Venture Capital and How to Make It in the Valley

With experience on both ends of venture capital deals, the Entrepreneurs Fund’s Marketing Director Woody Rea shared with us the ins and outs of venture capital. Venture capital focuses on deciding how to invest other peoples’ money in risky, early stage companies through endowments, donations, funding, etc.

Woody described the standard process of preparing a company proposal to investors; this involves deal flow (utilizing connections) and doing proper diligence and research. Referring to professionals in similar fields and receiving feedback is also helpful for companies prior to meeting potential investors. In our talk with Woody, he highlighted the most important factors when assessing the risk of a company and whether or not to invest: technical, market, finance, operations, and most importantly, management.

1. Technical aspects consist of the details of whether or not the product/idea works, and if it has been tested or even beta tested (when customers are involved and their opinions are taken into consideration).

2. Market aspects involve which consumers the product/idea aims for as well as how robust the target audience is and the product’s future growth rate.

3. Finance relates to where the monetary funds originate from, as well as how much and potential milestones that may attract more capital.

4.Operations involves the logistics of the product/idea.

5. Management deals with the people involved (and they should have relevant experience or ‘scar tissue’).

Our speaker also highlighted three intangible characteristics of entrepreneurs in the valley. It is vital to have passion (the drive to overcome obstacles), governance (balanced internal structure), and the most crucial, intellectual honesty (the ability to acknowledge the need for change and to adapt).

In terms of tips, Woody also provided many helpful words of wisdom to the group. Advice included moving to the valley if one wants a job in the valley- networking and making connections are the most prevalent way of doing business on the west coast. In addition, he forewarned future venture capitalists to first pursue a job within a corporation and gain experience to provide value to a CEO or boss. Woody even recommended going into product marketing and being assigned the company’s worst product to magnify the product’s growth and progress. Woody’s words are extremely valuable and relevant for the entire group, no matter which fields or paths we pursue.