Pivotal Labs hosted another great Meetup while I was in town for PodShare, this time it was a fireside chat with David Hornik (partner at August Capital) and Eric Zimits (partner at Granite Ventures). Ironically, and I was telling Ryan this at the onset of the night, that same day I had a meeting with Bob Dana of TripShare – who was the speaker I met at Pivotal the last month I was in town.
Okay okay, now on to the BEST OF from the chat:
David said that venture capital is an industry of innovation that will never die. It is engaging and ever changing. We are buying tech futures. You can buy wheat or corn but if you invest in the best tech, you are buying the future. There is always some new piece in tech that will surprise and excite you.
Eric sees cycles come and go. Silicon valley has a handful of people that stir things up, then it’s a race to who gets more; as a result rents increase/traffic thickens and then…#$#@! the rug is pulled out right under them and we go back to having a handful of people in the industry again. It’s a cycle. Everyone always thinks “it’ll be different this time” but that’s not the case.
Best Quote of the Night:
— StartupKid (@ElvinaBeck) November 22, 2013
How do you figure who will be great a entrepreneur?
David: You spend time with the person to understand how they perceive risks, if they admit that they don’t know all the answers etc. – VCs look for data that will excite them and want to spend the next decade with that founder.
Eric: It starts with an idea – let’s talk. People who are willing to learn and adapt and take insight do well.
David: You have to get in front of a VC that is ready to invest. They aren’t always investing! Sometimes VCs are fighting fires. Get yourself out there & network. Bootstrap and demonstrate a real success in the market. The goal should be to meet people who can help build the business and get them excited.
Over 13 years, I never funded an unsolicited business plan. You are better off sending an email through someone who already knows me. That intro creates a connection.
THINGS THAT SUGGEST NAIVETY:
David: Don’t out a slide in your deck with an exit option! There are only so many ways to exit and we already know all of them.
Don’t put a valuation on your company! Valuation will be decided by the marketplace, not you.
Eric: Hall of Shame pitches include prickly people who don’t respond well to questions. It is VC’s jobs to ask questions but some co-founders are defensive and that is off-putting. You have to be open to debate, honest & transparent, because we are all getting the boat. Be self aware and listen.
WHAT CAN BE EXPECTED FROM VCs:
David: You don’t want your VC to run your business, you want someone thoughtful, helpful and invested in what YOU are doing. VCs should let you run your business and we provide the introductions.
Eric: VCs know that if investors own too much of your company that you won’t be motivated.
THEN & NOW:
David:The number of firms that can raise money is smaller but ton of money is trying to invest into ventures! So there are fewer firms but larger funds. Today, the venture industry is a personal industry & we want to be involved with a small number of investments like $300m with 6 investors versus $1b fund where the VC hires people to help the startup grow their business. That is increasingly en vogue. Those are unconventional scenarios in today’s market, and we’ll see what happens but that is what’s happening now.
Eric: VCs are willing to test and adopt. Take internet privacy. Everyone is being mined and tracked but if there was an equal alternative option that did not invade privacy, would you switch? We can’t stay that Google is huge and it will stay on top forever because look at IBM and Microsoft – they were just as big once and fell from that title.
Check out David’s AWESOME Venture Blog