The following comment is from some who spent a year recently unsuccessfully seeking venture capital. It was directed at my post about changes in the venture industry, but it was useful enough that I decided it should be a post itself:
I recently went spent a year seeking funding for an Enterprise Security Software Start Up.
We had a compelling idea. We met with the usual suspects: USVP, Venrock, TPG, Sequoia Capital and a half dozen others.
We had top advisors, Mike Pliner who started Sytek and Verity, and Bill Yundt who founded BARRnet and was CIO of WebTV, and Walter Lowenstern, one of the founders of ROLM.
However, after all of the meetings it became apparent that we were not the “A” team. Our other drawback was that although we had a brilliant founder, he didn’t have the pedigree of someone who has been delivering papers at the RSA conference for the last ten years.
My conclusion is that the VC community is extremely risk averse, unless they are not the first one in the pool. Then no one wants to be left out.
If you want to do a software start up, boot strap it and then go after money once you have got a product. Active Ink which markets a forms product to PC Tablet Users is one such company.
Everyone needs a Mike Markulla or a Bob Noyce on their team. Look even Steve Jobs got funded. By the way, Markulla invested $250k. Arther Rock said he wouldn’t have invested if Mike wasn’t running the show at Apple, whose total initial funding was about $600k.
All in all, this was a good idea that lost the window of opportunity.
By the way I thought the VC community was honest and fair with us. During the dot.com boom, I was waiting for the VC’s to return to sanity which took far too long.