approach of ideas for entrepreneurs is not the most ideal – give one idea all the effort it deserves.

 

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SVASE VC Breakfast Club on 4th August 2011 featured Jon Soberg from Blumberg Capital

SVASE VC Breakfast Club on 4th August 2011 featuring Jon Soberg (http://bit.ly/lZ0fMK) of Blumberg Capital (http://www.blumbergcapital.com/)

Blumberg Capital focuses on technology and social media. They fund 10 companies per year out of the 2000 companies they see - usually in the seed or series A round.

Fund size ranges from $250K - $2M with $6M for the lifetime for the company and all deals are syndicated.

Often do convertible notes for first round.

VC: It does not take a lot of start and launch a company but the bar is getting higher before getting funded.

VC: Investment criteria for early companies - need to anticipate the market correctly.

VC: 35% of display ads are not shown at designated sites and areas on a web page.

VC: Easier to fund people with traction.

VC: How do you scale your technology?

VC: What is your revenue model?

VC: Where is the revenue coming from?

VC: This is a classically fragmented market – How will you achieve penetration?

VC: How are you reaching out to people to get on your platform?

VC: Describe your interfaces to Facebook – how do you use Facebook mechanics?

VC: How do you get customers to your platform?

VC: Is your application a browser plugin or is it a downloadable application?

VC: Since your product is live, can you provide details about customer usage and statistics?

VC: Give an example of how someone is using your platform.

VC: Is there some secret sauce that differentiates you from the others?

VC: If a customer already has these tools, what would make them switch to your product?

VC: Hone your message clearly to bring out the true value proposition – you need to find a beach head.

VC: Impetus to switch from one tool to another is not driven by price because of inherent data and relationships already in the tool.

VC: What is the specific pain that you are trying to solve?

VC: Is your strategy to go through channels long term or is it to go directly to consumers?

VC: There is a lot of noise about how to get market share.

VC: If you don’t solve the right pain point, adoption rates will be really high.

VC: How unique and defensible is your solution?

VC: How will you get avid fans to your platform?

VC: A VCs job is to compare apples to oranges.

VC: Find investors you like working with.

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SVASE VC Breakfast Club on 28th July 2011 featured Jim Connor from The Sand Hill Angels

SVASE VC Breakfast Club on 28th July 2011 Jim Connor (http://www.sandhillangels.com/members/11.html) of Sand Hill Angels (http://www.sandhillangels.com/).

SandHill Angels is composed of 60 investors who invest in 6 companies each year. They go through a screening stage to help decide which startups to fund or coach.

VC: Getting money is the beginning of the game, not the end of the game.

VC: With investment money, the dynamics of a company change.

VC: Build a sound business and the rest will take care of itself.

VC: Is your site up and running?

VC: Do you have any revenues?

VC: What is your defensibility?

VC: How do you pay consumers to comment?

VC: Have your pitch for the first 2 minutes.

VC: Talk to investors with a solid business plan.

VC: State magnitude of problem right upfront instead of going around in circles.

VC: Life Science Angels and Health IT Capital are two good life science funding groups.

VC: Create one live message that is analogous to an existing business.

VC: How will you draw people to your site to make monetization work?

VC: Who in your background gives you domain knowledge and expertise?

VC: Valuations are dictated by investors and market.

VC: Is this a real business or is it an MBA project?

VC: Pitch is different to VCs and Angels.

VC: VCs look for putting over $5 million in multiple rounds.

VC: State the problem clearly – bigger the problem, the more traction you get from investors.

VC: If you have customers, you take risks off the table immediately for investors.

VC: How many competitors are out there in the market doing the same thing?

VC: This social thing is so viral, just go out and launch it!

VC: Open a blog type website to allow people to comment.

VC: Talk about your product.

VC: Convertible notes are harder to fund due to inherent issues with getting to full funding.

VC: Get on Angels’ list if you are looking for early funding.

VC: What do you have to justify the funding you are asking for?

VC: If your product is up and running, go for cash flow positive.

