Mobile Point View by Paul Ruppert

VCs in Mobile: Tim Chang, Norwest Partner, Podcast Interview

Mobile Point View's First Podcast !  Readers--now listeners--here is the first Mobile Point View podcast with my friend Tim Chang of Norwest Partners, a 'silicon valley' venture capital firm with a strong emphasis on the mobile / wireless segment. TIm's a true 'Mobile Influencer' and I couldn't have a more knowledgeable guest for my first podcast.

Here's an overview of our 28 minute conversation.

                                                      Click on the arrow below to listen to my podcast with Tim Chang

For you traditionalists, here are my 'show notes' from the podcast:

• How to become a Venture Capitalist
• How Does Norwest Partners Differentiate itself from all the others in the mobile or wireless venture game?
• Are venture cycles aligned with the mobile industry development period?
• Where does the N. American market rank globally?
• What are the hottest segments of mobile right now, i.e., advertising, LBS, search, etc.?
• Why is mobile a 'mid-tail' development period, and what is it's hype cycle
• What is "mobile social placecasting"?

 

This and That re "The Funded"

This and That, a blog written by a Venture Capitalist at Spark Capital in Boston blogs on The Funded, which I covered in "VC Funding: 10+ Steps for Fledgling Entrepreneurs." Here's their entire (great) post on the "The Funded's" audience....

"There is a new web site for our micro community, The Funded - the Venture Fund rating site for entrepreneurs. Estimating the size of the community could be a McKinsey interview question. I will try to do the math but undoubtedly it would be imperfect.

I estimate a constituency of ~350,000 people at most - not bad

10,000 Card carrying venture guys (a small portion of the overall number)

1,000 active venture firms in our space over a period of 10 years with varying stage focuses 10 people per firm (includes everyone that has contact with potential founders, partners, associates, venture partners, EIRs)

300,000 entrepreneurs

15 companies per fund
4 funds per venture firm (10 years, 2+ years investing cycle)

60,000 companies
4 venture firms on average per company => 25% overlap ratio
15,000 unique companies (I should be able to find this number from venture source)
20 people that is or will become an entrepreneur at each company

40,000 Fudge Factor (people I did not account for - just because)

Here is the Alexa comparison for 3 venture related sites. Given my back of the envelope numbers (although not a very educated guess) and the traffic chart in Alexa (not known for its reliability), I would be very surprised if The Funded has currently more than 20,000 registered users.

So do I care? Of course I do, I like to check up on all the public reviews of our fund and all other funds and people I know. I love the ballot stuffing (which I suspect is the most traffic this site gets, I am guilty of it too), the genuine positive comments and the pissed off entrepreneurs. It is all good fun.

We see over a thousand companies every a year but invest in only about 10. There is really no clear reason why we say yes or no to a qualified investment. Most of the time a number of deals we pass, get investments from other very respectable funds. Sometimes we fund companies that a lot of other investors have said no to.

The reasons we usually invest are (1) chemistry (we may have worked with the team in the past and like them), (2) conviction (we really like the market the company is going after), (3) timing (as an investor we are ready to take on another project) but most of the time a combination of these 3 and other factors.

We are not always very graceful at saying no and we always have an opinion. If I did not foolishly think I knew everything and would be right most of the time, I could not be in this business. It is hard to be often wrong - historically only 1 or 2 in 10 companies provide meaningful returns - and live with it. If everybody were to like me, I'd be a rare human being and I suspect there would be something very wrong with me.

So the advice I'd give to an entrepreneur is as follows:

(1) if the investor / syndicate is the only source of capital you could find, check out The Funded after you get the money in the bank. You have dealt with much worse before, you just went through fund raising! You can deal with your new investor(s).

(2) if you do have a choice, do what we do - ask for personal references and track record. Call around as many founders/CEO's you can that have worked with the particular investor you are considering. Make up your own mind. We can not escape our past!

Good luck..."   

