Andreas_DFJ_pt1
Andreas_DFJ_pt1 (Parts 2 & 3 below)
I was fortunate enough to spend some time chatting with Andreas Stavropoulos, a Managing Director at Draper Fisher Jurvetson (DFJ). DFJ is an innovative, forward thinking Venture Capital firm that has a passion for creating a networked Venture Capital firm that can identify investment opportunities and deploy capital throughout the world.
In this podcast, Andreas takes us through a number of important points – such as the selection criteria he and DFJ go through when considering making an investment in a company. While chatting, I made a few notes which I wanted to make sure I called out -
DFJ tend to invest particularly early in a company’s life cycle – I asked if an entrepreneur needed a full team, customers and other key milestones before they would be taken seriously – Andreas took us through a number of critical considerations but to quote his immediate response…
“We’ll take two people and a dog seriously – Its never too early to connect with us.”
It’s interesting that identifying investment opportunities very early is part of the DFJ culture – I gathered it was a key focus and a strategy for identify the best opportunities for a significant return. Andreas repeatedly made the point that if a particular segment (Cleantech) or Geography (China) is ‘hot’ then the returns are likely to be impacted through competition. The ideal is to identify these segment and geographic opportunities before the herd catches up. So – DFJ works to identify opportunities which might be too early for some other VC firms. In fact, DFJ can point to investments they’ve made in industry changing companies such as Hotmail, Meetup and others which seem like obvious investments now, but DFJ invested so early in these companies lives that, in some cases, they were little more than a handful of passionate business builders and a big idea!
On this podcast interview, we also explored what DFJ and Andreas are looking for when they receive a submission for funding – for these points you would be smart to listen to the podcast, but briefly – be self filtering, take a look through the background and portfolio of each of the Principals in DFJ and make sure you know who to reach out to and why your proposition is relevant to them. Just starting the email with a reasonable rationale for wanting to connect, and not using some form “Dear Sir/Madam” template will already put you ahead of the crowd who are also trying to raise millions of dollars just like you.
…and here is a critical point. DFJ and Andreas read ALL submissions…in other words, you don’t have to be referred by a pal, a classmate or priest…you can just email, cold, with a smart, reasonably comprehensive 4-5 page summary of the investment opportunity and providing its interesting to DFJ – they’ll meet with you and then you can begin the dating process that may turn into a real relationship.
Again, listen to the podcast – and you are welcome to add you questions or comments – I’ll happily ask Andreas to respond, focusing on those which will benefit the largest number of readers.
So – thanks for reading, let me know if you have any questions or comments and I’d like to hear if you have heard of any other Venture Capital firms who are just as open at DFJ to cold calls from entrepreneurs? Is this abnormal or normal as far as you know? If you have heard of very open VC’s please post them in the comments – this could be helpful to others.
DFJ’s stated mission is “…to identify, serve, and provide capital for extraordinary entrepreneurs anywhere who are determined to change the world”. Its no surprise that DFJ value the passion of the founding team members almost above the size of the opportunity – partially, I would suggest, because all of the DFJ team have that same degree of passion for the business they are building and their own goal to positively change the world.
Thanks again Andreas – you and DFJ are a star act!
Andrew
PS – for a short time I have an audio course which could seriously help your fund raising. I’ll soon bundle it with a broader course so it could be pulled from availability at any time.
PPS – More info on Andreas and DFJ: http://www.dfj.com/about/
Andreas_DFJ_pt2 Andreas_DFJ_pt2
Andreas_DFJ_pt3 Andreas_DFJ_pt3
Last night I played a new album – the first track started and I listened – it was a great track. The next started and almost instantly, I knew I didn’t want to listen to that track, so jumped to the next.
That got me thinking…how can you know, in just a few seconds, you’re not going to like something?
Somehow – you just do, right?
And do you know what’s stranger than that?
More often than not, your first impression was correct!
If you go back and listen to that skipped track – you’ll probably find it really wasn’t worth your time.
That reminded me of one of the first things I was taught when I started within the brand management (marketing) group at Procter & Gamble – it was a simple lesson that just about everyone (especially within the internet marketing space) either consciously or unconsciously appreciates.
The lesson?
“You have four seconds to make a Great Impression”…
Now to Procter & Gamble that meant the product packaging needed to convince the consumer that they needed and wanted that product within four seconds…
If the product couldn’t do that then it would fail. Clear and simple.
