It doesn’t always have to be the venture capitalists grilling the entrepreneurs – at TechCrunch Disrupt, we’ve disrupted that notion (see what I did there?) and hosted an open-mic session for entrepreneurs to challenge VCs, live and uncensored.
The investors in question were Mark Davis (Associate at DFJ Gotham Ventures), Rick Heitzmann (Managing Director, FirstMark Capital), David Lee (General Partner of SV Angel), Mike Brown (AOL Ventures) and Eric Wiesen (General Partner, RRE Ventures).
Q: Is there ever a situation where entrepreneurs should be paying to pitch investors?
A: Rick – while it’s hard to say never, I’ve seen more scams than good things when it comes to that. Entrepreneurs nowadays are much more able to reach out to good investors. Short answer: I don’t think there’s every any reason to pay a fee to pitch.
Q: Do you like it when people pitch you in a unique and creative way?
A: Mark – We encourage it, sure.
David – We like to see authenticity, because it’s something you can’t fake.
Q: What was the worst pitch you’ve ever experienced?
A: Rick – That would be 20 minutes ago, when someone started whispering in my ear at the urinals. Bad idea.
Mike: I never understand why entrepreneurs just show up at the door of a VC’s office without an appointment.
Q: Is it better to be a small fish that can swim through the net, or a fish big enough to make the net useless?
A: Eric – I’m assuming your metaphor is about competitive landscape. My answer is simple: you want to be in an industry where there’s opportunity for startups to disrupt, where the incumbents are slow.
Q: How do you know something is disruptive before it’s obvious to everyone else?
A: Mark – I think you can tell relatively early on; you look at product, team, market size, competitive landscape, positioning, etc.
Eric: But in the end, you don’t know, it’s not a science. The job is to predict the future, and it’s very hard to do.
Q: What do you expect from a first round meeting?
A: David – it varies, but we look for passion, the business should really mean something to you. Some examples: YouTube, 20×200. Also, we love data; we want something we can work with. Just a PowerPoint but no data, that’s not such a good start.
Q: In the spirit of disruption: you spend a lot of time looking for investments. But there are more and more ways for startups to get money. So how do you see venture capital evolving? Do you feel threatened by the changes you see happening on that front?
A: Rick – I think VC was easier in the past, you just needed to get to the right people to get $10 million. It takes less money to launch companies these days, and owners keep a larger share of the company. The situation forces us to evolve, but that’s good for the industry.
Q: Do you prefer functionality over design or vice versa?
A: Eric – the data usually answers that question for us. Your users will tell you, it will show up in the numbers.
Mike – I don’t care that much how long it took to build your product, but focus on users to get feedback.
David – we prefer entrepreneurs doing one thing very well, not a lot of things reasonably well.
Q: Everyone’s opinion on financially backing competitors of companies in your portfolio?
A: Mark – we try to stay away from that, conflict in portfolio isn’t something you want. Too much risk for exposure.
Eric – if a company in our portfolio changes course and ends up competing with another one in there, we won’t stop them, though.
David – We’re probably the exception. We don’t take board seats, so we’re able to manage conflicts differently. We invest in competitors all the time.
Q: Entrepreneurs take risks to become big. What kind of risks are you taking to become the next Sequoia?
A: Rick – By working hard and being supportive, good things tend to happen. You build your reputation from the bottom up, building relationships with and for your companies. Even if you don’t invest, stay close and be nice, it’s a karma thing.
Q: It takes less money these days to start a company. Will bootstrapping make the need for VC go away?
A: Mark – venture capital can be a good thing for some, a bad one for others. Sometimes VCs back companies that don’t need cash, and it never ends well. But some startups need funding to get to where they want to be.
Mark is a venture capitalist and incubator. He’s currently the Founder of Interplay Ventures and a Venture Partner at High Peaks Venture Partners and a Co-Founder of Kohort, DevSpark, Founder Shield and Venwise. Prior, Mark was a VC at DFJ Gotham Ventures, where he invested in information companies.
Rick Heitzmann is a Founder and Managing Director at FirstMark Capital. Mr. Heitzmann joined FirstMark, formerly Pequot Ventures, in 1999, where he focuses on investments in emerging media and advertising and data and information services. Rick has led or co-led many investments in the consumer technology market including StubHub (acquired by ebay; NASDAQ: EBAY) and US Search (NASDAQ: SRCH) / First Advantage (NASDAQ: FADV) (acquired by First American; NYSE: FAF for $1.1 BN). Previously, Rick was...
David Lee is a Founder and Managing Partner of SV Angel, an angel fund with investments in companies such as Twitter, Foursquare, Flipboard, Dropbox and Airbnb. Prior to SV Angel, David was at Baseline Ventures, a leading seed-stage venture firm. He was a founding member of Google’s New Business Development team and led business development at StumbleUpon prior to its sale to eBay. He also was a corporate attorney at leading technology law firms. David has an M.S. in...
Eric Wiesen is a General Partner at RRE Ventures. Prior to RRE Mr. Wiesen worked for Updata Partners where he focused on growth-stage software investments. He first got interested in computers and everything you can do with them when his dad brought home an Apple II+ and a book on writing programs in 1980 and has been hooked ever since. More recently, Mr. Wiesen was an attorney in the corporate group at Fenwick & West, a leading Silicon Valley law...