Inside the mind of a VC: What deals are they doing, how do they decide to invest

SAN FRANCISCO--Last March 24, OLC attended the Northof41.org event in San Francisco where a panel of VCs covered some keypoints that CEOs should follow when it comes to getting a meeting with a VC and how to go about pitching your business.

 

Jeff Musson:  Moderator – President Dynamitenetwork.com

 

Sean Flynn – Managing director Shasta Ventures

 

Christopher Gottschalk – Principle Blumberg Venture Capital

 

Vish Mishra – Venture Director Clearstone Venture Partners

 

Andrew Romans – General Partner Rubicon Venture Capital

 

 

http://www.eventbrite.com/e/inside-the-mind-of-a-venture-capitalist-tickets-15904826765

 

 

JF -  In the general media, there is consensus a tech bubble is coming? What are your thoughts?

 

CG – It’s very different from the 99 and 00 years. From a public view it is very different. Things do move in cycles and I do feel like we are nearing the end of a new one. Does this mean we are in a bubble, I don’t think so.

 

VM – We’re not in a tech bubble is the short answer. You can’t compare the current environment to the “dot com bubble.” There are a lot more real businesses with revenues and probability now then there was back then.

 

There are some cycles that happen though and we are in one.

 

SF – I generally agree with the other gentlemen. I feel that greed is driving decision-making versus fear. We’re still writing checks and that is what it comes down to.  We’re not putting away the checkbook but we do sense some heat.

 

AR – Are we in a bubble, I think it’s a deal by deal basis. Some people come up and offer some ridiculous terms for the V.C.  We’re very grounded from where we were in 2000.

 

JFWhat are some tips you have for CEOs looking to get in front of a VC?

 

CG – We get about 3,000 business plans a year and have about 1,000 meetings and invest in about 10 to 15 companies. Anything you can do to get your business in front of us will help.

 

VM -  My philosophy hasn’t changed in years. We look at the insight of what the business is getting into. No one has a complete business plan, but when a company has great insight, I like this.

 

SF – My most recent investment was Block.io, which is an online boot camp for design and development. We knew this CEO from a former company he was running that we invested in. So, since we had a relationship with him, we had trust already built.

 

AR – The right advice is getting developer relationships when you don’t have money.  Getting referred by people is always a good way to get a conversation going.

 

JF – Tell us about the deals going on outside of the Valley?

 

CG – We like to feel like we’re active in other markets if they are within our industry. We are seeing a lot of innovation in Tel Aviv and in Germany.

 

VM – We made a decision to check out companies in India about 8 years ago.  We made this choice because it was obvious India was a growing market.  We’ve funded a company that is like the PayPal of India.  You do have to do a lot of vetting and du diligence when it comes to investing in India.

 

SF -  I don’t think entrepreneurs are any smarter here then other places. We also don’t do a lot of foreign investing but we do look at companies from different states in the U.S. We still do tend to ask the same questions regardless of where the entrepreneur is though.

 

AR – I lived outside the U.S for about 15 years. If you were looking to invest into a larger company, there is a statistical chance that those companies are here in the Bay area. If you want to invest in a Billion dollar company, it’s coming from China or the United States.

 

The most evolved ecosystem is here in the U.S.  This does not mean the people are any less smart, motivated or passionate in other countries though.

 

JFWhere is the smart money is going these days? What’s hot and what’s not?

 

CG – Fin tech is real hot right now. We’re getting a lot of calls around this space.  We have not got involved too much with this industry quite yet though.  Medical, wearables and security are also getting hot too.

 

SF – Hardware was really popular but harder to get into the hands of people. Recently hardware is becoming cheaper and more accessible. We’re pretty open into being reactive to trends that appear.

 

JF – When entrepreneurs come to you, what are some of the worst and best things they can do/say.

 

CG – Understand the value of your business is what I find key. Helping us crack this picture of an industry forecast will go in your favor.

 

VM - I think I’m easy to find and speak at a lot of events and attend events. I’m always around people.  If you ever see me, put your paper and deck away and just talk to me. I want to know “you.” You should be able to talk to me without a prop

 

SF – Fundraising is about finding the true believers and not changing the minds of the skeptics. Do some research and find investors who are right for your business.

 

In terms of mistakes, I’m very product focus and they spend more time talking about other things instead of the product.

 

AR – VC’s have a funnel, when you get a minute with someone they try to buff up the story. Please get to the point very quickly.  What is the funding history, what is the state of the product, what’s the industry, what’s the management team like. Don’t worry about what is hot, do what you are passionate about.