VC: Culturally, it is hard to change burn rate they believe is part of the business.

VC: Try to get to break even – it will change the way you are perceived.

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SVASE VC Breakfast Club on 21st July 2011 featured Carol Sands from The Angels’ Forum

SVASE VC Breakfast Club on 21st July 2011 featured Carol Sands (http://bit.ly/nqFeVJ) from The Angels’ Forum (http://www.angelsforum.com)

VC: Being blunt and direct is very effective in communication with entrepreneurs – don’t be offended.

VC: Have an open dialogue.

VC: It’s not that your business won’t work, but there may be an alternate idea.

VC: It’s important that you acknowledge the business process.

VC: Elevator pitches are short and clear.

VC: Finding funding is easier now than it was 1 year ago.

VC: In October-November time frame, the economy would be strained – every time there is uncertainty in the market, people hide their checkbooks.

VC: If you are looking for money, now is the best time.

VC: Figure out how much money you want to raise. You should be able to defend that amount.

VC: How much money would you need for the whole life of the company?

VC: Preserve your ownership of the company.

VC: Go for government grants; most likely military grants.

VC: Don’t automatically think you only need VC’s and Angels for funding.

VC: Attorneys are a great source of advisors.

VC: Talk to your attorneys before signing anything!

VC: Use the law firm as a route to funding sources.

VC: The sooner you get a good attorney, the better it is for your company.

VC: Pick engaging advisors with a chemistry hit.

VC: 2nd and 3rd advisors should be people start-up experts and 4th and 5th should be people in the industry.

VC: As an investor, I would never invest in a single person company.  I need a team.

VC: Funding takes 3-9 months with angels and VC’s.

VC: Add the fudge factor for all timing calculations.

VC: Most corporate ventures will not do early stage – they are typical followers in a syndicate.

VC: It’s not about what you need, it’s about what the investor is going to get.

VC: In your presentation, answer the question of how the investor will benefit. When will the investor get his/her money back?

VC: Be clear about expectations – if you want to go public, plan the company accordingly.

VC: Bad news should travel faster to investors than good news. It gives the investors time to react and bring in resources to fix the problem.

VC: Prepare due diligence materials before you go for investment.

VC: Ask your investor how much money they have. Sometimes they are still fundraising.

VC: Everyone who said no the first time are potential investors for the second round.

VC: The ones who earned money in Silicon Valley have made their money from their third start-up.

VC: Ultimate question – who is going to buy your product? Is the business plan thought through?

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SVASE VC Breakfast Club on 14th July 2011 featured David Hartwig from SAP Ventures

SVASE VC Breakfast Club on 14th July 2011 featured David Hartwig (http://www.sapventures.com/team.html) from SAP Ventures (http://www.sapventures.com)

SAP Ventures is focused on later stage start ups in the cloud, mobile, and collaboration space. They invest in 10-12 companies per year with $10 million or more run rates.

VC: Be crisp with your message.

VC: How well baked is your strategy and how advanced is your relationship to rise above the noise?

VC: Find out VCs who looked at successful deals and passed.

VC: Do you have a set of first killer apps that you can focus on?

VC: Explain your user experience clearly.

VC: What is your justification for asking a certain amount for funding?

VC: When you are pitching for cash, articulate the underlying capability and what you can do.

VC: Enterprise apps moving to cloud is getting important.

VC: Consumerization of enterprise apps – from UI to device perspectives

VC: Dropbox and box.net are getting important.

VC: Who own data in cloud when you switch away? This is getting to be a bigger problem.

VC: Looking for lower layer infrastructure investment – looking for robustness and scalability of technologies being used.

VC: In general, SAP makes strategic investments now and then.

VC: Is your approach to wrap in best of breed capabilities in your product?

VC: Who do you think are your most direct competitors?

VC: What makes you guys unique to succeed – how good is your team?

VC: Big opportunity, but how do you rise above the noise?

VC: Focus on real time applications.

