3 Pieces of Advice for Founders When Connecting With Top Venture Capitalists
Recently, Avalon Ventures founder Kevin Kinsella was featured on Forbes, providing his advice to entrepreneurs on attracting and connecting with top venture capitalists such as himself.
Kinsella knows what it means to grow and run a company on the ground, which is why getting into the heads of venture capitalists can be a tricky job, but essential for raising large amounts of money. Since he founded Avalon in 1983, Kinsella has specialized in the formation, financing and development of over 100 early-stage companies and is known in the industry for investing with his instincts.
Below is a summary of his advice to founders on connecting with venture capitalists:
1. Show Passion
Kinsella explained to Forbes that, “Great ideas for new companies (or products) are originally not thought to be great ideas. If the great ideas were just lying about, other people, or more likely other companies, would have thought of them already and tried to do them. It requires a passionate entrepreneur with a unique vision of the future environment, and specifically the future growth of his/her particular product or service, to push these ideas to reality against all the naysayers.”
When facing the long odds against success, entrepreneurs must:
- Marshal a vision
- Get other co-founders to share it
- Convince relatives and/or venture capitalists to back it financially
- Implement it
- Work days, nights and weekends to make it happen
Passion, therefore, is a key ingredient. It needs to be visible and is certainly one of the things Kinsella looks for in the founders Avalon backs.
2. Deep Technical Domain Knowledge
“In Avalon’s part of the tech/biotech universe, there is no substitute for expertise. Being able to do something faster, cheaper, better all stems from being ‘smarter than the average bear’. We think the smarter bears have a greater chance of success — and those are the ones we back,” Kevin explained.
The trick for VCs is identifying these bears, which is why entrepreneurs need to convince us not only that they have a great product, idea and plan, but that they are the one VCs should be hiring to make it or do it. Kinsella explained, “We spend a great deal of time assuring ourselves that we have identified the A-Team to execute a business plan. The nightmare scenario is to fund a company and later discover that a rival venture fund has actually funded the A-Team and that Avalon has funded the B-Team. I can’t remember that happening and the reason why is that we make sure we have the A-Team.”
3. Execute On Plan & Within Budget
Kinsella strongly believes in the importance of capital efficiency. “An entrepreneur does not have the resources of a government — which can, and does, permit unconscionable waste of the people’s tax resources on gross inefficiencies and bad ideas for which there is no accountability.” He continues, “An Avalon-backed entrepreneur who built the first privately financed vessel for the US Military since World War II — the next generation high-speed stealth boat for Navy SEALS — using no government contracts, was asked at a public forum, ‘How have you been so capital efficient?’ His answer: ‘Because it was my own money on the line!’”
This mean that the more you can show that even a small scale execution has done well and that you have been capital efficient, the more attractive you and your venture will be to professional investors.
Avalon seeks A-Team founders with deep knowledge, expertise and passion, who have demonstrated their ability to create a plan and execute it on a budget, and have a vision that will transform an industry. So while “investing from your gut” can seem like an intangible method of investing, in truth we’ve found the right ways of reducing the risk of our bets and discovering A-Teams time and again.