I’ve had the good fortune to work with some really great attorneys over the past fifteen or so years and would like to spend a few minutes explaining just how important they are to the VC ecosystem and, in particular, to entrepreneurs given the number of questions I’ve fielded of late as to whom to go to for legal service in OC. Rather than try to address each situation that I was presented with here, I’ll answer generally like any good (reformed) attorney and simply say it depends…and then provide you some general considerations when choosing an attorney.

First, I strongly believe that having one or more good attorneys in your corner can really help you at the inception of your new business endeavor and you should get them involved early and often (once you’ve decided on who you want) as they can truly help you avoid the frequent initial mistakes at a minimum. Some will tell you that a good attorney can be worth his or her weight in gold, but I prefer to think in terms of diamonds; namely, the right one can shine as brightly under the right light and should also be chosen based on the “4 Cs”. So, what are they? Simply put, they’re Competence, Chemistry, Collaboration, and Cost and I’ll take each in order.

Competence: You should retain the right attorney for the job based on the job at hand and the attorney’s competence in performing such job. This may seem like common sense, but you’d be amazed at how many people simply use their friend, neighbor, [fill in the blank], regardless of his or her specialty, out of convenience rather hire a domain expert. Doing so can be extremely detrimental to an entrepreneur, especially one in a sector where intellectual property truly matters. For the record, I’m not suggesting you don’t confer with your friend, neighbor, etc that is a litigator or maritime lawyer, I’m simply pointing out that (in my humble opinion) you should consult an expert in the subject matter you need help in. For example, you should consult with a corporate finance attorney with experience in representing start-ups in company formation and financings rather than a general practice attorney who dabble in a number of areas of law. Most good attorneys will be more than willing to refer you to an expert in a particular field when the matter is one off their proverbial reservation. Fortunately, there is a number of competent attorneys right here in OC with a vast array of specialties and extensive experience.

Chemistry: Bottom-line, you need to be able to work with your attorney and to trust him or her implicitly given the nature of the business you will likely be conducting with him or her. If you’re constantly at odds with your attorney, it can hinder your progress as a start-up. Spend some time upfront getting to know each other to see if he or she is someone you can work with. A good attorney will be rowing the boat right along side you and become a true team member. Again, it may seem like common sense but I’ve seen the uglier side of this relationship and it’s a very big distraction at a minimum.

Collaboration: This is similar to chemistry. You need to retain an attorney that not only understands your issues, but can dynamically work well with you to resolve the issues and get the work done. It is also a good idea to choose a local attorney as working with someone from afar on the litany of start-up legal issues can be a challenge and, in my opinion, deprives you from getting the most bang for your buck. It’s much better to be able to pop into your attorney’s office and chat, review docs, etc. than to attempt to do so by electronic means. Choosing a local attorney may also come with the fringe benefit of utilizing his or her offices and conference rooms for meetings with your team, investors, and the like (you know, when you don’t have an office yet and/or are trying to keep your burn down like a good entrepreneur). The other thing to consider here is whether your attorney is part of a larger firm that has a diverse set of practices to grow with you as your company grows. Having said that, I’m reminded of a plaque my father (a career pilot) had on his desk that read something like: “It’s hard to soar with eagles when you’re surrounded by a bunch of turkeys...” so I feel compelled to point out that it’s not always a good idea to rely on a single firm for all your matters just because you like and work well with one particular attorney. Make sure you’re getting the expert advice you need and will be presumably paying for rather than deal with a bunch of turkeys just because they share a nest with your legal eagle.

