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Posts Tagged ‘Investors’

The Digital Health Rundown

Posted in Events, tagged , , , , , , , , , , , , , on June 19, 2013 | Leave a Comment »

As follow up to the digital health event last week, we decided to do a quick overview of the panel discussion and also provide the video of the event, for your viewing pleasure.

The discussion was filled with information regarding the current landscape of the health industry, reforms that are changing the way healthcare affects individuals and businesses, and the key issues as to what exactly is driving the change within this rapidly growing space. Throughout the discussions, the messaging was clear that adoption and changing behaviors of consumers are what will drive and continue to drive the increase in health startups and products.  Because the room was pre-dominantly filled with entrepreneurs who have existing companies in this particular space, the question that came about quite often was, what is the best business model for a health startup?  While there is never one right answer, HealthTap’s CEO, Ron Gutman, believes that in order for a company to make it big, building the platform around the use case (problem you are solving) will be a more promising product.

There were lots of great takeaways from the event, watch the video below and see for yourself.

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5 Questions on Entrepreneurs and Startups with Sharon Wienbar (Scale Venture Partners)

Posted in Total News Access, tagged , , , , , , , on May 20, 2013 | Leave a Comment »

Recently, one of our partners, Greg Heibel, sat down with Sharon Wienbar from Scale Venture Partners for a no-frills conversation about investors and entrepreneurs. Aside from the fact that we now know Sharon would choose a beach over mountains any day of the year, she shared some really great nuggets of information about what exactly it is that investors think about when meeting with entrepreneurs or figuring out whether they want to place a bet on a particular kind of team. Here are some of the gold nuggets from the interview.

Greg: What is it that makes you take a meeting with an entrepreneur?

Sharon: Well, there’s a couple things, but the first is usually that the entrepreneur is operating in a market that we’re interested in. So it’s a place that I want to understand; I want to understand what he or she is doing. It can really help when the entrepreneur either has a background in the space or has been introduced by somebody we know, but I’m very unlikely to take a meeting with somebody who’s in a market that we’re just not going to invest in, because that would waste that person’s time.

Greg: What does it mean to be scaling?

Sharon: So, to be a scaling company means you’ve achieved the product market fit, which could sometimes take just a couple of months, sometimes a couple of years, to get the product right for what the market is looking for. [It also means that] you’ve found a sales channel that is working. And this is one of the things that we’re maniacal about is tense, right? It is working means this quarter you’re selling more than last quarter. It doesn’t mean that you’re doing tens of millions of dollars in revenue. We’ve invested in companies that have been in revenue, even three months. But, period on period the business is growing. You’ve found a way that is working to reach your customers and you want to raise capital to grow that dramatically.

Greg: When you’re looking at a company, what’s more important to you? The team or the technology?

For the rest of the interview, you can watch the interview below.

 

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What You Need to Know About Board Meetings

Posted in Events, Total News Access, tagged , , , , , , , , , , on May 2, 2013 | Leave a Comment »

We recently hosted an event focused on board meetings and invited panelists from the company and investor side to talk about their personal experiences in dealing with this topic. The panelists shared everything from choosing board members to what a dysfunctional board member looks like.  The panelists included Dan Levin from Box, Jules Maltz from Institutional Venture Partners, Gary Swart at oDesk, Geoff Tate previously at Rambus, and Sharon Wienbar from Scale Venture Partners.  The moderator for this event was our very own Greg Heibel.  Here are some key takeaways from the event and what every entrepreneur should know to ensure the successful management and implementation of your board and the meetings.

How do you pick a board member and what should the composition be?

While most of the time a board member will be an investor, you have to view them as a source of advice and counsel first, money should be second. Most people have it backwards and think that you should take the money first, add the investor to the board, and then worry about all else later. This is usually a recipe for disaster and irritation in the long run. When thinking about the composition, it is important to understand that you essentially have three different types of people on your board: executives, investors, and independent members. You may not be able to necessarily choose your investors, but the other two are completely within your control and you should exercise that control in a thoughtful and tactical manner. If you are able to select your board member, you should try and round out your board with people who have a different skill sets from you. Much like seeking out members of your team who complement your skills, the same can be said for your board members. Nevertheless, the universal truth to bringing something onto your team is to make sure that personal characteristics are aligned, the person is motivated, and has the skills and knowledge. As Gary Swart from oDesk said, “personal characteristics are things you can’t change. You can teach a chicken to climb a tree, but you’re better off getting a squirrel in the first place.”

