I was happily in attendance at yesterday’s Geek’n'Rolla Conference in London for technology startups, masterfully organised by Mike Butcher. The quality of the sessions was impeccable and TechCrunch put on a fantastic day. I woudn’t be surprised if next year’s gknr sells out in minutes flat.
One session by Fred Destin of Atlas Ventures shed some light on want startups should know about working with VCs. Here’s a rough summary of some of Fred’s points:
Bankrobber – to VC or not to VC – that is the question
Speaker: Fred Destin, Atlas Ventures
When seeking funding, people often haven’t done their work on thinking about next steps.
-How much money do you need/want? what’s the figure?
>Many haven’t thought about it
-What is the plan?
>Focus on the right things in your pitch
>No, we don’t sign NDAs unless you do something that competes with Qualcomm
>We don’t need more than 2 people in the room (a common mistake). We don’t need to see your banker
>Come 15 minutes early so you can set up and relax
>Know which person you are meeting so you can make your presentation fit for purpose
-You haven’t stopped being at risk until the money is in the bank; I have heard stories of a top tier VC pull out 2 days before close because of something a competitor launched
-Term sheet alone will never get you to the finish line
-Be paranoid about closing
-We want to drive an open and transparent relationship with our startups. With my startups, I cannot shut off at night. You have to think of your VC as nothing more than a financing opportunity at heart. It is no more, no less, than an investor. Pick as smart a person as possible but don’t expect incredible things. They will not build your business for you. We can drive some strategy. We help identify market dislocation before it comes and hits you. But as an entreprenuer you want to think three steps ahead. When do you want to step away? One of the most dramatic steps is when to bring in professional leadership. Think of your company as a business and have emotional maturity. The hero is always the founder, never the CEO we bring in, and take pride in that but manage yourself down into a role you like when the time is right. Too often we have to push and fight for this step. We tend to know when people start scaling up. Very often issues can flood you. You get sued, you have four key members demanding raises or they will leave to the competition > this is when you need to bring in outside help.
Question and answer with the audience:
>Are EU startups less aggressive, less focused, than Americans?
-Israelis win the prize followed by the Chinese, Indians and West coast Americans
-In EU typically people are less hungry and less fast. fundraising is challenging in that case
>As an investor, how comfortable are you, or uncomfortable, with the single person company?
-Extremely uncomfortable – the hardest hurdle is getting the first people to work for you for free. The next hardest is seed funding. These formative steps are most important. If you come alone you are almost unfundable because you have not attracted your core team. Companies are collective organism and on your own you are nothing. Your first step is attracting your first two guys. you won’t have the skills on your own, either.
<transcript ends>
Fred seems like a decent guy and shared a lot of good insight into the typical VC relationship. But some of his points raised flags about the type of situation Grow VC is here to solve; it seems to us that a lot of companies might not fit this rigid mould outlined above. If you’d like to follow Fred on Twitter he’s at @fdestin.
