June 20th, 2013 TriNet: VC Insights - When and Why You Should Take Your Startup Global
OLC attended TriNet’s VC Insights event, When and Why You Should Take Your Startup Global on Thursday, June 20, 2013. The event featured some big names in the venture capitalist world. Paul Cianciolo of FirstMark Capital, Matthew Brennan of Bain Capital Ventures, Ryan Ziegler of Edison Ventures and Judith Clegg of Takeout were the panelists while David Schwartz of DLA Piper acted as moderator.
The event started off with the panelists first introducing themselves. Matthew Brennan started by describing what Bain Capital Ventures is. “Bain Capital is known for its private equity arm, but Bain Capital Ventures is focused on the startup equity sector,” he said. Paul Cianciolo explained that FirstMark Capital does mostly seed and Series A and a few international companies, too. Judith Clegg said, “We have offices in New York and London and we have projects all around the world. A little bit of international flavor, you can say.” Ryan Ziegler gave a little background on Edison Ventures. “The firm was established in 1996 and we believe we are a growth venture firm. We manage about $1 billion in capital. I manage a technology, enterprise and healthcare team.”
The panelists were asked questions pertaining to venture capital and international startup expansion.
David Schwartz: Let’s say that company A is growing. When in your experience is the right time for them to expand internationally?
Ryan Ziegler: Companies that we look at—in most successful cases, the customer draws the company into new markets. The other thing is OEM. Most companies that we invest in don’t have product they’re selling to other companies.
Judith Clegg: I think the best companies coming out of Europe are expanding quickly. They build their product early on and spread it throughout Europe—like Skype.
Paul Cianciolo: Most of the companies that we’ve invested in are global in nature. Out customers are uniform in the desires of which product they want to buy. When we get to a point, hopefully they’re getting revenue in the American market and they’re able to expand internationally.
Matthew Brennan: Acquiring a team for technical products early on is critical. From this, the company has a product early on and has a team that knows the local market.
DS: What do I need to do to open offices in new cities?
MB: I think it’s important to look for companies that don’t have a single point solution. It’s important to have a company that understands what markets to go into. It’s exciting for us to see companies that know their core consumers and not spread themselves out in multiple verticals—because that’s inefficient and a waste of money.
JC: I think of real opportunities in terms of taking advantage of them. But also, it’s being cautious and doing them in stages.
RZ: It’s not rocket science to prove a product without a lot of traction. Find someone that will help you and help you understand the nuances of the market.
DS: What happens—what do you do when entrepreneurs are faced with international tax? Is that a red flag?
PC: If it’s a current investment and it’s a half-baked plan, it’ll be a tenuous board meeting. No one likes a half-baked idea. But no one has all the time in the world to file taxes, get patents—it’s a tough question to answer. We’ve worked with great advisors, though, to help us through situations like that.
RZ: We’d rather spend money on hiring people. You have to judge your confidence in the future. It’s a tough thing to monitor.
MB: In some cases, a lot of companies will take IP and move it to tax havens. I think it’s better to go after the market than focusing on saving pennies here and there.