Category Archives: Venture Capital

“Syl’s Stance: How Entrepreneurs Succeed at Venture Capital Conferences”

The annual cycle of venture capital conferences are again underway, setting the stage for entrepreneurs and investors to seek capital financing. However, gaining the most ROI from a venture conference requires an overall strategy, great preparation and tactical maneuvering throughout the VC conference cycle – namely, from the application and coaching preparation through the entire event day – and beyond.

For those seriously seeking investment from angels, venture capitalists or strategic investors be SUPER prepared and do so well in advance. This includes your team, your product demo, your ‘Investor Ready Business Plan’, and your intro ‘elevator’ pitch (30 seconds to 1 minute).  You need a firm and compelling ‘total investment opportunity story’ that permeates your people, your presentations, and your promotions. All players must be singing the same song and on their A+ game. Be on message and in key across all formal presentations, table discussions, hallway chats and cocktail reception conversations. This is ‘show time ‘folks at every touch point…all day…with everyone – from the moment you arrive in the parking lot until you drive away from the venue. With excellent preparation you will relax and tell your story with confidence.  The day is about moving onward and upward. And importantly, follow up with a thank you to all you meet, an invitation to connect; and be set to immediately send your venture capitalist (VC) presentation deck and your concise ‘Investor Ready Business Plan’ to qualified prospective investors.

For those testing the waters, I recommend you go as an attendee first, read the room, understand the dynamics of the day, make face-to-face connections and gather contact information –most especially from investors, as well as with services providers, who often server as influencers. Consider the best technologies, products, markets, teams and investment stories that gain the best attention, awards and interest from investors. Learn from them – both from their successes and failures. With this first hand intelligence and with the right advisors you, and your team, will be able to become ‘investor ready’ for your own ‘show time’ at the next venture capital conference.

Be well,
Syl

© Strategy Dynamix, LLC All Rights Reserved

What is your perspective?  Please share your thoughts in the comment section below.

About the Author
Sylvester (Syl) Di Diego, Managing Partner, Strategy Dynamix, LLC is a venture advisor and interim executive. Syl  has empowered hundreds of entrepreneurs and investors to successfully navigate the venture growth lifecycle. He has assisted in raising $300 million of capital financing to date. Learn more and connect with Syl at http://www.strategydynamix.com/aboutus/executives.php

Do VCs Have Money to Invest? Usually Not!

One of the more perplexing aspects of venture building is figuring out how to finance your technology and company. A common mistake is assuming that Venture Capitalists (VCs) have money to invest in your venture when you need them. The reality is that VCs at most times have no money available to invest in any new venture. Intrigued? Then read on.

While many entrepreneurs strive to connect with VCs, it is really somewhat of a waste of time in most cases. That is, unless you understand the inner workings of the ‘VC world’, selectively choose the right VC and have good timing.

All private equity funds, including venture capital funds, are run in a similar pattern. They raise money for their fund, invest in companies, wait a while, and then exit those companies for the purpose of trying to make a bundle of money. Each fund has a portfolio of typically 10 to 15 companies with an investment time horizon of about 10 years. Success is measured on the entire portfolio’s performance.

The fund raising period and the initial few years of investment are quite frenzied. This is when the pipeline is built, term sheets signed, due diligence conducted and expectations are high. Then comes the hard work and the wait. Earliest exits are during years 3 to 5, and these are often winners. Years 5 to 8 are when the majority of invested companies are exited and then the laggards after years 8 through 10 (or longer). Of course some sectors have much longer horizons – like pharmaceuticals; while some investor approaches have exits based on milestones much earlier in the technology commercialization or business development  stage.

To use a baseball analogy, the goal for the VC fund portfolio is to hit at least one home run, with the expectation that there will be a handful of singles and doubles. Walks will happen, but most feared are the fouls, or bad bets, that bring down the entire portfolio’s return. The goal for each invested company is 35% or higher ROI – depending on the fund.

So we can see that it is primarily in those first two to three years when a fund has money to invest. During that earlier period, initial investments are made, but also funds are committed or reserved for follow on investment rounds for the same portfolio companies. Thus, as a general rule, from year four onward (or 60-70% of the time), VCs have almost no money left to invest from a particular fund.

The lesson for entrepreneurs is first to be aware of the private equity investment lifecycle. Second, entrepreneurs should try to identify where a particular VC is in their lifecycle. This is not a simple task. One must read the news, ask around in networking circles and perhaps pose the question to the VC. Given the nature of the investment lifecycle the best times for entrepreneurs to connect with VC are when a VC is raising  its next fund or else in the first few years of the new fund. Of course always be cordial as VCs are always building their pipelines. Also, remember that the VC community is a small one and you never know when one VC might introduce you to another who is in the sweet spot of their investment lifecycle.

