Ask HN: The VC and the Geek. Do VC's only care about 'management team'?
4 comments
VCs invest in founders, not management teams. Some of the good ones have a strong preference for those founders to be engineers.
Most of the most successful VC investments have been backing very smart engineers. This pattern is not lost on them.
Most of the most successful VC investments have been backing very smart engineers. This pattern is not lost on them.
citation please? While this is sweet kool-aid, and I like the taste a lot, this is in direct opposition to almost all VC websites that I have read.
I expected this answer, posting here. I WANT this answer. But I need more. I need convincing that the VC sites are wrong.
Here's links from a one minute google. http://www.smallbusinessnotes.com/financing/venturecapitalde... http://www.markpeterdavis.com/getventure/2008/08/hi-mark-big... http://209.85.173.132/search?q=cache:HQ8zeI6-mXUJ:www.va-int...
... and so on. I have a bookmark folder filled with these somewhere, but for now, you get the idea.
I expected this answer, posting here. I WANT this answer. But I need more. I need convincing that the VC sites are wrong.
Here's links from a one minute google. http://www.smallbusinessnotes.com/financing/venturecapitalde... http://www.markpeterdavis.com/getventure/2008/08/hi-mark-big... http://209.85.173.132/search?q=cache:HQ8zeI6-mXUJ:www.va-int...
... and so on. I have a bookmark folder filled with these somewhere, but for now, you get the idea.
NEA and Sequoia funded us when we were 20 year old hackers with NO business experience whatsoever.
Would you agree that most 20 year old hackers are NOT funded?
Why do you think you were funded? What made you different from those who didn't get funded from those companies? Was it your demo? Was it a patent? Just an idea that was so brilliant, no demo, patent, or experience was needed?
I'm very interested in any introspection you might share, as to why you got funded when others did not.
Why do you think you were funded? What made you different from those who didn't get funded from those companies? Was it your demo? Was it a patent? Just an idea that was so brilliant, no demo, patent, or experience was needed?
I'm very interested in any introspection you might share, as to why you got funded when others did not.
Only bad VCs are looking for startups founded by MBAs. The better ones are looking for people with technical backgrounds who are willing and able to figure out how business works.
Right. Good! Am I going to argue with pg? If I could ask you for one more comment...
Most consumer electronics products that you see on store shelves are not patented. They're not sufficiently innovative to deserve one. That's also the case with my portfolio. I have a few pending patents, but as far as legally defensible IP, not so much.
My idea is to select perhaps 10 products, complete with photos of prototypes, and/or schematics, as well as trademarks that I have reserved, domain names associated with those trademarks, the few patents I have, and my resume, I guess, and create a package I can give to VC's.
Then, in the package, select one of those products as a "first product", and present a timeline and budget for bringing it to market.
Is this something that could fly?
Most consumer electronics products that you see on store shelves are not patented. They're not sufficiently innovative to deserve one. That's also the case with my portfolio. I have a few pending patents, but as far as legally defensible IP, not so much.
My idea is to select perhaps 10 products, complete with photos of prototypes, and/or schematics, as well as trademarks that I have reserved, domain names associated with those trademarks, the few patents I have, and my resume, I guess, and create a package I can give to VC's.
Then, in the package, select one of those products as a "first product", and present a timeline and budget for bringing it to market.
Is this something that could fly?
VCs don't generally want to see a portfolio of ideas. You're supposed to be the expert: they expect you to choose. What they want to see is a group of smart founders who plan to work in a promising area.
Also, they're generally leery of consumer electronics. Not that you shouldn't do that, but if you do, you should do it a la Meraki: make version 1 yourself in your basement, get ramen profitable by selling it to early adopters, and then go to VCs once you can show it's already taking off.
Also, they're generally leery of consumer electronics. Not that you shouldn't do that, but if you do, you should do it a la Meraki: make version 1 yourself in your basement, get ramen profitable by selling it to early adopters, and then go to VCs once you can show it's already taking off.
Thank you for telling me that probably would not have worked, and about the reluctance regarding consumer electronics. It makes sense they would be so, for the very reasons that are hindering me. (high initial investment, IP infringement risk, multi-country compliance, etc).
