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Entrepreneurs, investors agree: great talent always gets money

November 20th, 2012

By Joe Procopio

Joe Procopio

Joe Procopio

Two weeks ago, I moderated a panel on Internet Entrepreneurship at Raleigh’s Internet Summit. It was an intimidating experience as, although I’ve been on panels of all kinds, this was my first time moderating.

My panel was comprised of two founders – CEO Andy Beal from Trackur, a social media monitoring solution company in Raleigh, and COO Alexandre Douzet from The Ladders, the well-known online job matching service.

There were also two investors – Co-Founder/General Partner Brian Rich from New York-based Calatyst Investors and Co-Founder/General Partner Jason Caplain from Raleigh’s Southern Capitol Ventures.

Not to say that entrepreneurs and investors disagree all the time, but this panel agreed on quite a lot. Now, if you’ve ever seen a conference panel where all the panelists agree on everything, you know that can be the dead boring. But in this case it was actually helpful, because some really smart advice came out of it.

Regardless, I know what you want. Here’s where they disagreed

VC investment is down. Is this a hiccup or a trend?

Jason Caplain

Jason Caplain

The disagreement here was over the underlying causes of the downturn. Rich pointed to the ever-declining return on venture capital. Douzet noted the emergence of super angels, entrepreneurs who successfully exit their startup and use the proceeds to begin investing, have begun to replace early-stage, first-round VC money. Caplain offered that his firm has always made two new investments every year and is still doing that.

“Regardless of the overall trends,” Caplain said, “Great entrepreneurs always get capital.”

Everyone agreed with that. Aggressively.

Bootstrap or raise money?

Mostly there was agreement on why a startup should raise venture investment. Big, game-changing ideas in capital-intensive markets are obviously better candidates for VC money. Also, everyone agreed that an entrepreneur shouldn’t seek outside investment until they’ve determined that it’s absolutely necessary.

Andy Beal

Andy Beal, a successful serial entrepreneur.

Andy Beal has built several companies without funding. He’s a big fan of keeping equity and control in his pocket, and noted that without investor backing, he’s been able to take on big ideas, work with new sciences and technologies, and make quicker decisions that he would have been able to otherwise.

Douzet stated that The Ladders raised its only outside money early on, and has been running on revenues for eight years. He didn’t see any negatives to using that initial funding as a launch pad.

Everyone agreed that it all depends on the investor. Choose wisely.

What sectors are hot in entrepreneurship?

Different investors have different theses – methodologies they use to determine which markets and which types of companies to invest in. Overall however, Rich noted that any company that can automate manual processes and compete on price was going to get attention.

Douzet spoke to his interest lying not so much in new sectors, but in applying new technologies to The Ladders, namely by making a big push into mobile.

Caplain and Beal felt that the sector didn’t matter much if the product and the company were solid. Talented entrepreneurs with great ideas who can execute on those ideas were the most important aspects of determining a successful company.

Everyone agreed with that. Including me.

Joe Procopio (@jproco) is a serial entrepreneur who currently heads up product engineering for startup Automated Insights. He also founded and runs startup network ExitEvent. You can read him at http://joeprocopio.com.

 

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