What is the ideal number of board members?

There is no hard and fast rule for this, it really depends on what you need and how productive the members are to the company. The general consensus from the panel seemed to be five to seven, but keeping in mind that your board composition does not have to fall within those numbers. You could have two, you could have 10, as long as all members are contributing in a productive and efficient manner, the numbers really depend on what you’re comfortable with. Having said that, too many board members can make it tough for decision making and getting things done, whereas having too few, can also leave you with limited perspective. “Early in the company’s career, smaller is better” says Dan Levin from Box. “Every time you need to get something done, you’re going to need to get everybody to sign a piece of paper. It’s harder to get a large group of people together.”

Advisors and observers, should you have them?

Advisors are those who are there to mentor and help guide you as you develop, grow your company, and beyond. These people are not necessarily your board members and don’t always hold a board seat, but they act as additional individuals who are advocates of your company and either have the experience or network to take your company to the next level. An observer is someone who is an additive to the room, but doesn’t generally sit on a committee or have voting rights. There may be instances where there certain venture funds have the right to designate an observer, but they’re rarely exercised. Observers can be great if they have limited involvement in board meeting conversations, but have value that they can bring to the table. Again, much like how many members you should have on your board, there is no definite number as to the number of advisors or observers you should have. As long as quality is there, the quantity is up to you and what you feel most comfortable with.

What should be presented at a board meeting?

A few days in advance of your board meeting, you should be sending your decks to those who are participating. A week is usually ideal. It is best that all parties receive the information they will be reviewing, prior to the board meeting so that you can make the best use of time. Many entrepreneurs think that the deck they present needs to be comprehensive and immaculate, when in reality, it shouldn’t be. This should be the easiest material to produce because the information you include, should already be logged and updated on a regular basis. You shouldn’t need to re-create anything. As Dan said, your operations review is where things get created because that’s where you run the business. You should essentially be providing your board members with your operations review along with a few other additional pieces of information such as your financials, current key issues or strategies, followed by an administrative updates.

Given all this, keep in mind that the board is not there to run your meetings or your company. That is the job of the CEO. At the end of the day, if you are deferring to your board for major decisions, something is wrong. These are just some helpful tips as you think about putting together your board.   You can click here to see the full video of our panel event, or here for a one-on-one interview with Gary Swart, and here for the interview with Sharon Wienbar.

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Common Mistakes When Pitching to Investors

Posted in Total News Access, tagged , , , , , , , , , , , , on January 14, 2013 | Leave a Comment »

By: Renee DiResta (Associate at O’Reilly AlphaTech Ventures)

As a seed stage venture associate, one of my main responsibilities is evaluating new investments. There are typically upwards of 20 first-round meetings in any given week, so I see a lot of pitches. Let’s talk about the most common mistakes people make when presenting, with a particular focus on the first-time pitch.

Not targeting appropriate investment partners

First and foremost, before you start a conversation, it’s important to know that you’re pitching to the right type of investor. If you don’t have a prototype in at least the alpha or beta-test stage, chances are you’re a bit too early for most institutional venture capitalists. Your most likely source of capital will be angel investors. It’s still good to reach out to VCs – we like to form relationships early and watch a product grow – but don’t be surprised to hear, “Let’s keep in touch.”

Besides investor stage, it’s important to choose partners who are a good fit for the particular sector you’re working in. The ideal investor is more than someone who writes a check – it’s a partner who understands your market, and can add value via their expertise and their network. You should typically avoid pitching VCs who have invested in direct competitors, as they will generally not fund a company if there’s a potential conflict of interest.

Asking the VC to sign an NDA

It likely won’t happen. Here are a few great posts by other investors that explain why in more detail.