They came up with data driven ways to determine if the product met that four second rule.
Now consider a web page – the ads ( and the whole site itself) are designed to hit the target audience and convince them within just a few precious seconds.
The human mind moves on after those precious four seconds IF its not convinced.
Consider dating – don’t you just know, as soon as you meet someone, if there is going to be some chemistry between you?
Another example – My Father used to tell me that a person’s shoes were critical for making a good first impression – if they looked a mess they said something about the person who wore them – and they were almost the first things you saw. (there’s that four seconds again…)
So what does any of this have to do with raising money or getting an investor for your business or Startup?
Well – it’s critical to consider because…
By all means spend hours on the business plan, the executive summary, the powerpoint slides and the financials and all the other things you are building for yourself, your business and your target investors…they will probably be invaluable as you build your business…
But know this…
The first four seconds when meeting an investor could (and probably do) significantly impact your ability to close that investor.
Ughh – does that mean its all…chance?
No – absolutely not!
Just like anything else – you can put your best foot (or shoe 
) forward and optimize the likelihood of success.
Want more information?
Please post your comments.
Andrew
A year or two ago I sat on the Board of the Small Business Council – this was a group of entrepreneurs, handpicked by the UK government to advise them and the Department of Trade & Industry on all things related to Startups, Entrepreneurs and Small Business.
We would meet regularly as a board, look at programs to stimulate small business, proposed laws and regulations, meeting with tens of venture capitalists, angel investors and private equity folks at a time, as well as other small business owners around the UK and Europe. My area of interest and where I spent most of my time and energy was being a part of the Small Business Investment Taskforce looking at funding for small business and the Angel/VC and Private Equity Communities. This whole experience was challenging, stimulating and the learning curve was hyper incredible – it was seriously a once in a life time opportunity and worth going back to the UK for (after it finished, I went back to the US…)
So what has this to do with you having problems raising money?
Well, one of the insights this extended group came up with and reinforced by a monumental survey they undertook for a few years (called The Big Survey) – was that there was “no shortage of cash for small business” and just so you know, part of this study and the research after included looking at the startup environment in other countries – Europe, Australia and the United States. Supposedly, this was true not just in the UK but in those countries too…
I’ll pause there because, if you have tried or are trying right now to raise money for your business, you may have just fallen off your chair. Get up and I’ll type it in again so it doesn’t get missed.
One conclusion they came to was … “There is no shortage of cash for small business (…and startups)”
Now, when they tried to tell me that as an entrepreneur that has gone through the hot and sweaty crucible of raising millions of dollars by giving pints of my blood, crying into my startup pillow late into the night, and gnashing my teeth in absolute frustration - I found myself sitting on the edge of my chair and arguing – “Are you kidding? When you’re starting a business – finding cash is next to impossible…” I yelled across the boardroom, purple faced, heart racing.
With urgings to sit back down and wondering if they should call Security, they calmed me down and spent the next two hours is whispering my disagreement…
Do you know what they showed me – and what I’ve since had reinforced by multiple conversations with CEOs and Startup junkies?
And this is worth slowing down for too….
There is not a shortage of cash for startups and small businesses – even in this economically challenged times….do you know where there’s a shortage?
…there’s s shortage of companies that are READY to receive an investment from an angel or venture capital investor.
What?
Yep – You may think your business is ready to get cash from an angel or a VC – but maybe, just maybe, it isn’t.
It may not be that Investors have all gone on vacation just when you are raising money – it may be that either you are not yet investment ready or, and these two points could be true too… either…
-
There is a mismatch between where your business is versus what investors want to see or
-
You aren’t communicating where you business is at in the right way for investors to digest and get comfortable with.
Now this is big stuff – because if these points are right – perhaps it isn’t that there are no investors around, or that cash has all dried up – maybe, just maybe, you need to think different (read: rethinking…) about how you pitch your business or (and this might be tougher to accept…) perhaps you need to make a little more progress in your business before you are ‘investment ready’. But having raised $5M+ with a business plan, a couple of people and a concept after the dot com bubble had already burst – in my view – it’s probably the former – you may need to re-examine and rethink HOW you are pitching your business to investors.
Are you ‘investment ready’?
And how should I do that Andrew?
That – dear Reader – will be an extended topic for yet another blog post…
Until next time – please consider joining my mailing list and I’ll send you blog posts as and when we have updates.
How did this post hit you? Any comments? Or Questions?
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Thanks!
Andrew
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