What Do Early Stage VCs Look For?

WE Wednesday: What Do Early Stage VCs Look For?
WHEN: Wednesday, February 3, 4:30 – 5:30 pm
WHERE: JMHH 260
Presenter: Josh Kopelman W’93, Founder, First Round Capital Josh Kopelman W'93, Founder of First Round Capital, will discuss what early-stage VCs look for when deciding whether or not to invest in a startup.
More info: http://entrepreneurship.wharton.upenn.edu/resources/weweds.html


Assalamu'alaikum,

Alhamdulillah, petang tadi saya sempat menghadiri satu lagi aktiviti berkaitan Pemodal Teroka / Venture Capitals di Wharton. Sesi sejam ini disampaikan oleh Josh Kopelman, Alumni Wharton 93 dan juga pengasas First Round Capital. Beliau berpengalaman dalam satu IPO dan menjual 2 perniagaan sebelum memulakan First Round Capital. Syarikat beliau berusia 11 tahun, melabur dalam lebih 500 syarikat (sekitar 10,000 pekerja), 30-40 syarikat setahun...Wow! Apa yang menarik adalah mereka menerima lebih 4,000 permohonan setahun untuk pembiayaan dan hampir 99% ditolak (40 sahaja diterima). Sesi dimulakan dengan beliau bercakap dalam 10 minit sebelum dibuka kepada soal-jawab. Kehadiran full house, dalam 75-80 pelajar hadir, sampai duduk atas tangga. Tepat jam 530 petang, beliau berhenti. Itulah usahawan, tepati masa dan masa amat berharga kerana ada urusan lain pula. 

Di Malaysia, pembiayaan perniagaan masih berorientasikan pembiayaan hutang (debt financing), bukannya pembiayaan ekuiti (equity financing). Jika nak berniaga, kita cari institusi kewangan dan berhutang sehingga 90%. Kelemahan utama pembiayaan hutang adalah ia mengganggu aliran tunai dalam perniagaan, dan jumlah yang kita perlu bayar adalah melebihi jumlah yang kita pinjam, walaupun meminjam berasaskan perbankan Islam. Dalam Perniagaan, tunai lebih penting dari untung, kena faham tu. Memang ada kelebihan dan kekurangan pembiayaan ekuiti dan hutang, tetapi saya kini lebih berminat mengenai pembiayaan ekuiti. Malaysia masih kekurangan instrumen pembiayaan ekuiti, sama ada melalui Pemodal Teroka/VC, Pelabur Budiman/Business Angels  mahupun institusi ataupun Bursa Malaysia. PNS merupakan antara agensi kerajaan yang melabur dalam perniagaan francais melalui pembiayaan ekuiti (sebagai francaisor dan francaisi induk) selain pembiayaan hutang (kepada usahawan francaisi). Nota seterusnya dalam Bahasa Inggeris dan berbentuk isi/point memandangkan saya catat dalam BI.

First Round Capital voted for 1)Founder (and founding team)  2)Market   3)Product.  Outcome is driven by a team.

All plans are all wrong. All things changed. We are looking how well does the founder adapt to change.

How the founder understand the signals in the market?

We look at product and prototype. 

On product, we look at how the founder synthesis  thousands of decisions he/she has made? What let  the founder made the decision A, B or C?

We try to understand how the founder is thinking. What is the founder commercial instinct? Why this market? 

Air B&B technology is easy to develop. The difficult is to develop the networking. How the market develop?

What is the secret? Very simple contrarian idea.

Is the price worth winning?

Succeeding in a place that you can succeed.

Understanding the value of market that you are targeting is very important.

Most people failed because of the idea selection.

We try to understand how people think.

You need creative marketing campaign to create awareness among customer.

His experience - amazon + ebay = new company.

*Many company 'cheat' on the market place first before get the numbers (I advise not to follow this)

Investor is looking for  1)Growth   2)Health of the business  3)Cash burn.

5 minutes video presentation is not really work.

New ideas  -  how to synthesizing the trends/events/opportunity.

New ideas - understand the limitations of current business.

You want that crazy idea (contrarian).

Suck moments  can become good ideas and business opportunity.

Year 2016 - harder to get capital.

Founder Assessment

• We look for non traditional things in assessing founders.
• Personal sacrificing, no work-life balance among the founders.
• History/background of the founders --> working in summer; part-time jobs; studying while working and pay loan.
• Looking evidences of past behavior of gratification
• Being successful in school is not important (because you follow the teacher's map)
• Good founder - discovering their own map, not following other people's map.
• Founders have to validate their assumptions.
• Have skills in convincing people.
• Craft compelling narratives for customer.
• Have to be a story teller - You have to be a good story teller.
• How fast you learn? It's OK to say 'I don't know'. Your job is not to know everything. Your job is how to prove ideas.
• Your past track record is important.
• Referral matter is important.
• Founder mus have the ability to 'open door' to everybody.
• How founder assess signal and noise, filter them and made the decision (environmental scanning- you don't have to react to all changes/trends/events).

This is the matrix provided by Josh Kopelman in assessing ideas and proposals.  If you don't understand, contact me please...he3.

Consensus idea	X	X
Contrarian idea	√	X
	Right  Idea	Wrong Idea

Josh Kopelman, Alumni Wharton 93

Dewan ini memang penuh

Adakah saya akan mendapat kehadiran sebegini di Malaysia?