Transcript Early Stage Investing with Exceptional Entrepreneurs

Confidential
How do you build
high potential start-ups?
September 2011
Erik Straser, [email protected]
Confidential
Firm Overview
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Founded in 1983
Invested in more than 275 companies
Over $2.8B aggregate LP distribution to date
Currently investing from our Ninth Fund; $1.85 under
active management
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Deep domain expertise
Multi-disciplinary
Active, hands-on company builders
Leaders in public policy
• Cleantech: Solar, Storage, Smart Grid
• IT: Enterprise Focused Application & Infrastructure
and Consumer Web/ Mobile/Social
• Life Sciences: Personalized Medicine and
Transformational IT
• Hands-on company builders
• Stubborn belief that innovation lies at core of
venture returns
• Culture of risk-taking, pioneering new areas
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28 Years of Early Stage
Venture Investing
Leadership
Differentiated, Thesis-Led
Strategy
Diversified Across
Three Categories
Passionate Commitment
to Innovation and
Entrepreneurship
Entrepreneurs
• The fundamental ingredient
• Many people are entrepreneurial, very few are entrepreneurs
• Come in usually two types:
─ Market visionary: have a deep understanding of a market in flux
─ Technical visionary: have a deep understanding of how a technology
could transform a market
─ Craft credible, measured paths to risk reduction
• Are efficient at aggregating resources
─ Capital
─ People
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Markets
• Two types of markets:
─ Large, incumbent markets being subjected to new forces
─ Fast growing prospective markets
• Being created or transformed by:
─ New technology
─ New business models
─ New Regulatory Environment
• Markets that are addressable by a startup
─ Sales and Marketing
─ Distribution and Service
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Capital
• That is available to the best entrepreneurs and companies from:
─ Angels
─ Early stage (pre-revenue or early revenue)
─ Strategic Partners
─ Late stage (growth capital)
─ Mezzanine (expansion capital)
─ Exit via public markets (IPO) or trade sale
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That can be patient
That is sufficient in size to finance the company all the way
That understands the risk it is taking
That understands how downstream capital behaves
That is rewarded, along with management, in success
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Ecosystem
• Hardest thing to replicate about Silicon Valley
• Culture of risk taking and a culture that tolerates “smart” failure
• Rational policy and regulatory framework that allows startups to
succeed
• Self reinforcing system
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Research Universities for technology and raw talent
Healthy large companies nearby for managerial talent
Risk taking capital
Service providers that understand how to service a startup
• Legal
• Accounting
• Real Estate
• Banks and Financial Services
• Rewards success both financially and culturally
Confidential