9 Common Startup Mistakes

+Things to Know About

Venture CapitalMICHAEL GAISS

Senior Vice President, Highland Capital Partners

mgaiss@hcp.com | @michaelgaiss

Startup Weekend University of MichiganJanuary 23, 2011

Background

Formed in 1988 $3 billion under management, 8 funds, backed 200+

companies Diversified portfolio strategy

tech | internet | life sciences | consumer

seed | early | growth

20 investment professionals in Boston, Silicon Valley, Geneva, & Shanghai

About me University of Michigan (Engineering), University of St. Thomas (MBA)

Unisys, IQ Software, Gentia Software

Entrepreneurial Initiatives + Portfolio Support + Marketing

We back entrepreneurs with big ambitions.

We back young entrepreneurs.

We back young entrepreneurs.

We back young entrepreneurs.

We back young entrepreneurs.

We back young entrepreneurs.

We love early stage.

We look to build relationships early.

Money $15K/team

Free office space Boston or San Fran

Mentoring Our team + founders/CEOs

Value-Add Services Access to our network + Summer School Curriculum + Career Network

No obligation to Highland

www.hcp.com/signup

Joshua FeastMIT Sloan School of Management

Alain ChuardStanford Graduate School of Business

Motomu Shimaoka & Ann DeWitt Harvard Medical School & HBS

Mike SullivanHarvard University

Matt LauzonBabson College

Victoria RansomHarvard Business School

Jeff LeBrun & John RiceUniversity of Michigan Ross School of Business

Will O’BrienMIT Sloan School of Management

If you’re not starting a company, join one of ours.

www.hcp.com/careers

9 Mistakes Entrepreneurs Often Make on their First Startup

Less of this More of this

#1: Didn’t research & understand the competition.

#2: Haven’t talked to customers.

#3: No repeatable customer acquisition strategy.

#4: Don’t tell a good story.

#5: Know nothing about the investors they’re pitching.

#6: Make stuff up instead of saying “I don’t know.”

#7: Seek only confirming, not disconfirming evidence.

#8: Pick advisors that are easily accessible, not relevant.

#9: Treat fundraising like it’s an end, not a means.

What First-Time Entrepreneurs Should Know about Venture Capital

Assumes:You have a team.You’re building stuff.But, you need $$$.

VC is just one of many ways to finance your startup.

BootstrapBootstrap

LoansLoans

Friends & familyFriends & family

Angels / seed firmsAngels / seed firms

Venture capitalVenture capital

Growth equityGrowth equity

Public marketsPublic markets

EquityNon-equityRisk

Size of check

Grants / PrizesGrants / Prizes

We get paid from a few home runs (are you one?).

($50.0)

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

$300.0

$350.0

$M

M

Home run $20.0 $200.00 $180.00

Middle $30.0 $90.00 $60.00

Bad $50.0 $25.00 ($25.00)

Investment Return Profit

TOTAL $100.0 $315.0 $215.0

2 deals, 10x

3 deals, 3x

5 deals, 0.5x

All 10 deals, 3.2x

What are the most important things to us?

Market $1B+ addressable

slice Powerful macro

drivers

Deal Capital efficient Milestone-based

Team Relevant Hungry

Product / Technology “Painkillers, not

vitamins” Unfair advantage

We like good ideas, but prefer great execution.

Good idea Great execution

We love numbers (are you measuring everything?).

Check out blogs by David Cancel and David Skok for more:www.davidcancel.com www.forentrepreneurs.com

It’s easier to get our advice than our money.

We’re here to help

Entrepreneurship Central www.hcp.com/entrepreneurship_central

Summer@Highland www.hcp.com/signup OR www.hcp.com/summer

Career Opportunities www.hcp.com/careers

Social Highland Entrepreneur Network – LinkedIn Group (800+ members)

Twitter: @HighlandCapital

Facebook: www.facebook.com/HighlandCapitalPartners

Startup Mistakes to Avoid +

Things to Know AboutVenture Capital

MICHAEL GAISSSenior Vice President, Highland Capital

Partnersmgaiss@hcp.com | @michaelgaiss

Startup Weekend University of MichiganJanuary 23, 2011