I estimate a constituency of ~350,000 people at most - not bad

10,000 Card carrying venture guys (a small portion of the overall number)

1,000 active venture firms in our space over a period of 10 years with varying stage focuses 10 people per firm (includes everyone that has contact with potential founders, partners, associates, venture partners, EIRs)

300,000 entrepreneurs

15 companies per fund
4 funds per venture firm (10 years, 2+ years investing cycle)

60,000 companies
4 venture firms on average per company => 25% overlap ratio
15,000 unique companies (I should be able to find this number from venture source)
20 people that is or will become an entrepreneur at each company

40,000 Fudge Factor (people I did not account for - just because)

Here is the Alexa comparison for 3 venture related sites. Given my back of the envelope numbers (although not a very educated guess) and the traffic chart in Alexa (not known for its reliability), I would be very surprised if The Funded has currently more than 20,000 registered users.

So do I care? Of course I do, I like to check up on all the public reviews of our fund and all other funds and people I know. I love the ballot stuffing (which I suspect is the most traffic this site gets, I am guilty of it too), the genuine positive comments and the pissed off entrepreneurs. It is all good fun.

We see over a thousand companies every a year but invest in only about 10. There is really no clear reason why we say yes or no to a qualified investment. Most of the time a number of deals we pass, get investments from other very respectable funds. Sometimes we fund companies that a lot of other investors have said no to.

The reasons we usually invest are (1) chemistry (we may have worked with the team in the past and like them), (2) conviction (we really like the market the company is going after), (3) timing (as an investor we are ready to take on another project) but most of the time a combination of these 3 and other factors.

We are not always very graceful at saying no and we always have an opinion. If I did not foolishly think I knew everything and would be right most of the time, I could not be in this business. It is hard to be often wrong - historically only 1 or 2 in 10 companies provide meaningful returns - and live with it. If everybody were to like me, I'd be a rare human being and I suspect there would be something very wrong with me.

So the advice I'd give to an entrepreneur is as follows:

(1) if the investor / syndicate is the only source of capital you could find, check out The Funded after you get the money in the bank. You have dealt with much worse before, you just went through fund raising! You can deal with your new investor(s).

(2) if you do have a choice, do what we do - ask for personal references and track record. Call around as many founders/CEO's you can that have worked with the particular investor you are considering. Make up your own mind. We can not escape our past!

Good luck..."   

VC Funding: 10+ Steps for Fledgling Entrepreneurs

Tip of the hat to three Venture Capital focused bloggers in assisting in the process of securing VC funding.

I've helped raise VC funds in two successful start ups, served two years as an Independent Director on a US$160 million revenue company, and now serve on three advisory boards for mobile tech companies, and I think these three sites provide outstanding information for fledgling entrepreneurs seeking venture funding.

Burnham's Beat is written by Bill Burnham, who runs the hedge fund Inductive Capital. Bill is a former VC, and he provides an excellent illumination of the initial fundamentals in approaching VCs for OPM in his post last month "Ten Pragmatic Steps to Raising Venture Capital."  The post includes basics such as presentation outlines, gaining clues and texture on the VCs you're targeting, and sources of information on paticular VCs and partners.

Another site I've been reading and recommend as well is Soaring on Ridgelift written by Stu Phillips of Ridgelift Ventures. Two valuable recent posts are "The Pitch Deck" which covers how to craft a VC pitch, and "The List of Four Lists" which is a good strategy to pursue before you walk into the pitch meeting.

The Funded, turns the tables on the subject of VC funding and the process behind it. This site provides frontline insight from successful venture fund raisers with a compilation and ratings of over 3600 VCs and the partners they worked with. A very valuable insight to have as you walk into the pitch.

As Sun Tzu said: "Know thyself. Know thy enemy. Do not fear 100 battles." I've recommended all three sites to enterpreneurs who have been approaching me recently me for assistance, and I recommend them to you, too. 

VC Pilgrimage: Sand Hill Road, HBS and Chindia

My Pilgrimage to VC Mecca