On March 25, Startup Grind Austin welcomed Krishna Srinivasan to the guest chair at Startup Grind. Our conversation ranged from why he and his partners started LiveOak Venture Partners to their approach to investing and what they look for in a company.
Srinivasan and his partners have encouraged numerous aspiring entrepreneurs to take the plunge and start their own companies. They have a long track record of helping entrepreneurs build strong standalone companies with revenues of $50MM to $100MM often from a standing start. However, after 10 years at an established firm it was also time for them to look in the mirror, give themselves the same talk and “walk the talk”. They also felt that there was a strong missing need in the Texas venture capital community. This was the need for an early stage focused venture capital firm that would also invest across the full lifecycle of a company’s growth and be committed to helping build strong standalone companies. Srinivasan and his partners work closely with the companies in which they invest helping them with strategy, team, anything that they need to make their company successful. They also felt that a right sized fund would yield better returns for their investors. If you have a fund of 1B you need 3B in returns to make it the economics work, and there just aren’t that many large exits re that large each year.
And for the question that most of our audience had “what does a firm like Live Oak look for in an investment?” Just like in real estate, there are three important things: team, team and team. After team, there is the big question “Why now?” Srinivasan is looking for companies in interesting market segments where there is room for disruption and an opportunity to build a big company. In short, have a great team, a great answer to “Why now?” and an interesting segment and then prepare to present your company.
Don’t send a 60-page business plan. Have some hypotheses on what are the requisites from a product, technology, market and team to build your company, understand what the risks involved are and how you would use capital investment to resolve them. Srinivasan said, for entrepreneurs, there are always 20+ things that need to be done any time, good entrepreneurs understand which of these are the most important and how they would use capital most efficiently to address them in the right sequence. Here is where a hypothesis based approach is most relevant. If you aren’t sure exactly what the risks that you need to tackle and in what sequence, have a hypothesis, prioritize and keep iterating to make progress.
It was a great evening and Srinivasan was an engaging, informative guest. The companies LiveOak Venture Partners invest with are clearly in good hands. You can find more information at: http://www.liveoakvp.com
Wednesday May 29th, Startup Grind Austin welcomed Hall Martin, director of Texas Entrepreneur Networks. Martin has extensive experience growing businesses and growing Angel Networks. Texas Entrepreneur Networks, his most recent venture, has helped 60 companies get more than 60 million in funding in the past 2 years.
Our conversation started with Martin’s background at National Instruments and what drew him to technology in the first place – a desire to work on the next big thing. He started Angel Investing in the late 90s and joined the Central Texas Angel Network as one of its early members and found himself in charge of membership and then the director. He was the director of CTAN for several years, until he started Texas Entrepreneur Networks, a way to give entrepreneurs a place to go to find all of the information they might need to grow their companies in one place.
One of the other insights Martin shared from his crystal ball is what he feels the next big industry for technology will be. Given the increasing global issues with availability of water and the focus on local foods, Martin thinks that food and water technologies are going to be a hot area in the next several years. These are areas that can be more expensive to start than a software company, but there are beginning to be more accelerators and angel investors who are focused on this area.As we were discussing how revenue, even a small amount, can make startups much more attractive to angel investors, Martin shared an innovative funding model that he has found successful for Angel investors – revenue based funding. In this model, an investor invests and, instead of waiting for an exit to cash out, they get a percentage of revenue, usually around 5%,capped at a lower multiple total payout, like 2x. This is a lower risk model for an angel investor and allows them to recognize return much more quickly. It can also be beneficial for the entrepreneur, as they are not giving up equity in their company.
It was an informative evening with lots of good insight for the group! Looking forward to June’s event with Kevin Koym. Reminder, June’s event will be at Tech Ranch, not Capital Factory.
“Entrepreneurship as Life’s Path” is the tag line on Kevin Koym’s website. And he lives his words. Come hear his story at the June 24th edition of Startup Grind Austin.
Kevin Koym is the inspirational director of Tech Ranch Austin. Tech Ranch is a community and education hub for tech startup in Austin. Koym started the venture in 2008 with Jonas Lamis to address the absence of support they felt during their own ventures. To date they have had more than 300 entrepreneurs go through their programs and support a community of more than 800 through out Austin.
Before Tech Ranch, Kevin founded 7 different startups and has participated in entrepreneur networks in three countries. He brings a seasoned and global perspective to his work with entrepreneurs. The Association of Information Technology Professionals, Austin Chapter, has recognized his work. They named him “Technology Community Leader of the Year” for 2010.
This event will be at Tech Ranch!
Tickets Available on Eventbrite. http://www.eventbrite.com/event/5971983363
The secret to growing a strong company is to get a cornerstone client, massively incent them to let you solve their problem, solve their problem, and do it well. Then, sell your product to other clients like them. This direct, practical advice was given to the entrepreneurs who attended the April 29th edition of the Austin Chapter of Startup Grind. The guest was Mellie Price a successful multiply successful entrepreneur who founded Front Gate tickets.
