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Something (Kind of) Ventured

By Peter Christman  |  january, 2014, Issue 2
Left to right: Jennifer Long, Elisabeth Goossen, Andrea Poldoian, Scott Meadow, Liz Gay, Liz Han, Joanne Chen

VCIC Winners. Left to right: Jennifer Long, Elisabeth Goossen, Andrea Poldoian, Scott Meadow, Liz Gay, Liz Han, Joanne Chen, Jessica van der Vooren

"70% substance, 30% theatrics."

At least that's what Scott Meadow, Clinical Professor of Entrepreneurship, told our team on the Wednesday before the Venture Capital Investment Competition (VCIC). He of course was alluding to that ever-elusive mix of quantitative and qualitative factors that have bred success in the competitions of year's past. But 30% theatrics? That seemed high. With only a half hour of face time with the entrepreneur whose company we were to invest in, substance had to be everything.

On the day of the competition though, Meadow's guidance was on point. The condensed period of interaction, however impractical it may have seemed, forced spontaneity, charisma, and wit. It wasn't theatrics in the traditional sense; it was much more tangible and genuine. A fan favorite was Tricia Felice's ('14) equally tactful and hilarious reply to "Advisor" Meadow's belaboring of a point of contention. "I'll even put a star next to that one for you". Bravo.

The experience, however, evokes the question of whether or not VCIC is at all comparable to life as a real VC. Certainly the time constraints and forced investment in one of four startups isn't a reflection. Nonetheless, there was something about the "theatrical" side of the competition that did. The participant's interactions with the entrepreneurs, however manufactured at the outset, invariably slipped into something much more human than the prepared remarks had accounted for. And these moments—in which participants were utterly authentic and the discussion shifted from deal-making to relationship-building—separated the top teams from the rest. It was these moments in which VCIC did its best real-world impression.

Since its inception in the 1960s, the venture business has undergone dramatic changes. But, the past decade takes the cake. On the back of open source computing and AWS, it's now a thousand times cheaper to start a web-based company than it was in the early 2000s. The implications? VCs are re-branding (Vinod Khosla is no longer a venture capitalist, but a venture assistant); term sheets are changing (see Passion Capital's "Plain English" version); and firms that historically played in Series A and B rounds are stepping back into seed. Y Combinator, Kickstarter, and AngelList are only harbingers of the disruption ahead.

The future of the venture business is, thus, more figuring than figured, which means (for now) there's no definitive answer to where we might draw the connection between eight teams battling it out in C-104 to what's going on outside the walls of HC. That said, the discussions, negotiations, and questioning that occurred on Jan 17th suggest that the relationship between entrepreneurs and VCs is evolving. Increasingly, entrepreneurs want to see value from VCs beyond the bank account. And the VCIC teams that were able to best communicate their ability to provide that additional value stood out.

That's not to say that issues like liquidation preference, founder vesting, and anti-dilution aren't critically important. They are. But, to those planning to participate in the 2015 VCIC festivities, be sure to give proper attention to that 30%. As Mark Suster '99 so eloquently titled his blog, it's about building something from both sides of the table.

Last Updated 2/5/14
Last Updated 2/5/14