What is your perspective?  Please share your thoughts in the comment section below.

© Strategy Dynamix, LLC All Rights Reserved

About the Author
Sylvester (Syl) Di Diego, Managing Partner, Strategy Dynamix, LLC is a venture advisor and delivers venture accelerator solutions. He has assisted hundreds of entrepreneurs and investors to successfully navigate the venture growth lifecycle and helped to raise  $300 million of capital. Learn more about Syl and connect with him at http://www.strategydynamix.com/aboutus/executives.php.

The 5Ps for Successful Venture Start Up and Development

Entrepreneurs and business owners of any age or business stage will benefit by considering Sylvester’s 5Ps for Successful Venture Start Up and Development.

1. Potential

First things first. Let’s discover the potential of your new idea for your offering – whether it is a product, service or solution.  Take a look at who would use the offering and why. Are you fulfilling an established need, but doing it better? Have you identified a pain point that has yet to be addressed? Or do you have something people would love to buy if it were made – the Steve Jobs approach. Finding specific applications that are valued by specific potential users will give your venture a focus. You have a starting point to estimate potential sales volume, consider segments of users and define customer characteristics that will evolve into important understandings to define both your offering and your market positioning.

2. Prototype

Next, stop thinking and start making. Build a prototype – a rough working model of what the product, service or online community will do or look like.  Do not be afraid to try and fail with many iterations. After all, that is the creative, invention process. What is important is this – to test your idea with a prototype that will allow you and your potential users to see, feel, and touch the offering.  When you build, either physically or conceptually, you will become aware of requirements, cool features as well as constraints and bottlenecks. More, as you better understand product challenges, you will be at the right viewpoint to generate relevant solution ideas and product innovations. Be sure to test with sample target users to receive feedback on the usability and customer experience with your offering – and do this continuously throughout the product design phase.

3. People

As the saying goes – “People make the world go round”. Many successful entrepreneurs and industrialists have said that putting the right people together was equal or  more important for success than the business concept or product itself. Beware, though, of setting the right expectations.  Specifically, clarify from the start – the initial and long term roles, compensation and duration of the relationship. From first hand experience as a strategic business advisor, many ventures become derailed, or at least seriously delayed at critical investor or stakeholder negotiations due to lingering confusion or conflict among people involved with a start up venture. Vague promises and expectations – both spoken and unspoken, lead to massive problems. But have hope. Make a real effort to define stakeholder roles, expectations and compensation formulas. Begin yourself to document these understandings and also summarize your venture governance approach from a business viewpoint. Then formalize these in legal agreements. It is important to be clear and fair from the start for the benefit of the venture as well as for individual stakeholders. In many cases thing are already underway and a tangled mess. In these situations – stop everything and reset expectations. If necessary, make use of a business advisor or other professional to establish a new foundation. This can be addressed as a key goal of a strategic review or corporate offsite.

4. Priorities

As everyone knows, building a new venture requires executing an extensive list of activities and tasks. These may overwhelm many people and can lead to paralysis. Lack of priorities is a root cause for many venture team bottlenecks and burn out. Importantly, a lack of focus due to lack of priorities is expensive and demoralizing. It leads to inefficiency and higher than necessary cash burn rates.  The starting point for a solution is to clearly establish venture direction and goals; next set priorities and align them among the team. These are the essential outputs of your strategic planning. Be sure to socialize the prioritized roadmap among key stakeholders and across the organization to promote common understanding and commitment to execute your technology development and go-to-market plans.

5. Pace

A fifth lever for your start up is to decide the pace, or speed, for your venture commercialization.  Pace shapes your activity levels, drives your resource needs, and sizes your cash burn rate. Thus pace influences your finance needs and options. For most ventures a fast pace is a necessity. This may be due to an expiring patent, a desire for first mover advantage or taking advantage of an IPO window.  At other times patience is an asset.  In all cases, defining and guiding the required pace of your venture is an advantage for navigating your venture commercialization.

In conclusion, intentionally addressing the 5Ps of potential, prototype, people, priorities and pace, will allow you to better drive and shape your new venture for successful commercialization.

About Sylvester Di Diego

Sylvester empowers people to ReThink, ReCreate and ReLaunch technologies and businesses for successful commercialization, strategic market positioning and business development.

© Strategy Dynamix, LLC All Rights Reserved

About the Author, Sylvester Di Diego

Sylvester Di Diego is founder and Managing Partner of Strategy Dynamix, LLC, a boutique strategy, innovation and implementation  consultancy involved in business creation, development and transformation.

Learn more about Sylvester Di Diego at http://strategydynamix.com/aboutus/executives.php.

Learn more about Strategy Dynamix, LLC at http://www.strategydynamix.com/.