The panelists were:
Todd Young, President and CEO of Prospx
Vernon Bryant, Venture Partner at Austin Ventures
Barry Evans, President and CEO of Calxeda
Volney Campbell, Co-Managing Partner at HPI Corporate Services
The conversation was interesting and informative as the three panelists shared their experiences from both sides of the fundraising table.
While starting off with their own investments, friends and family money, and angel investments, both CEO's agreed that you need a strategy for connecting with the right venture partner. While there are times you will feel anyone with money is the right partner, holding out for the right match is important.
Getting funded takes longer than you might think. You need to spend a lot of time getting to know interested investors and proving to them that you can minimize the risk. There are lot of meetings that go nowhere, and others where you will run, not walk, away (one great story was of a VC team in California that used the founder's business cards as coasters for their drinks.... a clear sign they were not a good fit!).
Investors are looking for entrepreneurs that can communicate their vision. A compelling story in from a strong management team in a growing industry are all important, but it is rare to find all three in one company. Investors want to have personal chemistry with the people they will fund. It is like dating... not everyone makes a good long-term partner.
Companies need to "punch above their weight" and look for investors who have strong networks within their industry. Connections into customers, vendors and other companies in the space means the partner is brining more than just money to the table. This is paramount to the success for both sides.
When starting a company you must remember that you will spend a lot of time with your co-workers, investors and other partners.... thus you must choose wisely. You need to establish a team where the members balance each other. It can be a lot of work growing a company with long hours spent away from family. A sense of humor also comes in handy!
Before going to seek money you have to be able to clearly communicate your story. Be able to define your strategy and know where you are going to take the company. You will have to talk with a lot of investment firms before you find the right match.
To get funded you must have momentum. Plan ahead for success and execute. Waiting for they money might keep you from ever getting funded. Find other sources to keep you going as if you appear to be running out of cash you will take away your negotiating position. Taking risks can be scary, but is necessary.
Relationships matter. What goes around comes around, and how you treat people all throughout your life can come into play when you are seeking funding. You never know what action will connect you with the person who eventually leads you to the introduction to an investor. While technology is a great thing, there is no tool that can replace human-to-human conversations, evaluations, dialog and respect.
****Last point.... being invited to fly on a private jet to a fun destination can and will establish friendships that might lead to funding!!! ;-)
Have A Great Day.