flc keynote
TRANSCRIPT
Working With Venture Capitalists
FLC Far West | 26 August 2015
Who is this guy?
• Chris Yeh, Managing Partner, Wasabi Ventures
• @chrisyeh
• angel.co/chrisyeh
• Founded/invested in/advised over 100 companies
• Raised over $50 million in venture capital
How Does Venture Capital Work?
How Does Venture Capital Work?
• OPM (Other People’s Money)
• “2 and 20”
• Performance is everything
• Only successes matter
• Value comes from selection
• “Unicorn” hunting, not company building
• Minority investments
So what are VCs looking for?
A Tale of Three Legends
Don Valentine, Sequoia
Bill Draper, Sutter Hill & Draper Richards Dick Kramlich, NEA
You probably know their investments...
Don Valentine, Sequoia
Bill Draper, Sutter Hill & Draper Richards Dick Kramlich, NEA
“Only one thing matters….”
Great Market
Great Technology Great Team
Market Attractiveness
• Size
• 10% of a $1B Market = $100M/year = IPO, baby
• Openness
• Don’t bother creating a new desktop OS
• Willingness to try new things
• Financial services firms will do anything for an advantage
• Successful analogous startups
• If Yahoo, then Google; if MySpace, then Facebook
The Killer App
• A major pain (especially in the wallet)
• Aspirin, not vitamin (VMware, Uber)
• A new crack (cocaine, not plumber)
• Viral and/or addictive (Facebook, YouTube)
• An affordable indulgence/convenience
• Same, but not the same (Macbook)
• Magic
• Like nothing that came before (iPod/iPhone/iPad)
Unique Qualifications
• Relevant, successful prior experience
• Team has the complete set of required skills
• The first…the leading…the only…
• Relationships with key market players
The FLC challenge
• Technology might not yet be productized
• Market might not yet be identified
• No team to tackle the problem
• VCs are lazy
BUT, VCs love monopolies….
It’s all about putting together the package!
Case Study: ALuna
• Technology
• Wireless technology spun out of SPAWAR• 40X performance, 1/10th the cost
• Team
• Serial entrepreneur Tim Rout• Sold Endeka to Boingo Wireless
• Market
• $23.3 Billion spent on LTE this year
• 5G on the horizon
Recommendations
• The linchpin is the entrepreneur, not the financier
• Market the fact that you’re offering legal monopolies(especially in Silicon Valley!)
• Think like a VC
• Make sure when you license your IP, it’s part of an attractive triple-package• Technology + Team + Market
• Expect to kiss a lot of frogs!
Thank you!
• To stay in touch:
• https://twitter.com/chrisyeh
• https://www.linkedin.com/in/chrisyeh