Cost: Before all you big-firm attorneys panic and think that I’m going to suggest that entrepreneurs simply get the cheapest attorney they can to preserve their much needed cash, relax…that isn’t even remotely close to what I have to say here. I use the term “cost” here but I just as easily could have used the phrase “value exchange”…but it wouldn’t have started with a “C” and would have therefore thrown off my analogy. The value exchange I’m talking about here is simply making sure you receive appropriate value for the money you spend on your attorney (which goes to the other 3 Cs). It can actually be, and often is, more expensive to go with a particular attorney just because he or she is cheaper. How? Simple. A good attorney brings more to the table than just basic legal service. He or she has presumably worked with a number of companies you might want to work with but are unaware of, know a variety of capital sources, know a number of potential employees that you’d be interested in hiring, etc. Additionally, a really good attorney will help you avoid some common mistakes with respect to incorporation, patent prosecution, equity/debt financing, etc. that a lesser attorney may inadequately do. Avoiding such initial mistakes can save you money in the long run and ultimately prove to be cheaper for you overall. So go forth you brave entrepreneurs, lawyer-up, and build great companies here in OC.

I know I said I’d write about the start-up side of the OC VC ecosystem in my next post, but I’ve decided I need to establish a bit more background before attempting to tackle such a topic so I’ve decided to post on a few related items of interest instead.

I just returned from a week in the Rockies where I attended VCIR and tried to help my kid build a snowman in less than ideal conditions.  If you’ve been paying attention so far, you might (and should) be asking yourself why the hell a VC from OC attended the conference and is now writing about VC in the Rockies if his blog is about VC in the OC???  Good question; I’m glad you asked.  Well, there are several reasons.

First, operating under the premise that the greater Denver/Boulder area is an emerging VC/start-up ecosystem also growing in the shadow of Silicon Valley, I thought it would be good to see how they compare to our own OC and to network with some of their “indigenous VCs”.  I learned that the combined Denver and Boulder Counties, where most of the 33 companies presenting at VCIR are from (along with the indigenous VCs), represent a combined population of roughly 850,000 spread out across about 1,100 square miles and includes a major research university.  Sound statistically familiar?  Yeah, I know, they have more land and a much lower population density but I found the similarities to our own OC similar enough to warrant comparison and I’ll write more on this comparison specifically in the weeks to come.

Second, this was the 24th year of the Colorado Venture Capital Association’s VCIR conference so I thought it would be a good idea to see the folks in action based on the assumption that they have had time to work the kinks out  and present a unified conference.  I wasn’t disappointed and think there is something to be learned here for future OC VC conferences.  This was the last year of the conference as presented by the CVCA as they announced at the conference that they were becoming the Rocky Mountain Venture Capital Association and would now include Arizona, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming in addition to Colorado in the association.  The announcement caused me to lean over to Mark Heesen and quietly query if we SoCal VCs shouldn’t attempt to do the same thing given SoCal’s growing VC/start-up ecosystem prominence.  My question began what became an interesting dialogue and one on which I will convey my thoughts in the weeks to come so stay tuned for more on whether such a “Southern California Venture Capital Association” is merited.

Third,  I thought I’d check out the local start-ups to compare them against those I’ve seen here in OC.  While I was reasonably impressed, I’ll simply refer you to Dan Primack’s blog posting rather than share my own thoughts as I was able to meet and speak with him and found that I share his general sentiments here.  One of the more interesting companies I saw present was Me.dium and, in full disclosure, I’ve been participating in their private beta test for several weeks now and find their potential intriguing.

My final reason for attending was to hear Heesen’s keynote about the growth of Colorado’s emerging VC/start-up ecosystem and state of the industry in general.  Once again, I was not disappointed.  In fact, I will share the essence of his speech and the subsequent Q&A in a later post as I think both play to OC’s favor in the long-run.

I learned a lot at Intel and one of the more innocuous things I learned is to establish ground rules before engaging others in open communication in a public forum – especially if one (or more) of the topics presents possible differing viewpoints – so let me attempt to establish some basic ground rules for this blog as it is clearly “open communication in a public forum”.

Rule #1: I want to reiterate that I am and will be sharing my personal perspectives on a variety of topics in my capacity as a human being and citizen of Orange County, CA, USA…and only in this capacity will I communicate on this blog.  If you want my professional opinion, this isn’t the place but I’m easy enough to find.