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SVASE VC Breakfast Club on 7th July 2011 featured Sunil Nagaraj of Bessemer Venture Partners

SVASE VC Breakfast Club on 7th July 2011 featured Sunil Nagaraj (http://bit.ly/qk3kYu) of Bessemer Venture Partners (http://www.bvp.com/Default.aspx)

Bessemer Venture Partners recently raised a $1.6 billion fund. They focus on all sectors of start-ups, such as clean tech, healthcare, life sciences, technology, software, etc.

Mostly Series-A and beyond – some seed investment like $200K in a recent start-up.

VC:  Small business is a constant cash flow.

VC:  A Start-up is a 1 in 1000 shot.

VC:  Venture Capital is like a jet fuel – the start-up either takes off or explodes.

VC:  People are what they do rather than what they say.

VC:  Listen to customers.

VC:  Never tell your customers what he/she should not know about the product.

VC:  Pivot towards the trend of the day.

VC:  Build a great product and hustle your way into distribution.

VC:  Understand CAC (Customer Acquisition Cost) and LTV (Life Time Value – how much will you make out of people)

VC:  Does your product sound interesting to me?

VC:  Do your customers even care about this product?

VC:  If it is a really crowded space, how will you get people to your site?

VC:  How do customers achieve this today with existing solutions?

VC:  VCs look at competing trajectories to validate your business.

VC:  Licensing to folks that will then sell to others is a harder sell to VCs.

VC:  Verification of ideas is easy – just go out and talk to people.

VC:  How do you think the segment you are going after really needs your product?

VC:  Business buyers are logic and thoughtful – more than regular consumers.

VC:  Keeping things fun and simple really resonates well with VCs.

VC:  Time into the market is very important.

VC:  VCs prefer a product business where you can build once and sell a lot of them at a marginal cost.

VC:  Once you have sold and the customer gets it – stop talking.

VC:  Don’t include obvious/known data in your pitch unless it supports your story.

VC:  The only people who matter are your customers!

VC:  Read the first chapter of “The Four Steps to the Epiphany”

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SVASE VC Breakfast Club on 30th June 2011 featured Karan Mehandru of Trinity Ventures

SVASE VC Breakfast Club on 30th June 2011 featured Karan Mehandru (http://bit.ly/lV1D00) of Trinity Ventures - http://trinityventures.com.

Current fund is $310M of which 50% is deployed. 80% Series A with $2-9M as first check written. Typical staff sees 1200 plans every year of which 2-3 get funded.

Trinity ventures focuses on Saas, Cloud, Enterprise, and Mobile companies. They make a fair share of seed investments under $1 million.

VC: How do you charge for the software?

VC: Challenge with what you are selling’s and whom you are selling to

VC: Go after a larger set of customers with one module vs. going after one customer with several modules.

VC: The more you can grease the wheels with one strategy, the better it is.

VC: Collaboration - Nobody has figured out the killer app but everyone is trying to figure out an angle.

VC: In a collaboration environment, find other ways of charge, for example using storage as a mechanism for charging versus charging per user.

VC: How advanced is the underlying technology for speech recognition to build an app upon? How stable and robust is this?

VC: User experience is import – people don’t have patience with technology that doesn’t work.

VC: Become the discovery agent for content.

VC: How good is your technology and how good is your team to leverage it?

VC: People may not tolerate latency over the cloud for authorizing platforms.

VC: VC’s have a very keen eye on monetization – need to see how the business will make money.

VC: There is no checklist to a fundable company, but you know when you see one.

VC: Big believer in HTML5 – it will open a wave of opportunities.

VC: Startups should have a keen eye on monetization – need to figure out early itself if the business will make money and how much.

VC: For most VCs, choosing a company to fund cannot be described but they know it when they see it.

VC: There is no scientific formula for choosing companies to fund. No checklist to follow.

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Livestream URL for Launch: Silicon Valley 2011

It is finally here - Launch: Silicon Valley 2011. Information for accessing the event via live streaming is below:

http://www.foglifter.com/videostream_portal.html

User: SVASE2011
Password: launch6711

Here is the link which can let you see the app in iTunes:

http://itunes.apple.com/us/app/launch-silicon-valley/id440721263?mt=8

If the link is accessed on iPhone, it would open the app directly.

