Peter Barris, Managing General Partner, NEA, has led over 25 investments in IT companies that have completed public offerings since 1988. Featured last December, at Startup Grind at 1776 in DC.
There are a lot of really smart, experienced, and influential people in the DC area. Thankfully, there are business community leaders who get them to come out to share their insights at various gatherings.
Peter Barris, the Managing General Partner of the world’s largest venture capital firm, New Enterprise Associates (NEA), packed the house at December’s Start-up Grind at 1776 in DC. It’s worth checking out the full interview with Groupon’s founding investor who now leads the Chevy Chase, MD, firm that’s got about $13 billion to invest this year. http://startupgrind.com/2014/12/peter-barris-whats-it-like-to-run-the-single-biggest-vc-fund-in-history/#sthash.NaiJTOZj.dpuf
BUT WAIT…before you run off to pitch NEA, Peter Barris wants to be sure you understand one thing: A fund as massive as NEA has to thrive, too. It can’t just settle for any old investors dream of a 10X return, like investing $3 million to get $30 million out. “That’s interesting,” but for a company our size it doesn’t move the needle,” he said, referring to the greatest lesson he learned from working under Jack Welch at GE:
“No matter how complicated the business seems, it really always boils down to one or two things that are the needle movers in the business. Focus on them.”
So, you can be a great company, but if you don’t have the potential for “unlimited upside” NEA’s probably not your best shot for funding. The good news is there is still room for all sorts of companies and plenty of other funding options around. The key is finding the right match.
Big Idea CONNECTpreneur Delivers
Investor Panel (LtoR)
Moderator: James Quigley, Founder & CEO, Canvas; co-founder, Refraction; Todd Klein, Managing Director, Swan & Legend Venture Partners; Julia Taxin, Vice President, Grotech Ventures; Dan Mindus, Founder and CEO, Nextgen Angels; Kathryn Stewart, Managing Director, Cranbrook Capital.
The accomplished investor panel at the Big Idea CONNECTpreneur Spring Forum on March 12, 2015 at the Tysons Corner Marriott shared some insights on funding considerations, best practices, and finding the right match.
How to avoid the biggest funding pitch mistakes?
- Understand the venture firm or angel group you’re about to pitch. Know what industries they like, what stage they invest in, and their business model.
- Be prepared to explain how your market approach — not just features — differentiates you from competitors.
- Be conscious that you’re pitching someone who wants to make money on the money they’re going to give you.
Some Candid Observations
Forecast your numbers so you can hit them during due diligence. Make them more realistic but aspirational. – Julia Taxin, Growtech Ventures
Investors don’t like surprises, good or bad. – Dan Mindus, Nextgen Angels
We focus on true domain experts. People who know their field better than anybody else tend to be able to pivot quickly when things aren’t working and can adjust to change. – Todd Klein, SWaN & Legend Venture Partners
Whatever you do, set your milestones and deliver. Then, people don’t care whether you’re a woman or a man. – Kathryn Stewart, Cranbrook Capital
If you’re not in the New York or Bay Area then it’s still tough to raise $1 million. Most seed stage companies will start to piece it together from 3, 5, 10, 20, 50 different sources. That’s a challenge for entrepreneurs; it’s one of the things Nextgen Angels is trying to address by doing $1-2 million rounds ourselves. – Dan Mindus, NextGen Angels
We have earned our cynicism by things people have said to us to get our money. – Todd Klein, SWaN & Legend Venture Partners
Biggest Trend Over Past 2-3 Years
Nextgen Angel’s Dan Mindus was enthusiastic about a trend that Peter Barris had also noted at Startup Grind: Tech-enabled business models are bringing innovation throughout the funding food chain.
“Now there are companies like Uber or Airbnb, drone companies, lots of logistics companies out there where you have brilliant entrepreneurs attacking industries that have been stale for decades…,” said Dan. “I like that trend. It expands the scope of possibility for innovation. I’m hopeful about that generally.”
A Tech-Enabled Pioneer
Tom Monahan, Chairman and CEO of the Corporate Executive Board Company (NYSE: CEB) tells the crowd at Connectpreneur “Know who you are and surround yourself with people who complement your skills.”
It was technology combined with self-knowledge and the confidence in his ideas that inspired CONNECTpreneur’s keynote speaker, Tom Monahan, Chairman and CEO of the Corporate Executive Board Company (NYSE: CEB since 1999) to leave his job at a major consulting company and join CEB founder, David Bradley, as an early employee of what has become this enormously successful company.
It all started on a double date with an inspiring woman he would end up marrying, and a consultant from another big firm, Jay McGonigle, who shared his frustration about aspects of the consulting professions that “didn’t suit our personalities.”
“Some subset of what consulting firms were doing neither served them from an economic perspective, nor served the teams or the clients,” he explained.
About a year later, his new friend Jay called him to discuss a tiny company in DC that offered a platform for them to build against the conversation they’d started. They joined the budding company and began with a benchmarking tool for large companies, like GE, to address five major areas: HR, Finance, IT, Sales and Marketing, and Legal Compliance.
“The idea that at any company there is a senior executive or their team that is working on a problem that everyone else in their job has, has animated us ever since,” he said.
Technology has been vital to the delivery of their products for years but we’ve entered a new era for business insights.
“We’ve invested heavily in great access portals and strong analytics platforms to help customers link our insights to their work. The new news has been that we’ve increasingly been able to deploy technology ‘upstream’ in our process to analyze massive data sets to mine them for insights. While I think that ‘big data’ is an over-hyped word, there is no denying that combination of growing data sets, more public data, and more powerful tool kits has opened up a range of business insights not previously available to us.”
Questions they ask when they think about serving clients?
- If we solve this problem does this save them money? Is there a big dollar ROI?
- Does it recur? (We like subscription businesses.)
- Is there an asset we can put at the center that scales? Is it shared?
- Can we build a solution that delivers huge multiples of return?
“We don’t innovate by sitting in a room with a whiteboard,” Tom emphasized, “we innovate by talking to the best customer base in the world.”
No joke. Corporate Executive Board’s clients include 100% of the Fortune 100 and 90% of the Fortune 500. So, somebody’s bound to be doing something cool and this tech platform can spot anomalies in their performance data.
“We think innovation and leading edge thinking is a process of co-creation with our customer base. We’re humble enough to admit we probably don’t have the answer and we’re honest enough to go out and ask questions of the world. Humility as a driver of innovation is often underrated.”
So, what are the one or two things that moves this business forward?
“Great people…From identifying locations to recruit, to screening candidates, to evaluating performance, to engaging employees, to designing and customizing development experiences, we have the unusual privilege of bringing the most powerful tools and technology to bear on talent decisions (our own). And we can really see the impact that treating talent decisions with the same analytic rigor as financial decisions can have on the business.”
What’s an example of the coolest innovation insight you gained from client performance data?
“We continue to be amazed at how work itself is changing — and with it, the very definition of high performance. Today’s highest performers in almost any corporate function successfully collaborate with peers across functional areas and geographies to a massive degree.”
A very approachable Tom Monahan engages with people outside the ballroom after his keynote conversation with Tien Wong.
How has your work changed?
Janice K. Mandel 