Archive: Dec 2011

  1. Should we meet pre-traction?

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    This post was originally posted on Venturing from Israel, Micha Porat’s blog.
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    It is relatively often that I talk to entrepreneurs who tell me “it is too early to meet”, “we’re not ready” or “the product is not mature enough to meet”. Sometimes they’re right.  Actually, they’re always right, because it’s their prerogative to choose if and when to meet who and where.  But, I feel that in many cases, this statement is derived by a misunderstanding of the day to day business of venture capitalists, and where we feel we can add value to companies pre-investment. So I am writing this post to help clarify how I see my role and why I think it is never too early to hold a first meeting.

    As a venture capitalist, my purpose in life is to invest & help build great companies that will generate outstanding returns to our fund’s Limited Partners.  That role can be split into pre and post investment.  Let’s focus on the pre-investment, which I would estimate accounts for anywhere from 20% to 50% of a typical venture capitalists’ time.  Pre-investment is comprised of networking, sourcing, due diligence, and deal closing.  So why is it never too early to appear on a venture capitalists’ sourcing radar? Because there is value in brainstorming and leveraging the venture capitalist’s network, while the downside of appearing ‘unprepared’ can be mitigated easily.

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  2. An entrepreneur’s perspective on the junction

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    This post was written by Ido Yablonka, Co-Founder and CEO of ClarityRay, and a member of The Junction wave 3.

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    top10I’ll start at the end: if you’re located in Israel and are involved in an early-stage start-up, in particular one that is related to consumer web, you’re very likely making a big mistake not making the junction the first step in your journey. I tried to list down and explain the top ten reasons why.

    1. Focus.

    The odds are against you in this game, you’re outmanned and outgunned. The only way to win is by staying laser-focused on a target few others recognize, and closing in quickly. Every action you take needs to bring you closer to that target, and should do so with maximum efficiency so as to allow the next action, or a minimal margin of error in case the target shifts. Staying at the junction will not let you slip up. you will have many deadlines, presentations and constant feedback from your environment that significantly reduce the risk of waste in your battle-plan, as long as you stay attentive.

    2. Know how good competitors are.

    The junction filters by ‘entrepreneurial seriousness’, meaning admittance is conditioned upon the team’s willingness to work full-time on the project for the duration of the program. This is surprisingly effective. In my wave, the teams were all very able and hard-working, which made me reevaluate the level of startups out there, potential competitors in particular. Fearing competition to a point of paralysis is as destructive as dismaying it without grounds. The junction will clearly illustrate the absurdity in the latter option – people are generally not completely insane and those who are willing to risk several months, if not years, of high-paid work for a startup tend to have a real shot at winning.

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  3. No bullshit

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    No Bullshit

    No Bullshit

    A few weeks ago I participated in a panel that included myself and a couple of outstanding entrepreneurs. The event was part of an entrepreneurship and innovation class of one of the leading MBA programs in Israel.

    During the panel I was asked an interesting question by one of the students (who is also an entrepreneur). She asked what not to do when pitching to a VC?

    Usually the questions I am asked are the opposite types of what “yes” to do so, this question stood out. But I had an immediate answer as there is one mode of behavior that in my opinion is not only a turn-off but also pisses me off (excuse my language).

    My answer to her was “do not bullshit”! It is more than ok not to have all the answers and not to always have complete answers but don’t try cover it up with bullshit. Rather be transparent and open about the fact that there are still areas you need to check and analyze or that you do not know the answer and you need to find it out. In fact I even respect this type of honesty and it even gives the entrepreneur the opportunity to come back and have another discussion about the business.

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  4. Seed Stage Milestones (or “What I learned from The Junction Wave 3″)

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    This post was originally posted on Venturing from Israel, Micha Porat’s blog.

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    Last week we had our first demoday at The Junction (our co-working space/accelerator – read more about it on our website), and I was positively surprised at the number of companies that have managed to reach a phase where they were able to present a working product (our only requirement to come onstage). This is the end of our third wave of entrepreneurs at The Junction, and it is clear that this third group had more companies that reached a working, launchable product than the first two waves. I was interested to better understand what were the reasons for this? – what have we done differently that led more teams to reach a product they can demo and launch. From my conversations with the entrepreneurs, feedback was that having a demoday was a major component.

    In the early days of a startup, teams often feel they have limitless opportunities. They often change their product vision, for a better product-market fit. They think of various features that can be added to the product (Minimize!  more about this in The Startup Disease of Featuritis). They often let news and changes in the market sway them from one concept to another (future blog post…) Things are hectic in these early days (and they tend to stay hectic throughout startup life). When observing entrepreneurs at The Junction, it is often the case that 6-8 weeks into the 13 week program, teams have initial concepts of a product; but over the next several weeks, instead of going through productization and launch, they continue to iterate based on feedback from peers. They rarely manage to stay laser focused on getting to market.

    The addition of a demoday, an unchangeable date where they can either demo a working product, or stay out of the mix, kept many teams focused. Over the last couple of weeks of the third wave, teams were doing everything they can to wrap up the initial product, get their pitches ready, and be able to come onstage. It kept them focused. It kept them driving to a clear goal. It made them more effective. And in retrospect, looking at their performance during demoday (which was, btw, outstanding) this unchangeable date, this set-in-stone milestone (no pun intended), brought the best out of them.

    So if you are an entrepreneur, early stage or not, within a structured program or not, I encourage you to set a clear milestone for a WORKING product. Make it as short term as you can (FOCUS) and do everything in your power not to change it along the way. It will keep you effective. It will help drive you to success. Just ask members of The Junction’s Wave 3 – it already worked for them.