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Ask HN: The VC and the Geek. Do VC's only care about 'management team'?
My understanding, based on nothing but some reading, is that as an engineer, I have zero credibility when it comes to VC's. They see me as something like a janitor or an electrician, or any other skilled craft. "You need them, but which exact one you get doesn't really matter."
My understanding is that VC's don't invest in technology, or in engineers, they invest in management teams. You need the resumes in your portfolio that have letters like 'MBA' on them, instead of letters like 'EE'. I assume if your letters were 'PhD EE', that might compete with 'MBA' ... barely.
I have used this knowledge as an excuse not to even try to get VC money for any of my projects that currently languish in notebooks due to lack of capital.
So, my question here is ... Am I wrong?
- sama 18y agoVCs invest in founders, not management teams. Some of the good ones have a strong preference for those founders to be engineers. Most of the most successful VC investments have been backing very smart engineers. This pattern is not lost on them.
- robotrout 18y agocitation please? While this is sweet kool-aid, and I like the taste a lot, this is in direct opposition to almost all VC websites that I have read. I expected this answer, posting here. I WANT this answer. But I need more. I need convincing that the VC sites are wrong. Here's links from a one minute google. http://www.smallbusinessnotes.com/financing/venturecapitaldecisions.html http://www.smallbusinessnotes.com/financing/venturecapitalde... http://www.markpeterdavis.com/getventure/2008/08/hi-mark-big-fan.html http://www.markpeterdavis.com/getventure/2008/08/hi-mark-big... http://209.85.173.132/search?q=cache:HQ8zeI6-mXUJ:www.va-interactive.com/inbusiness/documents/MAN_VC1.doc+%22management+team%22+vc&cd=5&hl=en&ct=clnk&gl=us http://209.85.173.132/search?q=cache:HQ8zeI6-mXUJ:www.va-int... ... and so on. I have a bookmark folder filled with these somewhere, but for now, you get the idea.
- sama 18y agoNEA and Sequoia funded us when we were 20 year old hackers with NO business experience whatsoever.
- robotrout 18y agoWould you agree that most 20 year old hackers are NOT funded? Why do you think you were funded? What made you different from those who didn't get funded from those companies? Was it your demo? Was it a patent? Just an idea that was so brilliant, no demo, patent, or experience was needed? I'm very interested in any introspection you might share, as to why you got funded when others did not.
- pedalpete 18y agoI believe you are wrong. It isn't about degrees as far as I understand, but it is about the ability to sell the idea, manage it through production and growth. When a VC says they fund a team, they don't mean they fund degrees. Funding a team will often mean funding people with experience, or some other factor that lets the VC know that this is the right horse to back. Lots of engineers get funded, but they don't get funded for 'projects that languish in notebooks due to lack of capital'. So that's the problem first. You need to be able to sell your idea, and likely you should probably be on the road to building it or have something built before looking for funding. Pick up Curtis Carlson's book "Innovation: the Five Disciples to Creating What Customers Want". It will help you put together the proper positioning for your idea and get it ready to be heard. ----- EDITED ----- I REALLY liked Sama's response (which wasn't there when I wrote my original response above). My response is probably focused on steps. You can't go right from idea to VC (unless you have some serious connections and likely some very serious successes in your past as well). An idea is just an idea. It is a management team (which might need a good engineer) which brings the whole thing together. Rarely (though it does happen) is an engineer the best person to lead a business. Think Apple - Woz was the engineer, Jobs the manager/marketer. You might need to find your Jobs if you're Woz (okay, that's not the way the history works, but you get the jist). By the way, I'm in your boat (kinda) I'm the engineer of my start-up and also trying to be the management guy. It's tough going it alone, once you're in it, you'll likely understand why VC's focus on the team aspect.
- robotrout 18y agoI get that if you don't try, you won't succeed, hence my questioning here, as a way to jump start myself, perhaps. It does sound a little silly, doesn't it. Here's some guy claiming to have all these ideas in a notebook, but he's obviously not trying to do anything with them, or they wouldn't just be in a notebook. I have developed mass market consumer electronics for many years, for large companies. I simply want to continue to do that, for myself. I know, from actually doing it for many years, that $100K is very cheap, and $300K is normal, by the time you get plastics designed, molds tooled, PCB's and components purchased, etc. As your complexity goes up from there, so do your costs. Then it's time to actually go buy components, arrange shipping, and have the thing manufactured. Some things do not bootstrap. You either write the check or you don't, period. These products will not change the world. They're not revolutionary, and frankly, the world will get by just fine without them. But there is money to be made from them, as people will buy them. So, here I am, with experience and ideas, but a strong feeling that I can't close the deal, based on a lot of reading that I've done.
- pg 18y agoOnly bad VCs are looking for startups founded by MBAs. The better ones are looking for people with technical backgrounds who are willing and able to figure out how business works.
- robotrout 18y agoRight. Good! Am I going to argue with pg? If I could ask you for one more comment... Most consumer electronics products that you see on store shelves are not patented. They're not sufficiently innovative to deserve one. That's also the case with my portfolio. I have a few pending patents, but as far as legally defensible IP, not so much. My idea is to select perhaps 10 products, complete with photos of prototypes, and/or schematics, as well as trademarks that I have reserved, domain names associated with those trademarks, the few patents I have, and my resume, I guess, and create a package I can give to VC's. Then, in the package, select one of those products as a "first product", and present a timeline and budget for bringing it to market. Is this something that could fly?
- pg 18y agoVCs don't generally want to see a portfolio of ideas. You're supposed to be the expert: they expect you to choose. What they want to see is a group of smart founders who plan to work in a promising area. Also, they're generally leery of consumer electronics. Not that you shouldn't do that, but if you do, you should do it a la Meraki: make version 1 yourself in your basement, get ramen profitable by selling it to early adopters, and then go to VCs once you can show it's already taking off.
- robotrout 18y agoThank you for telling me that probably would not have worked, and about the reluctance regarding consumer electronics. It makes sense they would be so, for the very reasons that are hindering me. (high initial investment, IP infringement risk, multi-country compliance, etc).
- kanny96 18y agoI agree with your thoughts. It is sometimes difficult to digest not getting a fair opportunity, but after all, the world outside the school is not, well, the school. I also have EE background, with .95 PhD, and despite being ahead of the tech horizon, it's especially painful to be rubbished by some haphazard investors. However, i am sure, if i put my full energy behind it, someday it will certainly fly with or w/o VCs on board. So, the real key is perseverance and commitments. And of course, finding like-minded or like-positioned people helps getting there.