Ms. Price built Front Gate tickets to help a specific Austin music venue avoid the rigmarole and high-ticket fees associated with Ticketmaster. Front Gate proved the product in the first six months. Ms. Price also commented on the focus they employed when building the product. In what would now be considered a “Lean” approach they focused the initial versions by only offering the most important functionality. For example, they only offered General Admission tickets.
Another insight Ms. Price shared was that she never considered that she could fail. In her mind, this had to work. She felt that you must have this outlook or you will not persevere as an entrepreneur. The easy access to angel funding and the decreased costs of starting a company have made it easier to start bad companies. If you can’t find a cornerstone customer then that should be a flag for you that your idea is not yet ready. Sometimes it requires capital to start a company, especially in hardware, and then, the first investor is the first customer. If you can’t find someone to invest that should be a red flag. The best thing is to find a customer that will invest.
Ms. Price also reflected on her experience over her many entrepreneurial experiences and commented that she has learned to hire people who complement your skills. If you are a developer, find a partner who knows how to sell and run a business. There is real risk, especially in software, for technical founders to keep iterating to make a product perfect, but never figure out how to package it and sell it. “If you don’t execute, you will fail.”
Recently, Ms. Price founded Source Spring, which provides early stage investment, general business management and technology support for small businesses. If you would like to speak with them you can find them at sourcespring.com.
Julie Huls has served as the President and CEO of the Austin Technology Council since 2009 where she collaborates regularly with state and national leaders on economic and workforce policy development. A self professed “New Economy Evangelist” she has deep experience in Marketing, PR and business operations. Come her view of why Austin is tech new destination: http://venturebeat.com/2013/03/05/why-austin-is-techs-new-destination-of-choice/
In April, Startup Grind Washington DC had the privilege to speak with Dr. Magid Abraham, co-founder of comScore. This event marked Startup Grind DC’s first time hosting a speaker out of 1776, DC’s newest (and very promising) co-working space. The event was certainly an interesting and eventful occasion for all those involved: interesting due to Dr. Abraham’s remarks, and eventful due to an unexpected fire alarm that temporarily moved the event to the building’s lobby, stairwells, and sidewalk (not even kidding, on the street networking definitely happened). It was certainly a Startup Grind first, but in the end, we all came away with some insightful and powerful points provided by comScore’s legendary leader.
Since 2011 Texas Entrepreneur Networks has helped approximately 60 companies get Angel funding totally more than $60 million. They work with companies of all kinds from software to hardware, from restaurants to healthcare. Companies like Umbel, Greenling, Salt and Time, Xeris Pharmaceutical, and VolunteerSpot.
What’s their secret? Come find out at Startup Grind Austin on May 29th as we welcome Hall T Martin, director of Texas Entrepreneur Networks. Hear his story and learn about the resources and support his organization provides to Texas Entrepreneurs.
Hall T Martin gained his experience starting and growing companies at National Instruments where he launched technologies from startup to multi-million dollar business units. He used that knowledge as the executive director of the Central Texas Angel Network, and then in, 2011 – 2012 founded the Texas Entrepreneur network.
Personally the first Startup Grind event I ever attended, complete with Cash Money Records music, free pizza, and great networking. I was lucky enough to see one of the legendary VCs from Silicon Valley, Jeff Clavier. Throughout this interview he goes over a variety of topics any entrepreneur will still find valuable today such as how to get a meeting with SoftTech VC, how to perfect your pitch, and what NOT to do when trying to get a VCs attention.
[00:00:05.20] QUESTION: What about this thing right now, are you seeing, there’s been a lot of talk of, that just there’s all these companies that were funded at the angel level, they’re now coming in for a series A, not able to get that funding. Are you seeing that with your companies that you’re having, or not you specifically but companies in general, that is this a real trend that’s happening that companies raised angel round are now struggling to raise series A, maybe because they shouldn’t have deserved an angel round or some other reason?
One of the first big interviews Startup Grind ever hosted was with Jason Calacanis. Jason was kind enough to take time out of his busy schedule during his meetings in Palo Alto to come and speak to small intimate group at the Startup grind offices. Watch and learn more about Jason’s early entrepreneurial ventures during Web 1.0, what catches his eye in an entrepreneur and how to perfect your pitch.
[00:02] DEREK: On that note, let me introduce Jason; he needs no introduction, he’s worldwide.
In one of the earliest Startup Grind interviews, David Cowan from Bessemer Venture Partners joined us to discuss a variety of things going on in Silicon Valley. From what VCs are really looking for, seeing potential in the right entrepreneurs, and being on the board of one of the most successful app developer, Smule.
[02:34] DAVID: OK. I didn’t mean to get involved in the technology industry, it was an accident. I loved computer science and studied it in college. I had some friends that worked with me in the Science Center and we were called Terminal Watchers. They told me when I graduated that I had to interview with a company called Oracle. I didn’t know what it was or care, I was all set to get a job at some investment bank or management consulting firm; that was more glamorous back then. My friends urged me to go to the interview so I did. Back then, Oracle was hiring like crazy and didn’t know who I was, just that I was a computer science major.
Andi is the cofounder and head of operations and algorithm development at Whit.li. She has a Mathematics degree from Bryn Mawr College and a Masters degree in Epidemiology from the University of Texas.