[SDForum] A good entrepreneur needs a big Rolodex!
Story posted on: June 07, 2007
"VC investment in China was about $2B last year [about 70% of that is in the technology sector]. And grew about 50%. And if it keeps growing 50% and we stay flat, as we've been for the past 5 years, VC investments in China will be same as the US in about 6 years".That explains why all the major VC firms are setting up a beach head in China to look for early stage companies to invest in.
Entrepreneurs of the world, build a strong Rolodex!
Bengston, who also presents the quaterly MoneyTree Report, a study of venture capital investment activity in the United States, had an advice for entrepreneurs:
"The great test of whether you are a good entrepreneur is whether or not you have a good Rolodex. If you don't have a good rolodex, you got other problems!"
Why are large private equity firms investing in technology companies?
"It's a natural evolution. Private equity firms have generally existed in traditional industries that are more mature. And now that technology is getting more mature, it's a natural transition for these firms to use the same financial analysis, the same metrics to go after technology companies as they used to go after traditional ones. I think that was a predictable trend, but there's still not much intersection between private equity and venture capital."
What advice would you give to an entrepreneur looking to raise money?
"I suspect that the majority of the seed and early stage deals done by venture capital firms, are with entrepreneurs they have already done a transaction with in the past. So there's less due diligence, more confidence and little supervision required. I think it's much harder for someone coming out of school or coming out of a company that doesn't have a start-up success under their belt to approach a venture world for a seed investment of an unproven concept. My advice then would be to get the Web site up, get some traction and go back to them. But remember that most successful firms often need very little money, when you see at the history of microsoft, oracle, sap... who were so successful that customers were actually funding them."
A last word on valuations?
"Valuations for later stage firms appear high relative to current exit value. You are starting to have late stage valuation $70-80 million "pre" when the average merger and acquisition is also $70-80 million "pre"!"
User Comments
#1, ExpotsAbsoppy , le 24/10/08 12:08 PM
There was this guy see.
He wasn\'t very bright and he reached his adult life without ever having learned "the facts".
Somehow, it gets to be his wedding day.
While he is walking down the isle, his father tugs his sleeve and says,
"Son, when you get to the hotel room...Call me"
Hours later he gets to the hotel room with his beautiful blushing bride and he calls his father,
"Dad, we are the hotel, what do I do?"
"O.K. Son, listen up, take off your clothes and get in the bed, then she should take off her clothes and get in the bed, if not help her. Then either way, ah, call me"
A few moments later...
"Dad we took off our clothes and we are in the bed, what do I do?"
O.K. Son, listen up. Move real close to her and she should move real close to you, and then... Ah, call me."
A few moments later...
"DAD! WE TOOK OFF OUR CLOTHES, GOT IN THE BED AND MOVED REAL CLOSE, WHAT DO I DO???"
"O.K. Son, Listen up, this is the most important part. Stick the long part of your body into the place where she goes to the bathroom."
A few moments later...
"Dad, I\'ve got my foot in the toilet, what do I do?"
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