Skills

I was watching my Trojans get spanked by the Ducks in the Pac-10 championship game (could you hear me yelling?) while IM’ing a friend and commented on what a solid player I thought Nick Young was - despite his then current performance.  I debated with my friend as to whether Nick would “rise to the occasion at the next level”.  The debate led to a general discussion on what skills it took for different endeavors and eventually got me thinking about what “skills” it takes to get venture capital funding…which leads me to this post.

 Along these lines, most VCs invariably serve on a variety of panels on any given year and, inevitably, are asked what we look for to make our investment decision.  We all typically give the same canned reply about the size and nature of the market being addressed… the technology and/or competitive advantages the company will have relative to its competition in such market… the financial strategy and risk profile associated with building the business in question… and then all agree that the biggest emphasis really is on the people before moving on to another question.  In some cases, we simply respond that it’s all about the folks involved.  So, in light of my previous comments about Nick Young, what type of skills does it take to get venture capital funding?  In my humble opinion, it really comes down to what I call “The 3 Ps”: Passion, Persistence, and Perspective.

 Passion – Simply put, if you don’t believe in your endeavor with all your being, it’s hard for investors to do so.  I’m talking about genuine enthusiasm to the point that it is contagious.  You really have to love what you’re doing and let it show.  VCs meet with several entrepreneurs every day and those that stand out tend to be those that are most passionate about their idea/product/service/company.  If you’re not passionate about what it is you want VCs to invest in, we start to wonder why…

 Persistence – It starts before you even get a chance to pitch.  Odds are that you’ll hear “no”, “not interested”, “we’re going to pass”, or something other form of rejection many times over before you get to a “yes”.  You will also encounter a number of obstacles or challenges while building your business and you need to show investors that you have the ability to persevere despite the inevitable set-backs and the like.  Financing your business through venture capital creates a long-term relationship and your investors need to know that you’re not one to pack his or her things and hit the road at the first sign of trouble.

 Perspective – I think it’s the presence of this trait or characteristic (and the degree to which it is present) that separates those that “get it” and those that don’t.  Yeah, you need to have passion and persistence, but you also need to temper them with the wisdom to know when dial them up or down.  What the heck does that mean?  Simply put, it’s the ability to perceive things in their actual interrelations or comparative importance relative to each other and to the whole (i.e. being able to connect the dots).  Since most successful serial entrepreneurs exhibit this trait in abundance (hence the reason we VCs tend to chase them), you might now question whether perspective is innate or learned.  Good question.  I suspect there is a fair amount of debate on this one amongst the VCs.  Personally, I think it’s both and will always look for it in entrepreneurs I meet with.  Until next time, happy venturing…