Not having a deck

A good pitch should be a conversation, with a lot of back-and-forth questions and answers. Some entrepreneurs take this to mean that they don’t need a deck, especially if they have a prototype to demo. While a demo is the best way to convey what you’re doing, many investors (myself included) still appreciate a deck because it acts as an outline for your story. It helps to frame and focus the conversation, and is particularly useful for calling attention to important metrics (signups, downloads, usage over time, etc). It doesn’t have to be anything complicated; in fact, it should be quite simple. A good deck should have around 10 slides, with maybe a few additional for appendix-style materials to respond to anticipated questions. There are many resources out there for how to put together a good deck.

Presenting yourself as technology in search of a problem

While investors love to hear about innovative new ideas, we’re also very interested in what pain point the technology addresses. I want to hear about why your product is necessary. What problem does it solve? Who has that problem? At the early stage, it’s common for an entrepreneur to be exploring several potential target markets, and it’s perfectly acceptable to offer visions for multiple potential markets. Just don’t be technology in search of a problem…make sure you have a sense of who your customer will be, and convey that to the investor.

Misrepresenting the market landscape

This mistake generally takes one of two forms: exaggerating the size of the market, or ignoring the competition. When you think about your market, it’s important to differentiate between “market size” and “addressable market size.” For example, if you’re a K-12 edtech company, don’t describe your market size to the investor in terms of total dollars spent on education across the board at all levels. Talk about it in terms of the market you’re capable of reaching – your specific niche.

Similarly, many entrepreneurs make the mistake of telling an investor that they have no competition because there isn’t a company out there with their exact feature set. You have competition, even if it’s simply pre-existing user behavior. Know what you’re up against, and why you’re different, and be comfortable explaining that to an investor. If there truly is no competition, it’s highly likely that’s because you’re not solving an actual problem.

Not emphasizing why you are the person the VC should fund

So much of early-stage investing is making a bet on the entrepreneur. The product can and will change, so early-stage investors want to fund founders who can adapt and execute. The best idea in the world isn’t going anywhere if the founder isn’t passionate about the problem he or she is solving. So tell us about yourself and your team, not just the idea.

One final point: Many entrepreneurs wonder if it’s worth their time to pitch a non-partner. The reality is that analysts and associates can’t write checks, so if you have a connection to the firm and can get right to a meeting with a partner, go for it. But if not, keep in mind that the junior investor’s incentives are aligned with yours – they want to find great companies, and if they believe in a deal, they will advocate for it and help it through the pipeline. So make sure that you don’t convey a sense that meeting with the junior person is a waste of your time. 

A good first meeting is like a good first date. You’ve told your story and piqued the investor’s interest. End the meeting with a discussion about next steps. And prepare for your next meeting by thinking about the questions you were asked; those questions are a pretty good indication of what the investor is most concerned about, and alleviating those concerns will increase your chances of getting funded.

Good luck!

Renee DiRestaRenee DiResta is currently an Associate at O’Reilly AlphaTech Ventures, where she researches emerging technology trends and supports portfolio companies. Prior to OATV, she spent six and a half years as a trader at Jane Street Capital, a quantitative proprietary trading firm in New York. Renee holds a B.S. in Computer Science and Political Science from the State University of New York at Stony Brook. Follow her on Twitter at @noupside.

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Considering Your Options – What First-Time Entrepreneurs Need to Know About 409A Valuations

Posted in Total News Access, tagged , , , , , , , , , , , on November 19, 2012 | Leave a Comment »

By: Liya Brook (Partner at Preferred Return)

You’re an entrepreneur. You want to spend your time thinking about your product and not the tax code. But missing the boat on stock option tax laws can leave you in a sea of complications, from frustrated new hires to the loss of negotiating power in a future acquisition. To ensure you’re prepared and informed, read on for the lowdown on IRC 409A.

Getting to know your 409A

IRC Section 409A regulates most options you give to your employees (“nonqualified deferred compensation”). A 409A valuation provides a fair market value for your company’s common stock, which sets the strike price at which employees can redeem shares upon vesting.