I agree with your thoughts. It is sometimes difficult to digest not getting a fair opportunity, but after all, the world outside the school is not, well, the school. I also have EE background, with .95 PhD, and despite being ahead of the tech horizon, it's especially painful to be rubbished by some haphazard investors.
However, i am sure, if i put my full energy behind it, someday it will certainly fly with or w/o VCs on board. So, the real key is perseverance and commitments. And of course, finding like-minded or like-positioned people helps getting there.
However, i am sure, if i put my full energy behind it, someday it will certainly fly with or w/o VCs on board. So, the real key is perseverance and commitments. And of course, finding like-minded or like-positioned people helps getting there.
I believe you are wrong.
It isn't about degrees as far as I understand, but it is about the ability to sell the idea, manage it through production and growth.
When a VC says they fund a team, they don't mean they fund degrees. Funding a team will often mean funding people with experience, or some other factor that lets the VC know that this is the right horse to back.
Lots of engineers get funded, but they don't get funded for 'projects that languish in notebooks due to lack of capital'.
So that's the problem first. You need to be able to sell your idea, and likely you should probably be on the road to building it or have something built before looking for funding.
Pick up Curtis Carlson's book "Innovation: the Five Disciples to Creating What Customers Want". It will help you put together the proper positioning for your idea and get it ready to be heard.
----- EDITED ----- I REALLY liked Sama's response (which wasn't there when I wrote my original response above).
My response is probably focused on steps. You can't go right from idea to VC (unless you have some serious connections and likely some very serious successes in your past as well).
An idea is just an idea. It is a management team (which might need a good engineer) which brings the whole thing together.
Rarely (though it does happen) is an engineer the best person to lead a business. Think Apple - Woz was the engineer, Jobs the manager/marketer. You might need to find your Jobs if you're Woz (okay, that's not the way the history works, but you get the jist).
By the way, I'm in your boat (kinda) I'm the engineer of my start-up and also trying to be the management guy. It's tough going it alone, once you're in it, you'll likely understand why VC's focus on the team aspect.
When a VC says they fund a team, they don't mean they fund degrees. Funding a team will often mean funding people with experience, or some other factor that lets the VC know that this is the right horse to back.
Lots of engineers get funded, but they don't get funded for 'projects that languish in notebooks due to lack of capital'.
So that's the problem first. You need to be able to sell your idea, and likely you should probably be on the road to building it or have something built before looking for funding.
Pick up Curtis Carlson's book "Innovation: the Five Disciples to Creating What Customers Want". It will help you put together the proper positioning for your idea and get it ready to be heard.
----- EDITED ----- I REALLY liked Sama's response (which wasn't there when I wrote my original response above).
My response is probably focused on steps. You can't go right from idea to VC (unless you have some serious connections and likely some very serious successes in your past as well).
An idea is just an idea. It is a management team (which might need a good engineer) which brings the whole thing together.
Rarely (though it does happen) is an engineer the best person to lead a business. Think Apple - Woz was the engineer, Jobs the manager/marketer. You might need to find your Jobs if you're Woz (okay, that's not the way the history works, but you get the jist).
By the way, I'm in your boat (kinda) I'm the engineer of my start-up and also trying to be the management guy. It's tough going it alone, once you're in it, you'll likely understand why VC's focus on the team aspect.
I get that if you don't try, you won't succeed, hence my questioning here, as a way to jump start myself, perhaps.
It does sound a little silly, doesn't it. Here's some guy claiming to have all these ideas in a notebook, but he's obviously not trying to do anything with them, or they wouldn't just be in a notebook.
I have developed mass market consumer electronics for many years, for large companies. I simply want to continue to do that, for myself. I know, from actually doing it for many years, that $100K is very cheap, and $300K is normal, by the time you get plastics designed, molds tooled, PCB's and components purchased, etc. As your complexity goes up from there, so do your costs. Then it's time to actually go buy components, arrange shipping, and have the thing manufactured. Some things do not bootstrap. You either write the check or you don't, period.
These products will not change the world. They're not revolutionary, and frankly, the world will get by just fine without them. But there is money to be made from them, as people will buy them.
So, here I am, with experience and ideas, but a strong feeling that I can't close the deal, based on a lot of reading that I've done.