Looking forward to a great event !!!

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SVASE VC Breakfast Club on 2nd June 2011 featured Sean Aggarwal of Sand Hill Angels

SVASE VC Breakfast Club on 2nd June 2011 featured Sean Aggarwal of Sand Hill Angels. Sean is the VP and Chief Accounting officer at PayPal.

Sand Hill Angels consists of 50 Angel investors. They made 112 deals in 2010. Their sector focuses are consumer internet, social networking, video, technology security, and life sciences.

SHA sees around 50 deals per month. The screening committee invites 6 companies at screening meeting. Of these 2-3 are selected to present in a monthly dinner meeting. Start to funding takes 2-3 months. Fast track for companies looking to syndicate round.

Typical rounds are $500K-$1.2M of which SHA will put around $250K with one LLC per investment. Companies should be based in the Bay Area.

VC: Expectations have gone up where startups should have some product ready and should have had some customer engagement before raising money.

VC: What proof point exists that the market wants your solution?

VC: Have you spoken to customers?

VC: How do you keep other competitors out of this?

VC: Sharpen your presentation with a stronger start – grab me about you.

VC: Interest more in your presentation and make the message crisp.

VC: Work with a communication coach if possible.

VC: Is this IP protectable?

VC: Unit economics of hardware - is there a manufacturing advantage?

VC: How will you distribute your product?

VC: How do you envision monetizing over time?

VC: Look for one killer app value that can wow customers.

VC: Put product into investor’s face – show it to make it real.

VC: Create a sense of excitement when pitching to investors.

VC: If the entrepreneur does not believe in the product, nobody else will.

VC: How big could the market be?

VC: Narrow down to addressable market.

VC: Hit people on the head – get message out sooner and in a crisp way.

VC: If you have good nuggets, say them more than once in your pitch.

VC: It is tough to build a direct to consumer business from the get go.

VC: What is the secret sauce of your technology?

VC: What is the core value you are adding to the user experience?

VC: How will you enter the market?

VC: Look for a focused entry point in the market – how will I get my first check?

VC: How can you convince investors that there is a demand for your product?

VC: Focus on your pitch more and shorten it.

VC: If you are doing hardware, make sure you pitch to investors who do hardware.

VC: Show your hardware distribution channels.

VC: Cool idea, but is there really a market for it?

VC: How can you build a compelling case and how are consumers so primed?

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SVASE VC Breakfast Club on 12th May 2011 featured Bruce Schecter of Band of Angels

SVASE VC Breakfast Club on 12th May 2011 featured Bruce Schecter of Band of Angels.

Band of Angels is the oldest angel investor organization with 130 members.

60 business plans are seen per month of which 8 are invited for a lunch meeting that involves 8 min. of Q&A. Of these, 3 are invited back for a full presentation at a dinner meeting.

Participats: DDT software, FIO Technology, Pikaba, Pipeline Manager, Ring Free Mobility, Livesprout, SVB financials and Ti.Ki.

VC: Market is still very competitive for funding good entrepreneurs.

VC: Band does only priced rounds as anything else is unfair to early investors.

VC: How much of your pipeline is actually closed?

VC: Classic challenge – people do a great job of presenting products in pitches to investors but investors are looking for how they will make money.

VC: Biggest hump is go to market strategy.

VC: People fail because they don’t know how to sell products that they know to make.

VC: Give a clear sense of the price of your transaction – how will you make money?

VC: How many people have already paid for your product?

VC: Having to show investors that there is revenue generation happening is a great situation.

VC: Get quickly to the question of how much money do you need and how much will you burn?

VC: There is always investor prejudice on trying to be the first money in.

VC: Take a 1 pager write-up about your company and show it to every smart person you know before showing it to investors.

VC: Investors as like all humans deal better with concrete than abstract.