A 409A report accomplishes two things – it provides an input to your income tax calculation and provides protection under an IRS-established “safe harbor”.  This protection shifts the burden of proof for noncompliance onto the IRS, which means that it is up to the IRS to prove that the strike price is grossly unreasonable.

When do you need it?

Any time you want to hire US-based employees and offer them stock options in your company (with very limited exceptions), you’ll need a 409A valuation. Once you start granting options, your 409A report will need to be updated at the earlier of (i) 12 months from the valuation date on the report or (ii) any material change in your company’s value; usually this is a new funding round, but recapitalization, major contracts or development milestones can also be triggers.

What if you get it wrong?

Tread carefully. Non-compliance can result in fines and additional reporting requirements for the company. Your employees can be slapped with income taxes on option price spread every year until exercise, and a 20% tax penalty with interest payments (plus 20% tax in California).

On top of dealing with unhappy employees, you could also put a future acquisition in jeopardy. Acquirers don’t want to see a company that can’t keep their house in order. This can negatively impact a future deal or the timely release of funds to shareholders.

 Can your board set the price?

Yes, but they likely won’t. Anyone performing a 409A valuation is required to have expertise in performing similar valuations. Even if this person passes the “significant knowledge and experience or training in performing such valuations,” sniff test, he or she is still responsible for preparing a compliant report. Methodology evolves rapidly, and techniques for valuing private stock are increasingly complex.  Most startup officers, VCs and board members would rather not shoulder the liability or time commitment.

Why your fair market value is different from your post-money valuation.

Fair market value and post-money value are very different. Institutional venture funding is typically provided in the form of preferred equity. The post-money valuation calculation assumes all classes of equity are worth the same as the latest preferred share price. On the other hand, fair market value of common stock is the value at which the common shares would transact in an orderly, arms-length transaction: on the secondary market, common shares are likely to be substantially discounted relative to their preferred counterparts because of liquidation preference and other rights and privileges negotiated by investors. As a result, typically the per-share fair market value of the common stock is substantially less than the per-share post-money value.

How to find a provider
For the average early-stage startup, there are three factors that matter most when choosing a provider:

  • Price of the valuation (Typically $3,000 to $8,000)
  • Time and distraction (Usually 3-4 weeks for a standard engagement)
  • Audit defense history and likelihood that the provider will be around when the valuation needs to be defended (rejected valuations can cause additional problems).  As methodology evolves over time, the provider should be up-to-date with current practices and regularly interact with major audit firms.

Start by asking your attorney for a few names of firms they like to work with and interview the firms until you find one you are comfortable with.

However you decide to address your 409A tax requirements, make sure to stay on top of it so that you’re not dealing with a last minute scramble. Clean up can be messy and expensive – it’s important to get it right the first time.

Drop Liya a note at liya@preferredreturn.com. She’d be happy to answer your questions about this article or anything else valuation-related.

About the blogger: Liya Brook is a Partner at Preferred Return who brings over 10 years of experience providing financial, strategic, and compliance advisory services to a diverse client list ranging from venture-stage companies to Fortune 50 firms.  Liya has performed hundreds of equity and asset valuations for private equity positions, mid-to-large cap firms and early stage technology and life sciences companies. Liya received her Bachelors of Science in Economics at UC Berkeley (Go Bears!) and her MBA in Accounting and Finance at NYU Stern School of Business.  

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Coaching Session with Steph Palmeri from SoftTech VC

Posted in Coaching Sessions, tagged , , , , , , , , , , , on November 16, 2012 | Leave a Comment »

Our coaching sessions are designed specifically to help entrepreneurs get the advice and business connections they need to take their companies to the next level.

Because space is limited for this session with Steph, attendees must apply and be approved to attend.

Details and How to Apply:

  1. Only entrepreneurs in the following industries will be considered:

    • Consumer Internet
    • E-Commerce
    • Consumer Mobile Applications & Services
    • SaaS
  2. Send your one-page executive summary to Joyce Chuang by Sunday, November 25 at 11:59 pm PST.  Click hereto find a template for your summary.  Please follow the template as it makes it easier for the investor to review.
  3. We will notify you by Tuesday, November 27, whether or not you have been approved to attend. 
  4. Once approved, you will be assigned a 30-minute time slot between 1:00 pm – 4:00 pm.  Each time slot consists of 5 minutes to present your company and 25 minutes for Q&A – if you would like to ask Steph questions, please prepare them in advance of your arrival so you are ready when you meet with her. 
  5. The room will be equipped with wireless internet. 

