Startable

Julien Wallen had an interesting comment on my recent blog post on new year’s resolutions - in particular my resolution to attend more technology conferences in 2009. He quite astutely questioned if technology conferences had a positive ROI, “But I’m somewhat cautious about conferences. My experience is that either you need to prepare really really well to make best use of the time or the ROI is really questionable - that is with a startup budget not a VC one ;-)” So, I’d like to see if I can get a discussion going around this, and thought I’d offer up a venture capitalist’s opinion on technology conferences so that entrepreneurs could get a bit of a feel for if and how technology conferences might fit into their venture financing strategy. (read Julien’s blog post response on the ROI of tech conferences here)

Are technology conferences worth the cost?

Is there a positive ROI for a VC to attend a technology conference? 

Of course the answer is that It Depends!

Wow, what a cop-out answer!

As a venture capitalist, I attend conferences for one of three reasons (I reserve the right to increase the number of reasons if more become apparent.)

1. Meet new startups - conferences can be a very good place to meet new startups and find new potential investments.
2. Fill in an investment thesis - industry specific conferences can be great places for a venture capitalist to refine an investment thesis and learn more about the competitive landscape in an industry, get a feel for customer needs, the next generation of technology, best practices, etc.
3. Support an existing portfolio company - a good venture capitalist makes introductions that help portfolio companies succeed. Conferences can be great places for a VC to facilitate in person meeting between portfolio company executives and critical players in that company’s ecosystem. (In my short, not particularly illustrious career as a VC one of my shining moments was at a conference where I introduced a portfolio company CEO to several players, one of whom ended up becoming a large customer of the company and another of whom is now a serious channel partner for the business. The CEO compensated me with a cookie at a board meeting - a very tasty cookie.)

How does a venture capitalist make the conference worth the cost?

Preparation! In a prefect world, my conference schedule would be almost as scheduled as a day in the office, with back to back meetings with entrepreneurs and key players. Of course, one of the advantages of a conference is the ability to “wander” around and “bump into” people/companies that have been difficult for me to reach - and having a game plan in advance on who and which people/startups I want to “randomly” meet is pretty critical.

As an entrepreneur, how should technology conferences fit into my venture financing strategy? Read the rest of this entry »

One thing you must do before starting a new business is to talk to potential customers. Make sure you can answer the question, “who is going to buy/use this?” Figure out as much about your potential customer base early in your startup idea generation and then apply that knowledge against what you are trying to accomplish. Sitting down with and listening to potential customers before beginning your startup can help you justify all the effort you are about to expend, can help you focus your development on the exact solution that the market needs and can help you understand how to create a the right product positioning.

For some reason some consumer focused startup CEOs like to tell venture capitalists, “even my Mom/Dad will use it!” Of course your relatives will use your product; they’re your parents! Your Mom is not a focus group. Use online surveys. Find expert or passionate bloggers in the space that you are targeting and speak with them. (Yes, these people will likely talk to you, and if you’re eventually going to talk to venture capitalists about funding your business, you’d better get to them first, because VC’s will make those calls while they are evaluating your opportunity…) Talk to sales people targeting similar users. If you’re selling to big corporations, have you reached the people who will be buying your solution?

Read the rest of this entry »