Rule #2: This is simply my personal blog and nothing more. If you want in-depth reporting on the VC industry, subscribe to the Venture Capital Journal or one of the other seemingly endless publications on the subject matter. Similarly, if you’re looking for local start-up company analysis, best go elsewhere as I won’t go there here for a number of reasons.

Rule #3: With this post, I’m hereby introducing the concept of a “sidebar” wherein I’ll either establish one or more points (e.g. these rules), digress to clarify and/or correct a previous post (rather than re-posting), or to introduce a random thought or two out of out of place on OC VC.

Rule #4: I’m bloggin’ simply to have some fun (yeah, I’m a bit geeky), learn a few things along the way, share my thoughts on a few topical items, and to see if we all can’t stimulate the OC VC ecosystem in some meaningful way through our social interaction on-line (even if the only result is an increase in blogs about VC in OC or similar matters). Now, back to your regularly scheduled program…

Well, so much for timely posting each week… Given what my past week or so was like, I’m not too sure how the other VC bloggers find the time to post to such a degree as they do. In any event, I suppose any blog about venture capital in and around Orange County should at least spend a little time setting the stage…so here goes.

Unfortunately, most outsiders’ opinions of Orange County are based on what they have seen on a variety of TV shows such as Fox’s “The OC”, MTV’s “Laguna Beach: The Real Orange County” and Bravo’s “The Real Housewives of Orange County“. There are a number of us here working hard to change such perceptions but it will take time and, in my humble opinion, a much more concerted effort by the various socio-economic leaders of the county.

I won’t spend too much time here trying to get folks grounded in reality, as Wikipedia does a nice job painting the picture of Orange County, but for those of you who don’t want to click through it suffices to say that OC is a county in southern California with about 3 million residents spread across roughly 950 square miles and representing 34 cities and surrounding unincorporated areas approximately equidistant between Los Angeles and San Diego. While the current predominant industries are seemingly of the real estate, action sports (think surfing) and tourism orientation, there seems to be a slowly percolating sea change toward technology and life science industries (hence my interest in being a seed and early-stage VC in Orange County rather than elsewhere; that, and you can’t beat the scenery!). Had enough of the geographic and demographic background? Fine, me too…on to the “VC ecosystem”…

Working from an unaided memory here, but I believe the NVCA has something like 470 registered venture capital funds in the U.S. (representing about 90% of the venture capital under management) - of which I believe there are 7 domiciled in OC: Crosspoint Venture Partners, Okapi Venture Capital, Palomar Ventures, SAIL Venture Partners, Versant Ventures, and Ventana Capital Management. OC is also home to a number of funds not registered with the NVCA such as Huntington Ventures, InnoCal Venture Capital, Miramar Venture Partners, and presumably others as well. Again, off the top of my head here so I apologize if I’ve missed or mis-characterized any local funds. While not a VC fund, there is a chapter of an organized angel group here called Tech Coast Angels and I would be remiss if I didn’t at least mention them as they are an active player in the VC ecosystem. The primary local venture capital group is the Orange County Venture Group and most of the funds are active members in the organization. Additionally, there is a local “venture accelerator” NPO called the Orange County Technology Action Network or, appropriately, OCTANe for short. That’s basically the money-side of the equation; next post I’ll high-light some of the local VC-backed start-ups and provide some additional color commentary to the investor landscape here in beautiful OC. Until next time, adios

I’ve been sharing my thoughts on various topics for years and, after much peer pressure and consternation, have succumbed to finally organizing them and putting the proverbial pen to paper. My intent with this blog is to discuss the venture capital ecosystem in Orange County, California and surrounding “Tech Coast”. I’ll start out with a weekly post and see how it goes from there. If there are enough of you actually bored enough to read the posts, I’ll increase the frequency (time permitting).  As this is my first foray into the world of blogging, I expect this site will evolve over time.