Investor Information:

 

 

 

 

Meet:
Steph Palmeri, Principal, SoftTech VC
Thursday, November 29, 2012
From 1:00 pm – 4:00 pm at Orrick’s San Francisco Office

Applications Due:
Sunday, November 25, 2012 by 11:59 pm PST

You will be notified by:
Tuesday, November 27, 2012

Please contact Joyce Chuang with any questions.

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Startup Reel Contest with ReelSurfer – Win Investor Time

Posted in Total News Access, tagged , , , , , , , , , , , , , on September 17, 2012 | 1 Comment »

Are you looking to raise money? Do you have a great startup and need that one meeting with an investor to get you going? Here’s an opportunity to let your creative side loose and win a 30-minute meeting with a prestigious Silicon Valley investor.  Enter now in our Orrick Startup Reel Contest!

What is the Orrick Startup Reel Contest?  We’re working with our friends at ReelSurfer to run a video mashup contest. Contestants (preferably entrepreneurs who are interested in meeting with an investor since that is the ultimate prize) will cut clips from videos all over the web to create a reel that communicates a message related to the theme: startup advice. These reels can be informative, funny, entertaining, or just about anything you want them to be.

Here are two examples of some reels to get you started: How to Raise Money and Fundraising Advice.

There will be three grand prize winners, one picked by Orrick and two picked based on total votes. Each winner will receive a 30-minute meeting with a Silicon Valley investor.

Participating investors for the grand prize winners include Garry Tan from Y Combinator, Alex Niehenke from Crosslink Capital, and Kirsten Green from Forerunner Ventures.

Here’s how to enter:

Create an account at www.reelsurfer.com

  1. Create a reel of clips on the theme: startup advice

Submission and Voting Deadlines:

  • Submit your mashup reel from September 17 – October 7, 2012 at 11:59 pm PST.
  • Winners will be announced on October 8, 2012 and will be notified via email.

 Rules and Terms:

  • You may only submit one reel a day.
  • No vulgar language, extreme profanity or inappropriateness (a “McClurism” every once in awhile is ok).
  • There is no guaranteed funding from an investor.
  • Winners will be notified via direct email once voting has closed and the contest has ended.
  • Investor time will be provided to the winners either via phone, virtual conference, or face time.

Have fun with it and we look forward to seeing your mashups!!

 

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Best Practices for an Elevator Pitch

Posted in Total News Access, tagged , , , , , , on September 14, 2012 | 1 Comment »

We kicked off our first elevator pitch workshop and roundtables event at our Silicon Valley location a couple of months ago and it turned out to be a big hit.  In preparation of our fundraising series coming up, we thought it’d be a good time to recap on some best practices for elevator pitches.

Having a polished elevator pitch is something every entrepreneur should adopt.  The purpose of the elevator pitch is to convey the message of your company in a simple and concise manner.  You need to solicit interest from an investor before you lose their attention, so the best points must be delivered early and quickly.  Here are a few guidelines to help you as you build your elevator pitch.

1.  Framework

  • What market are you in?
  • What urgent problem are you solving?
  • What is the size of the opportunity?
  • Why will you win (differentiation, barriers to entry, unfair advantage)?
  • Where is the validation (customers, investors, etc.)?

2.  If available, be sure to include strong customer validation.  What better way to prove your company’s validity than by having a clear example?

3.  Do not use industry jargon.  You can’t assume your audience has the same industry knowledge as you.  Keep your language simple.  Investors are people too.

4. Practice your delivery.  A good elevator pitch takes numerous practices before it’s perfected.

5.  Timing.  The best elevator pitches are the ones that can be conveyed in under a minute (30 seconds is ideal).  It’s called an elevator pitch for a reason.  We once heard from an investor that he had to sit through a 50 minute elevator pitch.  Make it known that he vowed to never get on that “elevator” again.