VC: Always lead your conversation with a story

VC: Does the average consumer really know he wants this or does the consumer need to be educated?

VC: Make products that people really need vs. what they really want.

VC: Give some proof point that people really need your product

VC: Talk to 10 investors and you will get 11 opinions

VC: Speaking in analogies to existing businesses is a great investor presentation technique

VC: Use a 1-sentence equation to describe your revenue model so that the investor can easily remember and take back

VC: Why you and what is the proof that it will work?

VC: It is always nice to show investors that you have a clear vision and grip on your revenue model

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SVASE VC Breakfast Club on 14th April 2011 featured Matan Friedman of Bessemer Venture Partners

SVASE VC Breakfast Club on 14th April 2011 featured Matan Friedman of Bessemer Venture Partners.

Bessemer has under $1.6B new fund. Longest VC firm in US. Strong preference across multiple sectors. No stage, sector or geographical bias. Invest everywhere.

Participats: Blobin, Dot TK, Ecoscent, FIO Technology, Futurepath, Miromi, Sportlyzer, Sun Flake, and Green Zoo.

VC: Each partner has their own allocations. Growing size of fund means there are more partners.

VC: 10 seed deals per year – Angel side fund with $250K. See if it works and then invest in A round for $5M+.

VC: Look for opportunities with quick inflection points and not incremental growth businesses initially.

VC: Look for capital efficient markets.

VC: Solar financing for 1-100 kW commercial solar installations is an untapped market.

VC: Do you go to your channel vendors or to end customers?

VC: Lots of $$ going into nanowire technologies

VC: Hardware licensing is possible only if customers feel a pain point – like a 10x reduction in efficient or cost.

VC: $5B in fees for coaching and sports.

VC: Customer service experience is prime for selling any service – Zappos allows users to buy one shoe size higher or lower to find the exact fit before returning.

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SVASE VC Breakfast Club on 7th April 2011 featured Sanjay Pichaiah of Mitsui Global Investments

SVASE VC Breakfast Club on 7th April 2011 featured Sanjay Pichaiah of Mitsui Global Investments

Mitsui is an aggregate of 650 companies worldwide. Invest in all sectors – 1/3 Tech, 1/3 Green and 1/3 Health Care.

Around $1B investments in the US. Active over 10 years with 35 investments professionals working currently.

Participats: Agora, Blobin, Diligent Business Solutions, Dot TK, FIO Technology, Miromi, rollApp, and Secret Sauce Partners.

VC: What metrics do you use to rank people?

VC: How do you assess the quality of your products?

VC: What type of platform are you coding in?

VC: What is your revenue model?

VC: India markets are hot for internet and mobile.

VC: There are no well known metrics for the Indian market.

VC: In Indian market, equivalence of credit bureaus will spawn several consumer businesses – information to sell and resell

VC: Online ad space is hot in US, Japan, Europe, Korea and China

VC: Of $40B annually, $6B is in mobile and video

VC: $$shifting from traditional media to online media – today ads are more interactive

VC: There is a difference between usability and actual use of systems by users.

VC: Have you done a market study as to where your solution fits in?

VC: There is a need for newer platforms to teach content – Khan academy in youtube.

VC: Customer service experience is prime for selling any service – Zappos allows users to buy one shoe size higher or lower to find the exact fit before returning.

VC: $30B+ market for online clothing. 30-50% rate of return for clothing. Of this $3B is lost and $1.5B market for unsold clothes after return

VC: Can you gauge your actual use rate?

VC: If every gym signup shows up, the gyms will run out of capacity.

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SVASE VC Breakfast Club held on 31st March 2011 with Sumeet Jain of CMEA

SVASE VC Breakfast Club held on 31st March 2011 featured Sumeet Jain of CMEA Capital - http://www.cmea.com/

CMEA is investing out of a $400M fund with funding ranging from $100K to post revenue larger rounds.

CMEA focuses on Technology, Energy and Life Sciences. Technology funding requirements are software + capital efficiency + low touch sales.

