Venture Capital and how to find, approach and work with VC firms

 This panel is part of the Annual Investors Choice® Venture Capital Conference and the topic of the panel is "What Investors are Looking for - In Technologies, Companies, and Entrepreneurs".  The panel is moderated by Devin Thorpe of Thorpe Capital Partners.  Devin provides more information here and here.

Devin introduced himself as Devin Thorpe aka "The Ballast", in reference to his Bobsled ride the day before.  Here are notes on the proceedings:

Devin - As a Venture Capitalist and investor, what things are you looking for?

Tom – VCs should be focused on things are revolutionary, not evolutionary.  The whole market has changed over the last 5 years.  We have decided that we are going identify companies that we can focus on building businesses for the long term, to be sustainable.

Len – What is your exit strategy?  If an entrepreneur has some other strategy other than building a cash flow positive, sustainable business, he is probably not the right CEO to invest in.   It is absolutely key to have a team that can respond to everything that the market throws at you.  It is also important to look at market momentum.  You can have great ideas and companies, but if you look at who is buying your product.  Is that buying market growing and has momentum? 

Gaurav – Many entrepreneurs are taking $50 - $75k in investment and turning their company into a profitable company, instead of taking much larger investments.  Many firms are also outsourcing engineering and development off-shore and essentially focusing on sales and marketing here in the US.

Chris – Two tenets that are important to us.  One is Resegmentation.  This is taking disruptive technologies and introducing them into mature markets and industries.  The other is Convergence.  Where you are bringing together a multi-disciplinary approach that is much stronger.

Corley – What we see coming in new technologies?  We may not want to share and we may be wrong.  The principle thing is to invest in people.  The stuff on paper will change in a year, but the people will adjust to market conditions.

Devin – Of the many emerging technologies, what ones are still emerging and which ones are really becoming mature?

Len – It depends at which part of the industry you are looking at.  Some parts may be mature, but there may still be opportunities in different sectors within the industry.

Corley – Often you get several business plans about the same idea – sometimes that indicates that there is a new technology that enables new business.

Devin – are there opportunities for old school business, such as a restaurant?

Tom – There are always opportunities for investing in great teams and there may be better returns there because the sector is overlooked.  But the great VCs are looking at the things that will revolutionalize the world and make a bundle.

Questions from the Audience

Q. Who has invested in Utah and what has been your experience here?

Chris – I have found it to be easy to do business here.  I like the work ethic.  I am seeing a lot of early funding needs to help build a prototype.

Corley – we have invested in Senforce and we found that we found great employees here locally and we don’t need to go elsewhere to bring in talent.  There is a great entrepreneurial spirit here.

Q. We see that location is important.  I have been asked by Bay Area VCs if we would be willing to move to the Bay Area and they say that they do invest in the Rocky Mountain region, but the bar is much higher to invest.

Tom – if the VC can’t think enough out of the box to consider that you can exist where you are located, perhaps they shouldn’t be the investors that you need.

Len – Some Bay Area VC have done well enough and there is enough deal flow in the area where they can get in their car and avoid a plane trip, that they do not really want to look outside of that.  What business are you in and how can you improve your business?  You need to be where it is best for your business. Where can you best find talent?  Where is best for your customers.

Q. Is there a perception that you can’t build a big company in Salt Lake City? 

Chris – I have heard those speculations, but I think there are enough examples of success to counter that perception.

Tom – Unless you are in Boston, San Francisco, or New York, most cities in the US will have the perception about them.  You got to focus on the virtues that you have here, the talent, affordable housing, great work ethic.

Len – In New Mexico, you have great tech workers, but there isn’t depth of management, so we have to bring in a CEO.  So we sell safe neighborhoods, quality of life, pro-family benefits.

Q. What should we expect when we are asked what our exit strategies?

Tom – You need to say, we are going to build a company that is profitable and market leader and sustainable.  If you do and are successful, good things will happen to you.

Len – It is all about team and the market.  Never conceptualize a company around an exit.  That being said, be aware of who might buy you and when you come to a fork in the road and ask, will this make me taste bad to someone who might buy us if I make this choice and it is neutral to my business?  If  so, take another path.

Corley – The market is always going to be there.  Also you bet on the jockey, not on the horse. 

Devin – thank you very much for your time.