6.  Your elevator pitch is not a tagline.  Taglines are catch phrases that are intended to highlight an overall story in a few words.  An elevator pitch is the story about your business (this does not replace your business plan).

7.  The best elevator pitches are built up from an analogy or kernel that creates the “a ha” moment for the person listening to your pitch.

Some of the best pitches we’ve heard were from those who were just having a casual conversation with us.  A casual 30 seconds conversation.  Let us know your best elevator pitch.

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Coaching Session with Renee DiResta from OATV

Posted in Coaching Sessions, tagged , , , , , , , , , , , , , , , , , on September 10, 2012 | Leave a Comment »

From us to you.  Another wonderful coaching session provided by Orrick TOTAL ACCESS with the lovely Renee DiResta from OATV.  We’re now accepting executive summaries from entrepreneurs from all industries in tech excluding consumer apps that fall into the “mobile-social-local” space and e-commerce companies that have a flash sale/groupon model.  We’re not purposely trying to isolate these two types of companies, Renee just wants to make sure she’s providing the best coaching advice possible and those two groups aren’t really in her realm of focus.

With that aside… submit your exec summaries now!  For more information, see below.

Because space is limited, attendees must apply and be approved to attend.

Details and How to Apply:

  1. Entrepreneurs in all industries are welcome to apply with the exception of:
  • o    consumer apps that fall into the “mobile-social-local” space
  • o    e-commerce companies that have a flash sale/groupon model
  1. Send your one-page executive summary to Joyce Chuang by Sunday, September 16 by 11:59 pm (PST). Click here to find a template for your summary.  Please follow the template as it makes it easier for the investor to review.
  2. We will notify you by Wednesday, September 19, as to whether or not you have been approved to attend.
  3. Once approved, you will be assigned a 30-minute time slot between 1:00 pm – 4:00 pm.  Each time slot consists of 5-minutes to present your company and demo and 25-minutes for Q&A.
  4. We will have a laptop in the room available for you to use or you may bring your own.  The room will be equipped with wireless internet.

Investor Information:


Meet:
Renee DiResta, Associate
Thursday, September 20, 2012
From 1:00 pm – 4:00 pm at Orrick’s San Francisco Office

Applications Due:
Sunday, September 16, 2012 by 11:59 pm (PST)

Please contact Joyce Chuang or tweet @OrrickTA with any questions.

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Sign Up Now for Coaching Session with Javelin Venture Partners

Posted in Coaching Sessions, tagged , , , , , , , on August 8, 2012 | Leave a Comment »

Orrick’s TOTAL ACCESS program’s Coaching Sessions is a series developed specifically to help entrepreneurs get the advice and business connections they need to take their companies to the next level.

Because space is limited, attendees must apply and be approved to attend.

Details and How to Apply:

  1. Only entrepreneurs in the following industries will be considered:
  • Local Commerce
  • Online-to-Offline Transactions
  • Startups focused on Android (rather than just iOS)
  • Startups bringing the digital revolution to older industries in such a way that the other industries are adopting the new startups
  1. Send your one-page executive summary to Joyce Chuang by Friday, August 17 by 5:00 pm (PST).  Click here to find a template for your summary.  Please follow the template as it makes it easier for the investor to review.
  2. We will notify you by Tuesday, August 21, whether or not you have been approved to attend.
  3. Once approved, you will be assigned a 30-minute time slot between 1:00 pm – 4:00 pm.  Each time slot consists of 5 minutes to present your company and demo, and 25 minutes for Q&A – please prepare your questions in advance.

Investor Information:

 

 

Meet:
Richard Mordini, Associate
Thursday, August 23, 2012
From 1:00 pm – 4:00 pm at Orrick’s San Francisco Office

Applications Due:
Friday, August 17, 2012 by 5:00 pm (PST)

You will be notified by:
Tuesday, August 21, 2012

We’re looking forward to another great coaching session from Richard and hope you’re all able to get your executive summaries in before the deadline!

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