Participants: Agora, Buzzgenie, Dot TK, FIO Technology, Miromi, rollApp, Tackable and Vaayoo.

VC: Lots of dynamics at work to move mobile markets

VC: Identify your business clearly. Where will you spend most time? Focus on bringing customers to your website.

VC: Pick which way you are going early on – acquiring customers vs. wanting to partner with someone who has customers.

VC: How many downloads have you achieved from the app store? What is your outreach?

VC: Focus on how you will finally get paid and work backwards from that to define your business model.

VC: Online and mobile photo sharing business is getting very quickly over crowded.

VC: In mobile space, address most meaningful market by choosing iOS, Android and perhaps Blackberry

VC: How will people find you on the web? How will you cost effectively fin users of your technology?

VC: Focus on one core area for your business – singularly focus, focus and focus.

VC: As you grow, each incremental margin on $ should also increase.

VC: Things that are ideas by nature are not venture fundable till you go out and prove some aspect of it.

VC: Investors will invest in stories that are fundamentally inexpensive to do. That rules out a lot of hardware start-ups.

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SVASE VC Breakfast Club on 24th March 2011 featured Stephen Lee of Samsung Ventures

SVASE VC Breakfast Club on 24th March 2011 featured Stephen Lee of Samsung Ventures - http://www.samsungventures.com/

Samsung Ventures is part of the Samsung Group of companies which is a collection of 30 companies across a number of industries.

Samsung Ventures is investing out of an $800M fund with funding ranging from Seed to Series-E rounds.

Samsung Ventures focuses on Technology, connected devices, components, infrastructure and mobile applications.

Participants: Dot TK, FIO Technology, Miromi, rollApp, Tackable, Wehloq, Whylocate and Zeta Data Systems..

VC: Samsung focus companies are those that enable connected devices, maximize multiscreen experiences and exploit cloud infrastructure.

VC: Samsung needs companies they fund to have a strategic angle to Samsung business divisions and need some form of sponsorship from them.

VC: Getting funded by Samsung maximizes values of portfolio companies by giving access to largest TV manufacturer and second largest handset manufacturer.

VC: Samsung is looking for strong management team to build and scale the company to billion dollars.

VC: Find sponsors from strategic limited partners. In early stage, more sponsorship needed.

VC: Last few investments were a 3D company from LA and Swype for fast text entry in mobile devices.

VC: Lots of room in the market today for disruptive companies. This is a good time to start a company.

VC: Working with large companies and getting validation from them is a slow process. Be prepared for a long haul.

VC: Lots of apps in the mobile marketplace. You need to prove how yours is better. Show compelling working demo.

VC: What is your primary distribution strategy? How will others discover your solution?

VC: Start-up dilemma – you need good content to get users but you also need more users to generate good content.

VC: How are they messaging your product? What is the message they are saying to the audience?

VC: How will you scale your user growth?

VC: Know and target whom exactly you are selling to in a company.

VC: You need strategic sponsorship for early stage deals.

VC: Online education market is very interesting.

SVASE VC Breakfast Club on 24th March 2011 featured Stephen Lee of Samsung Ventures - http://www.samsungventures.com/

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Lively Funding Pitch Workshop with Eph Lindenbaum

"Last night’s crash course in how to raise funding was absolutely invaluable. Attending your workshops should be a prerequisite for every founder in the Valley." Luke Stangel, Tackable

These are always lively events, as we spend the first hour or so on how investors evaluate deals, so it’s interesting to see how the guest investors react to being asked to be really open about motivators & metrics, and how first time entrepreneurs react to the insights on what raising venture funding really means for themselves & their business.

Eph Lindenbaum dived straight in, quickly opening the kimono to shine a light on the venture funding process, and the implications for the founding team.  We covered a lot of ground, including how to get that first meeting, and what’s the purpose of it, in addition to running through a 10 - 12 slide deck that get’s across what investors want to see & hear, and what you need to look like to quickly catch their attention & move to the next stage.  Fun stuff, already paying dividends for the delegates, including one who has lined up a meeting with Sequoia!