On the 22nd I will be talking about business plans and fundraising for the 3rd time with the Tech Coast Venture Network in Orange County. I thought it would probably be appropriate to update the presentation a bit…

Attached is a revised version of the presentation I’ll be giving.

I hope you find it helpful!

Business Plans and Fundraising

I sat on a panel today, “Business Pitches that Hook Investors”. It seems all of the panelists took the position that you should skip the long process of writing a business plan (at least as a fundraising tool). Several people in the audience asked for a copy of my presentation, you can find it in a previous blog post: Why You Shouldn’t Write a Business Plan.

As a side note, I will be giving a longer version of this presentation along with some new material at the Tech Coast Venture Network meeting this Thursday, May 22nd. Details of the event are at www.tcvn.com.

Some of you may be attending the upcoming Harvard Business School Entrepreneurs Conference on Monday May 19^th in Anaheim, CA. As these things go it is definitely one of the better early stage events. While it does attract its share of service providers, it also seems to attract a nice cross section of entrepreneurs. I think this will be the 6^th year that I have attended. This year one of my other Momentum partners, Matt Ridenour, and I will be speaking on the panels. I am particularly excited about the topic that my panel (first panel of the day at 9AM) addresses: Do You Have the Right Stuff? Characteristics of Successful Entrepreneurs. Continue Reading »

On Friday, I moderated the Idea Validation panel at UCLA’s Anderson School Entrepreneurs conference. Thanks again to the four panelists – Jimmy Henricks and Patrick Dillon, co-founders of www.collarfree.com; Dr. Vladimir Ban, CEO of PD-LD, Inc.; and David Silver, author of Smart Start-Ups and President of Santa Fe Capital Group – all of whom pulled from their own experiences give helpful advice on how to think about validating a startup business idea.

One discussion item really stuck with me after the panel – whether women entrepreneurs face a tougher road when trying to raise venture capital. A panelist made the observation that women have a tougher time raising capital than do men and in a slightly tongue-in-cheek way, advised women to partner with men if they were to hope to raise funds. Several members of the audience disagreed strongly including an ex-associate from a Sand Hill Road VC and a fund-to-fund expert who made the point that “VC’s want to make money and couldn’t care less what you look like if there is a good ROI to be made.” I tend to agree with the audience but would love to hear what others with personal experience have to say on the point. I know several woman entrepreneurs who have successfully navigated the VC process and don’t recall any hearing about any specific bias against them. But I may be blind to the issue.

The panelist also cited data that supported his point. I do know there are fewer female venture funded entrepreneurs than there are male, but I’ve never seen any data that supports the claim that it’s the VC process that creates the disparity. If anyone has data, I’d love to see it.

I’m moderating a panel at this Friday’s UCLA Anderson School Entrepreneur’s conference (www.uclamba.com/eac/2008) titled, Idea Validation: How do entrepreneurs validate an idea before investing time and capital. I thought I’d jot down a few preliminary thoughts on the subject here and then see which direction the panelists decide to take it.
Continue Reading »

A few weeks ago, I was a speaker in a session hosted by TechBizConnection, a southern California networking group for technology entrepreneurs. There were some great quotes by the other speakers in the event on the challenges of building a new company. I want to apologize in advance for not recalling who offered which quotes! Following are some of the best quotes I heard in this meeting and other places along the way.

“It’s like taking off in an airplane that hasn’t been built”: This refers to the challenge of creating a new company (constantly learning and changing plans) while at the same time trying to land first customers and sell new products. By the way, this reminds me of a topic dear to me - “Why You Shouldn’t Write a Business Plan“. Continue Reading »

There’s been a lot of talk lately about investors laying low due to the recent slowdown in the economy. Looking closer at the numbers, it appears that there is a lot still happening.

Ben Kuo at SocalTech points us to the recent National Venture Capital Association (NVCA) study published just a few days ago. Though the amount of venture capital invested in southern California from Q1, 2007 to Q1, 2008 has decreased from $1.1B to $856M, the number of deals has actually risen! 93 companies were financed Q1 this year versus 85 last year.

Though valuations are lower and capital may be more difficult to come by, venture investors are still alive and well. Yes, exit markets are tightening up. Yes, the IPO market for venture baked companies seems to be in a drought.

However, keep in mind that there is a very distinct cycle to venture capital. Companies receiving their first round of institutional capital this year have a 3 to 5 year time horizon before they exit.  Don’t forget that several household names (i.e. Google, Paypal) “grew up” during downturns - just like the one we’re in right now.

Today’s Los Angeles Times carries an article that predicts that 2008 will be even tougher for start-ups seeking cash. There are a few themes in this article that we often talk about:

Venture investors will be very picky and, specifically, they will be looking for “the complete package”:  great technology, a big market, a strong team and, most important, evidence that the company has already started to get traction. This is a bit self-serving, but we think that groups such as Momentum can help bridge the funding gap by providing bridge funds and  management that is willing to go at risk to get traction.

There is also an interesting anecdote on a theme we often talk about: high valuations in early rounds are often a BAD thing. A company featured in the article was unable to raise additional capital during the current economic slowdown because they had been so successful at achieving a high valuation in an earlier round (it is always difficult to do a “flat” or “down” round).  So, the company went out of business.

If there is any news is in this article it is “more of the same”. You should not expect to fund a great idea or a great product but should be working to build a solid company one step at a time.  As you take capital along the way, don’t always focus on valuation but instead focus on getting the right amount of capital from the right partners.

Noam Wasserman, a professor at Harvard Business School, came up with a core concept about startup founder motivations:

Rich versus King?

Academics are long known for coming up with interesting, but relatively impracticable concepts. This is not one of them. Founders need to understand their motivation for starting the company. By taking time out in the early stages to understand why you are building the company, you can avoid a lot of heartache and headache down the road. Continue Reading »

In 2005, I followed in the footsteps of many other Los Angeles-based entrepreneurs. I moved our internet startup, Insider Pages, from Southern California to Silicon Valley. While we knew it would be a huge disruption to a fledgling company, we did it for some good reasons – access to capital, engineering talent, and a bubbling ecosystem of ideas, energy and innovation. It was the right move — Silicon Valley turned out to be everything we’d hoped for and more. In a few months, we’d built a top tier engineering team, attracted successful product and marketing people from other Silicon Valley companies, and had started building a network of business development relationships with other Silicon Valley firms. Continue Reading »