By Brita Belli
In startup lingo, it’s called the “Valley of Death,” the time after a startup has left the academic bubble and before it has reached commercialization. As the name makes clear, it’s a difficult time to find funding. For investors, says YEI Deputy Director Erika Smith, it’s all about risk. “At every stage, investing is about trying to reduce risk,” Smith told an audience gathered at YEI’s incubator on Nov. 22 for an early stage funding talk. “What are they willing to take on in terms of uncertainty?”
Panelists Kyp Sirinakis, managing partner at Rock Spring Ventures, and Adrian Horotan, principal of Elm Street Ventures, discussed how they make decisions about who to fund and offered advice on how to approach funders and hold their interest.
“We’re investing in people,” Sirinakis said. Rock Spring primarily works with technologies emerging from universities that have typically already received seed funding. For her to take a potential investee seriously she says they must come armed with a business plan and deck. “We know the business plan will change,” she said, “but it shows that you’ve thought through the steps and have discipline.”
Approximately half of the companies Elm Street funds come from Yale, and they are very active in the seed stage. He stressed the importance of face-to-face meetings. “The best way to get a meeting is to get introduced,” Horotan said, adding that phone is a distant second and email is a very distant third.
Sirinakis concurred, adding that Rock Spring receives 1,000 business summaries a year. “The ones that make it to the top have a trusted advisor or know someone in our network,” she said.
Once a meeting has been secured, the panelists advised dressing professionally (and in keeping with the company culture); telling a story; having other investors at the table; and grabbing the investor’s curiosity early on. For a crash course in pitching, Horotan recommended watching David Rose’s talk “Ten Things to Know Before You Pitch a VC.”Read More