Find out what kinds of companies are getting funded — and what it takes to get VC attention in 2016. Join one of VB’s senior analysts and VC pros to learn where the market ‘s heading and how you can leverage it all the way to the bank.
Despite any sky-is-falling rumors, VC confidence is thriving. The volume of deals in both amounts and frequency is up. In fact, 2015 was a record year, with over $100 billion dollars invested — but more importantly, that record is going to keep getting broken.
So how do you get a chunk of that change?
Lisa Calhoun, one of the expert panelists for our upcoming webinar shared some of the insights she’s gained as a partner at Valor Ventures when it comes to standing out from the crowd.
1. Corporate experience matters
More and more start-ups are established not just because a great idea hits, but because of pressure on the job market. Employment remains flat in business, so entrepreneurs are starting their own to create their own success.
“A lot of the best startups are started from need,” Calhoun says. “These founders have corporate experience, and have seen plenty of problems, and they know how to solve them.” That makes a big difference when it comes to the stability and longevity of a potential start-up investment.
Calhoun points out VMware cofounder Diane Greene’s corporate history as the best example. “Diane spent 35 years in different jobs in marketing,” Calhoun notes. That’s before she started her first (pre-VMware) technology company at 42, which sold to Microsoft for around $75 million.
Greene went on to co-found and build VMware into one of the fastest growing companies in tech, selling it for $635 million in 2003 to EMC in one of the largest acquisitions ever.
“That’s what the modern entrepreneur looks like,” Calhoun says. Investor confidence can be won by founders with significant corporate experience, and a thorough understanding of how a solid business functions from the inside out.
2. Look for corporate partners
The traditional corporate “partnership” isn’t a true partnership at all. Your start-up may pour money and energy into offering free trials, but big companies are reluctant to integrate trial software into their technology pipelines.
Start-ups have an opportunity to redefine that relationship as true partnerships with CMOs. The benefits are huge for both sides of the equation, Calhoun says. Instead of approaching CMOs with your hat in your hand, position your product as an opportunity for them.
“They won’t pay a lot,” Calhoun notes. “They won’t become a huge customer — but they will become a customer, and that makes all the difference.” You gain a named customer to offer prospective investors and the press.
3. Gender diversify your team
Calhoun sees gender diversity as a factor any company should consider when putting together a board.
A ten-year study of 600 early stage investments found that teams including female founders outperform male-only teams financially by 63 percent. And, Calhoun notes, hedge funds with diverse teams have been outperforming all-male teams by a margin of over 60 percent for the past 12 years.
“When both genders are working together, you have a broader perspective,” she says.
Paired with the fact that gender diversity is the only fully controllable risk factor an investor can manage, Calhoun says, gender diverse teams are gaining VC attention.
Currently only 7 percent of venture fund capital is going to startups with a gender-diverse founding team, but Calhoun considers this the lull before the storm. Woman-inclusive teams are currently over 20 percent of the population of tech startups, and she predicts that investors will begin to realize that the numbers are adding up to a huge opportunity.
4. Size and stage matters
A Cambridge report found that in terms of investor value and total gains, most of it is driven in early stage. And, Calhoun says, smart VCs are starting to sit up and notice.
While the average fund size increased last year by 71 percent, Calhoun notes, and most venture firms are launching larger funds, there’s room for smaller, early-stage companies to position themselves as a smart, lucrative alternative for VCs looking for real return on investment.
5. Think local
The venture landscape is evolving fast, and opportunities, Calhoun says, are springing up in your own backyard that weren’t there five years ago.
“Smart marketing technology startups are going to be looking for the incubators and the accelerators around them locally that have great local roots so they can access the early-stage dealmakers and early stage VCs more quickly,” Calhoun says.
There’s certainly a debate about whether accelerators help: “There’s a lot of research by companies like Seed Ranking — and experience in the field — that shows that they may not help you acquire a customer,” Calhoun notes, “but they will definitely help you acquire a network locally. And that’s a huge advantage for a marketing technology company.”
Don’t miss out!
What you’ll learn:
- Which types of companies are gaining funding, and where in the marketing tech universe they fit
- Where we’re seeing the biggest areas of consolidation
- Who the most involved / most active VCs are
- Implications for investors, vendors, and most importantly marketing technology buyers and users
- What you need to do to get noticed by the top VC, straight from the VC themselves
Jon Cifuentes, VB Insight analyst, VentureBeat
Lisa Calhoun, Partner, Valor Ventures
Sloan Gaon, CEO, PulsePoint
Ravi Belani, Managing Partner, Alchemist Accelerator, Stanford University
Moderator: Wendy Schuchart, Analyst, VentureBeat
Want to learn more? Join us for this live webinar on January 28, 2016. Register now for free!