Funding your startup is a difficult task. Bootstrapping, Angels, Super Angels, VC’s, Incubators are all options players in this growing space. Sanjiv Parik, Former VP at HTC held a panel to explore some aspects of this with Ethan Kurzweil (Vice President, Bessemer Venture Partners), Canice Wu (President, Plug and Play Tech Center), Steve Bernardez (Principal, ONSET Ventures), and Eugene Zhang (CEO, InnoSpring).
Perhaps the most important lesson from this discussion was to find an investor that offers more than money. In the words of Ethan Kurzweil, “The worst reason to raise money is because you’re out of it” – a subtle nod towards the importance of partners who bring more than capital to the table.
Bernardez discussed that ONSET Ventures typically looks for a Series A investment. This can be anywhere from three to five million dollars, which according to him has really changed over time. Bernardez believes that Series A’s are almost Series B’s now, and that it’s important to find investors that can scale with you over time. He stated that incubators and angel investors can only scale with you to a certain point, and that is where ONSET Ventures comes into play.
A different approach was offered by Wu; he spoke to Plug and Play’s style, a later Series C investment typically. Plug and Play has much to offer its startups apart from capital, primarily a wide corporate network, that can really help accelerate their growth in this later stage of the lifecycle.
Kurzweil offered a more general analysis of the investment landscape, explaining how there used to be limited pools of capital, and it was very difficult to make it if a panel said no to you. In the current environment, there are incubators, angels, super angels, and there is no preferred path any more. He elaborated that this really benefits the entrepreneur, with startups becoming cheaper and cheaper now. A key note Kurzweil made was that it’s “A lot easier to build a product than to build a company” – once again a reference to the key concept of this talk that an investor can offer more than money.
The next question explored the support structures that startups can expect from an investor. This was particularly important for learning what else investors can offer apart from capital. Wu believes that it allows the startup to “get a lot of validation” which is certainly an important factor in startup viability. I feel that this is crucial because it’s a form of reality check whether the enterprise is feasible, by people who have had years of experience. Wu continued that investors can “Get you in front of a lot of customers and other angel investors, to get a really good feel for it”. Bernardez followed up, describing what “Smart Money” meant to him – “Someone who can bring a set of relationships that will bring value to your products”. He added that “Smart Money” can also advise you on your business strategy, evaluate your business model, and help you with learning who to hire. The logic behind this was why spend 90% of your time on something that someone else already specializes in.
To close the overview of this event, I would like to leave the reader with a thought raised in the discussion:
“The average time from startup to IPO is 11 years, longer than the average marriage in this country”. Funding your startup isn’t just a capital infusion. It’s a marriage of vision, skill set, and opportunities between the startup and the investor.