D7 Epiphany (of sorts) - We Invest in our Interests

As you might imagine, I am constantly asked out to raise capital from VCs and what VCs are looking for.  In fact, I am asked so often that I wrote a piece about it awhile back titled Hope is Not a Strategy simply to be able to point folks to the post.  Well, I recently had an “epiphany for a post” while at D7 this week and spent the short drive home thinking about it some more.

Let me first set the stage.  We were at lunch and sitting at a table of 8.  To my left was an entrepreneur (to his left was Rupert Murdoch) and to my right was a VC friend of mine.  The entrepreneur and Rupert were in a discussion and, at one point, the entrepreneur leans over and asked my friend what he will invest in.  My friend’s response: “whatever I happen to be interested in.”  The response may seem flippant at first, but let me explain why it isn’t and why more entrepreneurs should pay attention to what VCs are interested in and only target those with an expressed interest in companies in their areas of interest.

One of the frustrations entrepreneurs commonly lament is that it is so hard to get a meeting with a VC.  Well, we VCs are extremely busy and very sensitive to the “return on time” factor as to how we allocate the hours of any given day.  Here in SoCal, there are so few of us (by comparison to Silicon Valley and New England and despite the population of SoCal), that the matter is further exacerbated.  So, what does this mean?  It simply means that we allocate our time towards areas of interest.  We are all looking for the companies that meet the general criteria I list in the above referenced post so it is even more important to learn what we are interested in…and understand that our areas of interest may (and likely will) change over time based on numerous considerations.  As I was thinking about this matter, I called a friend/entrepreneur I know and discussed the matter a bit with him and he quickly suggested that while my thoughts here were solid, I overlooked the fact that it can be very difficult for entrepreneurs to determine which VCs are interested in what and that their websites can provide clues but tend to be deficient to the degree that I’m talking about here.  Good point.  In fact, I’m hereby declaring to make some changes to this blog to clarify my interests and will also make some changes to our fund’s website in the coming weeks that hopefully helps explain a bit more about what I/we are interested in…so stay tuned.