It does sound a little silly, doesn't it. Here's some guy claiming to have all these ideas in a notebook, but he's obviously not trying to do anything with them, or they wouldn't just be in a notebook.
I have developed mass market consumer electronics for many years, for large companies. I simply want to continue to do that, for myself. I know, from actually doing it for many years, that $100K is very cheap, and $300K is normal, by the time you get plastics designed, molds tooled, PCB's and components purchased, etc. As your complexity goes up from there, so do your costs. Then it's time to actually go buy components, arrange shipping, and have the thing manufactured. Some things do not bootstrap. You either write the check or you don't, period.
These products will not change the world. They're not revolutionary, and frankly, the world will get by just fine without them. But there is money to be made from them, as people will buy them.
So, here I am, with experience and ideas, but a strong feeling that I can't close the deal, based on a lot of reading that I've done.
The best thing you could do if you have really been reading carefully is to get started on building what your idea is. And VCs may not be what you need - if you really believe the products would sell you could try bank/credit card loans etc.
It is not as if there was no entrepreneurship before VCs came into picture. With or without VCs, with or without certain degrees from certain schools, entrepreneurs will always be there and keep finding ways to chase opportunities they believe in.
Well said brother! While I'm not certain I'm willing to put $300K on credit card, I know there are people who have done this.
I agree that there is never an excuse, you just have to try a different way, till you succeed.
I agree that there is never an excuse, you just have to try a different way, till you succeed.
You agree with me then. My EE is useless to me. My experience, as it's not in sales/marketing/ is also useless. This drives me insane, as I sit in meetings with these guys, and trust me, they're not 'all that'. But you play the hand you're dealt.
I need to go find my "Jobs". Don't you find "finding a Jobs" a bit terrifying? That's really the last thing I want. Find somebody who talks a good talk, takes all the credit, and leaves you guest speaking at star trek conventions!
Back to the web start-up. Perhaps it will fund the rest someday.
I need to go find my "Jobs". Don't you find "finding a Jobs" a bit terrifying? That's really the last thing I want. Find somebody who talks a good talk, takes all the credit, and leaves you guest speaking at star trek conventions!
Back to the web start-up. Perhaps it will fund the rest someday.
No, not what I meant, on either the 'finding jobs' or that your EE is useless.
Your EE has tremendous value. HOWEVER, in addition to the value of creating, you have to create the environment where the product/idea is able to be sold.
I'm an anti-mac-boy (do we get a proper title? I hate being defined by something you're not), and getting quite a laugh about your remarks re: Jobs.
However, I think it is undeniable that Apple wouldn't be where it is today without him. From an engineering standpoint, sure Woz is a brilliant engineer, and made an amazing product, but it was leadership (management) that made apple into a great company (even if I don't like the way they do business or their products).
I wasn't aware you were referring to consumer electronics, but even so, take a look at how others have done it in the past. I believe the story of Palm may be a good one (though I'm not sure what product you are really talking about).
Also consider the financial times that we're in. Using Palm as an example, they got funded early dot-com (I believe), so what worked for them might no work for you.
I'm an anti-mac-boy (do we get a proper title? I hate being defined by something you're not), and getting quite a laugh about your remarks re: Jobs.
However, I think it is undeniable that Apple wouldn't be where it is today without him. From an engineering standpoint, sure Woz is a brilliant engineer, and made an amazing product, but it was leadership (management) that made apple into a great company (even if I don't like the way they do business or their products).
I wasn't aware you were referring to consumer electronics, but even so, take a look at how others have done it in the past. I believe the story of Palm may be a good one (though I'm not sure what product you are really talking about).
Also consider the financial times that we're in. Using Palm as an example, they got funded early dot-com (I believe), so what worked for them might no work for you.
My understanding is that VC's don't invest in technology, or in engineers, they invest in management teams. You need the resumes in your portfolio that have letters like 'MBA' on them, instead of letters like 'EE'. I assume if your letters were 'PhD EE', that might compete with 'MBA' ... barely.
I have used this knowledge as an excuse not to even try to get VC money for any of my projects that currently languish in notebooks due to lack of capital.
So, my question here is ... Am I wrong?