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How do you build high potential start-ups?

How do you build high potential start-ups?. September 2011 Erik Straser, es@mdv.com. Firm Overview. 28 Years of Early Stage Venture Investing Leadership. Founded in 1983 Invested in more than 275 companies Over $2.8B aggregate LP distribution to date

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How do you build high potential start-ups?

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  1. How do you build high potential start-ups? September 2011 Erik Straser, es@mdv.com

  2. Firm Overview 28 Years of Early Stage Venture Investing Leadership • Founded in 1983 • Invested in more than 275 companies • Over $2.8B aggregate LP distribution to date • Currently investing from our Ninth Fund; $1.85 under active management Differentiated, Thesis-Led Strategy • Deep domain expertise • Multi-disciplinary • Active, hands-on company builders • Leaders in public policy Diversified Across Three Categories • Cleantech: Solar, Storage, Smart Grid • IT: Enterprise Focused Application & Infrastructure and Consumer Web/ Mobile/Social • Life Sciences: Personalized Medicine and Transformational IT Passionate Commitment to Innovation and Entrepreneurship • Hands-on company builders • Stubborn belief that innovation lies at core of venture returns • Culture of risk-taking, pioneering new areas

  3. Entrepreneurs • The fundamental ingredient • Many people are entrepreneurial, very few are entrepreneurs • Come in usually two types: • Market visionary: have a deep understanding of a market in flux • Technical visionary: have a deep understanding of how a technology could transform a market • Craft credible, measured paths to risk reduction • Are efficient at aggregating resources • Capital • People

  4. Markets • Two types of markets: • Large, incumbent markets being subjected to new forces • Fast growing prospective markets • Being created or transformed by: • New technology • New business models • New Regulatory Environment • Markets that are addressable by a startup • Sales and Marketing • Distribution and Service

  5. Capital • That is available to the best entrepreneurs and companies from: • Angels • Early stage (pre-revenue or early revenue) • Strategic Partners • Late stage (growth capital) • Mezzanine (expansion capital) • Exit via public markets (IPO) or trade sale • That can be patient • That is sufficient in size to finance the company all the way • That understands the risk it is taking • That understands how downstream capital behaves • That is rewarded, along with management, in success

  6. Ecosystem • Hardest thing to replicate about Silicon Valley • Culture of risk taking and a culture that tolerates “smart” failure • Rational policy and regulatory framework that allows startups to succeed • Self reinforcing system • Research Universities for technology and raw talent • Healthy large companies nearby for managerial talent • Risk taking capital • Service providers that understand how to service a startup • Legal • Accounting • Real Estate • Banks and Financial Services • Rewards success both financially and culturally

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