The Inside Look into the Investment World

Over 95 entrepreneurs, both students and recent graduates, gathered at Northeastern last night to gain perspective on the world of venture capital and angel investment. The panelists at the biannual Investor Insights included such heavy hitters in the industry as Bob Davis of Highland Capital Partners, Jon Karlen of Flybridge Capital Partners, Chris Cuddy of Launchpad Venture Group and Matt Fates of Ascent Venture Partners.

Attendees were invited to engage in a dialogue that yielded insightful discussion around building your team and pitching to potential investors. The evening prompted an anecdotal story about Coldplay and an offer by Bob Davis to pay for more Twitter followers (@bobdavishcp – you’re welcome!).

Chris Wolfel, IDEA CEO, kicked off the discussion by asking, what types of traits are necessary in a young entrepreneur and what kinds of challenges can they anticipate facing? Jon Karlen insisted on a “never say die spirit.” He explained that in this industry ventures will hear “no” a lot, but there needs to be an “ability to persevere past any no” and “retool and go back out again.”

Chris Cuddy echoed Karlen and added that a willingness to ask for help and “reach out to advisors in areas where you don’t have experience” is a crucial characteristic in any entrepreneur.

The combined decades of experience of the panel led one attendee to inquire what the panelists wish they would have known as young entrepreneurs that they now know as investors. “It is okay not to know everything,” answered Bob Davis. He explained that if one comes to that understanding, then they will be better prepared for the finish lane to change. “Successful entrepreneurs can move with the tide and see how the market is evolving. I didn’t know that early on,” said Davis.

In giving advice to entrepreneurs who are at the very beginning stages, Kalen encouraged the audience to remember, “it takes time to get off the ground.” Cuddy stressed the importance of not selling yourself short, while Davis focused on the necessary task of compiling a fully thought out business plan. He explained that as a potential investor, he is not going to read your 50 page plan, but it is crucial for the entrepreneurs to think “through all of those components and a business plan will help facilitate that.”

Another audience member posed a question about using outside consultants and whether or not that raises a red flag to investors. The panelists agreed that there needs to be just cause behind using an outside consultant for one of the core components or expertises that your company is offering. Doing so would be seen as a mistake. Matt Fates cautioned ventures to be mindful that “there are things that make sense to outsource and things you can’t give away.”

Each of the investors offered advice and anecdotes about the biggest shortfalls that they have encountered when hearing a pitch.

  • Davis focused on the importance of sharing who you are, not just leading with your idea. He explained that when first meeting with a venture, he considers “people, market and product,” in that order. The entrepreneur and investor relationship has a lot to do with chemistry, explained Davis. He noted that a “great team will turn a marginal idea into something special” and if he gets to know the individuals, he will feel more comfortable asserting that a correct match has been made.
  • “Have the confidence to listen,” said Kalen. In pitch meetings, Kalen watches to see how venture team members listen and absorb feedback and their responses to such critiques.
  • Fates stressed that you “have to do your homework.” When deciding which venture capitalists or angel investors to target, Fates encouraged the audience to “find investors that are looking for you,” ones that have invested in similar sectors.
  • For the audience members who were more concerned about even having the opportunity to pitch potential investors, Cuddy told ventures to utilize connections rather than blind cold calling.

Building the perfect team was a popular topic throughout the discussion, especially since most of the audience members are beginning to scout for their first hires or build relationships with their cofounders. It is important to find “a bunch of puzzle pieces that work well together and complement each other,” said Kalen.

Cuddy shared his Coldplay connection, explaining that he knew lead singer, Chris Martin, long before the band hit it big.
Chris Cuddy, Jon Karlen, Bob Davis and Matt Fates

Cuddy explained that Martin once said to him, “we decided to be the best we that we could.” Martin was referring to his band mates, the people that he surrounded himself with. They decided not to focus on whether or not they were the best musicians or knew the most about the industry; rather they focused on what made them unique and special.

The closing pieces of advice from the panelists summed up an insightful evening into the investment world for all entrepreneurs in attendance.

  • “Do something where you feel you have something special. Maybe it’s the idea, maybe it’s the team,” said Fates. “And always show up prepared.”
  • “Everyone doesn’t have to be a founder. All of the companies in our portfolio are hiring and there is a lot to be said for the opportunity to learn” before starting your own company, explained Davis.
  • “Make sure you are in business with great people and learning everyday,” said Kalen. “The single biggest impact will be your team.”
  • Cuddy reminded the audience to “use the help that is in this community.” He urged, “using the resources that are available to you.”

To see more highlights from Investor Insights, check out our live tweets from the evening @IDEANEU or visit our website for more information.