9 Common Startup Mistakes
+Things to Know About
Venture CapitalMICHAEL GAISS
Senior Vice President, Highland Capital Partners
[email protected] | @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
[email protected] | @michaelgaiss
Startup Weekend University of MichiganJanuary 23, 2011
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