Pallavi,
My experience (it was my first time raising $$ recently, but third time
in a startup - hopefully it will be a hat trick) is that the market
space
you attack is very important to most VCs. The size of the market,
what's unique about your approach, the barriers to entry, etc. etc.
The "idea" per se gets put down by most VCs because most ideas
tend to be repetitive. When we approached VCs with what we felt were
truly unique ideas, they actually shared with us excerpts from
other business plans that came really close!! That helped us to develop
our own differentiators from the pack.
To distinguish yourself from the crowd, you must somehow get
the support of either established players in your field (pure Internet
plays are still so new that even a couple of years of experience
may be considered good enough - plenty of CEOs and executives
in their 20s and certainly many in their 30s) or create an "experienced
management team". The reason why most VCs seek management
team at some stage of the company is: it is far more important to
create business momentum, particularly if your field has few barriers
to entry and is not easily protectable by trademarks, trade secrets,
tangible proprietary assets, or some such thing. Most VCs feel
comfortable if you have someone or few in your early team who
have at least gone thru the process with or without success -
someone who they can trust. For better or for worse, it is generally
believed that a good management team with bad ideas can refocus
and create a good company, whereas a bad management team
with a good idea may go nowhere... again, if you are far ahead in
your market presence and have customer commitments/endorsements
etc., everything else may be forgiven.
Our funding process, which to me was the most challenging experience
in my life, worked out very well. But there were times when I was
questioning my sanity and doubting the integrity of several VCs. What I
have learned from people I've worked with and from several CEOs of
successful companies is that you must persist as long as you can. Don't
give up if you feel that your ideas have merit, you have some vision of
where you want to get and what you want to do. Quite often, many of us
former or current techies tend to get narcissistic about our technical
ideas. That's not such a great idea. Try to find some business
development
folks, others in your field who you trust, other entrepreneurs who may
have
gone thru the process and use them as a sounding board. Above all, don't
ever get cynical. Save $$ and keep fighting until you win. Vision gets
blurry at times - but if you persist, it will clear up just like the fog
you
see
in the Valley these days. Ideas get in and out of fashion along with
buzz
words. Even markets fluctuate with demand/supply, interest rates,
government
policies. VCs and their interests keep changing depending upon perceived
needs and "hot areas". Just keep up your own momentum. Work
with the best, and get harsh criticism from your own friends and
well wishers before angels and VCs get a chance to put you down.
On an average, you will need to wade thru at least a dozen until
you find one decent match for you... In some ways, we at PharmQuest.com
were quite fortunate, because I had been in startup circles for six
years
and
my partner had been a consultant in the Biotech-Pharma domian for three
years, and were widely networked. But we had never before talked to the
"real"
VCs. With VCs, at this time when millions of Biz Plans are floating
around,
introductions and referrals are very key.
Take my advise for what it's worth .... just sharing what I've learned
in the true spirit of this mailing list. My heartfelt thanks to many of
the
regular contributors and to the organizers at SIPA for keeping this
forum
alive. I have benefitted enormously from several of the discussions.
Best regards,
Shankar Hemmady
CEO, PharmQuest.com, Inc.
(408) 255-6300
BTW, we are still interviewing to complete our core team of Web
designers,
graphics artists and eCommerce specialists. If you or anyone you know
may
be interested, feel free to write to me.