Some Advice from the Money Guys

eiffel tower fireworksWhat do you need to do to separate the venture capitalist from a few hundred grand? They’re no fools, so it won’t be easy.

Shay Garvey, a partner at Dublin-based Delta Partners, urged preparation. Speaking at the recent Dublin Web Summit, he said the first three minutes of a pitch are crucial. Garvey — whose firm has €230 million under management in tech, communications and healthcare start ups — advised keeping it simple. Eoghan Jennings, former CFO of Xing, agreed. He likes to hear how problems are presented and solved.

One interesting point Garvey raised was to steer away from techno-babble. The initial assumption is that applicants can handle the technology, Garvey said. Due diligence by Delta would confirm that fact, no doubt. Just last night, however, Jennings retweeted that VCs would have a better hit rate if they used an octopus for due diligence!

Asked what mistakes people make, Simon Cook, CEO of UK-based DFJ Espirit, said he found an insistence on non-disclosure agreements (NDAs) off putting. He suggested telling funders about your idea and seizing the first-mover advantage. You can read more about different approaches to NDAs here.

Garvey replied that many of his applicants fail to do due diligence, and he was surprised at how little some of them knew about Delta.

Cook — whose firm has backed Skype, Imagine Telecom, Baidu, LoveFilm and Tesla Motors — said around two-thirds of the start ups they fund don’t make money. “Entrepreneurship is good,” he said. “Go start a company, but don’t [necessarily] ask me to fund it.”

Garvey said, despite the current recession, that he is very optimistic and that there is no reason large companies cannot be built up in Ireland.

Cook noted that the big difference between Europe and Silicon Valley is that more late-stage funding is available in the U.S. Yet despite the “myth of the billion-dollar company,” the average VC exit is around €300 million on both sides of the Atlantic, he said.

Fireworks at the Eiffel Tower in honor of Bastille Day (today) by hoteldephil on Flickr.com.



One thought on “Some Advice from the Money Guys

  1. Pingback: Measuring VC Sentiment « John P. Muldoon

Comments are closed.